The new OPEC Monthly Oil Market Report just came out with their Crude Only production numbers for May. All data in the OPEC charts are in thousands barrels per day.
There was very little in production changes and no surprises in the May data. Total OPEC production was up 142,000 barrels per day and that was after the April numbers had been revised up by 29,000 bpd.
Everyone is concerned about Iraq. Iraq’s April numbers were revised down by 22,000 bpd and May production was up 18,000 above that revised number. Iraqi production stood at 3,331,000 bpd in May but I expect that number will change in June and most definitely in July.
Of course everyone is concerned about Saudi Arabia. Nothing much happened to Saudi Production in May either. April production was revised up 35,000 bpd and May production was up 32,000 above that. Not a big move for Saudi. Saudi Crude Only production stands at 9,646,000 bpd.
Iranian production is creeping up but very slowly. April production was revised up 12,000 bpd and May production was up 18,000 on that to 2,799,000 bpd.
Libyan production is still way down and continues to decline. April production was revised down by 16,000 bpd and May production was down 19,000 bpd below that to 203,000 bpd.
The page OPEC Charts has been updated with the May production numbers of all OPEC nations.
All eyes on Iraq. Things there can only get worse, a lot worse.
Militants Vow to March on Baghdad After Seizing Key Cities
The capital, with its large Shiite population, would be a far harder target for the militants. So far, Islamic State fighters have stuck to the Sunni heartland and former Sunni insurgent strongholds where people are already alienated by the Shiite-led government over allegations of discrimination and mistreatment. The militants also would likely meet far stronger resistance, not only from government forces but by Shiite militias if they tried to advance on the capital.
What has happened so far is the Sunni militants have taken over the Sunni dominated sections of Iraq. That’s why the rebels had such an easy time of it. They found no resistance because the populace welcomed them with open arms. But most of Iraq is Shiite and that includes Bagdad. All the easy conquest are over, it will get bloody from here on out.
Iraq oil shock could kill world economic recovery, experts warn
As violence threatens Iraq’s oil industry, experts fear crude at $130 per barrel would damage the global economy.
“The worst case scenario is that we see production from Iraq slip down to levels in the last Gulf war, then oil could spike $20 a barrel very quickly,” Ole Hansen, vice-president and head of commodity strategy at Saxo Bank told The Telegraph.
“In that scenario, the entire economic recovery, which is still fragile, could stall and we could even slip back into recession in some regions.”
White House mum on pleas from Iraq for airstrikes, as militants gain ground
The Obama administration reportedly has rebuffed calls from the Iraqi government to carry out airstrikes against Al Qaeda-aligned militants who are on a violent march that is threatening to take over the nation’s north.
Should the U.S. help out with air strikes, or even perhaps move troops back into Iraq? My opinion, not just no but hell no! The Shia and the Sunni have been fighting each other for over twelve hundred years and they will continue to fight each other forever or until one of them is completely killed off, which ever comes first. We should never have gone into Iraq and for damn sure we should never go back into Iraq.
Ron Wrote:
“We should never have gone into Iraq and for damn sure we should never go back into Iraq.”
Yes we should have not gone into Iraq. We “broke” Iraq and all of the other nations we destabilized. I am sure your familiar with the old term “You broke it, you own it!” Unless the US steps in, the odds increase that militants start destabilizing other OPEC nations, KSA, and Kuwait are on the Iraqi border. I am sure captured weapons and Money will flow into KSA and Kuwait to in support of other militant groups.
The Militants don’t have to take over Baghdad, all they need to do is attack or disrupt Oil exports and refining to collapse the Iraqi gov’t. Iraq will join Libya in a long term state of anarchy.
Once the Militants disrupt Iraqi Oil Exports, (perhaps in a few weeks) we’ll see Oil prices start rising again. I think we could see WTI prices spiking above $120 and gas above $4.50 a gallon in the US if they stop most of Iraqi Oil exports. The US is probably already in recession (Q1 2014 is negative as so far retail sales have not improved in Q2). We might just see about 2008 type economic collapse all over again.
Here’s why we went into Iraq: http://edition.cnn.com/2000/WORLD/meast/10/30/iraq.un.euro.reut/
Not saying it was right or wrong, but it provides context. We did it to save the USD and Petrodollar arrangement then.
There is increasing amounts of evidence nearly daily that the Petrodollar is already dead, it simply hasn’t been realized yet. Given that, I don’t think we do much in Iraq other than protect the export terminals.
I have a prediction: Oil now goes to $110 which will make everyone complain but keep IOCs happy, for awhile. The Middle East drama will drag on ruining countless lives but keep the people who make drones happy, for awhile. Significant oil reservoirs in the world will continue to deplete at increasingly rapid rates while earth becomes warmer and we’ll all keep reading Ron’s Blog as powerless observers.
I would like to bring this discussion forward from my last post:
Dennis wrote: OPEC fears renewables. Their response in the past has been to keep supply up so low prices will snuff out renewables. If they restrict supply and prices spike, this tends to make renewable energy more competitive and as it scales up prices may fall to the point where oil is uncompetitive even when OPEC pumps full out to try to reduce price.
Yes, OPEC definitely fears renewables. They are desperately afraid that importing nations will invent “something else” that will turn all their oil into worthless black goo. That is one reason they claim to have enough oil to fuel the world for another one hundred years or so. And it is one reason they claim to have 4 to 6 millions of barrels per day of excess capacity. They don’t and they don’t.
But reserves and spare capacity is another subject for another day. “Renewables” is the subject here. Now I don’t want to discuss battery powered tractors, battery powered trucks, battery powered aircraft and such. I think the idea is rather silly but they do have their true believers and I don’t feel like arguing with them right now.
What I do have something to say about “alternative liquid fuel”, it doesn’t exist and never will exist. Now I know we have ethanol, palm oil, used frying grease and such. But we do not have anything on the scale required to fuel the world’s one billion road vehicles, not to mention off road vehicles like tractors construction equipment and aircraft. If we had five earths we still would not have enough land to grow enough liquid fuel and still feed the world’s bulging population.
We are already destroying the earth in an attempt to grow enough food to feed the population, grow enough fiber to clothe us, and grow enough trees to build homes, make paper, make furniture and other wood products. We are destroying all the forests of the world already and in doing so destroying the world’s habitat for all wild animals. We are even destroying the world’s inland lakes and seas. The Aral Sea was destroyed because of irrigation to grow cotton.
The idea that we can create 70 billion barrels of renewable fuel per day is absolutely preposterous. Or even half that amount is just as preposterous. As liquid transportation fuel declines the number of vehicles that burn liquid transportation fuel will also decline.
I wonder what the renewable fuel comparison would look like compared to the land that a farmer had to set a side for grazing and growing feed for the ‘horse’ power they needed to farm? I have seen estimates of 40% of their land was needed for that purpose. I think that it is pretty clear that it would be a lot more than 100% to run our industrial economy.
That 40% number can no longer be achieved.
That was for winter hay for oxen. Oxen are not a special breed. They are generic cattle trained from young age to pull, building up muscles etc. The cattle of today would make poor oxen because they have been bred for milk production or particular kinds of beef.
So there’s a good chance 50-60% of land would be needed now. The oxen cattle of yesteryear no longer exist.
There are still bloodlines of cattle around that are suited to use as draft animals but very few of them in western countries.
It would take a long time to breed enough of them to matter but we are not going to be going back to animal powered agriculture anytime soon- most certainly not within the easily foreseeable future.
The problem with farming with draft animals- in comparison to farming with tractors and other machinery with internal combustion engines-ASSUMING SUCH MACHINERY IS AVAILABLE- is a pretty simple one but still one that is usually overlooked by non farmers.
Farming work is seasonal in the extreme. You plow a few days, you cultivate a few days, you harvest a few days, you apply pesticides every week or two or less often during the growing season.The number of days you are actually in the field burning fuel are relatively few out of the days of the year.
It was not unusual for our tractors( We are retired now ) to sit for a week at a time during the summer and for a couple of weeks during the winter.We usually had two or three. Sometimes one or two of them would not be used for three months at a stretch during the winter.
Horses and mules and oxen have to be fed every single day for their entire lives.
We can grow enough corn or soybeans or other crops that can be processed for ethanol or a synthetic diesel on a hell of a lot less land than we can grow feed for draft animals.
And not only do you have to feed the draft animals- you have to feed the farmers who are using them. I can plow more with a small antique such as my 1957 Ferguson 35 in a week – assuming she doesn’t break down- by myself- even thuogh I am now getting pretty decrepit- than three or four young guys with prime teams of mules.Riding a tractor is easy work compared to plowing with mules- I learned how as a kid but thankfully never had to actually do it more than a few hours here and there in a garden spot.We still had a family mule back then because the old folks wanted to keep one for old times sake and the mule had to be worked to keep it in training.
Even a team of mules can’t be worked hard for more than ten hours in a day and for more than a couple of days without a day of rest.But if I had to I could still drive that tractor sixteen hours a day for seven days straight.There aren’t any cars going the other way out in a field and you aren’t too likely to have a serious accident going only five mph or so even if you are nearly asleep.
We could also manufacture enough synthetic gasoline and diesel to run our farms out of coal if we had to.
BUT no matter what happens on the farm in terms of on farm fuel consumption- the real future problem is going to be getting the inputs to the farm- these being fertilizers and pesticides and so forth- and getting the output from the farm to the table of people hundreds or thousands of miles away.
Ron is absolutely right- we haven’t a snowballs chance on a red hot stove of running our current civilization on biofuels. We are not even going to run the current American economy on biofuels- not even if we cut back to European per capita levels of gasoline and diesel use.
We are screwing up the environment at breakneck speed already. If we are so foolish as to commit to biofuels as a general energy for transportation policy we will destroy what is left of the natural systems that support us within a generation.
Damned if we do, damned if we don’t.
But nevertheless I think industrial civilization will survive the coming collapse in certain well situated pockets here and there for a very long time- maybe many centuries or even millennia. Barring bad luck such as a nuclear WWIII of course.
FARMING with biofuels exclusively would be considerably more expensive that using ordinary diesel but it would be infinitely easier than trying any alternative such as moving most of the people in big cities back onto the land.That in my estimation would be a literal impossibility.
AND for what it is worth- most antirenewable discussions of the economics of biofuels such as corn based ethanol and soy based bio diesel avoid mentioning the very useful byproducts. Mash is a very good livestock ration and soybean meal is just about as good as it gets as animal feeds go.
When these by products are properly accounted for biofuels are a somewhat better deal than they appear to be at first glance.
Hi watcher, I am curious about your farm and the kind of animals you feed. I am sorry I shouldn’t be so snarky, but there are people farming with drft animals today, they are not doing it to save the world. Many other reasons besides; perhaps to save themselves. My horses and mules work 3-5 days a week in ll seasons, but I don’t plow much (make a lot of hay) My horses and mules eat no grain. Our sheep don’t eat grain, and if I had cows they sure as heck would eat grain. My horses and mules follow sheep on pasture and help with parasite control. they also graze edges and rough places and keep the farm up. Any one that makes hay will have the best bale they made this year and the worst. With horses and sheep I can feed the best to the sheep and the worst to the horses. Lots of savings. I am not suggesting that draft animal power is a “solution” to peak oil, as I don’t real beleive there is one, but just that there are lots of folks doing it so guessing what it takes is not really necessary. I can see lots of pictures of my farm on my web album. picasaweb.google.com/mulemandonn. Again, I apologize if I was too short. Donn
Wish I knew how to edit after I reply. I am a poor typist and not very good editor. Aside from the many misspellings of course I meant that my cows would also NOT eat grain. Feeding grain to ruminants is strange? dumb? unnecessary.
I would just like to apologize again for the unnecessary rudeness of my original post. I often like to suggest to folks that the reason tractors replaced horses had little or nothing to do with what horses ate. Just like any other industrial process tractors were brought on to the farm to replace workers (human labor). And replacing this labor will be what is required should someone want to farm with draft animals. On the bright while folks worry about the increasing age and shrinking pool of farmers, I meet young farmers every day begging for a chance to learn about farming and growing food.
I could build a 60 to 80 cow dairy, graze the cattle, and use 6 to 8 horses to make the hay, Make grass silage if you want to (that is what my Amish neighbors do – it makes them modern); BUT, this farm would need more than twice the human labor to run than an equivalent sized tractor based operation. (note the size of Amish families – they are the fastest growing rural communities in this country)
Vegetable production without milk or meat production would need more horses per acre of production, but is already quite profitable for some small farmers.
Combining vegetable production with meat or dairy production in one operation would make the best use of the human power and horse power available. This would apply directly to Mac comment above about the number of days working. This combination of enterprises would share fertility, resources, labor, and skills. The cost of feeding horses would honestly be a small part of it.
I don’t think in terms of “feeding the world”. I think those that do; either want to make a buck off it (think monsanto) or want some one else to feed them (they never bring anything to a potluck). I think in terms of feeding myself, making some good food to sell or share. In this scenario draft animals become quite viable.
Donn, don’t worry about it. I read your original post and didn’t find it rude at all. Anyway we can put up with a little rudeness on this site, as long as it’s not every post. 😉
haha
Tidbits . . . OFM. In days of yore, back when “edible weeds” became a big deal in 1345ish in England (just before the plague), the standard for oxen owners was they stopped being farmers.
The oxen were big value assets. They were rented out. So while they ate every day, they were earning rent every day, too. In fact, you want to become the big kahuna of your community, own a water powered mill. Not gold. Gold is silly. Own the mill. (aka defend the mill, they won’t use mortars to get you out of your mill).
No wiring or plumbing in Amish houses. Hard to price them for mortgages. That’s changing just a little. Plumbing has now been authorized by God via Reconciliation in a closely divided Senate — induced by outhouse digging over the centuries and thoughts about the water table.
Hi Ron,
As less liquid fuel is available, less will be used. In the absence of plentiful liquid fuel, natural gas and coal will be used while it lasts, but as most liquids are used for transportation, as prices rise less will be used in cars, trucks, and airplanes and rail, light rail, buses, and ships will be built in densely populated areas and electric and hybrid cars and trucks will be used where other forms of transport do not. Available liquid fuels will be used for tractors and mining equipment, they will not decline to zero overnight and if they did (or when they do reach zero) then ethanol and biodiesel will be used for critical applications.
When I say renewables and energy efficiency I am thinking of wind power and solar along with the obvious move to public transportation and rail to replace cars and long haul trucking. High oil prices will accelerate such a transition, initially it will cause a recession, but appropriate government policy will move us away from fossil fuels once the decline to 73 million barrels per day of crude plus condensate arrives and peak oil is finally evident to the powers that be and the general public.
Hi Dennis, worldwide transportation is about 60% of total oil consumption. Industry is about 30% (including 15% as chemical inputs). The rest (agriculture etc) is 10%.
Substitution for the gasoline fuel used by cars (about 30-40% of total) may be the least difficult part, but only by comparison. It will take a revolution to convince people to give up the cars and I don’t have confidence in appropriate government policy.
I am waiting for the new BP report and hope to do more HL and other things with the latest data.
Hi Political Economist,
It will mostly take high enough oil prices to get people to give up their cars. It will not happen overnight, as oil supply decreases prices rise, people begin to change their behavior and it will indeed be revolutionary.
It is surprising to me that people think this cannot happen. I think people do not think that real oil prices can rise, I believe that is incorrect.
People often think that I believe that such a transition will be painless, they are wrong on that score as well. There will likely be a recession or depression as oil prices rise.
On government’s failing to do the right thing, I agree that it would be most efficient if the free market worked the way Walras envisioned. In the face of inadequate aggregate demand we could wait a very long time for the “long run” to arrive, as Keynes suggested in the long run we are dead.
So the government intervention I envision is government investment to get the economy moving after a depression arrives. Investment in rail, light rail, HVDC transmission and possibly appropriate tax policy (such as a carbon tax) to move us away from fossil fuels.
That I have to clarify. I am totally opposed to free market. I’ve even less confidence in free market than in government . All I am saying is that the various CURRENT governments in the world do not seem to be capable of long-term planning in response to peak oil. The best they can do right now to is pretend to care about climate change.
Yes, after depression and revolution, public investment will be necessary to lead the transition to renewables.
Hi PE,
I share your lack of faith in government and free markets.
In the face of depression level unemployment, I would hope that governments will not respond as they have to the great recession and decide that fighting budget deficits is the proper response.
Both Samuelson and Friedman would be spinning in their graves to see the current state of mainstream economic thought on the proper fiscal and monetary response to massive unemployment.
Why don’t the Iranian Shia buddy boys now annex and/or help out their Iraqi buddy boy Shities? Surely, this makes a bit more sense than asking the hated infidels for a little lead and bombs?
What would the Saudis say about this alignment?
Paulo
Iranian troops moved into Iraq this morning to “defend Baghdad”, say Iranian sources.
A 2 cents item.
We can probably stop watching the news out of Iraq. It will fairly quickly start being as reliable as that out of Ukraine.
I don’t understand your comment. There are reporters on the ground in the Ukraine who report to national news networks. Are you saying their reports are lies? Ditto for Iran. Whom do you think is censoring the news out of Iraq and why?
You must know Watcher, that I am not much of a conspiracy theorists. I simply don’t believe that all the world’s reporters and news agencies are in cahoots with any of the world’s governments to alter the news in ways those governments see fit.
Of course I take with a grain of salt all the “official” press releases from Iraq or Russia or wherever. But reporters on the ground usually report the news as they see it.
Systemic. The two source rule is destroyed.
How do you get two sources who didn’t orchestrate their story? And when you have a deadline to meet, how much effort do you put into concern about such a thing.
Hell, most coming out of Ukraine is sourced to Twitter and both sides are orchestrating that.
Watcher, the media is not a court of law. They have reporters that have worked for them for years, they trust them. If they ever catch them lying or just making something up, they fire them. They don’t require two sources since they trust their reporters. After all, all they are doing is reporting what they see. Why would they lie and risk losing their high paying jobs?
For them to lie, or for all of them to lie which is what you imply, would require a grand conspiracy among all, or at least most, of the reporters on the ground.
To assume that is just assuming way too much. I believe that among competing hypotheses, the one with the fewest assumptions should be selected.
Ron, you are not understanding. The reporters are the ones dependent on two sources. Not the editorial staff.
Nobody gets up in the morning to go to work to lie. But they do have to work within the system, and the system can fail, especially when it is well understood by some positional advocate trying to mold the narrative.
Then note how many stories are X X X X X X X, according to the interior ministry. No one went out and checked that story. The least expensive option is to present that text and specify the source and file by the deadline.
Watcher, the news coming out of Iraq are stories that are recorded with camera and mike, not stories fed to them by someone else that requires double checking. Of course reporters report what the interior minister says but surely we all understand this is all they are doing.
No one holds the reporter responsible for the truth of what any government official tells them. No one would expect them to get two sources as to the validity of the word of any government official.
My point is, I just don’t see the problem with the news stories coming out of Iraq or the Ukraine that you do. Or Russia either for that matter. If some reporter reports what Putin says, I know to take Putin’s words with a grain of salt. But if they say five people were gunned down in a public square I tend to give it more credence, especially if they have pictures.
Actually, few reporter report what Putin says.
I was aghast at how the phone calls between Obama and Putin were reported.
“President Obama made clear to Putin that blah blah blah and blah. Furthermore, he also expressed concern about blah blah and blah” and End Of Story. That was it.
There was nothing there about what Putin said. Worse still, the source of that story was the WH. Why didn’t they present what Putin said? Was the other end of the phone completely silent?
http://abcnews.go.com/blogs/politics/2014/03/heres-what-obama-said-to-putin-during-their-hour-long-phone-call/
If you go and dig into NYT and Washington Post articles about that you will find that they had to call the Kremlin to get any more information. Why? That challenges the systemic weakness and realities of deadlines and budgets that generated that ABC News article above. No time to call the Kremlin. Just release the WH account. Which is here, btw:
http://www.whitehouse.gov/the-press-office/2014/03/01/readout-president-obama-s-call-president-putin
It’s like the other end of the phone was silent.
Rather many are deceived by it, btw, re taking whatever Putin says with a grain of salt. Why not say that about WH releases?
btw here is how RT reported the phone calls:
http://rt.com/news/putin-obama-ukraine-crisis-484/
“”In response to the president of the United States’ expressed concern about Russia’s supposed meddling in southeastern Ukraine, the president of Russia noted that such speculations are based on inaccurate information,” the press statement read. “
Russian national reporters who regularly annoy Putin end up dead. Reporting from Syria is a very high risk activity. In many conflicts these days all sides target reporters directly. Even in Iraq several Western reporters suffered ‘friendly fire’ incidents.
Ron,
I believe what Watcher is referring to is that a lot of media simply copies what the gov’t reports. Rarely do we get the full story. At least in the US, Investigative journalism is dead as the US gov’t pretty much censors what is reported. The FCC now dangles broadcast license renew rejection as tool to prevent all of the facts from getting reported. They cover only the news that is gov’t approved or risk losing their broadcast license. I recall a few months ago a news story that the FCC was planning on assigning field agents to all of the news media outlets in order to ensure the public is being “properly” informed.
http://foxnewsinsider.com/2014/02/21/update-fcc-backs-controversial-media-monitoring-plan
http://www.msnbc.com/rachel-maddow-show/the-fcc-wont-monitor-newsrooms
That said, for the time being the Internet remains largely uncensored and remains the only way to find out what going on. Although if congress eventually passes a bill like SOPA, it will end uncensored news in the US.
The FCC now dangles broadcast license renew rejection as tool to prevent all of the facts from getting reported.
No, I flat do not believe that. That is nothing but paranoid talk.
I recall a few months ago a news story that the FCC was planning on assigning field agents to all of the news media outlets in order to ensure the public is being “properly” informed.
I am sorry Ron, you are my buddy but I am afraid I am going to need a link that supports that story. Because I flat don’t believe that one either. I think you guys are just a little paranoid.
Your links: I am not at all surprised at the Fox News link. That is pure Faux News. But your other link:
The FCC won’t ‘monitor newsrooms’
Ron, did you actually read that article? If you had you would have figured out that it disputes everything you are trying to prove. That article makes a laughing stock out of those who are paranoid of the FCC and feels they are trying to “control the news”.
Some House Republicans got involved, warning the FCC to stay out of newsrooms. The American Center for Law and Justice, a far-right legal group started by TV preacher Pat Robertson, started telling social conservatives, “Now we see the heavy hand of the Obama administration poised to interfere with the First Amendment rights of journalists.” The White House, the group added, intends to “put monitors in the newsrooms of every major media outlet in the country.”
None of this is true. None of it is even close to true. But if you rely on conservative media, the politics of paranoia was in full force last week over this one.
I’ve of coursed included a Link to MSNBC for a “Fair and balanced” approach. 🙂
I did read the MSNBC, which was downplaying the issue. MSNBC did not deny the program existed, just spinning the story to down play its significance.
Here’s similar story from the Washington Post:
http://www.washingtonpost.com/blogs/erik-wemple/wp/2014/02/21/fcc-bags-controversial-media-study-let-media-reporters-take-over/
Consider that most gov’t monitoring programs start out small and under the radar and morph to giant regulating programs. I can’t recall a single US gov’t agency in all of American history that didn’t grow larger and expand its power over time.
Hi Ron,
I am mostly with you in this case but I am reminded of one of my all time favorite cartoons. I think it was in the New Yorker but not sure.
A mature bearded king in luxurious flowing fur bathrobes is sitting on the royal crapper with his news paper and talking to himself.
” I know I’m paranoid. The question is am I paranoid enough?”
There is no question in my mind that the government of this country (and most other countries) attempts to use it’s power to influence the news. These attempts are coming from both the right and the left wing in this country.
I suppose you have heard about the scandal at the IRS involving the difficulties of organizations opposed to the Obama administration getting tax exempt status. It has been whitewashed for the most part but in my own mind at least there is no question whatsoever that there is substantial evidence that this was a deliberate policy. I am not saying Obama knew much if anything about it personally of course but we all know about how things of this sort are organized by professional politicians of all stripes.
The people at the top are protected by underlings who are supposed to be willing to take one for the team.
Taken all around I think we still have a pretty good press in this country considering that most of it is owned by big corporations with vested interests in the status quo. Reporters and editors have to be pretty damned careful of the owners even if they are free to stomp on government toes most of the time.
In reply to Watcher
“We can probably stop watching the news out of Iraq. It will fairly quickly start being as reliable as that out of Ukraine.”
I too believe that major news channels usually ‘spin’ the way news is reported. It is not a conspiracy it is just part of their normal behaviour.
But today they didn’t. The BBC world news just had a very good assessment of the Iraq situation by Michael Rubin of the American Enterprise Institute. He stated that the fighting was exclusively in Sunni areas by a combination of Jihadists and Baathists. A repeat of the uprising in 2004. Iraqi oil is for now secure in the southern Shia zone and the northern Kurdish zone. His longer term assessment is extremely gloomy for Iraq however another Syria or Bosnia.
Similarly on Ukraine the BBC unusually rejected the Ukrainian nationalist propaganda that Russian T72 tanks had invaded. The BBC stated that the tanks were in fact captured Ukrainian T64s.
If I had my tin foil hat on, I would think that the BBC being more truthful than normal suggests they are trying to counter any market panic possible if rumour about war in Iraq and war in Ukraine escalates into global fears.
“Similarly on Ukraine the BBC unusually rejected the Ukrainian nationalist propaganda that Russian T72 tanks had invaded. The BBC stated that the tanks were in fact captured Ukrainian T64s.
If I had my tin foil hat on, I would think that the BBC being more truthful than normal suggests they are trying to counter any market panic possible if rumour about war in Iraq and war in Ukraine escalates into global fears.
”
Yah, good call. Pretty much exactly that sort of thing. I noted a pair of NYT reporters who watched the Crimea seperation vote and walked around interviewing people concluded that the populace wasn’t being coerced and did want to join Russia.
They were reassigned.
Ron, Luis and I have been following the slow disintegration of Iraq and Libya for many months, it has at last broken into the news. So is this better than Sadam or Gaddafi? If it spills into Saudi (or rises up in Saudi) then that will be GW3 – maybe WW3. We should have kept on good terms with Putin.
