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This is a guest post from Neil Howes. Neil has recently retired from his position as an Associate Professor at the University of Sydney. Neil's previous guest posts at TOD include "A North American Energy Plan for 2030: Hydro-electricity the forgotten renewable energy resource" and "A National Electricity Grid For Australia".

Would a “50% of electricity generated by wind scenario” work in North America by 2030? In this post, I make a rough cut estimate of what might be required to make such a transition in about 20 years time.

Most proposals that are being made rely on a very big increase in carbon free energy, both to charge electric vehicles (EV’s) and to replace oil and natural gas (NG) presently used for hot water and space heating. In this post, I lay out a path by which 50% of North American energy might come from wind by 2030, including replacement of a large share of oil and natural gas use by electricity.

Quantity of Additional Low-Carbon Electricity Required

Present electrical consumption is 550 GWa. If the North American countries - Canada, Mexico and the United States - were to replace :

• 70% of their oil usage (by replacing over 90% of the oil used for heating and land transportation with electricity and 50% of the jet fuel used via a combination of conservation measures),
• 95% of the coal used for electricity production (250Gwa) and
• half of the NG used for hot water and space heating (60GWa)

They would need to generate an additional 450GWa, but would net out coal replaced of 250 GWa, for a total of 750 GWa production.

In a previous article, I have shown that hydro electricity could account for a third of this (140GWa). Other possible low carbon energy resources are solar, wind, geothermal, ocean (tidal and wave), biogas and nuclear power.

What if hydro-electricity can only be increased by 50% by 2030 (from 94 to 141GWa) rather than the 130% increase that I have previously suggested, and if other additional low carbon energy sources can only account for an additional 50GWa ?

This would mean that either more than 5% of today’s thermal coal would be needed to generate electricity or an additional 372GWa would have to come from wind power (50% of total). I am not suggesting it would be desirable to obtain more than 50% of electricity from wind, but wind capacity can be built quickly, and there do not seem to be any serious resource limitations to expanding wind (a recent report from the US Interior department noted that offshore wind alone could supply enough power to meet all US electricity needs). This level of wind power has been suggested by some (such as Repower America) as possible and practical, but many have questioned if wind could even provide 15-20% electrical energy because of the intermittency of wind energy.

For the purpose of the discussion of wind intermittency, I am assuming that an expanded North American grid extending from Alaska to Labrador in the North, and south beyond Mexico City will be built. Such an extended grid would help smooth out fluctuations.

Electricity from Wind

Although only 9GWa was generated from wind power in 2008 (26GW installed capacity), this represents 1.7% of N America’s electricity production and wind capacity addition has growing at about 30% per year over the last decade. The advantage of wind energy is that new capacity can be built quickly (1-2 years), with small incremental low risk investments. Wind energy is less site specific than hydro, has less impact on the environment, and wind energy doesn’t require cooling water. The cost of wind power capacity had been declining with technical advances, until the last 2 years with increased costs caused by rising material costs (especially steel and cement) and manufacturing capacity constraints. These costs now seem to be declining from very high levels in early 2008.

Capacity 2008 Average 2008 Capacity 2030 Average 2030 Lowest production 2030 Hydro 160 GWc 94 GWa 260 GWc 141 GWa 20 GW Pumped storage included in hydro (3 GW) included in hydro (6 GW) (40 GW) Coal 350 GWc 250 GW 100 GW (weeks) 5 GWa (summer) 0 Natural Gas 450 GWa 100 GWa 450 GWc (days) 40 GWa 0 Wind 26 GW 9 GWa 1142 GW (546 GW max) 372 GWa 312 GW (>98%) Solar (CSP) 0.5 GW 0.1 GW 50 GW 12.5 GWa 0 Nuclear 110 GW 100 GWa 130 GWc 125 GWa 100 GW V2G (PHEV) 0 0 50 GW (for 6h) (100 GW) (150 GW for 10h) Oil (Mexico) 10 GW <10 GW 0 0 0 Total 1056 GW 556 GWa 2147 GW 780.5 GW

Table 1: Electricity supply and grid regulating (demand) in N America 2008 and 2030

High quality wind resources (wind speeds greater than 6.9m/sec) in the US are estimated to be >5,500GWa, about x10 all of N America’s present electricity production of 550GWa. Canada’s potential appears to be similar or greater than the US, while Mexico’s wind resources are more limited (these figures do not include deep offshore resources that could be harnessed by floating wind turbines or higher altitude wind resources that could potentially be harnessed by airborne wind turbines).

For example, the Great Lakes have excellent offshore wind resources, and are close to major demand, with a potential of 321GWa in Michigan waters alone. Wind resources are widely distributed although some regions especially the SE of US, have poorer resources.