A selection of my recent stories:
China – the coal monster
America energy independence
The temperature forecasting record of the IPCC
Hansen makes the case for nuclear power
Your Green readers will HATE the last two – best stay away. But those who want to learn might be surprised at the contortions the IPCC has gone through to maintain the same story for 25 years. And its interesting that Hansen (like Lovelock) is very pro-nuclear and casts an interesting perspective on the exaggerated health risks of radiation.
Oh, Roy Spencer and Anthony Watts? With that company, green readers should indeed steer well clear, until they become less, ah, green; good counterpoint reading may include:
http://tamino.wordpress.com/2013/09/21/double-standard/
http://tamino.wordpress.com/2014/01/30/global-temperature-the-post-1998-surprise/
http://tamino.wordpress.com/2014/02/06/cowtan-way/
As for growing energy supplies on a finite planet, well, if you can do that with nukes, then I’d like one grain of uranium on the chess square A1, two grains on A2, four grains on A3, eight grains on A4, and so on through the complete chess board. Otherwise, not much more than a Bottle As Usual plan for an alcoholic to get through a rough spot, but sure, some folks might try some nuclear fling. Hasn’t worked out too well in practice for America and other nations with their aging fleets and as yet not flaming fuel ponds; maybe the Chinese will have better luck? Time will tell.
thrig,
Then there’s the argument: Why not just ignore the odd crackpot theory when more than 97% of REAL climate scientists agree that we have a big (huge) and increasing problem. Your links are excellent, thanks.
Doug
I avoid Euan’s site not because I am ‘ green’ (I am not sure what that really means anyway) but because it espouses climate change denialism and I do not wish to increase his traffic flow. I cannot but help feel that his sporadic appearances on Ron’s blog are just attempts to bolster his readership.
I have given Euan permission to post his links on this blog anytime he wishes. And that same permission is extended to all Peak Oil bloggers.
Thank you Ron, and as an illustration of how totally ignorant some of your commenters are your regular readers may want to start with this post dating from November 2006.
http://www.theoildrum.com/story/2006/11/19/135819/75
I think Doug Leighton should go crunch the numbers and come up with his guys who had a better forecast!
Your other readers may want to check all these posts out as well:
http://euanmearns.com/oil-drum-posts/
In particular the ones under the heading “Lead up to the 2008 Crash”
And as for Andy Hamilton, while Ron was setting up this blog I was working on winding down The Oil Drum that had grown at it s peak to 170,000 unique visits per day. I really do resent your comment.
Now to be perfectly clear, I think Ron has done a great job in carrying over the “Peak Oil” community from TOD and providing a forum for the continued existence of part of that diverse community. And I appreciate Ron’s tolerance of my views here. Any blog that becomes intolerant of well argued views becomes a dictatorship.
Any blog that becomes intolerant of well argued views becomes a dictatorship.
I agree– but the term “well argued” is key.
Going postmodern, and just making stuff up, and insisting it is as valid as peer reviewed science is a bit of a stretch.
But point well taken.
Dave, which bits of my posts did I just make up? I’m plotting data and making observations that the peer review process appears to have missed. Again, which bits of my posts did I just make up? You made the allegation, support it with data!
I visit your site daily for your energy insights.
Your stance of AGW is not supportable.
I’m neutral on Nuclear, but whenever humans design or maintain them, problems often arise.
Dave Ranning, My view on AGW fits in on the lower end of the IPCC consensus. So I’m afraid your opinion is not supportable. What is not supportable is the propaganda sent out that there is a consensus, where the IPCC view ranges from tolerable to meltdown.
What is not supportable is the propaganda sent out that there is a consensus, where the IPCC view ranges from tolerable to meltdown.
Really?
One more time:
You are more than welcome to resent my comments Euan, most welcome. They still stand. Frankly a denialist calling others ‘totally ignorant’ is the height of irony – I am still chuckling. Yes I am more than familiar with your work on the Oildrum (I signed up with that late lamented organ back in 2006 or thereabouts).
I was just looking at a global warming website and there are sparks flying and blood being spilled in the argument there over the particle size of ceramic proppant used in North Dakota.
It’s vicious.
Watcher,
No one could possibly be more knowledgeable about ceramic proppant size than you.
Well, there is that.
Andy,
Good point. I’m not “Green” either but I am strongly anti-denialism. As I recall Euan is also North Sea oil depletion denialist (if that’s a real word). If he is, the guy is living on another planet, along with the Tooth Fairy, Superman and perhaps Father Christmas.
Doug
As I recall Euan is also North Sea oil depletion denialist…
Now wait just a cotton picking minute here. Are you sure about that? I just cannot imagine Euan saying the North Sea is not depleting… fast.
Actually I’m not (totally) sure but there was something along that line a long way back. Since I’m away too lazy to go hunting through hundreds of old blog comments, I’ll retract that sentence (reluctantly) if you wish.
Euan posted a comment to the effect that the people who say the UK is going to be running out of oil and gas in five years should not have been allowed to into college or something to that effect. \
I personally posted a reply that maybe the UK would not be out but would be in a hell of a bind by then or something to that effect. This was a few weeks back in response to a link posted by somebody on this site and probably his too.
Now as to whether man made warming is real or not- so far as I can ascertain from extensive reading the earth as a system is accumulating heat energy. Most of it seems to be going into sea water at the moment.
Any body acquainted with the basics of geological and physical processes should understand that ten or fifteen years is only an eye blink or a yawn maybe in terms of climate. We don’t yet know about all of the short term cycles that probably exist nor about all the random variations that might be likely. The record of highly detailed observations isn’t long enough.
To me the trend seems perfectly clear- a decade just doesn’t mean much in terms of geological or climatic time scales.
And mankind is doing more than just pumping co2 into the air. If we stop pumping aerosols for any reason we may see the thermometer climb in a hurry.
All that energy accumulating in the top few hundred feet of seawater is probably going to bite us hard on the backside pretty soon.My money for what it is worth is on warming resuming in no unmistakeable terms in the near future- non mistakable meaning to people who look at only short term records.
Ten or fifteen years is really very short term- and just about all the hottest years in recent times are among that fifteen years.
After the long winter we had in Wisconsin this year, I think global warming is a bunch of garbage or maybe it is some kind of a scam? All I know is that I lived in Wisconsin all of my life and this was one of the longest and coldest winters that I have ever went through. The weather bureau in Green Bay said that we set a new record for the most below zero days in one winter. Then they came up with that new bogus weather phrase “The Polar Vortex”??? Anyway, I really got tired of the weather men saying 4 letter words almost every day “wind, cold, snow”.
Personally I belief we are going to go back to the ice age and the corrupt scientists and liberal media elites just want to make us believe that the world is getting warmer so nobody is alarmed.
I often wonder what motivates someone to publish things like this. Is there a way to make money putting comments onto blogs and websites? I do see common themes (talking points?) such as local weather, corrupt scientists, liberal media elites, global warming scam, etc. Are there groups that actually publish scripts?
http://none/.
What kind of address reference is this?
The Heartland Institute has been known to pay people to deliberately stir up skepticism using a well-crafted set of talking points.
The oil and gas industry is also generally seen as large contributors to the Heartland Institute and their denial campaign, so maybe in that there is a rationale behind why a skeptic like the one above would post on a peak oil blog.
Wisconsin was cold this past winter!
I followed the cold winter proves warming is baloney circus on a couple of right wing sites such as the Washington Times. I also had some weather sites bookmarked for Siberia which is as large as this country or close and the weather there was record warm.
This info was like water on a ducks back to the regulars at such sites.
Most people make their minds up about such things based on their cultural and tribal loyalties.If Rush and Newt say it ain’t so then by god it ain’t so if you are a so called conservative.
If Greenpeace says it is so then it is so if you believe in Greenpeace and what it stands for. I have numerous acquaintances who are ” green ” but truth be told nearly all of them are as ignorant of the sciences as any backwoods Baptist preacher.
Even a typical Ivy League graduate is more than apt to be scientifically illiterate.You can graduate from Yale with one survey course in one hard science. No lab. One semester. No math needed. I checked the online catalog myself before I was willing to believe this.
EO Wilson in his book Consilience which was first published in the late nineties IIRC states that you can graduate from two thirds of the colleges and universities in this country without taking a science course.The situation has probably gotten worse since then.
I got used to being the butt of jokes for being a ” cow college” guy while in school myself. But any ag student at my U got the full nine yards in his freshman year of chemistry and biology with the kids majoring it these fields. Same classroom same hour same instructors.It got harder later on in terms of the science course load.
It is not the fault of people like Chuckster that they don’t understand a technical argument.You can’t balance a checkbook unless you can both read and write and in addition to that do basic arithmetic.
The vast majority of the public is flat out scientifically illiterate.No matter how many times this obvious truth is repeated most of us forget it and get our undies in a bunch thinking anybody who doesn’t agree with us is stupid.
But stupid and uninformed are not the same thing.
Hi Chuckster,
There is a difference between weather and climate, nobody has claimed that the winter would not be cold in Wisconson.
The melting of the arctic has changed weather patterns. Do you think the meteorologists are just making stuff up?
Remember that we are looking at the weather for the globe over the entire year.
Are summers warmer in Wisconson than they were in your youth, I know this is true in the Northeastern United States, but I have never visited Wisconson so perhaps the weather has become cooler there throughout the year.
Andy, in my mind calling Euan a ‘denier’ does not reflect scientific thinking..
The basic foundation of scientific thinking is supposed to be based on attempting to reject the null hypothesis. I too have been called a denier, when all I am doing is to question the AGW hypothesis. That is part of the scientific process and I think it should be encouraged by ‘supporters’ of the AGW hypothesis. You can never prove something true; you can only fail to reject it. So what has been done to attempt to reject the AGW hypothesis by its supporters? I suspect very little. In today’s climate I think that would be called heresy by its believers.
I do know that there are a lot of scientists that accept AGW as an established hypothesis, and that, in part, is actually why I question it. Up to about a year ago I too just accepted it, but then I started looking into the details. I did not like what I found. The evidence is mostly just extrapolated models fitted to extremely sparse estimated data that has really only been validated over a very short time period. I now think that it is possible that AGW hypothesis is built on a house of cards.
Note that I am impressed with how much we now understand about our past because of these scientists and their work. I just don’t think that it adds up correctly in the models.
Adding to my unease with climate science is that I know of other public decisions based on ‘science’ and consensus that were largely fabricated by well-meaning people. They too attacked deniers and shut them up using consensus and ridicule as a weapon. They were wrong and there is now evidence to reject the hypothesis, but their supporters today still refuse to accept any evidence that would reject it. It is now an established hypothesis so it must be true as everyone knows. It has become a religion. As a result they are making the lives of millions of people miserable and causing many early deaths.
So no, I don’t really trust consensus or scientists any more than I trust in god.
If you don’t like evidence based on models then I recommend reading “The Scientific Guide to Global Warming Skepticism”
which outlines the case for AGW using physics and data. From its website it “looks at both the evidence that human activity is causing global warming and the ways that climate ‘skeptic’ arguments can mislead by presenting only small pieces of the puzzle rather than the full picture”. It can be downloaded at http://www.skepticalscience.com/The-Scientific-Guide-to-Global-Warming-Skepticism.html
Yes I have already read it. It did not quite my unease. Climate scientists and their supporters are so confident that they are right that they cannot consider that they may be wrong. It seems to me that climate science has become a religion.
I think it does a good job of showing AGW is happening, and to “deny” it is denying monitored data – there’s no right or wrong involved in that. There is still lots of uncertainty about what this means for the future and there can be some right and wrong about that. The debate should be about the risks and the consequences, not about the physics (just as with peak oil!)
Hi Oldtech,
So you reject the scientific consensus on everything?
Maxwell’s equations, Newton’s laws?
You are absolutely wrong that climate scientists have done little to reject the null hypothesis.
A lot of the “missing heat” that has not shown up in increasing air temperatures has been stored in the ocean. There are a number of lunar and planetary cyclic effects which can influence the rate that this energy is partitioned between the atmosphere and the ocean.
For those who have missed it check
http://contextearth.com/2013/10/26/csalt-model/
and click the index to other posts for a list of all posts on this subject. I have played around with the model a little myself, see chart below.
Oh, Roy Spencer and Anthony Watts?
Credibility just took a shot to the brain.
Yup, maybe a “double tap” even. I’m working really hard at pissing Ron off right now so if everything with my name on it suddenly disappears………….
Hey, I don’t do that. I have banned a couple of guys but because they were posting very ignorant and stupid things and just making an ass of themselves. I actually love it when some folks disagree with me. I just love the conflict.
It turns out that Euan is not a North Sea depletion denier after all. In fact he has been talking about North Sea depletion since at least 2006. But I take it you have already clicked on his link and figured that out.
The architecture of UK offshore oil production in relation to future production models
Yup, thanks.
Roy Spencer is a retired NASA remote sensing climate researcher who is still in charge of their satellite temperature monitoring system. I think he has won several awards from NASA. Can you please inform the readership of Ron’s blog of your credentials to comment!
You do realize that Roy Spencer is also a proponent for intelligent design!? Sorry, but I just can’t take someone like this seriously in a scientific manner, ex-NASA or not.
“And finally, despite my previous acceptance of evolutionary theory as ‘fact,’ I came to the realization that intelligent design, as a theory of origins, is no more religious, and no less scientific, than evolutionism. In the scientific community, I am not alone”
Yep, a member of the Cornwall Alliance:
http://www.sourcewatch.org/index.php?title=Cornwall_Alliance
“a coalition of clergy, theologians, religious leaders, scientists, academics, and policy experts committed to bringing a balanced Biblical view of stewardship to the critical issues of environment and development. The Cornwall Alliance fully supports the principles espoused in the Cornwall Declaration on Environmental Stewardship, and is seeking to promote those principles in the discussion of various public policy issues including population and poverty, food, energy, water, endangered species, habitat, and other related topics.”[1]
We really need higher standards.
Let’s see, let’s see, apart from the rejection of evolution thing, that’s cool if you swing that way, I guess, but on climate, hem. “Time to push back against the global warming nazis” (Feb 2014 blog post) well if you don’t have evidence I guess hey, heated rhetoric! Is Hansen therefore a nazi, or since he is pro-nuke does he get a pass on that brush? But blog postings ain’t hardly science, so next up would be the “Remote Sensing” article by Roy from July 2011 over which the journal editor espoused: “after having become aware of the situation, and studying the various pro and contra arguments, I agree with the critics of the paper. Therefore, I would like to take the responsibility for this editorial decision and, as a result, step down as Editor-in-Chief of the journal Remote Sensing.” Wow! An editor resignation for letting a Spencerism out to publication! Heh! Not someone I would dare cite. Except maybe if leprechauns were involved…
I say we ask the Talking Snake. He hangs out with the Rib Woman, under that Magical Tree.
He is my go to guy when it comes to Biblical Scholarship on the myth of Global Warming.
Liberal Lies!
Dave (and Steve if you’re out there),
Check this out: http://tamino.wordpress.com/2014/01/30/global-temperature-the-post-1998-surprise/
Doug
Sorry Dave, You’ve already been there. Steve then, this is definitely for you. Time to call it a day!
Euan: Best not insult the global warming religion!
To be fair all those who espouse theology seem to sit in the ‘denialist’ camp, funny!
To all,
The most recent IPPC estimates for equilibrium climate sensitivity (ECS)suggest at least a 66% probability that it is between 1.5 and 4.5 C for a doubling of CO2 levels above preindustrial levels.
Euan thinks the low end (1.5 C) is the better estimate. The consensus of experts is that there is about 16 to 17% probability that the ECS is 1.5 C or lower and that there is an equal probability that the ECS is 4.5C or higher.
If Euan were building a bridge, would he build it in such a way that there was a 17% chance that the bridge would fail under expected loads or in the face of uncertainty would he do as most engineers would do and include a margin of safety so that the bridge would be extremely unlikely to fail?
Many people understand that the climate science (particularly the effect of aerosols) has a great deal of uncertainty, but the best evidence gives a range to this uncertainty (1.5 to 4.5C for a doubling of CO2).
Structural Engineers usually overdesign a structure by about factor of 3.
So I would think that from an engineering standpoint even if we thought 1.5 C may be the correct ECS we would design policy as if 4.5C or even 9C might be the correct ECS estimate just to be safe.
Euan may be a geochemist rather than an engineer and may not think in these terms.
“As violence threatens Iraq’s oil industry, experts fear crude at $130 per barrel would damage the global economy.”
Glaringly true. The world economy is shuffling along with help from printing $, low interest rates, and so on, however a 20 buck jump in oil price will definitely put the squeeze on. Even a 10 buck rise with Brent going to 120 would have an obvious downward effect. Then the big question is what do policy makers do to get things revved up again? The options are becoming more limited and risky.
The other question is; would higher oil prices last very long before lower demand brought the price back down?
Check your watch and note the likely time of a SPR release threat.
“What has happened so far is the Sunni militants have taken over the Sunni dominated sections of Iraq. That’s why the rebels had such an easy time of it. They found no resistance because the populace welcomed them with open arms. ”
This is too simple an interpretation. The news coming out of Mosul and Tikit is that the mass of the local population is fleeing from the Isis terrorists/freedom fighters. Though the Arab population of mid and northern Iraq is mainly Sunni Muslim and deeply antagonistic to and fearful of the Shiite Arabs of the south who dominate the Iraqi governemnt, these Arab Sunnis are moderate and in many cases secularised. Much of the Mosul population will also be non Arab Kurds, strongly secularised. Sunni Arab and Kurd peoples are fearful of the fanatical ISIS fundamentalist Sunnis who will be seeking to impose for example, Sharia law, the stoning of adulterers and homosexuals, the wearing of the Burka, Quranic education, a Jihadist militant programme, vicious anti liberal values and general intolerance. The mass of the population flee from the fanatics rather than welcome them. The success of ISIS is due to the low morale and inadequacy of the Iraqi army that never recovered from the dissolution imposed on it after the Coalition victory and occupation in 2002.
ISIS has captured cities; it may be that Al-Baghdadi, the wily and cunning ISIS arch strategist, did not really want to find his fairly limited forces suddenly left with a city of 2 million to govern and defend. Much more satisfactory would have been a rampage through the city, then an equally sudden withdrawal. It is questionable whether he will want to take control of Baghdad; that city is vastly greater than Mosul or Tikrit and has a very large Shiite minoritythat would be impossible for ISIS forces to control.
Shouldn’t be too long before some individual names are brought forth to demonize. Putin was a largely good guy 2 years ago.
heard a news clip yesterday on Democarcy Now that a large part of the people fleeing Mosul were doing so based on their fear that there is an imminent threat of a large reprisal attack including American air strikes. As far as I know, we have not responded to Al-Maliki’s request for new air support.
I’m trying to imagine where 500,000 people fled to and what they are going to do once there.
Iran’s special forces rush in to help floundering ally
http://www.thetimes.co.uk/tto/news/world/middleeast/iraq/article4116273.ece
100 years after the Summer of 1914 . . .
Most of us on the planet are like the Austrians in 1913 arguing who our next Hapsburg Ruler is going to be.
Assassination of Archduke Franz Ferdinand of Austria (June 28, 1914)
http://www.history.com/this-day-in-history/archduke-ferdinand-assassinated
1914 was the year the United Kingdom went through its Peak Coal event.
Because we transitioned to oil for the navy.
And millions of the miners died fighting in the war. Millions.
We would have peaked soon anyway.
http://www.cnbc.com/id/101754233
Ford Motor Co said it would lower the fuel economy ratings for six vehicles and make goodwill payments to owners of about 200,000 cars.
The action covers all of the automaker’s 2013 and 2014 hybrids and plug-in hybrids, as well as the 2014 Ford Fiesta.
In some cases the changes lower cars’ combined fuel economy rating by as much as 7 miles per gallon.
Ford said it identified the discrepancies in internal testing and notified the EPA, which then retested the cars to compute the new ratings.
Last sentence is the cool one. So EPA does jack.
As a non-Iraqi specialist this is my understanding. Am I right?
I believe most of Iraq’s oil is in the south of the country near Basra which is a Shia area. The fighting in Sunni areas should not interrupt the flow of oil.
Nope. Big chunk up north that flows up to Turkey. Probably more in the south, but it’s not 90/10.
“The fighting in Sunni areas should not interrupt the flow of oil.” Kirkuk is a supergiant oil reservoir located in northern Iraq. In 1971 production rate was approximately 1.1 million barrels of oil per day and since then, the field has continued to produce large volumes. You’re right, sort of, but the north is VERY important. Just ask the Kurds.
And the Kurds have their own pipeline through Turkey for exporting their oil, while the government’s northern pipeline has been out of operation for weeks due to insurgent attacks.
I keep wondering if the Iraqi Kurds see much reason to help the government, which they have not got along with for some time now. The ongoing mess may be seen as an opportunity to strengthen their autonomy.
I’m repeating from a post I made just before Ron opened this topic.
Who knows. Perhaps for the Kurds it will become a lesser of two (or three, or four….) evils kind of decision. Not that I have an opinion on the matter but you have to admit these chaps have had a pretty rocky time of it throughout recent history.
The Kurds have been fighting ISIL for a while now in Syria.
‘Kurds and mainstream rebel groups had largely managed to hold an uneasy truce in the northeast of the country, which was shattered in recent months when jihadists attacked Kurdish communities near the Turkish border.’
I read that ISIL is opposed to the Kurdish relatively pro-western stance and their attitude towards women’s rights.
Thanks
An Iran with their hands full helping out Iraq allies will be unlikely to continue on in Syria and/or do much about any Israli threats or attacks re: Nuke Program. Could Iran fight a 3 front war? Not likely. Oil price might spike but neo-cons must be rubbing their hands in glee as this unfolds.
Paulo
Stocks have dropped, oil has risen in price on the news in Iraq. All that goes on is about oil and gas. They are everything. Other than food, stocks, commodities and the paper that proves ownership of these things are nothing without oil. As in the past one day again food will be everything and everything else without food will be nothing. The early settlers here in Ky. observed the natives using oil that had come to the surface in ponds or in puddles as a laxative. How could they have known that it was addictive and that a large amount of it could cause so much social diarhea?
OPEC shielded from making tough calls as oil price stays high
https://ca.finance.yahoo.com/news/opec-shielded-making-tough-calls-oil-price-stays-070936317.html
“NEW YORK, N.Y. – The oil market has balanced out quite nicely for OPEC in recent years. Now, upheaval in Iraq shows that balance may be more precarious than it has seemed.”
Or, as Secretary General Abdullah Al-Badry said in Vienna Wednesday after the Organization of the Petroleum Exporting Countries decided to maintain its current output of 30 million barrels a day: “Everybody’s happy.”
Ron, I have written so much on the decline of North Sea oil and gas in the last 8 years I cannot begin to recall all the sources. Some of your commenters today are so devoid of knowledge it is really hard for me to know where to begin to address their comments. I may also add that its late here in Aberdeen and I’ve been tucking into Spanish biofuel – just like the good old days;-) But I hope that the majority of your readers look at this chart, read the post and judge the knowledge of some of your commenters accordingly:
UK North Sea Oil Production Decline
Reading the thread above it is clear that one contributor (Doug) wrongly attributed views to you regarding North Sea depletion (for which he is acknowledged his mistake).
That is rather different from ‘some of your commentators’ which suggests there were multiple attacks on your integrity (at least regarding work on oil depletion).
Clearly more than one contributor felt compelled to rubbish your views on climate change, but that is exactly as it should be. You may have done some meaningful work on oil depletion in the past – but that has no baring on whether people shouldn’t feel free to lambast you as a climate change denier (however you may attempt to camouflage your position).
http://www.cnbc.com/id/101755408
Oil could rise another $15: Oppenheimer expert
“Iraq is responsible for 3 million barrels a day of crude oil supply,” Gheit pointed out on Thursday’s “Futures Now.” So “if Iraq stops exporting oil… add that to the disruption in Libya, the situation in Nigeria, you’ll have a total of more than 4 million barrels of lower supply worldwide.
And that could push oil prices to a much higher level—maybe 10,15 dollars higher from here.”
Of course, spiking oil could have broad ramifications on the U.S. economy.
“Very typically, economic expansions come to a screeching halt when you get a big pop in oil,” warned ConvergEx Group chief market strategist Nicholas Colas.
Brent oil went up today $3.07 to end above 113. We’ll see what happens to oil price tomorrow and next week.
4 mbpd shut in out of 85ish? I say pshaw.
Embargos of the past did 10 mbpd out of 50. Or the Iran/Iraq war shut in 5 mbpd for multiple years out of 55.
Behold the crushing power of Chinese consumption explosion.
4 mbpd shut in out of 85ish? I say pshaw.
No, we are talking crude oil here, not bottled gas. About 75 mbpd if you include condensate, about 70 if you don’t.
Roughly, Syria has 400,000 barrels off line, Sudan and South Sudan, 200,000, Libya 1,200,000 off line and Iran about 900,000. That comes to 2,700,000 off line. So if Iraq goes down then that’s another 3,000,000 barrels per day or 5.7 million barrels per day if Iraq were to go completely off line.
It’s still a pittance compared to historical norms.
I laid this out a few ronposts ago. There were 10+ million bpd offline during the Arab oil embargos. Out of a helluva lot less than 75 mbpd. Probably 55 then. The Middle East went from 22 mbpd in 1978 to 11 mbpd in 1983 and didn’t get back to 22 until 1997.
The Iran Iraq war took 5 out for 8 years. EIGHT YEARS!! And out of what, 60? Hell, even the Soviets surrender and upheaval took 2-3 out of 60 for 3 years.
Present shut-in totals are nothing compared to the norm. The big difference? China.
Watcher Wrote:
“There were 10+ million bpd offline during the Arab oil embargos. ”
As I recall the US had gas shortages back then, and it tipped off high inflation in the US. That was the era of the Ford Pinto and the AMC gremlin 🙂 Back then, China was a Oil Exporter, today its the largest importer. You can’t compare the oil shocks of the 1970’s to today.
FWIW: the loss of 3 Mbpd from Iraq is probably enough to cause oil prices to go up $20 to $30 per barrel. If a higher prices are sustained for a few months is almost certainly going to tip the global economy back into a deep recession. The US is already probably in recession (US 2014Q1 official GDP -1.0% JPM said US GDP -1.6% for 2014Q1). Retail sales have been weak so far so its very likely Q2 will also be negative.