If an additional 372GWa was to be generated from wind power by 2030, this would require an expansion of today’s 26GW capacity to 1142 GWc. I am using a 0.33 capacity factor although this could well be higher as larger turbines are built and with expanded grid infrastructure, better remote wind sites will be developed including off-shore wind having a higher capacity factor. Such an expansion would require new capacity additions to rise from the 2008 level of 9GWc to 60GWc per year by 2013, and continue at that level until 2030.

This is more than the National Renewable Energy Lab's (NREL) 20% by 2030 wind power proposal that envisioned installing 16GW capacity per year, but the NREL expected much slower growth than has occurred, thus the US alone has reached 2013 expected capacity in 2008. Wind capacity would have to increase by 50% for 5 years to reach 60GW capacity additions per year by 2013, allowing an additional 1110GW capacity to be built by 2030. As the NREL study showed, wind turbine manufacture is suited to rapidly expanding capacity, providing capital and labor are available. Many components, such as large towers and turbine blades can be manufactured locally from steel plate, glass fiber and resins, or casting made using multiple molds prepared from master plugs. Foundations and electrical connects can be built using normal reinforced concrete construction methods that are used for road, bridge and multi-story construction.

Photo credit: flickr/samballew

ERoEI and Life Cycle Resources

Both hydro electricity and wind power have high ERoEI, hydro because of the long life of structures (>100years) and wind because of the fast energy payback, even assuming a 20 year life of turbines. Earlier studies of turbines built in 1990’s 100-750kW capacity had an average ERoEI of 18:1, but larger turbines (500-750kW) had >30:1. Turbines are now 1.5-3.5 MW and appear to have ERoEI of 30-200:1, with energy paybacks of a few months. Life-cycle analysis indicates that wind energy, is low FF use, and CO2 emissions (5-40 g/kWh) about 25 to 100 times less than coal-fired electricity. Oil used for road transport would be 1- 5% of energy use.

The steel required to build 60 GW capacity per year would be 6.9million tonnes (115tonnes / MW capacity), about half the amount of scrap steel that could be recovered annually from scrapped N American automobiles, using electric arc furnaces.

Integrating 50% wind energy into a continental grid.

Wind energy is variable at one location, producing less than 30% of the average output (ie. <10% capacity) about 30% of the time, but as the distance between wind farms increases the correlation between power output and locations decreases. Most studies of wind integration into grids have examined relatively small geographic regions, such as Denmark(43,000km^2), Northern Germany(<50,000km^2), and the UK(250,000km^2). A UK study looked at sites up to 800km separation (North/South), and found a low correlation between distant sites, so that >80% of the time a wind grid would be producing >30% average output.

Even more optimistic predictions were made by Archer and Jacobson, when they examined predicted output of up to 19 sites covering a 850x850 km region (700,000 km^2) in US mid-west. Better information about wind shear at heights typical of modern turbines, and the “nocturnal jet” show that more consistent wind power is available during summer evenings than originally realised. Similar studies in Australia with 9 sites in 3 states, over a 4 year period, separated by up to 1500km, showed energy output was >10% capacity 98% of the time during peak demand summer months.

Canadian wind strength - source (pdf)

Critics of wind energy can cite specific times when wind energy provided little, for example ERCOT in Texas, Feb 2008, 2992MW wind capacity only produced 300MW (6%) or in California on July24, 2006, during peak power demand, where 2377MW wind capacity only produced 333MW (12% capacity). While Texas (695,000 km^2) and California (423,000 km^2) are large by European standards, two sites in California (San Gorgonio Pass and Altamont Pass) accounted for 50% of CA capacity. North America covering > 22 million sq km, is 50 times the area of California, 100 times the area of the UK, and 500 times the land area of Denmark or Northern Germany. Furthermore, the continent has an East/West width at 50N latitude, of 4,000 km, a critical issue for wind reliability, because weather systems, such as slow moving blocking high pressure systems and low pressure storm fronts generally move from west to east at these latitudes.

There are ten major high quality wind resource regions in N America;

1) NE coast and off-shore (QC,NS,NB,NH,ME,VT, RI,SDC)
2) West coast and off-shore (CA,OR,WA, BC),
3) Pacific coast of Alaska, and Aleutian Islands
4) the Canadian prairie extending through the mid-west plains and Texas plateau (SK,ND,SD,NE,KS,OK,TX)
5) the Great Lakes off-shore and lake shore regions(ON, MN,IL,WI,MI,OH,PA,IN,NY)
6) the Appalachian Mountains(WV,KY,TN,NC,VA)
7) Rocky Mountains(NM,CO,WY,ID,MT,ALTA)
8) the Nelson River and West Hudson on-shore (MAN)
9) James Bay/ East Hudson’s Bay on-shore (Northern QC)
10) Labrador and Newfoundland on-shore(NFL).