I heard a generic bozo on Bloomberg radio today say that the $10 rise in WTI would erode GDP maybe 0.2%.
It was the same bozo who, when WTI hit 105ish last September, and then fell to the high 90s, announced this would be a GDP boost of 0.9%.
So the Cubans lost all their oil overnight. What could they do? They found out real quick by doing it. Same could everybody else.
All my retired academic friends spend their time running around the planet on streaks of burning oil. I stay home. I have lots more fun and disposables than they do, and almost no vapor trail.
Running out of oil? No, running out of sanity. I’m living in a madhouse.
Yep, the Cubans learned to live without Soviet oil — by sending doctors to Venezuela in return for their oil. They didn’t learn to live without oil, they just found a new supplier.
Were the Cubans to run out of oil suddenly, they’d have to have horses pull their 1955 Chevys.
Single best source of insight into Iraq and the mid-east in general. Juan Cole
Juan is a respected expert in mid-east affairs nad has been covering Iraq continuously from the beginning of the Iraq war — he foresaw everything. Please read this post
Actually, this is the post I meant.
Sorry, he reads like an ideological extremist safely ignored.
He starts out with Bush/Cheney hatred and never mentions Tony Blair, and any non Brit who fails to recognize Blair’s decisions were the definitive measure of rational thought hasn’t thought deeply.
But far worse is this:
“Mosul’s changed circumstances are also an indictment of the irresponsible use to which Sunni fundamentalists in Kuwait, Saudi Arabia and elsewhere in the Oil Gulf are putting their riches. The high petroleum prices, usually over $100 a barrel, of the past few years in a row, have injected trillions of dollars into the Gulf. Some of that money has sloshed into the hands of people who rather admired Usama Bin Laden and who are perfectly willing to fund his clones to take over major cities like Aleppo and Mosul. ”
This is just absurd. If one supports the positions and actions of whoever, and funds that whoever, how can that be called irresponsible. That’s just subjective flailing.
Watcher, once again I must disagree with your assessment. I read the article and found it to be spot on, especially the part about Bush and Cheney. And I suspect that, the part about Bush and Cheney, is what prejudiced you against it.
Or perhaps I am wrong. Perhaps the fact that he so accurately nailed the antics of Bush and Cheney is what biased me in favor of the rest of the article. 😉
But let me re-post the link so folks can decide for themselves:
The Fall of Mosul and the False Promises of Modern History
I too think that Juan is spot on. The sordid history of interference by the west has long been documented and Juan knows this well. I too remember it from when I took courses in college in the 60’s. And we only compounded it by our invasion of the ME. Yes, I know that it was only officially Iraq, but in reality we have been pulling strings in most of the ME since WWII. It has created lots of resentments.
We in the west tend to think of history in years. People in the ME tend to think in terms of what happen to their ancestors. So even events that happen 100 years ago that seem forever to most of us, can seem like yesterday to them.
How is any of that relevant to “irresponsible Sunni expenditures?”
Screw Juan Cole – he stumped for NATO’s bombing of Libya..
To me he’s just another minimally-read blogger that jumped at an opportunity to gain mainstream credulity
Just released: http://ir.eia.gov/ngs/ngs.html
It is beginning to look like gas prices are going to spike for sure next winter but I am not very knowledgeable about the beginning of the heating season and thus heavy winter gas consumption on a national basis.
Are prices apt to start climbing – if they do climb- before the elections?
While the short-term graph looks grim (the previous two winters had higher than usual values, and the previous five years likewise high), extending the data to include all of http://www.eia.gov/dnav/ng/xls/NG_STOR_WKLY_S1_W.xls shows that the yearly stalactite of winter draw-downs has nipped below 1000 in 1994, 1996, 1997, 2001, 2003, and now 2014. The lowess shows a slight up-and-to-the-right, not any “oh lordy” slaughter as for Arctic sea-ice or some past-its-prime supergiant. If there are concerns, I do not see them in the underground gas storage numbers. (Hunting down the price data for previous sub-1000 recovery years might be a handy next-step, along with adjusting for population growth, inflation, the Atlantic Multidecadal Leprechaun Oscillation, etc.)
Err, that’s for natural gas, not gas gas, per the previous AWS posting. Gas gas might well go up, but that’ll just jack up my food costs, as I walk everywhere I need to go.
At the risk of dragging us back to the import of Ron’s original post (OPEC Update…) for a moment;
I note that, to the possible reduction in production and the amount of oil that will be available on the market for importers to import, all the above commentators seem to follow the line that the response will be an increase in PRICE.
But that can only work when the elasticity / flexibility in demand in response to price can immediately accommodate the increased price. Price goes up; Demand goes down TO MEET THE AVAILABLE SUPPLY.
But the day will come tho (and that day may not be far away), that, at any price, the supply WILL NOT MEET THE DEMAND. At. Any. Price.
At that moment the hard decisions will have to be made by the SUPPLIERS. “Who do we NOT supply?”
I doubt that they will say “We’re 10% short, so we will short every order on our books by 10%. We will send 100,000 tonne tankers loaded with 90,000 tonnes and a note to teacher explaining why we’re short.” ????Instead they will look to who is their best ‘friend’ (reliable payer, protector, defender of the faith, etc) and supply them, and let the rest ‘do what they may’. That means that some importers will simply get the bad news. “Sorry, none for you today!”
Isn’t that how it must work out?
We are getting to the end of the stage where ‘Elasticity’ of price and demand will cover it. So lets put it on the table here – the time is coming when some orders will not be filled.
My personal view is that the small importing countries with little or no indigenous production will be the first to be dropped. But you folk are better at this envisioning than I – how do y’all see The Oil Business (buyers and sellers) managing in practiceas Oil goes over the top of the supply curve at a country by country level, compared to considering it just in terms of a theoretical view of the global situation?
Thanks
At the global level who gets the oil will decided by 2 factors.
1. Who has the most money / gold /other real assets like food. The price will go up. Some countries
like Portugal will be thrown to the wolves and have banker inflicted depressions and big drops in consumption. Portugal has shiny new toll motorways that are almost deserted as no-one can afford the tolls.
2. Who has the biggest navy. That is easy. The US. Even now, the only exporter who can thumb his nose at the US is Putin.
‘…big drops in consumption’.
Isn’t that my point (I think it is!) – if you get NO oil supplied, you don’t get a ‘big drop in consumption’, you get Armageddon!
You get a brief burst of Mad Max then its prompt population decline to sustainable Hunter Gather status.
Remember, remember….
http://www.peakoilblues.org/blog/2006/08/21/remember-remember-the-5th-of-september-2000/
‘..On September 9th [2000 AD], a nation-wide panic buying of fuel began. A few days later, over half of Britain’s gas stations were shut down. When the first deliveries of gas began again on September 15th, 90 percent of gas stations were without fuel. ‘
‘…The impact on critical infrastructure was devastating. Food didn’t get delivered to supermarket shelves. Ambulance services stopped as did blood supplies to hospitals. ‘
‘…Food sales increased 300 percent, and as the sight of empty shelves became common, panic buying increased. By September 13th, having no bread or milk, a number of supermarkets began rationing food purchases’
After ten days; system shut down, end of energy supplies (electricity grids fail) end of effective government or population control. Ten more days most people immobilized from lack of water supply and no food. No where to go. Ten more days mortality climbing… Ten more days all quiet on the western front but for a few roving bands of scrounging bipeds, and the odd four-legged carnivore.
(Oh, and for those nations silly enough to have (or to have neighbours who have) nuclear power plants, well they will have gone onto standby power with loss of grid electricity, and cores and spent fuel ponds will have melted down and out as soon as the fuel for the standby generators ran out. Plumes of Fuku Dust will be swirling over the land in perpetuity, just to add to the welcoming ambiance.)
Any advance on that?
I remember the fuel protests. I had a car full of petrol and drove more than usual as I enjoyed the relatively empty streets and less aggressive driving style. I normally travel mostly by bicycle. I strongly suspect that the protests had the quiet backing of the oil majors who wanted to send a shot across the bows of the new (New) Labour government. If the protests had been policed in the same way as the average green/anti oil protest, there would have been zero disruption.
But no, it will still be a nominally open market. Demand will be curtailed in certain target markets by the banking class. It will not result in empty food shelves, although food banks will be overwhelmed by demand. We may see some rioting in the streets as happened in Spain and Greece but overall order and the food supply will be maintained.
I think the big losers in the next round of demand destruction will be the smaller developing nations. Do you remember the collapse of the TIger Economy in the 90s? That was the bankers pulling the plug from the comfort of their VDU screens.
Ah you were there! So after 10 days 90% of petrol stations were without fuel. With a sustained ‘Sorry’ from your oil supplier, then the country would have been Empty Tanks and no fuel for transport of any kind after 20 days.
Ralph, what do you think would have been going on in your town after day 20 (No food supplies, no energy, no mains water, no vehicles moving at all, even yours), after day 30… after day 40..? You saw the beginning, if it persisted what story would you tell?
The army would have been sent in and the fuel would have been delivered. It was a political crisis not a fuel crisis.
Of course if someone was stupid enough to nuke the middle east then mad max would ensue, short of that the 1% do not want oluduvi any more than we do. Who would cut the grass in their gated communities?
This was a political protest. It would not continue if it resulted in people dying, the government would take action.
Oil supplies will not decline overnight as Ron suggests. There will be some time to adapt.
The whole hunter gatherer discussion I will not get into.
Fuel will be rationed if we get to that point. Price will do a lot of the rationing.
If there is not enough oil it is sold to the highest bidder.
Oil supplies will not decline overnight as Ron suggests.
You worded that entirely wrong. You make it sound as if I suggested oil supplies will decline overnight. You should have written: “Oil supplies will not decline overnight as Ron pointed out.“
I don’t mean to nitpick but when words make me sound as if I am really stupid it concerns me.
I apologize.
I meant that you suggested that oil supplies will not decline to zero overnight.
I think that cannot be misinterpreted.
I did not mean to be ambiguous, but you are correct that my initial comment was poorly worded.
Again sorry. I am pretty sure that nobody here thinks you are stupid. Even though there are a few that don’t agree with every thing you say.
In this case I was attempting to agree with you.
I think that cannot be misinterpreted.
Oh surely you don’t mean that?
“As Ron suggests they will.” If you leave off “they will” it is still implied.
“The decline of world oil production will not cause economic collapse as many peak oilers suggest”
Now I ask you, is “it will” implied? Sure it is and I think 999 people out of 1000 would agree.
I knew you were attempting to agree with me, but you did word it wrong. As I said I don’t like to nitpick but….
Hi Ron,
I apologized, and agreed that my initial statement was ambiguous.
Did you read the following?
“I did not mean to be ambiguous, but you are correct that my initial comment was poorly worded.”
Perhaps the previous sentence was not clear.
I also wrote,
“I meant that you suggested that oil supplies will not decline to zero overnight.”
I guess I should have said that the preceding sentence is unlikely to be misinterpreted, rather than,
“I think that cannot be misinterpreted.”
where I would interpret “that” as the preceding sentence.
Or do you think that
” Ron suggested that oil supplies will not decline to zero overnight.”
is an ambiguous statement?
I clearly admitted that my initial statement was poorly worded and ambiguous.
Dennis, I am sorry but I misinterpreted your last post. When you said “I think that cannot be misinterpreted” I thought you were referring to your statement “as Ron suggest.”
Clearly not, now that I have re-read your post.
Please accept my apologies.
Hi Ron,
Not a problem. I often post quickly and clearly I do not read carefully what I have written before posting.
I also want to note that upon reflection about my initial comment with “Ron suggests” at the end. It was not even ambiguous, it has the opposite meaning that I intended and was just flat out wrong. My referring to it as ambiguous was being too kind to my poorly written sentence.
Again my sincere apologies for my poor writing skills. Ron suggests (or thinks or has stated) should have been at the beginning of the sentence in my initial comment for the meaning to have been what I intended.
DC Wrote:
“I meant that you suggested that oil supplies will not decline to zero overnight.”
I think what Ron is referring to (correct me Ron if needed) is that at some point production will decline that breaches a tipping point that destabilizes the entire industrialized world. It may begin with one big industrialized nation collapsing, and work its way through the rest.
In order for our modern economy to function, there is a minimum supply limit. Below that limit the entire economy collapses unless it regain the resources it needs. That said I have no clue at how low the supply of liquid fuels the economy can tolerate without collapsing, but it exists. Production does not need to go to zero before the collapse begins. Perhap a lost of 1/3 of production is enough to set us on a permanent death spiral.
Hypothetically: What if over the course of the next 12 months, the US loses all of its oil imports (not all of the sudden but we started today at 10-12 mbpd of imports to 0 by July 2015). But will still have the 7 to 8 mbpd of domestic production. Would the US economy be able to survive? At first the US might do OK , but as consumers cut spending, companies will start folding. More and more of the population will become unemployed. Business that don’t fail (ie those that sell food, energy, etc) will find it difficult to source replacement parts as their equipment fails or wears out. Crime will certainly soar as the unemployed use any means they have to obtain the resources they need to survive. No doubt the gov’t will meddle with the economy and appoint clueless bureaucrats in positions to address the crisis but will only exacerbate the problems by misappropriating resources for boondoggle projects. Resources and money for road maintenance will become unobtainable causing disrepair that results in bridge closures that make it difficult for supply chains. The US currency will fail as people are no longer willing to exchange goods that are difficult to obtain. and as people turn to the black market to avoid rationing and other gov’t mandates. Penson plans collapse as they depend on solvent companies to pay into them. The same is true with gov’t wealth fare and entitlements. If tax revenue declines its will be impossible for gov’t to make entitlement and wealth fare payments.
That said we could have a drop in Oil & Gas investment if the global economic falls back into a long term recession. Demand for oil will fall as demand declines because of rising unemployment. Without sufficient revenue, Oil companies will not invest in new projects and will focus on existing production. There will be less R&D investment to find new ways to improve recovery or extract oil in difficult fields. The Middle East will become a powder keg as the regional gov’ts are unable to provide the promised resources and entitlements to their people when demand for oil was as plentiful. Disgruntled ME Citizens will riot, cause terrorism and start civil wars that make it difficult, if not impossible to continue exports and investment in their oil fields. Western technical resources (Oil & gas engineering) will leave if they feel threatened.
For the most part, this is already happening in the middle east. Violence and anarchy is spreading rapidly through most of the middle east and Africa Oil exporters. And we have no yet breached Peak Oil! Nor have we entered a global recession. When the West had its crisis in 2008, Asia was growing. But now, Asia (China and India) are buried under a pile of debt and over capacity. Its very unlikely they can avoid falling into another recession this time.
TechGuy, you hit the nail on the head. What people forget is that everything is connected. We will make the transition to electric energy only if oil becomes very expensive. And the transition will be very expensive also. And all that extra expense will cause hardship and unemployment as you suggested.
Important: Alternative forms of energy, like electricity, will be very expensive and cumbersome. Trucks must haul very large batteries that will be very expensive and very expensive and time consuming to get recharged every couple of hundred miles, if that much. Ditto for cars. This will add great expense and time lost, sitting at recharging stations, to the whole economy. This will only be possible if gasoline and diesel prices get very expensive. All this extra cash drain will be a huge drag on the economy.
Oh, I corrected your spelling, I hope. You wrote “power keg” and I changed it to “powder keg”. I hope that was what you meant.
Hi Ron,
Such a transition will be very difficult.
Note that with proper planning railroads and light rail can be electrified and that most trucking would be short haul, batteries could be designed so that they can easily be swapped out for fully charged batteries.
Remember that expensive necessities that require a lot of investment will create jobs. All of the infrastructure investment cannot happen without creating employment to accomplish it.
On Tech Guy’s suggestion that Just in time(JIT) manufacturing will cause problems, that is correct. The solution, don’t use JIT methods when global trade starts to break down because it will be less efficient.
A complete breakdown of the grid is a pretty unlikely scenario unless one assumes that world oil output declines very rapidly.
The chart you posted on North Sea decline showed that output fell to half of the 2002 level over a 9 year period which is roughly a 7.5% annual decline. I think it is very unlikely that World output will fall at that rate, but if it did the economic crisis would be severe. The likely response of governments worldwide would be to adopt a World War 2 type footing where the necessary infrastructure investment would proceed very rapidly.
JIT principles will still be right in case of (major) disturbances. You just want to adjust the size of buffers depending on the risks and effects of those disturbances.
Hi Enno,
The scenario that Techguy lays out envisions total collapse of World trade and maybe even regional trade within nations as liquid fuels become scarce.
I also think that many at this blog think that this decline in liquid fuels will be very rapid.
I do not agree that it will be very rapid unless there is total social collapse.
I have said before that the rapid decline scenario assumes that decline will be very rapid and often cites societal collapse as on of the causes while also pointing to rapid decline as the cause of the societal collapse.
In the case of the North Sea (and I doubt World output will decline any faster than the North Sea), over a 9 year period the decline was about 7.5% per year and output was reduced to half of its previous peak over the 9 year period.
World output is unlikely to decline this rapidly, it will be more like 3% decline.
If that is correct JIT will work with bigger buffers as you suggest.
If Techguy is correct, firms will need to keep larger inventories of parts to avoid constant disruptions (assuming that they can get any parts at all).
Essentially modern manufacturing does not continue under total collapse so the point would be moot.
At end of the thread I will post a chart with a decline scenario matching Jean Laherrere’s predictions, but using the shock model.
Hi Dennis,
Agreed. Although it is interesting to think through several decline scenarios, I strongly belief it is wishful thinking to belief that they will be accurate. It’s enough to try to predict a direction. I am an optimist, and also see a slow decline scenario as definitely possible (and likely). There is absolutely nobody who would benefit from a total collapse, and incentives are what keeps the world going in circles. Besides that, there is no past evidence that would point in such direction.
Adam, you gave a pretty good scenario of what would likely happen if oil “suddenly” disappeared. However that is not likely to happen, the “sudden” part I mean. I think it will happen but it will take a few years, it won’t happen overnight.
However there is one part you got terribly wrong:
You get a brief burst of Mad Max then its prompt population decline to sustainable Hunter Gather status.
It’s “hunter-gatherer” status but there will be no hunting. As things start to get really tough it will take but a few months, perhaps weeks, for every wild animal to be tracked down and killed. In far less than one year there will be nothing to hunt. It is already happening right now. There is preciously little wildlife left in highly developed countries like the U.S. and Europe.
You can go to any village market in Sub Sahara Africa and by “bush meat”. Monkeys and anything else that can be tracked down and killed are available today in every village market below the Sahara. It will all soon be gone and the hungrier people get the faster it will all disappear.
I saw a report on TV the other day where they are having a severe baboon problem in Africa. There have been so many grazing animals killed off that the predators have mostly all died off. As a result the baboon population has exploded. Kids are kept home from school just to keep the baboons run out of the cornfields. But not to worry, when the natives get really hungry they will hunt down and kill the baboons as well.
Ron is quite correct in stating that there is nowhere near enough wildlife to support a large population, not even a small one. However he misses the hunting/gathering of pigs, sheep, cows, and other farm animals that would immediately occur in a “Mad Max” situation.
There is a huge weight of farm animals on the planet and most would not last the winter without stored food from humans.
I also do not think a fast loss of petroleum will occur, or the other fossil fuels. Too bad, since we really do want to miss out on the tipping points (if that is possible) of climate change.
Either way, things are changing and will continue to change. As the breadbaskets of the world and the fisheries disappear, the adjustments will be severe and fairly permanent.
Hunting down game animal population to zero scenario unlikely.
Forty mile radius maximum around cities before blisters incapacitate overweight feet.
People and animals around cities have no chance. Farther out, odds improve.
Hunting down game animal population to zero scenario unlikely.
No, extremely likely. In fact it’s a lead pipe cinch. And you said “game” animal population. When the collapse happens all animals will be game animals. Any animal made of meat will be hunted to extinction. Except rats and mice of course. We will eat the songbirds out of the trees, if we can catch them.
Forty mile radius maximum around cities before blisters incapacitate overweight feet.
Are you joking? There will be no overweight people. Everyone’s ribs will be showing. And people are, or will be, everywhere. Go forty miles from cities today and you will see people everywhere, just not as densely packed.
People and animals around cities have no chance. Farther out, odds improve.
Father out you might survive a little longer. But people will scour every square food of land everywhere looking for food. And that includes Africa. Sub Sahara Africa will be stripped of every wild animal. Animals in cold country forest will survive the longest but eventually even they will fall to people trying to survive.
Want to know what really happens during times of extreme famine, like you will see everywhere during the collapse?
Ukraine Famine
The scene Burtianski described was repeated in towns and cities all over Ukraine. In the countryside, entire villages were being wiped out. The hunger drove many people to desperation and madness. Many instances of cannibalism were recorded, with people living off the remains of other starvation victims or in some instances resorting to murder. Most peasant families had five or six children, and some mothers killed their weakest children in order to feed the others.
And you think some animals will survive? And they will be game animals no less.
Nah. Have read a lot of Ukraine’s famine.
The issue is blisters. And no, the folks are overweight as the disaster unfolds (of course the definition of “sudden” is in play here). One way or another, only the young and tough leave the cities and even they will form blisters.
Human density falls off rural pretty fast.
Starvation doesn’t kill, consequent disease kills and cannibalism slows down as eating diseased flesh raise the reluctance bar.
The item of the scenario that I think is missed most often is water. The bodies in the cities won’t be buried. No calories to spare for digging. So they bodies will be tossed into the rivers to be carried away. So if you’re downstream, you can’t drink that water.
I’ll toss you a wild card, Ron. Flies. The fly population will absolutely explode, and they need water too.
Nah. Have read a lot of Ukraine’s famine.
What on earth does that mean? Are you saying that you don’t believe a word of it? Are you saying that the Ukraine did not have a famine? Exactly what does “Nah” mean?
The issue is blisters. And no, the folks are overweight as the disaster unfolds (of course the definition of “sudden” is in play here). One way or another, only the young and tough leave the cities and even they will form blisters.
Starving people are never overweight. Fat is an evolved characteristic. Fat is just a store of food to get you over long periods of no food. A person does not starve until they run completely out of fat and start to burn muscle. Blisters would be the least of problems in such times.
Human density falls off rural pretty fast.
That statement is so general that it is devoid of meaning. I lived most of my life half way between Huntsville, Alabama and Fayetteville, Tennessee. About 16 miles as the crow flies from each. That rural place, called Hazel Green, AL, is getting their own WalMart this year. Population doesn’t fall of any place in the U.S. unless you get in the big Western states like North Dakota, Montana and Wyoming.
Starvation doesn’t kill, consequent disease kills and cannibalism slows down as eating diseased flesh raise the reluctance bar.
Absolutely incorrect. You are confusing starvation with malnutrition. People die from malnutrition related diseases. Malnutrition is when you don’t get enough food to keep your body functioning properly. Starvation is when you get no food. Over the course of history hundreds of millions of people have died from starvation. People most definitely do die of starvation. And not everyone turns to cannibalism, only a very few do that. And starvation is not a disease, neither is murder. Historically most people who turned to cannibalism during times of extreme famine, did not eat diseased flesh.
I don’t need a wild card. Your hand is so bad a pair of deuces would beat you.
Nah, you still aren’t understanding.
The water company workers don’t go to work. They are looking for full shelves. The water disappears from the city pipes. People leave and try to flee long before they enter starve mode or lose more than a pound or three, unless they are diabetic and/or cripples, in which case they wait for the gubmint to get the water back on. Tack on some healthy caregivers who get all duty bound and you have lotsa maggot food in the cities.
When they die and stink up the apartment bldg, the others waiting for the gubmint to come fix things will haul them out and toss them in a ditch or river. Easier fly access and contaminated river.
I don’t sign onto the well armed enclave concept because every national guard armory in the country has mortars. So that concept fails.
What works is distance. Be away from cities with your mouth shut and trust in the Almighty Nike and his ability to cause blisters.
they wait for the gubmint to get the water back on. Tack on some healthy caregivers who get all duty bound and you have lotsa maggot food in the cities.
When they die and stink up the apartment bldg, the others waiting for the gubmint to come fix things
Never mind. I now realize where you are coming from. Those damn deadbeats living in a section 8 apartment building, waiting for the gubmint to fix things. You have it all figured out.
I happen to hold a different view.
I think section 8 housing now is mostly somewhat comfy retirees. Interesting landlord formula. If you rent to oldsters, the place does not get trashed, but you can’t raise rent faster than pension CPI adjustment. If you rent to youngsters, the place WILL be trashed, but maybe rent increases will pay for it.
A new excellent formula is owning trailer parks. Those are the bottom of the barrel. You can abuse the hell out of the renters because they have nowhere else to go.
Come on, man. I offered you the wild card of flies. Who wants to breathe flies?
Hey man, I was trying to discuss what might happen to the entire world when hunger and misery envelopes the earth caused by a rapidly declining energy and food supply.
Then you come at the discussion from the view of a right wing US politician, talking about people depending on the gubment to fix everything and all that.
I will have none of that shit. Sorry.
Not at all right wing. Lotsa folks will depend on the gubmint to fix an unfixable problem.
In fact, if you’re diabetic or crippled, relying on the gubmint to come fix the problem is not only the obvious mindset such people will have, it’s the only one they can have. Then you get a lot of other urbanites who aren’t comfortable with leaving familiar surroundings and the Occam’s Razor easiest and most direct mindset for them to arrive at is, again, wait for the gubmint to come solve the problem.
And so, only the toughest and strongest and maybe even youngest will be the ones walking outwards forming blisters.
Apocalypse is ideology neutral. Just work through probabilities and you have a lot of dead people within a 40 mile radius out from cities, mostly choking rivers.
Watcher Wrote:
“Forty mile radius maximum around cities before blisters incapacitate overweight feet.”
Ron Wrote:
“Are you joking? There will be no overweight people. Everyone’s ribs will be showing. And people are, or will be, everywhere. Go forty miles from cities today and you will see people everywhere, just not as densely packed.”