Other more remote regions such as, the Canadian arctic (Baffin Island) also have good wind resources that are influenced by circum polar weather systems. The North American grid presently extends to nine of these major regions, the exception being the Alaskan Pacific Coast.

Source: Evaluation of Global Wind Power - Christina L Archer and Mark Z Jacobson

If an installed capacity of 1142 GW wind energy was built at widely dispersed wind locations we would expect to deliver within a range of 27-39% of capacity (expected power 372 GW) over the entire N American continent most of the time. This is a best guess estimate, based on studies of connecting multiple wind farms over much smaller regions, where more connections do not increase total power under high wind conditions but produce more power under conditions of lower wind speeds. Since the 10 regions are up to 4,000 km apart, and can extend for up to 1,500 km, it would be very unlikely for more than three of the ten regions to be producing < 5% capacity at any one time, based on the normally distributed power curve of combined sites. Seven of those 10 regions also have flexible hydro capacity so 7/10 of the wind power would be firm. The other 3 regions each extend >2,000 km (the East and West coast and Mid-West), so it would be unlikely that 2 of these regions would be producing <5% of capacity at the same time. This would mean the grid would be receiving > 27.4% of the expected 33% capacity for the installed national capacity (>312GW). Thus the grid will have to supplying up to 62GW (3.6%) additional peak power in low wind conditions, when those coincide with a peak demand period. Additional reserves of 219 GW are thus 350% larger than expected wind variability.

Generating 50% of the electrical power by wind places high demands on the grid.

Critical to any plan that involves a large expansion of renewable energy is the expansion of the N American grid with long distance HVDC connections between regions of high wind, solar and hydro electricity generation and regions of high electricity consumption. A 3,000 km UHDV link from Alaska and the Yukon to both the Western and Eastern Interconnections would be especially important to access both wind and hydro resources and would add extra stability to the grid. Losses by a 800,000V DC line would be 2% per 1,000km, less than existing 1,000km HVDC used today to bring power from Canada to the Eastern Interconnect. Good wind resources along the arctic coasts of Hudson Bay and Labrador would only need short transmission lines to connect with existing James Bay (QC), Nelson River (MAN) and Churchill Falls (NFL) hydro schemes, sharing the same HVDC lines to the eastern interconnect. A southern HVDC line from Arizona/Sonora solar power sites to Mexico City would also link into the Rocky Mountain and Mid-West wind regions.

Using 372 GWa wind power across the continent will require large amounts of electricity to be moved long distances, but not as much as may be imagined. Most of the NG peaking plants are close to demand so this power would only travel short distances. Water impounded behind a dam is the cheapest form of electric power storage, and it can be drawn upon at very high rates for short local demand peaks, reducing the demand on the HVDC interconnects. Pumped storage is 85% efficient, it can be low cost when combined with existing hydro dams, but more expensive if a purpose built facility. All regions with high wind resources, except the Prairie/mid West region also have access to one or both of these storage mechanisms, and because the wider grid will be able to replace hydro use, interconnections between regions can be of limited capacity. Care and maintenance coal-fired generators that are located near demand could be used with 24-48 hour notice, if hydro was not available (due to low water levels) or if longer low wind events persisted in one region.

Energy Source GW capacity cost/kW cost ($billion) Hydro:new dams 25GW $6000 300 Hydro:additional turbines 55GW $1000 55 Small hydro 20GW $1000 20 Solar 50GW(av 12.5GW) $2000 100 Nuclear 25GW $6000 150 Wind 1115GW(372a) $1500 1672   Transmission distance(km) cost @ 1M/GW.km (billion) Alaska/Yukon to Grand Coulee 30GW 2000 60 Yukon to Nelson 10GW 2000 20 Nelson to ND 20GW 1000 20 mid-west to SD 45GW SD to Chicago 70GW 500 35 QC to East coast 30GW 1000 30 Labrator to NE coast 20GW 1000 20 Local regions 1GW 20000 20 Sonora to Mexico city 10GW 1000 10 Sonora/Arizona to CA 20GW 500 10 Total transmission 225 Total cost 2522 cost/year 126

The assumptions I have used are that the additional hydro and pumped storage capacity is built on existing dams, by adding more turbines, to provide more peak power or new remote dams are built where good wind resources (9-10m/sec) can be combined with hydro sharing the same transmission lines. In sub-arctic regions water flows are high during summer, wind is high in winter. Similarly CSP solar power located in SW of US and adjacent Sonora would provide additional peak power to Mexico, CA and TX.