I believe Watcher is on the right track. Most of the people living in urban regions will never make it out alive to rural regions to prey on game. I am sure the gov’t will use propaganda, promising aid that never comes, and most will not leave until its too late. If it happens in Winter +90% of urban dwellers will freeze or succumb to illness. A lot of people will likely migrate to areas that the believe they can find food – other cities or surrounding suburbs. They’ll fight each other over scraps. Elderly people or families with young children won’t be mobile enough to flee. The rest will never make it to the rural regions. Also consider that chaos and violence that will occur that makes travel out of urban regions nearly impossible. No doubt that thugs will operate as wolf packs preying on refugees to take what ever resources they carry with time. Those without resources won’t be able to last a 100+ mile journey to rural regions.
I have no doubt that towns between the urban regions and the rural regions will take measures to prevent refugees from entering their town. This is what happened after Katrina with the small neighboring towns set up armed road blocks to prevent refugees from entering. Few people in urban regions have maps. Most have a navigation gizmo or a smartphone to guide them. No power, no smart phone or gizmo. Where will they go without directions or maps? How many people can get home from work without traveling on major roads and highways? They are clueless!
Only a very small percentage of urban dwells know anything about hunting. Most will fail, thinking what they saw in the movies or on TV is the proper way to hunt. Most will probably injure themselves (broken ankle, leg, arm), get themselves killed (Fall down off a cliff, slip and break their neck), or get hopelessly lost in the woods.
That said, There are sufficient numbers of rural dwellers that will quickly exhaust wild game. Most of rural people are hunters. I believe during the great depression it took less than 6 months to kill off all of the game. I suppose when the game does run out, any urban refugees that make it to rural regions, will become the hunted, either because they are considered invaders, targeted for what ever resources they carry or worse (I will leave that to your own imagination)
FWIW: Once the grid goes out our cities and suburbs become death traps. There will be no water, no way to cook food, no way to flush the toilets, no way to heat or cool dwellings. Most modern home are total dependent on electricity to remain livable. Turn off the power and the water and see how long you can make it. Few people even bother to prepare. Most have less than two weeks of food and even less water. People take everything for granted. Probably 5% to 10% of home dwellers will burn down their own home, either trying to heat their home, cook food on a kludged makeshift stove, or with candles. No fuel and water for the firetrucks means a repeat of the 1871 Chicago fire nation wide as fires spread uncontrolled.
That said, What happens when the spend fuel pool catch fire. Anyone traveling 100 miles near one will be dead in a day.
“I am sure the gov’t will use propaganda, promising aid that never comes, and most will not leave until its too late. If it happens in Winter +90% of urban dwellers will freeze or succumb to illness. ”
Govt will make every effort to serve the taxpayers. They’ll fail. Too little to go around is too little to go around.
It falls apart when distribution emphasizes cities. Those not in cities aren’t going to contribute. They’ll take their chances in court.
Winter is not the worst time for it to happen. It’s not a great time, but it’s not the worst. Worst would be late summer or early fall. Apocalypse in August means crops aren’t harvested.
Apocalypse in November has a lot of food stored here and there.
I don’t see any collapse happening that fast. Why couldn’t there be a long period lasting several years were power and other services become less and less reliable. There would be brown-outs and shortages, but then supplies show up and services are restored for a time. The brown-outs would slowly get longer and longer.
Preston Wrote:
“Why couldn’t there be a long period lasting several years were power and other services become less and less reliable”
Its possible, but not necessary going to happen. As the grid and other services become unreliable, so will finding replacement parts. The world has an enormous number of parts (billions!). A diesel truck probably has a few hundred critical parts. If they can’t get replacement the truck can’t be used.
I am sure your aware the most of the industrialized world has switch to a Just-in-time (JIT) process. Factories only produce enough items or parts to meet demand for a short period. They only stock the raw materials the need to make the parts they plan to build. Lots of machinery and subparts are sourced overseas. So if we loose access to global trade, a lot of factories aren’t going to be able to produce the parts or goods they make. Even with all domestic production ,the raw materials can be sourced thousand of miles away. for instance, the supply for the plastic for their injection molds comes from Texas, and the electronics from California. The steel comes from a steel plant in Michigan, the fasteners from Ohio, the wiring from Georgia.
So if there are fuel and electricity shortages, it going to be very difficult for factories to source all their materials. Perhaps it might take months or a year before they have all of materials need to run the line.
Another issue is that most factories (at least in the US) are highly automated. A lost of power, even for a fraction of second will shutdown the entire line. In most cases the have to scrap all of the parts on the line since they are in a incomplete state and the machines loss track of the cycle. When production on the line is interrupted it can take a full day to reset the the entire line to restart it. If they power grid is unreliable. its unlikely that factory is ever going to produce a product. In a time of shortages it may be impossible for the factory to retool to adapt to unreliable grid and distribution\transportation system.
FWIW: The biggest problem with a unreliable grid is going to be the worlds 400+ nuclear reactors. They need a constant source of power for cooling, even when the shutdown. A typically spent pool contains more highly radioactive material than all of the the worlds nuclear bombs. A typical nuclear bomb will contain just a few dozen kilograms of uranium or plutonium. A single spent fuel will contain thousand of tons.
If a nuclear power plant loses power for more than week, the water in the spent fuel pool begins boiling and after 3 to 10 days, the spent fuel rods will become exposed to air. They will catch fire and start releasing extremely radioactive material into the environment. I believe a loss of a single spent fuel pool will render about 140K square kilometers uninhabitable for a few thousand years. I fear that once we lose one spent fuel pool it can spread like a disease as everyone must evacuate the contaminated region. This will completely disrupt transportation and the surrounding infrastructure, making it difficult to to maintain other reactors in the same region. If the adjact reactors fail it will continue to spread until whole nations become uninhabitable. A lost of one Spend Fuel pool in Japan would likely render the entire nation uninhabitable.
We have literally built ourselves a global doomsday machine without anyone realizing it.
I fear the US is putting all its eggs into one basket by switching to NatGas fired power plants. Sooner or later we are going to run into a severe NatGas shortage leading to permanent rolling blackouts that end up as permanent blackouts.
Lemme fire off one more concept here. Survivalist “expert” types never get this stuff right. They are “former green berets”, which means 70 lbs and 30 years ago at age 19 they spent 6 mos or so being trained in how to run through obstacle courses and use whatever equipment was handed out then — with maybe a few hours or days of the curriculum devoted to “living off the land”.
But I digress.
The water stops flowing in the pipes.
Cruel and Unusual Punishment.
Ya’ll do realize all the prison cell toilets won’t flush? The prisons will have to open their doors. No food or water. You have to open the doors. You think it’s bad that gang members flow out 40 miles from cities? Wait til the inmates arrive.
Ron, Good call on that one as few people realize how quickly wildlife especially large animals diminish when humans are using them as a regular year round food source. Though right now here in E. Ky. wildlife seems overabundant I figure roughly sixty days would elapse before they would become all but extinct due to human consumption. Smaller animals would likely last a longer time frame due to a lower eroei. Old timers here tell me that the sight of a deer in the “40s “50s or early “60s was a rare event as large animals had been hunted to the point of extinction during the lean years of the depression. During the siege of Leningrad strange meat started showing up on the black market. People knew it was not cat or dog as these had been long before consumed by the starving populace but those who could bought it and were grateful for a few more days of life. Starving people’s sense of sustainability begins and ends with the immediate need for food and rightly so.
In the Arkansas Ozarks they ate up the native deer in the 30’s.
These deer can disappear in the mountains, you can’t see them till they move. The current white tail deer is not native to the area. Major ecosystem shift like the chestnuts.
Walnuts are a fave of survivalist semi wackos. Lotsa calories and fat and protein (fat is a big deal, game doesn’t have fat, google “rabbit starvation”).
Problem with them is the tree takes 7 yrs to bear fruit.
I suppose you meant importer in reference to the US.
We aren’t exactly able to thumb our nose at Putin. He could put us – collectively- in one hell of a bind if he decided to stop exporting oil for even a month or two at current levels.
My guess is that the rest of his buddies running the country would gang up on him and he would have an ”accident ”of some sort such as heart attack requiring his retirement if he were to do that as things stand now-
But if we were to try to push him – and push RUSSIA – into a tight enough corner then the Russian people and government/ mafia would probably stand behind him and he could and might actually shut off oil exports for a while.
If he did it would throw ten million people in this country out of work and the stock market into a tailspin.
Importer – well I really mean (from my own casual area of interest) the 150-odd small importing nations (using only about 12 million barrels a day between them) which rely more or less completely on imports from other exporting states.
I worry that any real gap between supply and need will see some or all of these small importers with little or no local production simply forgotten. That’s where I see the Ten Days to Anarchy theme playing out. It came close in Europe in 2000. It looms large for many more today.
The USofA produces what – 60% of its needed supplies – and could function on that alone if push came to shove. Production and purchase of useless widgets would decline, but life (and food supplies) could be sustained. Not so for a small nation suddenly faced with ZERO oil to import.
Cuba.
However, few countries have such a well run government. In places nobody in the West cares about, there would be a lot of deatha nd destruction. Business as usual, in fact.
‘…In Places that nobody in the west cares about.
Well Ralph, the citizens of Papua New Guinea, Bhutan, British Virgin Islands, Comoros, Cook Islands, Dominica, Montserrat, Nauru, Saint Kitts and Nevis, Saint Pierre and Miquelon, Samoa, Sao Tome and Principe, Tonga, Vanuatu, Vietnam, Cape Verde, Central African Republic, Gambia, The, Lesotho, Saint Vincent and the Grenadines, Solomon Islands, Western Sahara, Egypt, Burundi, Cayman Islands, Grenada, Guinea-Bissau, Laos, Saint Lucia, Belize, Mauritania, American Samoa, Cambodia, Greenland, Liberia, Swaziland, Somalia, Afghanistan, Antigua and Barbuda, Bermuda, Eritrea, Faroe Islands, Montenegro, Aruba, Maldives, Mali, Niger, Rwanda, French Polynesia, Seychelles, Malawi, Barbados, Sierra Leone, Burkina Faso, Guinea, Peru, Guyana, Mongolia, Fiji, Zimbabwe, Bolivia, Djibouti, Haiti, Georgia, New Caledonia, Uganda, Kyrgyzstan, Botswana, Zambia, Korea, North, Macau, Mozambique, Nepal, Iceland, Malta, Moldova, Macedonia, Gibraltar, Madagascar, Togo, Namibia, Estonia, Benin, Mauritius, Burma, West Bank, Paraguay, Nicaragua, Bosnia and Herzegovina, Albania, Tanzania, Bahamas, The, Tajikistan, Ethiopia, Senegal, Uruguay, Latvia, Costa Rica, El Salvador, Armenia, Ghana, Luxembourg, Honduras, Cyprus, Slovenia, Guatemala, Lithuania, Netherlands Antilles, U.S. Virgin Islands, Uzbekistan, Slovakia, Kenya, Jamaica, Serbia, Croatia, Lebanon, Sri Lanka, Bangladesh, Indonesia, New Zealand, Panama, Romania, Jordan, Dominican Republic, Cuba, Bulgaria, Hungary, Belarus, Puerto Rico, Ireland, United Kingdom, Morocco, Czech Republic, Finland, Israel, Ukraine, Austria, Chile, Portugal, Switzerland, Philippines, Pakistan, Sweden, Australia, Hong Kong, South Africa, Greece, Poland, Turkey, Belgium, Taiwan and The Netherlands with oil imports ranging between 910 barrels a day and 870,000 barrels a day (totaling just under 12 million barrels a day) thank you for your concern at their impending demise.
Data from the CIA world fact book (2011 data)
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2173rank.html
Hey man. That’s business.
Says the Canadian with abundant fuel supplies. 🙂
So why are we Canadians who sit atop the Natural Gas paying the U.S. equivalent price of $8.25 per unit rather than anywhere near the $4.50 Henry Hub unit price?
Peak oil happened in Alberta in 2002, (NG in 2005 or so) and now has to rely on expensive-to-produce tar sands product that fetches a $10 to $20 discounted price compared to WTI. Total of France has left the arena completely because start-up costs in the tar sands are too high.
Citing Canada as a reliable and sufficient supplier is buying into the propoganda of both the oil & gas folks at CAPP as well as our federal and provincial governments who rely far too heavily on royalties to finance “our needs”.
Probably because your envirowackos were funded by Warren to stop the pipeline to China, errr, the coast, which flows bux into Burlington Northern.
Sometimes it is good that there is one mostly good natured and mostly well intentioned bully on the playground.We Yankees are going to look after ourselves first of course but in the last analysis there are good reasons to be glad we have such an enormous military industrial complex.
IN THE END things are going to go to hell in a hand basket at some point due to peak oil unless the plateau and decline are so strung out that the world economy can adapt without outright collapse. My own estimate is that such a slow decline in oil production is one chance in a million- negligible.
BUT organizations and alliances such as NATO are not powerless and it is in the interests of countries such as the US, Germany, UK, and even Russia and China that there not be a mad max collapse.
Some oil will continue to flow to places like Portugal for a long time- enough to supply essential services such as food distribution and farming- because it will be easier and cheaper to supply it at the point of a gun if necessary than to deal with the consequences of not doing so.
I am not saying mad max and the horsemen won’t be running wild. I am saying it won’t happen overnight or over a period as short as a year or two.
I expect to have plenty of time to grease up the backhoe and dig my bomb shelter and spend all my money on non perishable goods from toilet paper to aspirin to fertilizer to a few more rounds of buckshot.
I might even write a few thousand bucks in bad checks if the situation seems to warrant doing so.The sheriff is not going to come looking for me in the case of WWIII for writing rubber checks. The sheriff will have his hands full with bigger problems by a mile if somebody pops off a few nukes.
IF mad max shows up you need to be well out in the boonies, well armed, willing to used the arms, have like minded friends, spring water or a shallow well that you can draw your water from, and substantial supplies of emergency food. DRY high protein livestock rations such as are fed to horses and cows are a superb choice. They are dirt cheap and could be easily bought by the truckload in the early stages of an emergency whereas a supermarket would be picked bare in hours.Such rations will keep indefinitely in cool dry storage.A couple of barrels of diesel fuel, an older diesel tractor,a few tons of fertilizer, etc etc.
A ton of salt.
I have or would have all these things on hand in a couple of days in a repeat of the Cuban missile crisis situation.
But the truth of the matter is that most farmers- the vast majority of farmers these days- would starve about as fast as city dweller in a sudden collapse unless he wanted to live on wheat or soybeans or beef exclusively.Hardly any farmer raises more than a very small percentage of his own food anymore or keeps more than a week or two supply in the house.
We used to raise apples and peaches. The season for both is short and you would starve on a fruit diet anyway.Gardening leveraged by keeping chickens and hogs and couple of dairy cows once supplied most of our food- back when I was a kid.For the last fifteen years I have bought ninety percent of what I eat from neighbors or the supermarket.Gardening works but if you have a trade or a way of making some money other than slave wages you can buy your food in far less time than you can raise it and preserve it.
Growing a bushel or two of green beans and potatoes and sweet corn is fun and good exercise but I can get such stuff from local growers in season for around a quarter to a third of the usual supermarket price ready to go into the freezer or cellar.Fresher and better quality – stuff hand selected for neighbors.
It’s pretty hard to force exports with a military.
You can interdict supply with a military, but it’s a lot harder to force oil to be loaded onto a tanker than it is to sink one.
The powerful countries -NATO and China and Russia – will control the seas. The exporters will load the ships because that is the way they import food and other necessities.
NATO and so on will decide where they unload as the result of havine blue water navies.But I wouldn’t want to get caught in one of those small countries. Not all of them are going to make the cut at some point.All of them may not make even the initial cut.
In microcosm, we get that stuff about Russia and why “they are hurt more cutting off Europe than Europe is hurt”.
Exporters need food? As in KSA? They don’t have to pump 9 mbpd to buy food. They can buy enough food with 200K/day. Now they did get used to the cash coming in that funds the big domestic Keep Arab Spring Somewhere Else program, but if they mow down enough Shiites they truly don’t need to export more than a few hundred K/day to eat and probably live reasonably well.
In the context of FOOD, and only FOOD, this stuff can stay in the ground for posterity.
I’d even be willing to suggest that when the plan is laid out to The People, they won’t riot. They’d love to be the unquestioned dominant power on Earth, guaranteed, if they just forgo a few big screen TVs for 5 or 10 years. Even if they dominate 1 billion instead of 7, they’ll be happy.
Re: Adam, “My personal view is that the small importing countries with little or no indigenous production will be the first to be dropped.”
It’s interesting to peruse the liquids consumption numbers as annual Brent crude oil prices doubled from $55 in 2005 to $110 in 2012, especially the changes in consumption in the developing countries:
http://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm?tid=5&pid=5&aid=2&cid=regions&syid=2005&eyid=2012&unit=TBPD
Interestingly enough, the developed net importing countries are the countries that have tended to reduce their consumption as global annual crude oil prices doubled. My 2002 to 2012 China, India, (2005) Top 33 Net Oil Exporters and US normalized consumption chart follows.
I suspect that a sharp decline in Global Net Exports of oil will be most sharply felt in the developed net oil importing countries, although releases from emergency reserves would certainly help.
“… although releases from emergency reserves would certainly help.” Surely emergency reserves are nothing more-or-less than a buffer and of no consequence in the larger scheme of things?
Depends on depth and duration of the disruption in net oil exports.
You guys are laying out who gets what and who gets hurt by not getting what and you aren’t extrapolating the issues.
If you’re an exporter and you read the newspapers it is going to occur to you that son of a gun — there isn’t enough, and why the hell are we sending any at all anywhere else? We should be saving this stuff.
Most will. Canada won’t have a choice, but most will. They’ll just talk loudly about the monumental efforts they are making to get oil shipped, while shipping less and less. They will walk the tightrope of saving as much of it as they can and not causing their country to be invaded.
Then they let time pass and militaries get defueled and then they can stop the charade and close the spigot altogether.
This seems like the obvious course of action for exporters.
Hi Watcher.
Indeed…if they had their druthers and a functioning government.
The reality, however, seems to be exemplified by Libya and Iraq. No functioning government, shut in and damaged reservoirs, and declining production.
Which brings us to Saudi. They won’t be able to avoid exporting. They can’t feed, clothe, or provide manufactured goods for their population without selling oil. And when their troubles break the surface, they’ll go the way of Libya and Iraq.
We all worry about using up the available reserves…but the situation goes bad much sooner (from a geopolitical standpoint) if we don’t use up those reserves.
-Lloyd
Which brings us to Saudi. They won’t be able to avoid exporting.
Of course they won’t cut exports completely. But Saudi can well afford to cut export, and to cut them pretty steeply. They have done so in the past and could very well do so again.
If they were to cut exports by 25% and prices rose 25% they would lose nothing but would gain longevity for their oil supply. I am not saying they will do that but after the peak a lot of countries will very likely decide to husband their oil. That will make the decline much steeper. In fact that is exactly what I expect will happen.
Yah I’ve looked at the KSA rationale when it comes time to save for posterity. Their little quirk is the large non citizen workforce.
Every drop they don’t pump is a remittance generator being sent home to Bangladesh. A bit dicey for KSA closing the spigot.
I do think a huge part of it is what platitudes are mouthed. The louder the talk is about how hard someone is working to “serve our customers”, the more one should suspect them. Of course, they already have some doods off the reservation talking about Aramco limits so that’s rather a lot of secret keepers they will be relying on to stay quiet — as they keep saying how they are producing flat out, but really aren’t.
Orrrr, another approach is to declare some new, undeveloped fields to be uneconomic and then really do pump flat out in the other fields and really and truly do peak out and start to fail. The undeveloped field is pretty effectively off the radar screen if you’re trying to do a posterity focus.
Hi Ron,
The rise in prices will reduce the demand for oil, at some point the prices rises to the point that people will use fewer and fewer cars and trucks as trains, light rail, and electric buses and trucks(local in cities) displace liquid fossil fuels.
The liquid fossil fuels will be used in agriculture and mining.
I realize that you think this is impossible, I disagree.
Nah, if someone is seen to be changing infrastructure over to electric this or that, you cut them off immediately.
Under no circumstances does any rational supplier fuel his own demise.
Hi Watcher,
I doubt it will come to that. Prices will rise and the economy will adjust.
It helps to have a healthy respect for the power of violence. It’s very effective.
Jeff Wrote:
“Then they let time pass and militaries get defueled and then they can stop the charade and close the spigot altogether.”
There is always the threats of nukes, ICBMs don’t need a spigot. I am sure the US, China, Russia will park a Nuke Sub off the coast to ensure the oil flows. That said the Middle east’s exploding population is a severe problem. They are dependent food and other resource from the west. Most of the Middle east gov’t are on the verge of civil war. I think most ME exporters will self-destruct before they cut of the taps to the west and Asia.
We are saved!!!!
CNBC have it all worked out.
Oil supply will be increased by the Iraq situation.
The Kurds hold Kirkuk, and will aim to increase oil production from their own fields as well from the Kirkuk field.
The rebels will not be able defeat and hold Baghdad and therefore will not be able to get to Basra and disrupt the oil flows from there.
So there you have it, oil production will rise, therefore the price should fall. We are saved.
Now who has a bridge for sale? I have money burning a hole in my pocket.
I just knew there had to be a “sunny”(Sunni?) side to all of this death, destruction and mayhem! I hope that the the sarcasm is baked into the statement.
The Iraqi oil fields are mostly in the north, which is controlled by the Kurds and the south, which is controlled by the Shiites. The Sunnis are in the middle where there is no oil.
If I was a Sunni, I would try to make friends with the Shiites and Kurds instead of starting a war against them.
The question is whether the Iraqi army will be more willing to fight to defend Shiite areas than the Sunni areas. There were several reports that many Iraqi army personnel in Baghdad were wearing civilian clothes under their uniforms (so that they could throw away their uniforms and blend in with the civilian population, if the need arose).
Iraq today is a tragedy, plain and simple. We will only add to the horror Bush perpetrated by unilaterally returning.
We shall see if the army can stay together— it doesn’t look good.
Junior and The Thugs squeezes all the toothpaste out of the tube, and Obama, as marginally competent as his administration has been, will not get it back in.
We pulled out way too soon. I’m thinking that to do it right, we should be in it for the long term… say a thousand years or so.
Anyhow I do think that the Kurds will keep their gains and will be able to maintain exports. A few years ago I bought a FNS (former Navy SEAL) lunch. He was on his way to work with the Kurds on pipeline security.
If, as a country, we could talk rationally about oil, I bet we might be feeling a little more love for the oil sands.
We will exploit the Tar Sands until we won’t— investment in energy and capital doesn’t pan out.
Already starting:
http://earthfirstjournal.org/newswire/2014/06/12/oil-companies-abandon-tar-sands-mine/
(maybe the first link to Earth First!)
Ukraine PM Warns “Prepare For Russian Gas Cutoff On Monday”
Having set a deadline of June 16 (next Monday) for pre-payment of gas supplies from Russia to Ukraine, it appears Ukraine officials are willing to take the pain of no energy instead of paying what Gazprom is asking:
UKRAINE PM ORDERS GOVERNMENT, REGIONAL AUTHORITIES TO PREPARE ENERGY SECTOR FOR RUSSIAN GAS CUTS FROM MONDAY
The last negotiation had Ukraine willing to pay $326 and Russia asking $385, which Ukraine said “was not a market price.” There are more problems for Europe though as Ukraine’s PM has ordered the national regulator to revise ‘transportation tariffs’ for Russian gas via Ukraine (i.e. to Europe).
Well, if you’re Ukraine you cause as much upheaval as you can. They can’t even afford the lowest prices they themselves have offered.
They will cause all this upheaval and hope to get bailed out — but an item not being focused on is the non homogenous reality of “Europe” being cut off. It ain’t “Europe”. The UK will have plenty of gas. Ditto Germany.
It’s Poland and the Czechs and generic eastern European countries that are going to be cut off. The EU is going to swagger forth and demand a solution, but they aren’t demanding it for the EU members that matter. Those aren’t threatened by the Ukraine cutoff.
GAZPROM will lose a lot of money not selling gas to eastern Europe, where “lose” means “not collecting what they would have gotten”. But they ain’t going bankrupt and the routes to the Chinese markets will continue development.
Hard to see where the Ukraine has much leverage here.
The flow of news reporting over the last few days has been strange indeed. There seems to be a novel new addition to news reporting that is speeding things up and increasing the level of confusion, Twitter. I do not use it, do not like it and have never considered it important before.
Two stories in the last couple of days seem to have been made up on Twitter. They have spread like wildfire and refuse to die down.
1. The capture of Baiji refinery in Iraq has now been denied a second day running by both the Whitehouse and the Iraqi gov’t.
2. Russian tanks invading Ukraine. See for instance this article http://www.jpolrisk.com/russian-tank-probe-in-ukraine-confirmed-with-us-official/
It seems real but is it? It is information that all appeared on Twitter but is it true?
Firstly the destroyed tank shown in the video was actually destroyed in Georgia a few years ago.
Second a post in Jane’s Defence Weekly states that the tanks are not Russian at all but Ukrainian.
After seeing how bad Twitter is I have changed my opinion on Twitter. It does have an important negative influence. I still do not like it it, and I am certainly not going to use it. I much prefer thoughtful debate to instant hysteria.
Yeah, things are getting crazy this Friday the 13th, Jeju. Take a gander at the article linked below that just printed! What else can go wrong?
http://in.reuters.com/article/2014/06/13/ukraine-crisis-naftogaz-idINL5N0OU27V20140613
– Russia and Ukraine unable to agree on gas price
– Russia has set deadline to cut off gas supplies
KIEV/MOSCOW, June 13 (Reuters) – Ukraine began preparing on Friday for Russia to cut off its gas after talks on long-running price dispute broke down, raising the prospect of supplies to the European Union also being disrupted from Monday.
Turning off the taps would aggravate the worst political crisis between Russia and Ukraine since the Soviet Union broke up in 1991 and set back fledgling peace moves in east Ukraine, where government forces are fighting pro-Russian separatists.
Russia initially demanded Ukraine pay $485 per 1,000 cubic metres of natural gas but then offered to remove the export duty, a move that would reduce the price to $385 – around the average amount paid by Russia’s European clients. Ukraine had held out for $268.5 until Friday, when it said it was ready to pay $326 for an interim period of 18 months while a long-term price was worked out.
“Ukraine will be ready under such a compromise to pay its unpaid bills from the past,” Kobolev told reporters in Kiev.
But President Vladimir Putin’s spokesman described the new offer – based on a proposal by the European energy commissioner who is mediating talks – as “inadequate”.
Instant gratification takes too long.
The Ukraine is going to have to come to terms with the modern day price for NG. However, I’m thinking the EU will step forward and offer to bridge the price difference so Russia’s oil can still feed through the Ukraine pipelines to the EU.
Harrrrrrrrrd check to write when you know it’s going to GAZPROM.
The news flow is getting even weirder today. The American state department has now ‘confirmed’ that Russian tanks have entered Ukraine. To explain how it is possible given that these are Ukrainian tanks bloggers have now come up with the theory that Russia moved captured Ukrainian tanks from the Crimea.
See https://twitter.com/MiddleEast_BRK/status/477580091791527936/photo/1
My guess on how this fits in with peak oil. We will never know when peak oil arrives because the flow of information ceases to be reliable when the world hits a major crisis.
Hey, why didn’t NoDak release the April report today? It’s Friday night and all.
Because numbers are too bad, and they can’t blame it on weather anymore. 🙂
I have yet to see any reports of the oil field workers hopping in their vehicles and heading for the Kuwaiti boarder. I would suspect Baghdad would not be considered a safe crew change point in the current situation, and it would be hard to see any sensible western expats turning up for crew change to go to work. I would expect any wells that are currently being drilled would be working towards being suspended, to allow the crews a speedy exit.
I have spoken to people who were caught up in Saddam’s invasion of Kuwait, that had to “borrow” vehicles to drive to the Saudi border, dodging a few Iraqi troops on the way. Their biggest problem was the Saudi border guards were not going to let them in to the country because they didn’t have visas. It took someone high up in the British embassy at the border to convince the guards to let them transit the country.
Hopefully the Kuwaitis are more understanding.
Iraq was never a country I was going to volunteer to work in, now I know why.
http://www.wnd.com/2014/06/200-u-s-contractors-surrounded-by-jihadists-in-iraq/
Completely non credible, but there it is.
Thanks Watcher,
If they are “crew changing” via C-130, then Baghdad is not considered a safe place to be.
When the TSHTF in these cases it is usually either up to the companies to look after there employees or for the employees to look after themselves. The company I used to work for when Libya fell apart, hired there own plane to evacuate their men along with some employees of other not so generous companies who were willing to leave their men behind.
The fellas in Kuwait last correspondence from their employer from Orange county Ca. was to the effect, “there is nothing else we can do from hear, so god be with you”. It was then that the boys decided to “borrow” some transport and make their own way to the Saudi border.
Political instability is a little occupational hazard when you start working in 3rd world countries.
Someone on here was asking advise about working in Iraq for a family member. I think it was Paulo. What was the result? I hope all is ok.
Hey Toolpush,
As per your advice and additional research my son decided to stay working in Canada and forgo the Iraq excperience. As this unfolds I keep sending him articles!! Glad he is home.
regards….Paulo
Paulo,
Good to hear that your son is safe and well. I don’t really like giving advice in those situations, as I feel it is a personal choice of where people choose to go. But I certainly don’t have any problems giving people the information to make better informed decisions.
cheers
ToolPush Wrote:
“I have yet to see any reports of the oil field workers hopping in their vehicles and heading for the Kuwaiti boarder”
I haven’t found any specific news about Oil companies but it appears “US companies” are evacuating workers:
http://www.trunews.com/us-companies-evacuating-iraqi-airbase-say-officials/
I am sure Oil companies are getting their people out. The US Military isn’t guaranteeing there safety. If the US is evacuating its military bases then there is no immediate plans to stop ISIS. I think by the end of next week or perhaps the week after, Iraq oil exports will stop. except for the Kurds. If ISIS secures the south I am sure they will engage the Kurds.
From the news I’ve read, the Iraqi army is surrendering to ISIS and not even firing a single shot. . Unless this changes Iraq will fall quickly. Iraq may become the next Libya, where only a minimum amount of Oil is exported.
“17.21
Very interesting interview with Esmat Rajab, the head of Iraqi Kurdistan’s most powerful political party in Mosul, who says Maliki wanted Mosul to fall for political reasons.
Quote I believe al-Maliki wanted Mosul to be captured by ISIS so that he could force Parliament in Baghdad to declare a state of emergency. Once that happens, he will be the only ruler of Iraq and he will have all authority. Mosul was under siege from ISIS for several days and he didn’t do one thing to stop it.
http://www.telegraph.co.uk/news/worldnews/middleeast/iraq/10899712/Iraq-crisis-ISIS-battles-for-Baghdad-live.html
Does this look like plan gone wrong? Let ISIS get some advances, get emergency power, get US support, and then save the day and be the hero. Some how I things got out of hand. But it does sounds plausible as all the stories are of the soldiers dropping their uniforms and guns, the army didn’t fire back as they were not ordered to, and Malaki couldn’t form a quorum to pass emergency measures.
I can’t see the Kurds giving Kirkuk back too soon, or for a very high price. Independence comes to mind.
I think the oil price will be a good monitor as to whether Basra and therefore oil supplies will be affected in the short term, but I think the long term fix is already in. There will be a long delay on any more development of the Iraqi oilfield.
A somewhat interesting article on Vox: U.S. Energy System in 11 maps.
Following the links and reading the linked articles also of some interest.
A couple of things I noted:
U.S. has reached Peak Coal?
Wind energy accounted for 4.1% of electricity generation in 2013?
http://www.vox.com/2014/6/12/5803998/the-us-energy-system-in-11-maps
Very lightweight, ‘thin and crispy’, but somewhat interesting.
Oil Industry in Iraq Faces Setback to Revival
“The collapse of Iraq would bring an international oil crisis,” said Dragan Vuckovic, president of Mediterranean International, an oil service company that supplies state oil companies in Iraq. “It would mean crude oil would go up to $150 a barrel. It could spread unrest to Saudi Arabia and Kuwait.”
It looks like the future is here now.
Saudi urges reduction in Opec talks
Saudi Arabia has suggested Opec meet just once a year, rather than twice, a sharp reduction from the days when the group met for up to seven times a year in the early 2000s.
And OPEC is sliding into irrelevance.
Of course one aspect of the ME unrest driven price spike is that it will help the Frackers’ profitability…..
Yes but American motorists won`t be happy about this.
Well American motorists, being the most wasteful on the planet, are going to spend this century learning not to drive like its last century still. Same all through the OECD. Might as well start now.
Related: autodependant suburbia is also nearly over. Get out before the value has all gone.
Oil has been north of $100 for most of the year. It hit $100 late December. That was before Ukraine was on the radar screen, and Iraq was unimagined.
Oil has been 103 or 104 for weeks. The narrative is there is a “spike” from Iraq, but if so, it’s $3.
Watcher,
Yes oil has been $100 for a while, but with the opening on the southern Keystone pipeline from Cushing to the gulf coast, shortly to be followed by the duplication of the Seaway pipeline, the pressure was to lower the price by draining Cushing and overwhelming the Gulf Coast refineries. The “experts” were predicting $80 per barrel. To me it was never going to happen, but the market pressure was for a decrease in the oil price. Ukraine nullified the downward pressure, Iraq it taking the lid off it.
As I said before, if Basra is disrupted then all bets are off, and I feel we are off to the races, until those exports can be resumed. I would suspect these exports would be in a downward trend, as there will not be too much development going on until everyone regained confidence the the security of the area. Of course if the Chinese are real desperate for oil, they could send their own security forces to continue and increase Iraq’s exports, similar to Southern Sudan.
I suppose that one of the several gorillas in the room is that while oil is happily trading north of $100 a barrel the bottom price of recovery of the cheapest oil to produce is steadily increasing as the easiest resources are consumed.
The daily price of oil is a poor indicator of the range of actual production costs, and I get anxious when people chat on about the price of oil decreasing to random low values in response to oversupply.
If a glut of supply causes the price to fall below the price of production for any individual producer for a sustained period, then that production is no longer economic, and (unless supported by other higher profit production by the same producer) those wells will be abandoned and the production lost. A field of Nigeria was recently shut off and walked away from as it was unprofitable, in spite of it producing 60,000 bbl per day when they switched off the pumps. And they won’t be back at any price because the cost of re-starting abandoned and rotting infrastructure will be too high.
So behind the scenes the bottom price of oil is steadily rising and we may find that $100 is not just the price needed to stop oil states getting their Arab Springs – never to return – it may also be the price below which there is no viable production at all.
Sure, the resulting reduction in supply will see the price rise again but some of those non-viable fields will have been walked away from for good. New production (at any price) is clearly not keeping up with the volume needed for replacement of depleting fields and so in addition the ‘rising bottom’ effect will see production ratcheting downwards with every zig in the zig zag price of oil.
Adam,
I think you just defined Peak Oil, in your own words.
Doug
Thanks for the reassurance Doug!
The progressive realisation of each of the numerous unintended consequences of the brainless utilisation of finite resources takes some time to seep up from the stygian depths of my thick old brain to see the light of day! Thanks for bearing with me as I come to my own understanding of it all!
Stranded asset risks are larger than anyone thinks
Chris Nelder, Smart Planet June 13, 2014 at 1:02 pm
Yes, the Stranded Assets story. Actually, it’s a good article. Regardless of merits, however, I think there will continue be a more-or-less Business-As-Usual approach to all fossil fuel burning until something (more) dramatic comes along; various climate tipping points coming more clearly into focus for example. In any case, the Stranded Asset argument will fuel the anti-climate warming crowd: More vindictive tirades and crackpot rants.
Daniel Yergin gets one right. Iraq’s oil industry faces setback to revival
“All the oil companies are on alert,” said Daniel Yergin, the oil historian. “They are going to worry about the security of their people and installations. Obviously, no one is going to do anything new. Confidence about the growth of Iraqi oil output becoming a key element of stability in the world oil market is now in question.”
The entire Iraqi oil boom is dependent on foreign oil companies. Remember they let out bids to foreign oil companies with payment based on a “per barrel” increase in oil production. Now it looks like those foreign oil companies may be pulling their people out. And for sure they won’t be putting any more people into Iraq. And this will make foreign oil companies think twice about investing any more money in Iraq, realizing every dollar of it could be lost when rebels overrun their project.
My Vancouver neighborhood Chevron station is now charging C$1.534/L for regular grade gasoline. This works out to US$5.34/gallon, and is the highest price I’ve ever seen here. The Monday morning transit buses are going to be packed.
Hi Frugal,
What are the typical prices for regular gasoline in Vancouver (for past 12 months)?
If my memory is correct, gas prices here have been around $1.35/L (US$4.70/gallon) over the last year or so. It’s been years since it crossed the $1.00/L level, which shocked people at the time.
Because of a myriad of federal, provincial (including carbon), and municipal taxes, Vancouver has the highest gas prices of any major city in Canada. The only places more expensive are isolated communities in the far north.
Gas pains: Fuel could hit record high price this weekend
Here’s a local take on the high gas price situation for this area.
Frugal Wrote:
“My Vancouver neighborhood Chevron station is now charging C$1.534/L for regular grade gasoline”
How is the Vancouver housing market holding up? My understanding is that the wave of Chinese buyers has vanished. I would imagine the Canadian housing market is probably only months away from tanking and taking the Canadian economy with it.
Canadian housing prices reflect a a lack of supply and reluctance to move.
I live in Toronto. Detatched and semi-detatched homes are not being built in the city proper, because there is no land available. My house cost $210,000 ten years ago and is now worth over $500,000.
These values do not reflect huge new homes on large lots- my lot is 16′ wide, the house is a 100 year old semi, and maintenance is constant. The value is there because I am directly on a streetcar line, 8 minutes walk from the subway, and a 20 minute bike ride from downtown. Oh, and a library, community centre, and well regarded grade and High schools are nearby, as well as a great mass of hospitals and specialists only a bus ride away (paid for by Government Health Insurance.)
The trick to that increase in value is that if you cash out and leave, you can never come back. Any house you buy will not appreciate at the same rate. (Well, maybe if you move to Vancouver and then come back.) The number of houses mortgaged at their current valuation is quite small. Many of us could not afford to buy our houses if we had to pay mortgages based on their current prices.
As long as Toronto has high paying jobs, our houses are going to hold their value, and since the GTA is 20% of the Canadian population, our influence on the housing market is huge.
And for the next two years, I expect to see the rate of appreciation increase (at least for the city core.)
Those bankers who keep expecting “a softening of the market” and a “gradual decline” in prices? They all live downtown.
They don’t see the havoc being unleashed on commuters by roadwork on the Gardener Expressway, the main route into the city from the west. My sister has one-way commute times that used to be 30 minutes and now range from 45 to 135 minutes.
It will be ongoing for another year and a half…if I could avoid going to the west end until 2017, I would.
-Lloyd
Hi Ron…obviously, I missed a tag in my comment. If you would be so kind….
Not sure which tag you missed. Hope I got it right.
In Campbell River on Vancouver Island regular was $1.41/litre, yesterday. Vancouver has a hefty transit tax on it as well as the usual levies, and that is why their gas is so much higher than elsewhere. It has been between 1.31 and 1.37 for the last 6 months in CR? Costco (in Courtenay) has the cheapest fuel but the drive isn’t worth the savings for the most part.
I live 1 hour west of Campbell River, approx 75 km towards Pt McNeill. (I usually burn purple in my truck).
Where I live the area is depressed and housing does not sell quickly. I doubt it will fall any further as it costs 2X to build what you can now buy. Vancouver and Victoria is absolutely stupid expensive. I have about $150,000 into my place (including the land and fixed assets like well and greenhouses, etc) with lots of sweat equity being a carpenter and able to do all the building. In Vancouver, if you could find riverfront…it would be worth 2 million? Maybe more? Maybe 3 or 4? I don’t know, really…but those of us who live outside of Vancouver or Victoria don’t understand why anyone would live there if they didn’t have to for work…it is simply too freaking expensive. My buddy has a son who just paid $400,000 for a building lot in Victoria. Can you believe this? The kid is 28 with a new baby. Obviously they have help from somewhere…plus a crazy mortgage.
You can buy an ocean view home here, (and watch the cruise ships pass), for $175,000. A 7 acre parcel with a small cabin, dug well and septic just sold for $120,000. Climate is good for Canada…plus no bugs. Good fishing and gardening. You have to like rain and wind, though.
Paulo
Tech Guy re: “I would imagine the Canadian housing market is probably only months away from tanking and taking the Canadian economy with it.”
The housing bubble might burst in the big cities, but it certainly won’t take the Canadian economy down. It will hurt those who bought high and live in the cities, but the rest of us are doing quite fine. I would like to see it happen as common sense needs to prevail. No one can afford to live there, really. While the economies of large cities are very consumer driven, like in the States, the basic foundation of the real Canadian economy is resource extraction with export sales. Oil sands, fishing and fish farming, mining, ag, with some manufacturing make up the foundation. I could care less if the Chinese like to buy in Vancouver, although I do have some friends who sold out to retire where I live. (I just finished putting away 6 years of wood heat into sheds. I was going for 10 years, but I just don’t have the room.) Outside of Vancouver no one really cares about it except for the Canuck rebuild and their draft pick. I think many would like to see it collapse, to be honest. It is embarrasing to be lumped in with this housing market. They now offer codos for sale of just a few hundred sq. feet.
http://metronews.ca/news/vancouver/638161/would-you-live-in-canadas-smallest-condo-300-sq-ft-from-109900/
This is the same price I paid for my my place.
Paulo
Paulo Wrote:
“The housing bubble might burst in the big cities, but it certainly won’t take the Canadian economy down.”
Where did all the loan money come from? I suspect mostly from Canadian depositors, investors and perhaps foriegn investors. In the US when the Housing bubble popped credit disappeared there was no money for even tiny loans. I am pretty certain when the housing bubble pops its going to impact the Canadian economy and probably the US economy too. Never in history anywhere in the world has a house bubble that popped hasn’t affected the economy.
The bubble will burst hardest where it burst hardest last time: auto-dependant ex-urbia. Cities proper (walkable, transit rich, bikeable, mixed use urban cores) are booming and will hold and grow value through the next repricing.
We are undergoing a huge ‘Reset’ (To use Richard Florida’s term). The nature of where and how we live and work and move is all changing, profoundly, and the massive change in resource availability is at the core of this.
It will take decades but we are already well into it (the last Reset took the depression, the war, the GI Act etc to work through). The realities that underpinned that postwar world are being inverted. Evidence of this everywhere. At its heart it is the end of the world built by cheap oil and changing to one powered by all other sources through electricity.
It is nothing short of the end of the suburban world. What will happen? Places that can’t or don’t repair themselves into whole mixed communities, truly local places with good non-car connectivity will wither. But others will re-invent themselves. Already the rebirth of traditional urban cores is well underway.
And Vancouver is a good example of this.
Peter,
I lived most of my life in downtown Vancouver (Kitsilano) and we did so comfortably rarely using our car: This was an almost European experience. Now, however, the population has grown so much (Greater) Vancouver has become an increasingly horrible version of suburbia. For this reason, I don’t think it’s reasonable to use this city as an example of a utopian center — any longer: The population is forced further and further from the core forcing commuting nightmares. Perhaps I’ve made unsupportable generalizations but I’ve seen this city go from a relatively idyllic center to one which stretches a long way in the opposite direction. For family reasons we spend about half our time in rural Canada (our home) and the balance in Europe (mostly Italy and Norway) so I feel qualified to make these comments. I do agree suburbia is mostly a version of Hell about to become obsolete.
Doug
Sorry Patrick, one of my best friends is named Peter: no offense please?
Yes, right now we have developed these strange ‘bi-level’ metropolises. Vancouver, Melbourne, London, Paris (especially Paris), San Francisco.
The quality of the cores and the peripheries hugely contrasting. And this is expressed politically too. Mayor Ford is the Suburban Toronto’s creature; they voted for him. Same in BC, the de-carring and placemaking is all the work of Vancouver City, yet the state is still building massive roads and incentivising sprawl all around the city.
This is a disconnect that will not last. One of these spatial orders, has a sustainable resource base and the other doesn’t.
Yet this is already an inversion from the driving boom years; poverty is now increasingly suburban, the elites are back in centre (where they have always been except for that strange age that we’re all from: the second half of the 20thC)
This change will only accelerate and price at the pump will be a big driver (excuse the pun).
In realestate terms ‘drive till you qualify’ still applies, except now many will not be able to afford the driving.
Autodependant places and industries are going to lose value.
Another way to look at it is that as we leave the economy and the spatial order of the cheap oil age we also will leave many stranded assets, and not just in the big carbon industries themselves, as described here by Nelder:
http://www.smartplanet.com/blog/the-take/why-the-potential-for-a-trillion-dollar-carbon-bubble-grows-bigger-every-day/
It is hard to get a good handle on the banking industry because it is nearly impossible in my estimation to find anybody who both understands it in depth and doesn’t have an axe to grind.I have given up on finding such a person myself.
BUT – it is a fact that when a bank loans a ton of money on a house the seller gets paid and spends the money.If the house depreciates enough that the buyer defaults rather than sells if he cannot make the payments, the bank is short the difference.
It is not surprising that a bank suddenly faced with lots of six figure bad loans is going to be short of cash to loan and skittish about who can borrow it.
The thing that has always bothered me is that the explanations of how and where banks get enough money to loan five or ten times more than their deposits never seem to quite make complete sense.To me they seem like a dog chasing it’s tail never quite getting a good hold on it.
For now I have concluded that the reason for this is that the banking system is simply not sustainable at all over the long term and that it is operating like a happy drunk who has not yet exhausted either his ability to hold a couple more or the cash in his wallet.
This insane credit expansion has to end badly at some point.
But I know a few people who have lived damned well borrowing money against real estate – so far. When the prices of the real estate they own with huge mortgages on it comes back down to earth they will have lived very well indeed but they will be bankrupt.
Those who have bought at say a hundred and sold out at two or three hundred have in essence been paid big money for something worth a lot less once interest rates go up and so far as I have been able to figure this out, interest rates must go up eventually.
If the perpetual growth model fails- and it is absolutely certain to fail, the only question is when and not if- the banks holding the mortgages on the super expensive houses in Canada are going to be in as much trouble as the banks were in the US when the real estate market bubble deflated.
Some friends who invested in real estate for years always sold out and went to cash whenever the prices of houses in their area exceeded the prices most people could pay and get qualified for a mortgage at a more or less reasonable rate rather than a teaser rate. They got out a little ” too soon’ using this rule of thumb but they never lost a dime on an investment house following it.
If you can’t rent a house under consideration for purchase as an investment with at least a pretty close to break even cash flow you are on very dangerous ground in terms of the market being in a bubble.
Being” in the hole” owning versus renting as an owner is ok in stable times because the payment is fixed if you have good sense and rents will go up.The first couple of houses I bought I lived in and paid a little more than I could have rented an equivalent house for by the month but after three or four years the would have been up fifty or a hundred bucks while the payment stayed the same except for taxes and insurance.
There are plenty of people who are paying off thirty year mortgages with a third of the proceeds of the rent they collect these days. If you bought a house for say eighty thousand twenty five years ago and got a decent cash flow for the last fifteen or twenty years out of it in addition to living it it early on you might sell it today for three hundred or even much more depending on location.
Leverage and inflation are marvelous tools if you can use them responsibly.
But at some point…………………………… It will work until it doesn’t.
Just like oil….. It will be there until one day it …………..ISN’T- at least not in the quantities needed at the prices that can be paid and life as we know it continue.
I have an old wrecked three cylinder five speed Geo Metro sitting in a corner and am keeping an eye out for one that is solid- meaning nearly rust free. It will go in a barn when I find it and eventually get a complete drive line swap from the wreck if I am still around when gas hits eight or ten bucks.
It will also get a few modifications to further improve the fifty mpg these cars will get if driven carefully.I don’t suppose I will have the money for a newer car that will run cheaper such as a Volt but I have plenty of time to swap the engine and so forth.
Look up March 2009 FASB (Financial Accounting Standards Board) “mark to market ruling”. Mortgages pre 2009 were carried on bank balance sheets at a value marked to the market — meaning what they could fetch if they were marketed to the public. In 2009 they would have fetched zero.
FASB, to prevent all the banks having to mark down their loan portfolios to zero, abrogated the mark-to-market reqmt for valuation. It was changed to this (paraphrase) “the asset will be valued at a level the bank judges it would be worth in normal market conditions rather than those existing”.
It was supposed to be a temporary change. It remains in effect now.
As to fractional reserve lending, it is what it says. There are reserves requirements/regulations. A bank is allowed to lend some 100s of % above money on deposit. If they find they have excess reserves, meaning loan demand is well under the regulatory 100s of % above the money on deposit, those excess reserves are usually redeposited at the Fed. Presently, 0.25% interest is paid to banks with excess reserves at the Fed and shhhhh, this next part should be kept quiet . . . the amount of excess reserves currently on deposit at the Fed from PDs (Primary Dealers, those who can bid at Treasury auctions) is just 200 billion dollars less than the total amount of QE since 2009. Clarifying . . . nearly all the QE was redeposited at the Fed. Banks could not find creditworthy borrowers for it, and still can’t. (and this is why there is no hyperinflation).
OFM wrote:
“If the house depreciates enough that the buyer defaults rather than sells if he cannot make the payments, the bank is short the difference.”
My understanding is that Canadian home owners can not walk way from mortgage debt. They are on the hook for it for life. Much like student debt in the US where student loans can’t be discharged in bankruptcy.
Patrick wrote:
“Cities proper (walkable, transit rich, bikeable, mixed use urban cores) are booming and will hold and grow value through the next repricing.”
There are no depression safe jobs in the cities. All of the jobs in cities are either service jobs, or administrative. Virtually every major US city is insolvent with huge unfunded liabilities. As the economy crumbles indeed people will crowd into the cities, looking for wealth fare or jobs that don’t exist. Manufacturing and other types of jobs will continue to relocate to the rural regions be closer to the resources (agriculture, energy, raw materials, etc) and to escape crushing taxes, high energy costs, etc.
This is incorrect.
From the BankruptcyCanada.ca website:
” Secured debts – what happens? (just to make sure it’s clear, a mortgage is a secured debt.-Lloyd)
If you have negative equity or you don’t want to keep the asset, you can simply default on the payments and surrender the asset to its creditor. The debt then becomes an unsecured debt, to be included in and discharged by your bankruptcy.”
Lucky for us we live in Canadian cities.
Over the last 50 years there has been an increase in the urban population and a decrease in the rural population. I don’t see a lot of manufacturing jobs moving from the city to the hinterlands- unless you consider Longhua Subdistrict, Shenzhen,China to be the hinterlands.
There are no depression proof jobs anywhere. What’s your point?
Unless you hunt all your meat with a bow and arrow, chop down trees with a stone axe to make a fire for heat, and entertain yourself singing folksongs you write yourself, you deal with us city folk. AS OFM has pointed out, even farmers are too specialized to survive on their own.
-Lloyd
It is fair to say that, in general, there is an unexamined default assumption among peak and climate aware people that the future is [or should be] entirely rural. Yet the evidence doesn’t support this. Outside of true subsistent economies rural life is resource hungry, carbon intensive, and inefficient. And basically not scaleable.
Although it may be a surprise to many, especially those who formed their views in the 60/70s counter culture, it is the case that per capita the more urban a place the lower its resource draw, and the smaller its carbon footprint and therefore many urban economies are thriving again now. In particular the less auto-dependant a place the better it is placed [other things being equal; it helps to have new tech clusters, universities, or other products and services valued in the new economy]. No-one on this site should be surprised about that; this is not an energy crisis so much as a liquid fuels one, and where does that bite first and hardest? Transport, and the private car in particular.
So the well documented return of the city is not in spite of the limits to growth, but because of them. Of course there are problems, especially for the biggest conurbations. There is most certainly such a thing as too big. Similarly right sized rural communities should thrive too. Particularly those well placed to serve the booming urban areas.
So it is the in-between spatial order that we will see change the most, auto-dependant suburbia, ex-urbia, those single-use communities dependant on long vehicle commutes, or on oil age soon-to-be sunset industries, that will go into secular declines. Just like the great monotonal industrial cities of the Rust Belt did at the end of the industrial age.
http://www.amazon.com/The-End-Suburbs-American-Moving/dp/1591845254
In my opinion, the Canadian housing market and by association, the Canadian banking system and Canadian economy are in a precarious situation at the moment. I see strong parallels with what happened in the US just before its housing/banking collapse.
At the moment, the banks are lending large sums of mortgage money to almost anyone who wants to purchase a house or condo and can scrape together a 5% down payment. So why are the banks willing to take such risks?
It’s goes something like this:
(1) I go to a bank and tell them I want a mortgage to buy a home;
(2) The bank asks me what my income is and if I have any other debt;
(3) A few days later the bank offers me a pre-approved loan, which is typically 5 times or more my pre-tax annual income;
(4) I go to a realtor who takes me through a series of overpriced homes, but first I’m asked to sign some kind of contract that’s highly favorable to the realtor;
(5) I put in an offer for a home;
(6) Assuming nobody tries to outbid me, the offer is accepted;
(7) After all the paper work is done, I need to pay a bunch of people, (a) the realtor, (b) the notary public, (c) the house inspector, (d) the government transfer fee, (e) the previous owner of the home, and (f) the Canadian Housing and Mortgage Corporation (CMHC).
This is where it gets interesting.
The CMHC takes money from you (which is usually added to the loan) to insure your loan in case you default. But if you default, it’s not you but the bank who gets the money, up to a value of $1 million. In other words, you pay the premiums to insure somebody else. The CMHC is a federal government agency similar to Fannie May or Freddy Mac in the US.
So what happens to the loan?
(8) The bank turns it into mortgage backed securities (sounds familiar?);
(9) The bank sells the mortgage backed securities to investors such as pension funds who buy the stuff even though the income (interest) is low because its backed by the Canadian government and therefore considered safe.
So how do the Canadian banks make such obscene profits from a process like this. The answer is that they make money off fees. At every step where they have their finger in, they charge a fee. So the more transactions they process and the more loans they issue, they more risk free money they make.
Anyone who has a real understanding of what happened in the US housing market / banking system can easily imagine what will likely happen next.
The above setup works fine as long as housing prices continue upward. So what happens if housing prices stop going up for whatever reason?
(1) People who can’t make the monthly payments won’t be able to cover the loan by selling the house;
(2) Defaults will increase;
(3) CMHC will start losing money as default payments exceed premiums;
(4) CMHC will demand higher premiums and more restrictive loans from the banks;
(5) Banks will process fewer loans and will raise interest rates and demand higher down payments;
(6) Housing prices will decline;
(7) Housing construction will decline;
(8) Unemployed construction workers, bankers, and real estate agents become prevalent. Real estate, banking, and housing construction make up about a quarter of the Canadian GDP;
(9) Pension fund values decline;
(10) The discretionary economy, such as retail, takes a hit;
(11) The housing market collapses;
(12) We slip into a recession;
(13) Canadian tax payers attempt to bail out the CMHC;
(14) All levels of government borrow even more money than they are doing now;
(15) …………………
It’s easy to see how everything in the economy is interrelated and how quickly all of it can unravel.
Simply securitizing a group of loans isn’t a problem, if the loans underlying the security are sound. Unless you have evidence that the Canadian banks are lending to unqualified buyers, this is all irrelevant.
There are two unrelated assumptions here: 1)that everyone is overextended, and 2) that if house prices stop rising, people will not be able to make their payments.
Re Point 1: Most mortgages are not financed at the current value of the house. There is a spread of mortgage due dates: some are 24 years in; a crash is unlikely to affect this owner. Those at greatest risk are the last ones in. In the Greater Toronto market, which is 20% of the Canadian housing market, there’s this interesting problem: we all have to live someplace. Toronto has a 1.7% rental vacancy rate. We aren’t building McMansions in the hinterlands: we’re building condos on the transit lines. They are being built because people want to live there. People buy them as personal residences or rental properties- because there are no ground-level houses at affordable prices, and the rental stock has not kept pace with demand.
Re Point 2: House prices not rising does not cause people to be unable to make their payments. Not having enough money causes people to miss their payments.
Once again, unless you have evidence of US-style fraudulent loans or unqualified borrowers, you don’t have a case here. The subprime debacle was about lying, cheating, and not doing your due diligence. Mortgage-backed securities weren’t the problem: misrepresented Mortgage-backed securities were. You have not given us any evidence that this is going on in the Canadian mortgage market.
-Lloyd
Lloyd, I totally disagree with your analysis of the current Canadian housing market.
Unless you have evidence that the Canadian banks are lending to unqualified buyers, this is all irrelevant.
The current debt/income, price/income, and price/rent ratios in Canada are at the same level as that of the US just before it housing collapse. So yes, the Canadian banks are lending to unqualified buyers just like they did in the US. If the Canadian banks weren’t lending to similarly unqualified buyers like in the US, then these ratios would obviously be much lower than what they are right now, but they’re not. If you don’t agree, then explain how these ratios ever became the same if the Canadian banks didn’t lend to similarly unqualified buyers??
Once again, unless you have evidence of US-style fraudulent loans or unqualified borrowers, you don’t have a case here. The subprime debacle was about lying, cheating, and not doing your due diligence.
Most pre-collapse housing loans in the US were not fraudulent, and it wasn’t just these fraud loans that collapsed, it was the whole housing market that collapsed. And it collapsed because the overall debt/income, price/income, and price/rent ratios were way above historical values, just like they are now in Canada.
These ratios are what matters, not how they came about. In other words, it doesn’t matter whether fraud or government loan guarantees caused these ratios to become so high, the end result is the same.
I don’t believe that those ratios are germane to this discussion. If the borrowers are not defaulting (and they’re not) and CHMC is not in default (and they’re not) your point is moot. Correlation is not causation, and we don’t even have correlation here. You have to prove to me that they’re unqualified, and therefore our Banking regulations are faulty or our bankers are corrupt. Let’s see if I can precis the relevant facts that you provide evidence for: you seem to think we have a lot of debt that we somehow seem to be paying the interest on. ( That’s it, as far as I can tell; the rest is unsupported or irrelevant.) This is fundamentally different from the US crash, which came about because those unqualified borrowers couldn’t pay the loans. Those ratios don’t matter if we can pay the freight. And even if we couldn’t pay, you’d then have to prove to me it was because of bad banking practices. So you got nothin’ until something happens, or you can prove the banks are corrupt or the regulations are faulty.
Let’s look at Wikipedia’s article on the Subprime Crisis:
“The percentage of lower-quality subprime mortgages originated during a given year rose from the historical 8% or lower range to approximately 20% from 2004 to 2006, with much higher ratios in some parts of the U.S.[4][5]
———snip———
The Financial Crisis Inquiry Commission reported in January 2011 that many mortgage lenders took eager borrowers’ qualifications on faith, often with a “willful disregard” for a borrower’s ability to pay. Nearly 25% of all mortgages made in the first half of 2005 were “interest-only” loans. During the same year, 68% of “option ARM” loans originated by Countrywide Financial and Washington Mutual had low- or no-documentation requirements.”
None of these things are happening in Canada. What’s happening is that our properties are becoming more expensive. I would posit that this might be because we’re a good place to live, and that, unlike the US and most of Europe, we’re an oil exporter. It might be a sign of growing income inequity. Who can say for certain?
Again from Wikipedia:”The Financial Crisis Inquiry Commission reported in January 2011 that: “… mortgage fraud… flourished in an environment of collapsing lending standards and lax regulation. The number of suspicious activity reports – reports of possible financial crimes filed by depository banks and their affiliates – related to mortgage fraud grew 20-fold between 1996 and 2005 and then more than doubled again between 2005 and 2009. One study places the losses resulting from fraud on mortgage loans made between 2005 and 2007 at $112 billion.”
While most of those loans may have been good (and remember, 51% qualifies as “most”,) $112 billion is a pretty sizeable number. As for “it wasn’t just these fraud loans that collapsed”, Watcher explains the fractional reserve system above- obviously the insurer of the loans collapsed. If they hadn’t, there wouldn’t have been a crash. The question is what percentageof bad loans is required to throw the system into collapse? For your analysis to be worth anything, you have to tell me which loans (or class of loans) are bad and why, or how we should be changing borrowing requirements, or some evidence of things going south- say, an increase in mortgage defaults.
Uh, no.
The end result is notthe same, because we haven’t had a banking crisis. (This is a pretty important point.)
There are any number of reasons why those numbers could be high, and any number of things that could happen because of them. There is no way of judging the probability of the ratios being important, of a collapse, or of the ratio’s relation to a hypothetical collapse.
Because there hasn’t been a collapse. You can’t do a post-mortem without a body.
I don’t have to prove anything. You have to provide some mechanism for your ratios to prove there is a problem.
-Lloyd
For your analysis to be worth anything, you have to tell me which loans (or class of loans) are bad and why, or how we should be changing borrowing requirements,
It`s dead simple, the banks should be refusing to lend money to anyone if this pushes the borrowers debt/income ratio beyond a threshold value. For example, the debt/income ratio must be kept below 3. From a 100 years of experience, the banks have discovered that the higher this ratio is, the more likely the borrower is to default, especially in a falling market. But now they don`t care because they`re not taking any risks.
Perhaps.
What will trigger the crash you’re talking about is a rise in interest rates. Given that rates can’t really go much lower, that’s in the cards at some point. When that point is, no one knows.
Other than that, so long as people continue to pay their mortgages and few people are delinquent on their mortgages, things can proceed as they are for awhile yet (I’d say indefinitely, but that just sounds stupid). Something will upset the apple cart eventually, but whatever that is, it isn’t here yet.
Lloyd wrote:
” There are two unrelated assumptions here: 1)that everyone is overextended, and 2) that if house prices stop rising, people will not be able to make their payments.”
If the housing bubble pops unemployment is going to rise. Those that loose there jobs will have a tough time making their mortgage payments.
“Unless you have evidence of US-style fraudulent loans or unqualified borrowers”
Lots of people in the US that had prime loans ended up defaulting after the lost their jobs. The excessive prices makes it difficult to stay on top of their mortgage payments, if they lose their job or see their wages cut. Defaults were not limited to subprime borrowers. Lots of prime borrows also walked away when the became underwater. it was cheaper to walk away and rent then struggling with mortgage payments. Once the bubble popped lots of rental properties became available as hedge funds bought foreclosures and started renting them out. Although, after the crisis, home prices rose because of the QE programs and rock bottom interest rates, but still most people that bought during the bubble years are still underwater.
“We aren’t building McMansions in the hinterlands: we’re building condos on the transit lines. They are being built because people want to live there.”
England is even more frugal than Canada is. Lots and lots of homes in England were condos (flats) near the transit lines. They still suffered when their housing bubble popped, in fact they never even recovered.
“Over the last 50 years there has been an increase in the urban population and a decrease in the rural population. I don’t see a lot of manufacturing jobs”
Whats left of of US Manufacturing is relocating to lower cost regions in the US. Lots of jobs are moving out of CA,NY,NJ,CT,MA,etc to lower costs states, FL,NC, TX, GA, etc. Companies that are relocating are buying properly outside of the heavy urban regions for lower taxes and land purchase costs. The regions with the biggest economic growth in the US are where the Oil boom is North Dakota, Texas and rural Pennsylvania. Detriot is becoming a ghost town, while Tennessee (rural state) is becoming the new Auto capital of the US. GM, Ford, Toyota, Mercedes, BMW all have new assemble plants located in rural states. Another example is GE is returning Appliance manufacturing from China to Kentucky. GE is also has been closing plants in NY.
The Last 50 years saw a big increase in cheap energy. Most of the relocation previous was to the suburbs which probably grew by 5 times in the past fifty years because of Cheap energy. The Big Cities didn’t see that growth as it was too expensive. Most of the people I know living in big cities (US) are millennials renting a bed in an shared apartment, and millennials have the one of the lowest workforce particiation rates in the US. I don’t know any Boomers or Gen-X/Y moving into the cities. Most of them are leaving the high cost suburbs, areas for lower cost states.
I think a lot of of the jobs in the cities will disappear, even if there wasn’t a pending energy crunch. Software automation is taking root and the job losses are piling up. Demand for lawyers, accountants, and other administrative jobs are disappearing because business processes are going electronic. Even retail is declining as Web giants like Amazon are taking sales away from brick and mortar retailers. McDonalds and other big fast food restaurants are working on automation to reduce staff.
I also think as energy become more expensive more companies will in-shore manufacturing again. It will be cheaper to produce goods at home, than ship them half-way around the world (especially if the value of the dollar starts tanking). I don’t see companies building new plants in the cities because of the sky high costs. So once the next financial crisis or energy crisis is underway, what jobs besides basic services and gov’t jobs will survive the long term in the Big cities?
Your reply is not responsive to my statement. I mention the idea that if house prices stop rising, people will not be able to make their payments because I think the idea is ludicrous. I did not mention a housing bubble popping, and further, I do not see or acknowledge a bubble. So what you think will happen in the case of a housing bubble popping is not relevant or responsive.
As I said above, it depend on the volume of bad loans required to throw the system into collapse. You have no evidence of bad Canadian banking practice, or of an increase in defaults, so there is no collapse, so your story is irrelevant.
So there are no cities in those states, and they don’t locate any of those plants near towns or cities?
Banks, Universities, Hospitals, High and Low Culture, publishing…
-Lloyd
As I said above, it depend on the volume of bad loans required to throw the system into collapse. You have no evidence of bad Canadian banking practice, or of an increase in defaults, so there is no collapse, so your story is irrelevant.
The historically high debt/income ratio is strong evidence of large volumes of bad loans being issued by Canadian banks. What else would cause this ratio be well above historical norms?
And why would there be any defaults whatsoever while housing prices are rising? If the homeowner can`t make the payments, instead of defaulting, he/she just sells the home at a profit and pays off the loan. This is not an option when prices are falling, and that`s why there is a big increase in defaults during falling housing markets.
No it’s not. A bad loan is one that is in default. These loans are not in default, and are therefore not bad loans. The ratio is not “evidence”. It is an indicator you are trying to interpret, and it remains a random statistic until you can attach it to an event.
The high debt/income ratio could have other causes: just off the top of my head, young couples with $100,000 in student loans, two BMW’s on 5 year loans, and a new mortgage. This would skew your ratios very nicely, without the mortgage loan being bad, and is quite possible if the couple in question were in banking or software.
Others? Using a line of credit to finance your own business. More of us work for ourselves nowadays. I’m not incorporated, and have a $20,000 line of credit. This reads as personal debt, even when I use it for my business.
My brother in law has bought stock on margin.
It doesn’t have to be bad mortgages.
Lloyd Wrote:
“Banks, Universities, Hospitals, High and Low Culture, publishing…”
Yes service jobs that depend on other sectors of the economy to stay in business. Banking will be dead on the other side of Peak Oil since banking large depends on a expanding economy. If energy production contracts, its very difficult for businesses and people to capitalize on loans. Banks expect to get paid back + interest. In a post peak economy the economy will contract as products and services that depend on cheap energy are no longer in demand. Lots of people will lose their jobs as demand drops.
FWIW: energy = capital. Declining energy means less capital. Already Banking is largely dead in the US because of rock bottom interest rates. No body can make money on loans. Banks are surviving by collecting fees on banking services and dumping their underperforming assets on the US federal reserve at “Mark-to-Fantasy” values. Hedge funds and other institutional investment business are also moving out of Wall street. Florida is a hot place for Hedges since there is no state income tax. The switch to electronic trading has made Working on Wall street obsolete.
I know a few people in Banking and they are looking to get out. They’ve see the writing on the wall.
In the US, higher education is in a bubble as tuition costs have tripled in the past ten years. Its going to pop soon in the US because the existing graduates loaded with student loans can’t find jobs and the younger crowd is less likely to follow into the same trap.
Healthcare in the US is becoming extremely expensive. Obamacare has doubled insurance premiums and instituted high insurance deductibles which makes seeing a doctor very expensive for most. In Canada, there are waiting list to get any serious treatment as healthcare is essentially rationed. Where do patients get money to pay for healthcare?
Publishing – its going the way of the buggy whip as people switch to ebooks. This applies with software automation tech. With Amazon anyone with a laptop can publish their own books and authors can write from anywhere. Demand for print is vanishing and brick and mortar bookstores are disappearing.
Bottom line is that an economy depends on production not services to survive the long term. People need food, energy, manufactured products. A service economy can’t survive the long term.
“So there are no cities in those states, and they don’t locate any of those plants near towns or cities?”
There are virtually no factories or manufacturing in any of the Major US cities. All of its located in the suburbs or in rural regions. Its just too expensive to operate and remain competitive. I am sure there are a few boutique manufacturers that specialize and that have high margins, but this isn’t the norm. Even IT is moving out, as business have moved out Datacenters to regions where electricity is cheap.
“I mention the idea that if house prices stop rising, people will not be able to make their payments because I think the idea is ludicrous.”
I was responding you exact statement above. You stance is that when home prices stop rising that there won’t be a correction. I was responding to that. Soaring housing prices will play in reverse as those trying to sell discount prices in order to sell out before the prices sink even lower. What goes up fast also comes down even faster. Unemployment will rise and those that loose their jobs will have a difficult time playing their pricey mortgages. I suspect a lot of home owners fork over a lot of their paycheck to service their mortgage. Any wage declines can quickly make their mortgage unaffordable.
Key issue is that fuel cost stress is not synchronous. It doesn’t hit everywhere the same. Sky Train using or cycling Vancouvan just isn’t as affected by pump price as drive-only ex-urbanite. Guess who is going to have more trouble with her loan, and guess whose dwelling is going to have more troubling finding a buyer?
I try hard to be a realist when I comment. I also try hard to step as far back from the trees as I can as to get a better look at the forest.
”So how do the Canadian banks make such obscene profits from a process like this. The answer is that they make money off fees. At every step where they have their finger in, they charge a fee. So the more transactions they process and the more loans they issue, they more risk free money they make.”
This is an absolutely key point that must be understood in order to understand modern day housing bubbles in the US and also apparently in Canada. The banks do not make money any more on loans. They make money on the fees associated with the loans and get rid of them as soon as they possibly can.The risk of default, as seen from the pov of a given bank and a given loan officer, exists for as little as thirty days to six months in most cases because that is about as long as the bank is going to own the loan before unloading it to some quasi government business.
I don’t know much about Canada but if the situation parallels the recent US situation I think it is inescapable that he is right about Canadian banks loaning to freely.Money that is too readily available at low interest rates tends to create a mind set in potential home owners to the effect that housing prices are going to go up forever.This sucks in buyers willing to pay ever more for property that is desirable to them in large part NOT BECAUSE it is worth so much more intrinsically but because it presents an opportunity to cash in to the tune of six figure profit without doing any work to earn it other than living in the house or renting it for a decade or less.
This is a dangerous way to invest but it works………until it doesn’t.
Now as to the death of suburbia–All the regulars here know I am a doomer in general terms but I don’t think doom is in the cards short term except maybe in places without resources.Places dependent on importing virtually everything and exporting finished goods are going to be the first to crash after the places that import everything and export next to nothing.
Adam Smith’s legendary INVISIBLE HAND is not on the end of SUPERMAN’s arm but it can work real miracles given time and materials to work with.There is no doubt a current trend back to city living in more prosperous areas but suburbanites aren’t going to just roll over and die without a fight for their life style.
I have never had the experience of traveling extensively but I have lived in the deep country, in a small town with a big university, in the suburbs of a fair sized city, and in a highly regarded gentrified city core.
The suburbs have a hell of a lot to offer to people who place a lot of value on certain aspects of suburban life.It is simply impossible except for the one per centers to live in the city the way a suburbanite lives in terms of privacy and space.When I lived in what was once the suburbs of Richmond and the houses were wall to wall I built a six foot fence around my house and yard and had some outside space exclusively mine.When I lived in the Fan District I had no garage no yard no place to indulge my hobbies or an occasional project. The rent was double my house payment and the apartment was not as nice as the house so I bought the house.
A pretty short ride in the family jalopy put the wife and me back in the same parking spaces we used to search for on the street and we continued to walk to the restaurants and bars and so forth that attracted us to the Fan in the first place.
Now ”everybody” seems to believe that the public is never going to accept electric cars because they cost too much and they won’t go all day on a charge and take too long to charge up.
IN my estimation ” everybody ” is a fool in this instance. A Nissan Leaf will reliably go over fifty miles on a charge and that is far enough to save the ‘ burbs in terms of most of the people who live in them and commute to downtown by car.Let us not forget that the Leaf is a Model T electric- the first one really out there on a mass market scale even though the price is sort of high. T’s weren’t all that cheap either in terms of the wages people earned back then.
And suburbia itself can change. The sterility of the landscape is the worst part- miles of houses without anything else- but this is due to ill considered zoning regulations and these regulations will be gradually changed for the better. A lawyers office and a dentist and a hairdresser and eventually a restaurant will be built in suitable houses and a little local life will return to the burbs.
The investment is too big to just walk away from it. A person with a comfortable but energy inefficient house and a comfortable but energy inefficient car can upgrade the house and trade off the car for a very small fraction of what it would cost him or her to acquire a SOMEWHAT comparable house or apartment or condo in the heart of a city.
The owners of suburbia are going to spend that fraction because they are not going to have any choice except to lose their financial butts otherwise.
This process of suburban transformation in energy efficiency is going to play out over the next decade or two.
Beyond that- who knows?
But I would rather live on a quarter acre in suburbia and drive a two seater fore and aft super subcompact car than live on the tenth floor of a condo building with no privacy at all and no personal green space and no place to indulge most possible hobbies.
The difference between the rent of a DECENT COMPARABLE place downtown and the house payment will easily cover the cost of a top quality heat pump and insulation upgrades and a roof covered with pv panels to boot.
Controlling the news.
A few days ago there was a discussion about controlling the news. I stated, and still believe, that reporters report what they see and hear, not what the government tells them to report. And the same goes for the major news outlets. But we all know different news outlets have different biases. Fox news will always turn a positive story about the democrats into a negative one, by hook or by crook. I don’t think even the most avid conspiracy theorists would claim that the administration controls what Fox reports.
However I have just learned that there is a way the military can, somewhat, control the news coming out of war zones. There are such things as “embedded reporters”. That travel and move with the troops in war zones. The military must grant permission to each reporter to embed themselves with the troops. And here is the kicker, the military can permit reporters whom they think will give favorable reports about military actions and deny permits to those whom they think will give unfavorable reports. The reporters are of course, always in fear of having their access terminated if they piss off the military leaders and therefore try very hard not to do that. That means they must be very careful in what they report, always paint the military in a very favorable light.
Chelsea Manning breaks silence, accuses U.S. of lying about Iraq
And the New York Times article that Chelsea Manning authored:
The Fog Machine of War The U.S. Military’s Campaign Against Media Freedom
I have no idea how she got that article out of Leavenworth Prison.
It is hard to know how much information is suppressed by various people in positions with the power to suppress it, and how much is simply missed by reporters and journalists. There are only so many of them and the world is a big place.
Beyond that there is the obvious but often forgotten fact that most reporting is revenue driven. The news business has bills to pay and pays them mostly out of advertising revenues. Only an idiot would ever expect his local paper to have much to say about peak oil considering the fact that most local papers run tons of advertisements for the auto industry in general and local dealers in particular.
Beyond these limitations there is the additional obvious fact that news organizations themselves often have agendas both overt and covert.
I make a point of reading a couple of right wing rags because they invariably report some stuff missed -deliberately in my opinion – by organizations such as Mother Jones and NPR.
Fox is faux in a lot of ways- no question.
But a few minutes ago I searched both liberal sites for ” missing Lerner emails”.
\
Nada.
But you can bet Fox has this story- as well as the Washington Post and some other major papers that are more middle of the road than NPR and Mother Jones.
If you don’t read both wings you are apt to miss a lot of relevant news.
If there isn’t a coverup of a deliberate abuse of power at the IRS on the part of Obama partisans I will give anybody an hour to draw a crowd and kiss their butt in front of it. It has taken the IRS a year to admit to congress that they did not turn over a bunch of emails sent and received at the critical times.
Shades of NIXON and erased or lost tapes right?
If the majority of the msm had made any real effort to dig into what Ocare really is and how it is really going to work for the last four years there is no doubt in my mind that Obama would have lost the last election.The democrats are most likely going to pay a hell of a price yet this fall and next time around unless the repugs manage to allow the tea party to snatch a defeat out of the jaws of victory.
I am not a republican or a neoconservative but a sort of old time and rare conservative with opinions strange to most people given my thinking.
(Times change and the free market has failed in delivering afford able health care. Hence the responsibility has devolved to government.I believe that socialized medicine is the future and that it will be a better future.Good medical care for everybody is going to be a lot cheaper over the long term than the consequences of not having it for the bottom half or third of our society.)
But this does not change the facts about the failure of the msm to actually tell us the truth about Ocare four the last four or five years.You can’t keep your doctor and you can’t keep your old policy and you are apt as not to be paying a hell of a lot more instead of less.
It didn’t take a genius to see and understand this during that time.It only took a willingness to look at the facts which is what journalists are supposed to do.That willingness was mostly missing in action.
This rant has been brought about by my desire to throw a little light on the shortcomings of our press.
In the end, maybe a decade or longer from now, Ocare is going to be seen as a huge win for the country and for the democrats just like social security and medicare and school lunches and all that sort of stuff.BUT this does not change the facts that it was passed by lying about it and that the democrats are going to pay a heavy price for doing so this fall and next elections.
It does not change the fact that the media did a piss poor job of telling us what it really meant was going to happen.
All things considered I am reasonably sure we are better off as a country with Obama than otherwise but this is not to say ”the most transparent administration in history” is any better from the standpoint of ethics than any other administrations over the last half century.
Only an idiot would ever expect his local paper to have much to say about peak oil considering the fact that most local papers run tons of advertisements for the auto industry in general and local dealers in particular.
Oh really? Is that the reason we saw nothing about the General Motors ignition switch recall scandal on TV or in newspapers or magazines? No one wanted to piss off General Motors or GM car dealers so we heard nothing about it?
Mac, news outlets are not as afraid of pissing off advertisers as you seem to believe. If there is a story and they fail to report it then that would really piss off the public. And that is one group they really don’t want to piss off.
But all that has nothing to do with local newspapers failing to report on Peak Oil. They reason they don’t have stories about peak oil is that most have never heard of it. And the few that have only have the news stories from the net or CNBC to from which to form their opinions. And that opinion is: “Peak oil is a theory that has been thoroughly discredited”. The advertising revenue from the local car dealer never enters their mind. And the local car dealer has likely never heard of peak oil either.
Hi Ron, I am certainly guilty of some rhetorical exaggeration here but on the other hand the msm managed to ignore the massive amounts of smoke arising from the GM coverup for a long long time. When such a story does finally break of course they have to cover it then as if it were really ” news” where as only the end result of all the story is actually ”news”. The rest of it has been out there for a long time on alternative news sites and forums.
And of course not all owners of msm and all editors at msm publications are tied into business as usual to the extent that they are self censoring due to fear of losing ad revenues.
I don’t know if you would consider The Rolling Stone magazine a msm publication. To be being an old long haired semi hippie I don’t think of it as mainstream; but it is where I go nowadays for a lot of news regarding the banking system.
But I will use this forum- your very own- to make my case. In my opinion, and in yours too I am sure, peak oil and related issues are about as important as any issues whatsoever including global warming because fossil fuel depletion is joined at the hip to just about every problem the world is facing.
Surely any body with a working brain who has spent a little time on studying this matter must come to the conclusion that peak oil is going to have some extremely unpleasant consequences and relatively soon- certainly not a half a century from now.
How much coverage of peak oil do you see in the MSM?
Not much I warrant.The media are mostly ignoring peak oil. I have not counted but I suspect there are many more articles about asteroid impacts and the demise of dinosaurs in the msm as there are about peak oil. One major sporting event gets more coverage than peak oil gets in the entire year by a factor of a hundred at least in my estimation.
It is almost a miracle that the msm press functions as well as it does considering the money and pressures involved but it still leaves a lot to be desired in my opinion.
msm managed to ignore the massive amounts of smoke arising from the GM coverup for a long long time.
Do you have any proof that this is the case? Any links about the problem before it hit MSM? I think you have it backwards, it was MSM that dug up this story. When the first recalls were issued by GM they were right on top of it like ugly on a monkey. They posted the news the very day they first heard about it. Of course I have no proof of this, no more than you do. But I subscribe to Occam’s Razor, that is that among competing hypotheses, the one with the fewest assumptions should be selected.
As to peak oil coverage in MSM, or the lack of it, again, they don’t cover it because they never heard of it. And the few who have heard of it take their cue from folks like Leonardo Maugeri Oil: The Next Revolution THE UNPRECEDENTED UPSURGE OF OIL PRODUCTION
CAPACITY AND WHAT IT MEANS FOR THE WORLD, The Harvard Kennedy School. June 2012
Coupled with global market instability, these features of the current oil market will make it highly volatile until 2015, with significant probabilities of an oil price fall due to the fundamentals of supply and demand, and possible new spikes due to geopolitical tensions. This will make difficult for financial investors to devise a sound investment strategy and allocate capital on oil and gas companies.
A hypothetical oil price downturn would have a significant impact, albeit short-lived, if it occurred before most of the projects considered in this paper had advanced significantly – that is, before 2015.
Conversely, if an oil price collapse were to occur after 2015, a prolonged phase of overproduction could take place, because production capacity would have already expanded and production costs would have decreased as expected, unless oil demand were to grow at a sustained yearly rate of at least 1.6 percent for the entire decade.
With such prestigious folks as the Harvard Kennedy School saying there is about to be a glut of oil because production costs would be so low, how can anyone believe in peak oil?
Ron,
As I see it YOUR argument makes my point for me in regards to peak oil. The msm reporters are ignorant POSSIBLY because they are too lazy or incompetent to do their jobs. They may be doing exactly what some others here have accused them of- repeating what they are told without making any effort to check the fxxxxxg facts.
Perhaps the ones who do do their job and investigate the facts wind up working at alternative media publications or working for free or nearly for free or finding other work.
It may not have occurred to YOU but it is perfectly obvious to ME that YOU are hundred times better reporter of the news concerning peak oil than everybody on staff at any newspaper in this country combined even though you are working for essentially nothing in terms of monetary income.
IF you were young and energetic and had a salary and a generous expense account and a byline with a major publication you could really make some waves.You could probably crash the stock market all by yourself.!!!!
Now I do not actually believe that the vast majority of reporters who do not report on peak oil, etc, in a serious way are too stupid to check the internet and find sites such as this one and do a little basic research.
My Occams razor interpretation of the facts is that they know the story they could write will be turned down for publication and that if on salary they will get an ass chewing for not spending the time on something the publication can use.
Not publishing certain news does not have to depend strictly on fear of lost advertising revenue. A really serious discussion of peak oil and resource depletion in the msm would almost certainly result in a panic and a stock market crash and a lot of people – many millions of people – being thrown out of work.
Maybe there is an unspoken consensus among editors and owners to avoid this scenario?????
Court cases get sealed frequently but nobody in the press seems to have been following the gm screwed up keys except auto nuts in the early stages.
I personally know about one family that got involved in a lawsuit- not involving GM- but a drug – that suddenly starting enjoying a new lifestyle. They went from driving jalopies to driving new cars and living in a decrepit old trailer on a trashy street to a fancy new double wide on ten acres and have a bass boat and lots of goodies of that sort.
They won’t say a damned word about where the money is coming from of course but it is a well known among their acquaintances that they MUST HAVE gotten a cash and annuity settlement from a drug company unless maybe they hit the lottery without saying so.
Everybody knows one of their kids died unexpectedly.
Mechanics who work on GM cars are fully aware of the ignition switch failures and cars cutting off as a result. This has been a rather common problem with a part that seldom fails as a general rule.Any reporter who really wanted to get in there and dig could have broken this ” news ” years ago.
A lawsuit can be sealed and even expunged in official records but it lives forever on the internet because the court dockets are all published someplace on the net and usually in local papers to boot.
It is only ” news ” in my estimation in terms of the facts of the coverup finally being brought out in court.
The cover up failed but it worked long enough for a lot of people involved to collect their salaries for years longer and even retire.
I don’t want to go so far as to claim that reporters are lazy or incompetent as a rule or that editors are craven cowards as a rule. As I said early on in this discussion the world is a big place and there just aren’t that many real reporters and journalists out there.
Lots of stories are going to slip thru the cracks, some of them forever.
The msm reporters are ignorant POSSIBLY because they are too lazy or incompetent to do their jobs.
You cannot blame the entire industry and say they all are lazy or incompetent. If only a few did not publish articles about peak oil then you might possibly say that. But when they all behave in the same manner then you cannot possibly blame it on incompetence.
People in the media are just ordinary people. If you polled everyone in America, or Europe, you would get a certain small percentage who are aware of peak oil. If you polled every executive in the media you would get almost the same percentage.
Peak oil will be all over the news later in this decade when it becomes obvious that crude oil production is in decline. There will be no concern over what it might or might not do to the stock market. They will report the stories because they are news and let the chips fall where they may.
People believe what they desire to believe. People believe what fits into their worldview or ideology. Of course they listen to the views of the experts. But there are experts on both sides of any issue. Therefore people only listen to the expert that tells them what they desire to hear.
There is no conspiracy against peak oil, or anything else for that matter.
I too make a point of reading the news from many different sources. I do tend to trust some more than others, but I always ask myself if a story has biases and investigate if it is interesting or has potential impact. I have become particularly suspect of health news stories based on observational studies (coffee protects against diabetes), so there I will often look up the original papers if I care. Many of these type stories are garbage in garbage out and are actually potential dangerous if people follow their advice.
It seems to me that a lot of other stories are just fluff written to get clicks. Still others are written by one industry or another to promote their interest.
Fox news, quite obviously, has an anti Obama slant, but will occasionally have a story worth reading. I consider Aljazeera one of the better balanced sites. The guardian is also pretty good. The New York times and Washington post are the mouth pieces of officialdom and are required reading even if you do not agree. I also find it interesting to read Russia Today or ITAR TASS from time to time for different perspectives.
The New York times and Washington post are the mouth pieces of officialdom …
Do you consider this New York Times story:
The Fog Machine of War The U.S. Military’s Campaign Against Media Freedom… to be the voice of officialdome?
Did you consider the exposure of the Watergate break in and the following cover up to be the work of the voice of officialdome? It would have never been exposed were it not the work of two Washington Post reporters, one of them a staunch Yale graduate republican (Woodward).
Just wondering?
Sorry Ron, But the NYT and other media are not the same organizations they were decades ago:
http://www.washingtonsblog.com/2014/04/u-s-government-new-york-times-admit-lied-ukraine-russia.html
For the most part the media just reprints news provided by the gov’t. Consider the numerous gov’t scandals, Fast and Furious, IRS, VA, etc all have limited coverage. Each one if these are as bad if not worse than watergate, yet its BAU (Business as Usual) and the media does very little to, no investigative reporting. The information we get is usually leaked and reported overseas before the US media begins covering it.
There are other numerous scandals that are occurring that are not getting any coverage in the US. Usually what makes front page news are sports scandals, or gossip type news about hollywood stars.
Former CBS investigate reporter speaks out about censorship at CBS:
http://newsbusters.org/blogs/matthew-balan/2014/06/03/sharyl-attkisson-media-execs-censor-or-block-stories-dont-fall-line-a
Your blog is a prime example since you find next to nothing about peak Oil on the news. The only news organization that even mentions “Peak Oil” Is Putin’s RT (Russia Today). Its pretty pathetic when we have to turn to Russia, an oligarchy, for a source of investigative journalism.
I don’t even bother watching the news or media. I am so disgusted with the US media its not worth the time to watch or read it. Thank goodness for the Internet and reporters such as yourself to provide the real story!
Not a lot different from travel writers getting free stays at resort hotels they are reviewing.
Positive bias is systemic because products aren’t bought by people who have a negative outlook. Advertisers are very clear about this.
Your role is to serve as a conduit for our advertising, the goal of which is to sell products to people in a mindset to buy them. We understand you have a perspective of journalistic impartiality — but we have no obligation to fund your impartiality. Make your viewers happy or we’ll find someone who will.
Not that I am a defender of Fox , but here is Fox’s coverage of the Putin/Obama phone call:
http://www.foxnews.com/politics/2014/03/28/obama-urges-putin-to-pull-back-troops-from-ukraine-border-in-phone-call/
Contrast it with what was noted before from ABCNews. Which seems more balanced?
Contrast it with what was noted before from ABCNews. Which seems more balanced?
Yes, I will compare the two and I will say without hesitation that ABC news is far and away more balanced than Fox. There is no rule that says that Fox cannot, on rare occasions, produced a fair news story. But about 99% of them are not fair or balanced.
Not that I am a defender of Fox , but….
To even insinuate that Fox is more fair and balanced than ABC, or NBC, CBS or anyone else other than ultra right wing hate radio, betrays your words. You are most definitely a Fox defender.
And as to the story and video you linked to. It did seem indeed fair. However that was very similar to stories I heard on NBC, CNN and all other networks back at the start of the Ukrainian crisis. In fact I did hear, on CNN and NBC, this same story delivered in the same tone as this story. Therefore I don’t see your point in insinuating there is something in this story that would not have been reported by the other networks.
“Therefore I don’t see your point in insinuating there is something in this story that would not have been reported by the other networks.”
It wasn’t. Simply that.
The point is specific and precise to that story. All other considerations and issues are not relevant. Very specific. Very precise. No question I can find superior coverage of other stories in non Fox vehicles, but the conversation is about this story.
Very specific. Very precise.
In fact, speculating, the reason that phone call coverage was superior was because they have more budget to dig.
Per NYT article:
http://www.nytimes.com/2014/05/29/business/media/may-brings-a-loss-of-viewership-for-cable-news-channels.html?_r=0
It’s about how May was a poor news watching month for everyone, but inside the article is :
“**As for Fox News, the dominant leader in cable news ratings**, had its worst overall month since before the 9/11 terrorist attacks, and its prime-time lineup of hosts all scored their worst numbers in the years since then.”
They have the money. They could be more thorough in the phone call story.
Your reply “simply that” made absolutely no sense at all, therefore I have no reply.
As to the cable news channels, there are only three, Fox, CNN and MSNBC, though MSNBC is mostly a talk channel, not a news channel. Then there are the others channels that have news several times a day, CBS, NBC and ABC. Fox gets all the ultra right wing and tea party folks so that leaves the rest to be divided among five other networks. That is the reason they are first in cable news. While they get all the nut cases the rest, the sane folks, are divided among the five others. 😉
Ron – To arrive at the 99% claim do you not ignore or besmirch current or past Fox pundits including Shepard Smith, Juan Williams, Kristen Powers, Dennis Kucinich, James Carville, Bob Beckel, Geraldo Rivera Marvin Kalb, Alan Colmes, Mara Liasson, Bill Schulz, Susan Estrich, Santila Jackson, Simon Rosenberg, Tony Snow, Lanny Davis, Pat Cadell, Sally Cohn, Jehmu Green and Mark Lamont Hill. As a socially liberal Neo-Malthusian I find both the left and the right to be frequently lacking. Rachel Maddow has been quoted as saying that Shepard Smith is one of the best newscasters. I would agree. At the moment Megyn Kelly, though still lacking prime time experience, is clearly among the most entertaining purveyors of news and opinion
It kinda doesn’t matter. With 6 out of 7 billion due to die, soon, no real point in keeping score.
If the differential has a leak at the seal or a tiny puncture that goes unnoticed, the 80w oil will slowly leak and you’ll get howl. Eventually, it will come to a screeching halt. No oil to bathe the gears is a bad bad thing. If your cooling system has a leak that evaporates faster than the leak is noticed, your engine will heat to a red glow and you’ll wonder where the leak is until you finally find it. You’ll come to a halt there too. No oil, no go. No water, no go. Steam engines need water and grease.
If a collapse occurs because of oil shortages, the freeways will be empty of cars and there will be zero traffic; the probability of major pile ups of vehicles every 5 miles is very likely. There will be nobody there, they’ll all be on the side of the road 5 miles away from the scene of the wreck with blisters on their feet. They’ll have to live in the ditch. It will be massive homelessness.
Like the mother said to her child after they were unloaded from the cattle car near Auschwitz and after she had scoured the nearby gardens for anything to eat but the gardens had been raided long ago, “if we only had some potatoes, we’d be rich”. Their world came to a screeching halt, the end of the world as they knew it.
Your stomach rules, oil will be the last thing on your mind.
You can go out to the boonies, find asparagus and harvest that, gather, and can then eat it. If you have some hardwood smoked country bacon, you can have the bacon and asparagus kebob. Might end up with a few wood ticks on you, but that is part of the sacrifice, the price to pay. Plenty of firewood out there in all of the dead fall in the trees, it is at your doorstep. A lot of woolly mammoths were cooked for dinner. It is going to be your problem if you are unable to survive amongst the abundance of the flora and fauna available. You’ll need a clinical parasitology book too.
People in the city won’t make it ten miles, let alone forty. The die-off will be swift, like an earthquake with a resultant tsunami, it will be devastating.
Maybe drought is bad for crops, but nothing is more devastating to a crop than too much water. You’ll wish for a drought. Too much water is twice the misery of too little, you are helpless.
Too little oil is where we’re at right now.
Hey Hill guy. Do you folks have a take on Iraqi oil field irreparable damage if they get shut in?
Two regions, Texas & Italy, on the front lines of immigration crises. I noticed some similarities.
Arizona Republicans threaten action over immigration
http://www.washingtonpost.com/blogs/govbeat/wp/2014/06/14/arizona-republicans-threaten-action-over-immigration/
Palace of Squatters Is a Symbol of Refugee Crisis
http://www.nytimes.com/2014/06/15/world/europe/palace-of-squatters-is-a-symbol-of-refugee-crisis.html?_r=0
You know, I wonder what KSA’s policy is on illegal immigration.
If a time is coming when exporters decide to keep it in the ground for future generations, that mindset should be unfolding now as regards illegals coming in to swill at the domestic spending trough.
Thailand is fairly intense when it comes to tossing out Laotians and Cambodians. I have heard nothing about the Myanmar border, tho. Singapore definitely doesn’t open their gates and arms. Pretty sure the Aussies patrol waters aggressively to keep Indonesians out.
The Catholic church btw has always opposed this sort of thing. The haves are supposed to share with the have nots. Had Mexico actually continued to ramp oil output, that would have been dicey.
You know, I wonder what KSA’s policy is on illegal immigration.
KSA has no illegal immigration problem because they don’t have any illegal immigrants.
Saudi has about 7.5 million expatriates living there. That is about 21% of the total population. They all have permission to live there. A lot of them may be leaving soon however.
From Wiki: Saudi Arabia
The CIA Factbook estimated that as of 2013 foreign nationals living in Saudi Arabia made up about 21% of the population.[5] Other sources report differing estimates.[214] Indian: 1.3 million, Pakistani: 1.5 million,[215] Egyptian: 900,000, Yemeni: 800,000, Bangladeshi: 500,000, Filipino: 500,000, Jordanian/Palestinian: 260,000, Indonesian: 250,000, Sri Lankan: 350,000, Sudanese: 250,000, Syrian: 100,000 and Turkish: 100,000.[216] There are around 100,000 Westerners in Saudi Arabia, most of whom live in compounds or gated communities.
They all, except the 100,000 Westerners, are employed as houseboys, yard workers, general laborers and other menial jobs. Saudi’s will, in general, refuse this type of work. They consider it below their dignity. However:
Unemployment in Saudi Arabia: a Ticking Time Bomb?
According to figures from the International Monetary Fund (IMF) released in July 2013, 1.5 million of the 2 million new jobs created in the last four years went to non-Saudis. Meanwhile, the IMF indicates that the unemployment rate among Saudi nationals has reached 12%. The youth (30%) and females (35%) are particularly affected by the country’s unemployment problem.
On a different thread, I described Saudi Arabia as “Metastable,” in that it appears to be stable, but it is inherently unstable, especially as they transition from the current generation of geriatric rulers to the next (much larger) generation of princes.
At one time I was hired to do a job in Oman. During this time we lived in a compound and had zero contact with the general population. Which means being driven to “work” and driven back to the compound, period. Food was catered and Western, period. Sometimes I think if we were under quarantine there would have been more freedom. I think I saw women at the airport but perhaps it was just some fabric floating by: This was about 30 years ago. The “job” was to teach Omanis how to interpret seismic data; a total waste of time. I’m not suggesting it’s like that now and I’m not suggesting Omani Engineers aren’t as capable as Engineers in other countries but it’s certainly a different world and it was impossible for me to understand Arab thinking which seems to have a religious component at EVERY level: Rather different from Sweden where I met my (Norwegian) wife!
My first experience with the Arab culture was back in the 80’s when I was travelling the world. My girl friend, now my wife, and a younger Australian girl who invited her self along headed off to Morocco, by train from London. The carriage we were on from Paris to southern Spain was all Moroccan plus the three of us. I didn’t realize two nights and a day was long enough to be bonded into a culture.
Anyway we spent the next two weeks being passed from one family to another. We experienced first hand of Arab hospitality. But there was a price to pay. We had a crash course in Arab hospitality, that we hear about, and learning the cultural do and don’t 24 hours a day. We did break a few rules, in error, and it was very draining. To the point that the self invited girl flipped out and we had to put her on the train to back to London.
It was a fascinating experience and would not have missed it quids, but it did show me first hand the real issues that divide Muslim/Arab culture and the Christian/Western culture.
My conclusion was that the two cultures were basically mutually exclusive and are better off living apart. Both religions believe they are the only true religion, because they basically are the same religion, just took different paths around 600 AD, and therefore are not open to outside ideas.
Toolpush,
We mostly agree, I think. Being totally irreligious I’m hardly qualified to hold opinions here but your 600 AD date may be about the time major religions more-or-less came to the conclusion god is within the individual (not in clouds or up a tree) and the proper creed should be built around the: Do unto others…. model. Since then, of course, things have rapidly gone downhill, everywhere. The small community where I live must hold a dozen churches and they all seem to think they’re right and the rest have it wrong. So, you don’t have to look for a Christian-Muslim dichotomy, you just need six people and they’ll disagree on almost everything — just read Ron’s Blog!
Doug
Yes Ron, I know, we’ve drifted a little past PO and AGW.
No problem, I am enjoying the conversation.
As Ron is happy, I will reply
Doug,
Any two people will have differences, but can agree to live under the same rules. Even your dozen churches may have different interpretations of their religion and beliefs, but will agree to live under the same laws, and they will apply to everyone in the community. Once you cross two religions that both believe they are the “only true religion”, you have built in conflict.
Both cultures have their own rules and each work well when they are followed, the problem comes when one group tries to live by “their” rules in the opposing culture. This is where conflict arises. eg My little trip to Morocco. The three of us were walking on the beach, it was cold and wet, but my girlfriend wanted to watch the storm surf, the other girl and myself headed back to the house, leaving my girlfriend behind.
When we arrived at the house the family were frantic when we told them my girl friend was by herself. So a mad rush to find her. When we did she was being escorted by a young boy who had come to be her guardian, so all was well. Our lesson, we were told an un-escorted girl was considered fair game and no one would come to their aid, because nobody in her family felt she was worthy of their protection.
Now transfer that line of thinking into a western situation, and wonder why we have we have a few conflict in the community, but this is what we have and it is hard to see how we will get away from it without both sides learning a lot of tolerance, and understanding where the other side is coming from. Unfortunately I am not seeing many heading in this direction, thought the Pope had a Rabbi and Mullah in for tea at the Vatican the other day. As they are all derived from the same base, I don’t understand why all these men of “peace” don’t get together more often.
“Once you cross two religions that both believe they are the “only true religion”, you have built in conflict.” Got it: You mean like the Catholics and Protestants?
Toolpush,
Remember, you mentioned 600 AD date first. Between then and now there was a lot of blood spilled between Catholics and Protestants, laws or no laws, and events in Ireland weren’t really all that long ago. Of course the Middle East is a nightmare; throw oil/politics in and the mess becomes (became) insurmountable.
Doug.
The Protestants didn’t break away until the 16th century, and separated from the Catholic Church which was well established and had been running for 1,600 years. At the time Mohammad re-directed his form of Christianity, as you alluded to, was still being molded, therefore there is a much wider split between Islam & Christian than between Catholic to Protestant. The Jews, Muslims and Christians all use the same old testament. The Muslims and the Christian wrote different interruptions of the New Testament, for want of a better word, and therefore have different books today.
The split between the Protestants and Catholic is just a different interruption on the same book.
This results in Protestants and Catholics basically agree to the same laws of the land, where the Muslims basically have a different set of rules/laws to live by.
Which is right and which is wrong, who cares they both work when you only have one set of rules to live by. The conflict comes when you are trying to live by two sets of conflicting rules, especially when most people are ignorant of the opposing side’s rules, as I was when I left my girl friend on the beach by herself.
The Protestants didn’t break away until the 16th century, and separated from the Catholic Church which was well established and had been running for 1,600 years.
Not quite 1600 years. Luther started the Protestant Reformation in the 1520s but the church was far from 1500 years old even then.
There were Christian sects in Rome as early as the second century but the church did not exist as an established organization until it was established by Constantine in 313.
Ron,
Good to see you are still on board. I agree with your numbers and your finer eye to detail than myself.
Which brings up the point of how and why Constantine converted Rome to Christianity, when they had historically be feeding them to the lions. He pulled significant dates and ceremonies from a mix of Roman religions to combine and unit the populous. Arguably the most famous date that was change 25th Dec, the day the Pagan worshiped the winter solace. Another move was moving the Sabbath to Sunday. Brought in worship to idols, (statues of saints)etc.
By the time Mohammad came along a lot of these things were institutionalized in the Christian religions. Mohammad made his writings with a Jewish, Christian back drop which incorporated some stricter interruptions than the reigning system.
The one thing Islam and Christians both believed in strongly, is they are the “only true religion”. To me these three words are the source of most of the conflict between the two, basically the same religions.
I think we may have exhausted this off topic subject, and I am also off to bed, so unless there are any special requests, I will leave this conversation as it is.
Yah, that’s good stuff. Surprising Iraqis don’t flee into KSA. Kuwaitis probably did when Hussein invaded. To the south, maybe the desert is too big for Oman or Yemenis to try to get in.
The Philippines has horrendous employment problems. OFWs are the norm, and those who go to KSA as domestic helpers essentially could not get another job. Hong Kong or Singapore is preferred, particularly with HK having a long term relationship with Manila for providing this work and formalized rules on minimum wage and treatment of the workers. The OFWs of course send money home.
KSA is the absolute bottom of the barrel for Philippine OFW domestic helpers. Anywhere in the Middle East is a hated place to **have** to go. The OFWs claim perpetually that they are abused and contracts are not adhered to, most specifically in how they are to be paid, provided on site quarters and also 3 meals a day. They say all the food they get are Ramen noodle package type things. And the Phils is 99% Catholic and any evidence of that in their quarters will get them beaten.
As mentioned before, when the Saudis decide to save oil for posterity, those remittance generators are going to be sent home. They won’t go quietly.
Watcher wrote:
“Surprising Iraqis don’t flee into KSA. Kuwaitis probably did when Hussein invaded. To the south, maybe the desert is too big for Oman or Yemenis to try to get in.”
Many Iraqi’s are shiites and KSA is sunni. Like Catholics and protestants, they don’t really like each other. The ISIS group made up of Sunnis is probably funded by KSA and other sunni controlled gov’ts.
NYTimes reports U.S. is evacuating embassy in Baghdad. WhiteHouse says it’s not an evacuation, it’s a “relocation.”
ASSESSMENT: CARRIER BATTLE GROUP MOVING TO EVAC 4K US CITIZENS. STRIKE AIRCRAFT LIKELY WILL FLY COVER. IN HOURS.
ABC on Friday quoted an unnamed US official as saying that after reviewing the most recent intelligence data on Iraq, “It makes one want to kill oneself.”
The last US helicopter out of Saigon, in 1975, , a couple of years after the US finally gave up and pulled out of Vietnam:
Militants post images of mass killing in Iraq
Now the Shiites are watching these videos and vowing revenge. And the Kurds are using the opportunity of chaos to grab territory. Looks like an all out civil war is about to start in Iraq, just like what’s happening in Syria. And this cannot be good for oil production.
Wrong link, here’s the correct one:
Militants post photos of mass killing in Iraq
I wish there was an edit function.
22.27 The Pentagon has issued a statement about the security boost and evacuation at the US Embassy in Baghdad. Staff will be evacuated using commercial, charter and State Department aircraft. The US military also has “airlift assets at the ready” should they be needed, Pentagon spokesman John Kirby said:
”A small number of DOD (Department of Defence) personnel are augmenting State Department security assets in Baghdad to help ensure the safety of our facilities.”
Military official says less than 100 US military personnel headed to Iraq to augment us embassy security, mix of Marines & Army.
Anything flowing out of the north . . . the buyer has got to stop and wonder who they are supposed to pay. That upheaval alone should cut output.
Aus/NZ futures are open and oil is $107.33ish.
Watcher.
Nothing has been flowing up the northern pipeline for a while. Someone keeps putting holes in it. Kurdistan has built their own pipeline, filled their tanks at the port and loaded and shipped two tankers.
In my eyes no oil has been taken off the market as of yet. The oil supply will only be effected if loading from Basra are interrupted. The price is going up on fear, not lack of supply. I must admit I filled my cars when I heard about what was going on, maybe demand went up a little?
Watcher,
About whom to pay for Kurdish oil: A week ago or so I read that the Kurds had opened a bank account in Turkey to hold payments for the oil they plan to ship, the money to be held until agreement was reached with the Iraqi government on how to divide it up. The Kurds started shipping because they say they aren’t getting their portion of the government’s budget. I’m wondering if the current situation will see the Kurds stop waiting to use that money. If buyers decide that the threats, of legal action against anyone who buys Kurdish oil directly instead of through the government, are empty, then It’s Morning in Iraqi Kurdistan.
Two cargoes have been shipped, I believe, but I don’t know if there have been deliveries. Last I saw, the first was waiting in international waters off Morocco (it had been in Moroccan waters but the government said “Leave”). I don’t know about the second.
http://uk.reuters.com/article/2014/06/11/uk-kurdistan-oil-idUKKBN0EM1OA20140611
(Reuters) – Russian oil firm Rosneft bought a cargo of Kurdish oil for a German refinery it co-owns with oil major BP, quietly circumventing Baghdad’s ban on independent oil sales by its autonomous region, according to trading sources.
Surely we are witnessing the Balkanisation of Iraq. Into at least three states; one Kurdish, one Sunni, and one Shia. Probably for the best, current State a made one anyway.
However this would rather have some knock on effects. Not least of which is that surely Iran’s position would emerge the stronger. No issue from where I sit but the US has spent the last few decades actively demonising that nation only to hand half of Iraq to them, and a huge chunk of the remaining and more accessible conventional crude… through an avoidable and incredibly expensive war pretty odd. And it would question the integrity of all the made-up states in the region.
To be fair though this is more the law of unintended consequence than anything else. War more than any other human business leads down this road. Just ask all the royal families of Europe that were unassailable in 1914 and most actively cheered for that stoush. That worked out well.
Still, remember that ‘Mission Accomplished’ photo-op? Doh!
It’s never really clear whose mission you are accomplishing even in the most successful seeming military actions till the dust fully settles.
Hi Patrick,
I’m reminded of the newspaper reporter who asked an old Chinese Scholar: What do you think were the main consequences of the French Revolution? To which the old Scholar replied: It’s too soon to say.
Cheers, Doug
Wasn’t that Mao?
Ah yes, the Attribution Game.
I’d guess 90% of Americans actually think JFK sat down and made up the speech: “Ask not what your country can do for you…” Of course it would have come from some speech writer who picked it up from Cicero or perhaps a Greek general on the eve of his battle with Persians. So to answer your question I asked an old friend, a Chinese scholar now in his 90s, about the quote and he said: Many phrases are attributed to Mao, they are all really good or really bad depending on which side you were fighting on.
As for partition, my recall is Turkey unequivocally said they would not tolerate the formal existence of a Kurdistan. A big chunk of their population at that border would want to join.
Well, this context is mostly about ISIS getting paid for shipments. They hold so much territory it’s hard to see how they can’t manage to control a few hundred thousand barrels.
That $hundred million will buy a lot of . . . whatever. If I were them I’d be funding assassins to take out Iraqi govt officials and leadership. OTOH, gotta presume the Saudis are funding their Sunni brothers (or Qatar is).
I don’t think they need oil for a little while. It looks like they have enough petty cash for some time.
http://www.theguardian.com/world/2014/jun/15/iraq-isis-arrest-jihadists-wealth-power
“By the end of the week, we soon realised that we had to do some accounting for them,” said the official flippantly. “Before Mosul, their total cash and assets were $875m [£515m]. Afterwards, with the money they robbed from banks and the value of the military supplies they looted, they could add another $1.5bn to that.”
The first tanker (United Leadership) is still loitering off Casablanca…
http://www.vesselfinder.com/?mmsi=538005502
This infrtmaoion is off the hizool!
06-15 18:36: US President Obama preparing to open a direct dialogue with Iran on Iraq Ransquawk
So much becomes so much more clear when seen through the window of oil. $107.33, and no question whatsoever any Iranian help in Iraq will have total elimination of sanctions as its price, which flows more oil and lowers the price.
That part of about nuclear weapon development? Off the front page.
New Utica wells rival core Marcellus output
Posted on June 12, 2014 at 3:00 pm by Collin Eaton, Houston Chronicle, FuelFix
HOUSTON – Natural gas, and not oil, has turned out to be the dominant fossil fuel in Ohio’s Utica Shale, a big disappointment to the industry that prompted BP and Halcón Resources to abandon the play earlier this year.
But Aubrey McClendon’s new wildcatting venture American Energy Partners and a handful of players are racing to snap up land in the southeastern corner of the play, where operators have found wet gas and high-performing, affordable wells that rival some in the core of the Marcellus Shale, an analyst said at a press briefing last week.
“The wells are so strong in the southeast that $4 gas is fine out there,” said Jeanie Oudin, an analyst with Wood Mackenzie.
—
Exxon Mobil, Magnum Hunter, Rice Energy and Antero Resources are among the oil and gas producers moving southeastward to Belmont and Monroe Counties, about 100 miles east of Columbus, Ohio, where 19 of the top 20 best-performing Utica wells were drilled in the fourth quarter.
Some operators have recorded initial production rates that are on par with wells in in Susquehanna County, the Marcellus’ core area, about 150 miles north of Philadelphia. They have pumped close to 40 million cubic feet of natural gas per day, Oudin said.
In the northern areas of the Utica, closer to Cleveland, Wood Mackenzie expects more operators to pull out, as the rig count has dropped in areas like Chesapeake Energy’s coveted “oil window,” a hard-to-reach chunk of oil-soaked rock that turned out to be a lot smaller than the industry had first believed.
Little oil in the Utica?
There are investors that would give Aubrey McClendon money? Even a cursory due diligence exercise should have…
Hat tip: Inside Climate News
Chesapeake chasing ‘all-but-forgotten’ shale assets
Posted on May 19, 2014 at 11:50 pm by Collin Eaton
Article has numbers on drilling costs and some cheer-leading.
P.S. Sorry Ron, managed to not close a bold tag again.
BP statistical review of world energy 2014 is out.
Oil production rate is up by 0.6%, natural gas by 1.1%, and coal 0.8%. That’s much slower growth than historical averages. We all know about oil situation, but big story IMO is coal. At current prices significant portion of world coal production is uneconomical. And it will only get worse, because of fast wages growth in China.
Earlier in the thread there was some discussion related to a fast crash in oil output.
I used Jean Laherrere’s estimates as a starting point, where crude (C+C) less extra heavy (XH) oil URR is 2200 Gb and XH (from Canadian oil sands and Orinoco belt in Venezuala) URR is 500 Gb and the all crude URR is 2700 Gb.
I used Paul Pukite’s (aka Webhubbletelescope) Oil Shock model to model both crude less XH and extra heavy oil and attempted to match Jean Laherrere’s crude less XH scenario pretty closely. My scenario for extra heavy oil is a little more conservative than Jean Laherrere’s (lower peak by about 40% occurring 20 years earlier).
Note that in the chart “ext rate” stands for extraction rate which is similar to the depletion rate from developed proved reserves.
The annual decline rate in this scenario is less than 2% up to 2027 and reaches a maximum of 2.8% in 2052 and then falls back to 2% by 2080.
The extraction rate shown on the chart is for crude less XH. For Canadian oil sands the extraction rate gradually rises to 5% in 2050 and for Orinoco the extraction rate gradually rises to 1.4% by 2090.
The 2013 forecast from the Canadian Association of Petroleum Producers (CAPP) is used as the basis for oil sands output out to 2030, along with Jean Laherrere’s analysis.
For comparison Jean Laherrere’s Crude less XH forecast is below (the brown curve in Jean Laherrere’s chart would be compared with the blue curve in my chart).
Finally I show the same scenario over the 1990 to 2030 period (only the horizontal axis has been changed, the scenario is the same, the crude less XH is not shown).
We may not be aware of the decline until 2020 because it will be gradual over the first few years, in 2020 we will be 4% below the peak and by 2021 will have fallen off the “plateau” that began in 2005 (27 to 28 Gb/a output of C+C). Hopefully peak oil will be clear to most by 2021, how much progress can be made in 10 years (from 2021 to 2030) in transitioning away from liquid fuels by building more rail, light rail, and building more fuel efficient (hybrid and electric) private transportation.
It might also become clear that natural gas will follow closely behind oil in reaching a peak (2020 to 2030 would be my guess) so maybe we won’t wait until that peak has arrived before ramping up the use of wind, solar, and geothermal along with building an HVDC grid to more easily move excess electricity from sunny and windy areas to areas where the sun is not shining or the wind is not blowing. It will be expensive, but so will sea level rise and climate chaos, which is why coal is not a good option (unless the carbon can be sequestered and I think that would likely be even more costly than wind, solar, and geothermal).
Hmm NoDak seems a bit late, and the report will be for April, which was a shorter month.
For all the excitement about Ukraine and Iraq the last few days the price of oil has yet to make a strong upward move. As of writing WTI is at $107.
It is yet to break out of range of this increasingly tight triangle.
http://www.economic-undertow.com/wp-content/uploads/2014/06/Triangle-of-Doom-060114.png
I posted earlier that some of the media overreacted to current events. In particular by printing Twitter gossip as if it were fact. But in the short to medium term the situation in both Iraq and Ukraine is clearly a disaster that will have major consequences. Next time we get such a news flash I too will be driving to the gas station to stock up.
I have to object to this “triangle of doom”.
The bottom line of the triangle I can believe: easy oil is produced first, so the cost of production increases over time.
The top line, though, is nonsense. Why is it that consumers must get a linearly decreasing cost of oil or go broke? At the rate shown in the diagram, the cost of oil would have to be zero in 15 years. Actually, as the cost of oil increases, consumers will use less; but this does not mean that they go broke.
Based on our thermodynamic analysis of world petroleum production our conclusion is that 2285 Gb of oil is extractable. Not all of it will be extracted. Once conventional (API 30-45) is fully depleted most of the alternatives, extra heavy, ultra deep, shale, and bitumen will be left in the ground. They will have become uneconomical to extract without the energy subsidy of conventional.
http://www.thehillsgroup.org/
From above:
Hey Hill guy. Do you folks have a take on Iraqi oil field irreparable damage if they get shut in?
As Colin “Power Point” Powell pointed out to Junior : “If you break it, you own it”.
Don’t know if GWB could find it on the map.
But it is broken now.
Hi BW Hill,
The link below gives a synopsis to a paper by Brandt of Stanford University which disputes the low EROEI numbers often cited for oil sands.
http://www.theoildrum.com/node/10011
The main argument is that if only the external energy inputs to the bitumen production process are considered (from natural gas and electricity produced externally to the oil sands operations) the net external energy return (NEER) is 20 to 1.
Based on this and Jean Laherrere’s analysis ( along with forecasts by CAPP), I think it likely that 250 Gb will be produced from the Canadian oil sands, Venezuela (Orinoco) is also likely to produce 250 Gb, but the ramp up will be slower and peak levels of output will be lower (peak in 2090 at 1.3 Gb per year vs bitumen peak of 2.2 Gb per year in 2050). Venezuela is more of a guess, but with help from outside experts as oil depletes elsewhere, the Orinoco oil will eventually be produced.
A scenario for World Extra Heavy (XH) Crude output in chart below based in part on previous analyses by Jean Laherrere (his analysis has a peak for XH in 2070 at 6 Gb per year), though my scenario is more conservative with an XH peak of 3.4 Gb per year in 2050.
So you guys don’t believe in Unburnable Carbon defined as: “Wasted capital and stranded assets as in between 60-80% of coal, oil and gas reserves of publicly listed companies are ‘unburnable’ if the world is to have a chance of not exceeding global warming of 2°C” Because if you do a lot of assumptions would need to be tossed out the window.
Anyway, neither do I, but there’s the IEA on this bandwagon as well: “Fossil fuels’ share of the global energy mix will fall from the current 82 per cent to 76 per cent in a 4 degree world, the IEA says. That is a world the IEA calls its ‘new policies scenario’. Fossil fuels’ share of the global energy mix would fall still further to 65 per cent if we avoid dangerous climate change of 2 degrees – the IEA’s 450 scenario.” http://www.carbonbrief.org/blog/2014/06/the-iea-weighs-in-on-stranded-assets-not-just-a-green-conspiracy/
Hi Doug,
The oil and natural gas may be able to be burned. It depends on what temperature we are shooting for, I think it should be 2 C above 1750 Global temperatures, and equilibrium climate sensitivity which is at least 3 C for a doubling of CO2 above pre-industrial levels (about 550 ppm). Most of the coal should be stranded and be left in the ground.
And I agree that this is unlikely to happen at least in today’s political climate 🙂
Very ineresting. So just from eyeballing, XH will rise from about 3 million barrels per day now to near 10 million barrels per day by mid-century.
Dennis said:
“Based on this and Jean Laherrere’s analysis ( along with forecasts by CAPP), I think it likely that 250 Gb will be produced from the Canadian oil sands”
I think David Hughes hit the nail right on the head. As they move further from Fort McMurray the over burden gets greater, and the oil bearing sands gets thinner. When I was up there last year I took a look at it, and it sure looks like he is right. The over burden has almost doubled since they started. Anyone with experience in open pit mining knows that the combination of increasing overburden, and a thinning deposit is the kiss of death. As far as steam injection goes; it takes 512 BTU to boil a pound of water. That’s a lot of NG to cook out a barrel of crude, and their NG supply is not unlimited. Think I figured out one time that at $8 MM they would be better off selling the NG than using it to cook tar sands.
I took a brief look at Brandt’s analysis previously. Number one, the $cost/BTU ratios indicate he is way out of wack. With production costs of $80/barrel you can’t have an ERoEI of 20:1. That energy is going somewhere, and it shows up in production costs. (Thanks for the link, I lost mine in this quagmire we call an office.) There were a couple points about his take on bitumen mining that I considered in error, but I’ll have to review it again before I comment too much.
As far as Iraq goes, I really don’t believe anyone would be stupid enough to shut-in those fields. Even fanatical right wing Islamic fundamentalists aren’t gong to throw away $300 million a day! They may be nuts, but they are not stupid!
http://www.thehillsgroup.org/
Hi BW Hill,
It is expected that the bitumen from mining will wind down and most of the rest will be produced using steam assisted gravity drainage. I imagine if natural gas becomes too expensive, they could use the recovered bitumen to produce steam.
It depends a lot on the price of oil, I expect that real oil prices will increase over time.
CAPP’s forecasts have been revised downward so I may be wrong, clearly David Hughes would have a better handle on this than I would.
http://old.globalpublicmedia.com/transcripts/827
In the interview in the link above (which is 2006 so it is old), Hughes claims the resources are there, but it will take time to develop them. I agree.
I couldn’t find anything else on oil sands of significance, do you have a link?
BWHill Wrote:
“Based on our thermodynamic analysis of world petroleum production our conclusion is that 2285 Gb of oil is extractable. Not all of it will be extracted.”
One potential oversight in this analysis is that the price of conventional oil will increase as extraction costs increase and supply decreases. I think your model represents the best possible outcome because it does not include the economics of conventional oil extraction. Consider that since 2005, the world spent about $4.5 Trillion with a loss of 1 mbpd of conventional production since 2005. The economic cost to further maintain production is going to be exponential.
The higher prices are going to starve the global economy well before we extract it all. If the economy can’t tolerate higher prices then continued investment in extraction will also fall. Currently, my best guess is that it all collapses before 2025. The next few years will be interesting (in a bad way) as we breach peak C+C.
One key piece of data is to model when the super-giants reach the end of the horizontal drilling recovery and after, production collapses (which is probably close). The loss of the super-giants will be a game changer since they provide the least inexpensive conventional oil. Much like a star athlete makes a good team a great team that wins championships. The loss of the super giants will have major economic ramifications that can’t be recovered from. I don’t think we need to see a loss of production from all of them, just a combined lost of production somewhere between 5 mbpd and 8 mbpd. I think it will be enough to breach the tipping point from which the global economy can no longer be sustained.
Considering that KSA and Kuwait have both begun EOR (CO2 injection) projects in their super giants (Ghawar/Burgan), we probably don’t have much time left.
Dennis Coyne said:
“I imagine if natural gas becomes too expensive, they could use the recovered bitumen to produce steam.”
That was Brandt’s argument, and one I disagreed with. If you go to our site, and look under Study Graphs, graph# 20, Exergy vs API you can see that bitumen, with an API of 8.5 has an energy content of about 150,000 BTU per gallon. These are the same values measured by the EIA; exergy is the energy content of a hydrocarbon available from combustion. We computed them from the combustion equations (and that burned up no small amount of CPU seconds). When you factor in that 29% of that energy has to go to the production of waste heat (Second Law requirement) and from reports from SynCrude on steam needed for the process, in situ using bitumen as a heat source becomes an energy loser. If a hydrocarbon can not act as an energy source, its only value is as a feedstock.
Tech Guy said:
“One potential oversight in this analysis is that the price of conventional oil will increase as extraction costs increase and supply decreases.”
You obviously have not been over the report. We go into just that factor in extreme detail. Again, if you go to our site, and look at graph# 9, and graph# 17 you can see the results of that analysis. Common sense tells you that the price of crude must be a function of its production costs, and its production costs are a function of the energy needed to produce it!
http://www.thehillsgroup.org/
The BP Statistical Review for 2014 is out.
I wanted to show that as far as people are concerned, peak oil is already behind us, and the decline is well in progress. Below is a graph shown where you can see the world oil production per capita. The consumption per capita in China is shown separately.
If you’re not living in China or Saudi Arabia, I belief the red line is the most important graph for you, which shows the produced oil that is still available for you (world production – consumption SA & China).
I removed Saudi Arabia as the largest consumer of subsidized oil (AFAIK), and China as the incredible growth engine of the last 30 years. Probably there are all kinds of improvements possible on the data & graphs, but I think my main point stands : the oil that is available to a person in most parts of the world has declined significantly for already 35 years, which is shown by the red graph. The Peak Oil date will therefore in my opinion not have any particular effect, and is not important, nor the decline afterwards. This in contrast what is often written here. Comments are welcome.
Notes:
– population numbers from wikipedia
– BP notes there is a difference between the definition of oil produced and consumed, which I ignore.
One clarification : Of course I don’t mean to say that declining world oil production is not important, as it is very important, but the effect of declining oil availability is already visible much longer.
Enno,
On one level, perhaps your graph is the most meaningful data here. You could add, based on a review of demographic data from 233 countries and areas around the world, including a 2010 population censuses, the UN projects the world’s population to reach 9.6 billion by 2050. No matter how much oil is produced it will have to be shared by a lot more people.
Hi Doug,
There are several projection for population by the UN, the low fertility scenario matches better with the progress in the Total Fertility ratio(TFR) since 1965 (a decrease from about 5 to 2.5 world wide from 1965 to 2010). The low fertility projection is 8.3 billion in 2050 with a TFR of 1.75 at that time. This is a pretty conservative estimate because a continuation of the rate of decrease since 1965 would get us to a TFR of 1.4 by 2050.
The maximum is reached in 2049 in the low fertility scenario and population falls to 6.8 Billion by 2099 and World TFR falls to 1.5 by 2100.
Also the decline in total output clearly means less per capita. The rate of decline is important in my view.
To my mind the blue line in Enno’s chart is of greater significance. Price will ration who gets the oil as it always has.
Subsidizing cheap oil for the population makes much less sense than giving coupons for gasoline and diesel which can be traded on a white market. This would encourage conservation as people who use less fuel can trade for money and the gas coupon dealers can then sell to those who choose not to conserve.
It could even be an online market like ebay (or maybe bitcoin) where people could buy and sell their gas ration. Saudi Arabia will get to that point if they are smart, rather than selling $100 oil for $20.
BP shows a decline in Saudi net oil exports, from 8.6 mbpd in 2012 to 8.4 mbpd in 2013, putting their ECI Ratio (Ratio of production to consumption) at about 3.7, which would be on the extrapolated ECI glideslope:
Enno said:
“I wanted to show that as far as people are concerned, peak oil is already behind us, and the decline is well in progress.”
Our report indicates conventional peaked at the end of 2005 (beginning 2006). As far as other liquids are concerned, the majority of them are such poor energy sources that they don’t even count. It takes energy to run an economy, black goo in a barrel does nothing but contribute to the production of plastic pipe (and other stuff). The energy from petroleum peaked about 2000. We show that by 2035 the US will be running on about 5 mb/d, with a GDP of about $4 trillion. Without other energy sources coming on line, we will maintain that level for decades. That is if the war nuts don’t blow us all to hell!
http://www.thehillsgroup.org/
BWHill wrote:
“We show that by 2035 the US will be running on about 5 mb/d, with a GDP of about $4 trillion.”
The US economy will collapse well before we breach those levels. There is too much debt and no mitigation program to prepare for a transition. I also don’t see how we will be producing anywhere near 5 mbpd in 2035. We are using horizontal drilling and CO2 EOR to squeeze out the last of the recoverable oil in our conventional oil fields. We get about a 1 to 1.5 Mbpd from the GoM. I just don’t see it lasting to 2035, or even 2025. Even today, US conventional production is only about 5 mbpd. The rests comes from shale.
This is late but relevant to the discussion of the quality of reporting.
http://www.washingtonpost.com/wp-dyn/content/article/2005/07/30/AR2005073000044.html
Anybody who thinks you can steer a front wheel drive car with a dead engine should try it sometime. It can be done but it requires a lot of muscle and if you are not on the alert ready to apply it, or if you don’t have the muscle, you are very apt to lose control of the car.
Maybe this kid was drunk, maybe not. I have ridden thousands of times in cars with drinking drivers over the last sixty years and I drove under the influence hundreds of times myself in by gone days. I have never been in an accident in which alcohol played a role but I have been in two when I was driving and had not had a drink for months or years. (For the last thirty or forty years I have not had a drink more often than once or twice a year on a social occasion but in my younger days the norm was to get a six pack anytime you hit the road or went visiting or to the river or cooked out or watched a ball game. Both of the accidents I have been in happened in since I got too old to party with the college crowd.)
Just about everybody I knew back in the sixties and seventies would have a beer or two or three and get behind the wheel without a second thought.
Drunks have a lot of accidents but unless they are falling down drunk the chance of them crashing on ANY GIVEN day is actually very slim..
That car in my estimation cut off on that kid and given the fact that she would have been used to effortless steering — the odds are she lost it because she did not have both hands on the wheel and plenty of muscle.
The air bag did not deploy. It is a cinch statistically that the reason it did not involved the ignition being off although that would not have been obvious at that time.
Somebody should have followed up on that air bag not working.
http://headlines.ransquawk.com/headlines/iraqi-baiji-refinery-the-largest-refinery-in-iraq-halted-production-yesterday-according-to-the-deputy-oil-minister-16-06-2014
Ahhh, that was quick:
http://headlines.ransquawk.com/headlines/iraqi-government-in-control-of-baiji-refinery-not-gunmen-and-production-halt-is-due-to-tanks-being-full-according-to-deputy-oil-minister-16-06-2014
hahahahahahah
“For the moment, it is hard to see how anything can be salvaged in Iraq. The ISIS may cause enough havoc there to shut down Iraqi oil production forever. They can start World War III. They can inspire insurgencies across the whole Islamic world and beyond. The caliphate they establish will then have to figure out how to support a population twenty times as great as the region truly can support with a medieval economy. Sooner or later, they’ll be selling shrunken heads in the souks.”
-James
They sure as hell are funded, and if they get some of the oil and sell it, they’ll be funded more. Selling Syrian oil around sanctions is widely done. They’ll know how.
The new BP review is out. What a disappointment. Look at this picture. I opened two windows. The top layer is the 2013 review, the bottom layer is the new 2014 review, so the columns are shifted one year ahead for reasons of easy comparison. It’s about natural gas production. I laid the United Kingdom-numbers right on top of each other. See what happened? The UK just shifted the data 3 years back!! They didn’t even bother to cover this fraud up properly. They used exactly the same numbers.
Please read: “They shifted the data 3 years ahead.”
There’s a lot of this going on lots of different places.
Wait a minute, I don’t see it.
The 2002-2007 data in the 2013 (bottom) report are now used as the 2005-2010 data.
Stops doing it in 2011, but you’re right, they are redefining the goal post in terms of calculating decline over time.
They say “Yes,we are in decline, but it’s only a recent phenomenon. And it is not as bad as you think it was.”
FWIW: It could just be a copy and paste error in excel. Probably someone preparing the report wasn’t paying attention.
A human error? Sure, but… BP is UK-based. And they struggle with a large Scottisch call for independance. (The North Sea gas and oil fields would be in Scottisch territory.)
Unfortunately I did not save the background excel-file last year.
Anyway: The guy behind Mazamascience.com will see the same thing.
Tom Whipple’s summary of the Iraq situation is good here: http://www.resilience.org/stories/2014-06-16/peak-oil-review-jun-16