Thus wind and hydro electricity from Alaska and sub-arctic Canada (Nelson River, James Bay and Labrador) would be 100% reliable, with hydro replacing wind during low wind periods, and water stored during high wind periods. The capacity of the transmission lines from these 4 regions could be 145GWa shared power, from 280GW wind capacity and 135GWc hydro. The mid-west prairie region could share connections to the Great Lakes (sharing Nelson River power), and share solar connections to CA via Arizona or south to Mexico. Thus, the major consuming regions would produce about 60% wind and hydro power locally and import 200GW, representing 26% of total power but < 10% of peak power capacity. Thus if in the future a major consuming region (W coast) were to lose 95% of local wind power capacity of 150GWc (say only have 7GW of expected 50GWa) for 6 hours it would require at most to import about 1/4 of the lost production (11GW) via the HVDC grid from several other regions (Alaska, Rocky Mountains, Mid-West), moving an additional 0.5% of national peak power capacity. The other 32GW, would come from short distances (NG peak, hydro) using existing infrastructure as it does today. Over1-4 days this loss (192GWh) could be restored by continued higher imports (2-8GW), during off peak periods, allowing local hydro to be accumulated.

A smart grid would enable short term demand reduction reducing refrigerator, A/C or heating demand by short term on/off cycling. Real cost pricing of peak power would encourage consumers to reduce activities such as dish or cloths washing during peak times. Hot water heating using CO2 heat pumps is especially suitable for grid load management, because of the potential to store energy as hot water over the peak period. Vehicle to grid (V2G) can provide short term spinning reserve power (pdf) and could provide longer term storage to help reduce long distance power transfers, using as little as 500Wh transfer in vehicles that had completed the days journey (100M vehicles) providing up to 50GWh towards a demand peak due to grid failure, with only a minor change to available EV range.

Photo credit: flickr/kevindooley

Another potential energy resource is a reduction in electricity consumption due to more efficient utilization. One-third of today’s electricity consumption could be saved if all states used electricity as efficiently as the ten highest GDP/kWh states (pdf). Perhaps N America doesn’t really need to rely on more than 50% of its electricity from wind power. Others could make a reasonable case that solar could also provide up to 50% of N America’s power.

The most urgent problem is the arrival of “Peak Oil”. No amount of low carbon electrical energy is going to directly replace oil used in transport or oil and condensate used for chemical synthesis. Abundant low carbon electricity, however, will allow a lot of additional options during the transition to a low oil economy.

References and related posts

Archer & Jacobson - Evaluation of global wind power (pdf)

Danish Wind Power - Wind power diurnal variation

Peak Energy - The World’s Largest Wind Turbine

The Oil Drum - Offshore Wind

The Oil Drum - Making the case for wind, again

The Oil Drum - Advice to Pres. Obama (# 4): Go for Wind Power, Seriously

The Oil Drum - Energy from Wind: A Discussion of the EROI Research

The Oil Drum - Floating Offshore Wind Power

The Oil Drum - Alternative Wind Power Experiments - SkySails and Airborne Wind Turbines (Peak Energy)

Peak Energy - Saul Griffith: Inventing a super-kite to tap the energy of high-altitude wind

A gust of progress: Creating windpower transmission in the Midwest FRANKLIN ROOSEVELT helped bring electricity beyond America’s cities to its most distant farms. Barack Obama hopes the countryside will return the favour. Much of this challenge rests in the gusty upper Midwest. In recent years Interstates 29 and 80, highways of America’s heartland, have teemed with lorries bringing wind blades to new plants. Efforts to build transmission have moved more slowly. There are 300,000 megawatts of proposed wind projects waiting to connect to the electricity grid, says the American Wind Energy Association. Of these, 70,000 megawatts are in the upper Midwest.

Now action is at last replacing talk. Firms are proposing ambitious transmission lines across the plains. The region’s governors and regulators are mulling ways to help them. The federal government is playing its part. In February the stimulus package allotted $11 billion to modernise the grid. Since then members of Congress have proposed an array of bills to develop transmission. Jeff Bingaman, chairman of the Senate energy committee, intends to start marking up transmission plans next week—though debate over other parts of the energy bill may delay progress.

Would BP Please Buy Chesapeake Energy? Amid mounting furor from investors and analysts over Chief Executive Aubrey McClendon's $110 million pay package, Chesapeake Energy's shareholders need a savior.

A BP takeover has been rumored since last November, when Chesapeake Energy suffered a liquidity crunch that collapsed shares. The troubled deepened when McClendon was forced to sell 90% of his holdings to satisfy margin calls.

Oil price fall brings opportunity The collapse in oil prices had opened a huge opportunity for foreign investment in Iraq, officials and private investors said on Thursday.

Until recently, with prices above $100 a barrel, the biggest hurdle to foreign investment had been resistance by Iraqi officials, who believed they could rely on their oil revenue to drive hard bargains. This, said investors was a far greater barrier than even security when it came to making decisions on putting money into the country.

But now with prices about $50 a barrel, Iraqi officials had become far more receptive to the efforts of the World Bank and national development agencies to drum up investment and diversify the country’s economy away from oil, one UK official said.

Iraq could need soft loans from oilfield bidders LONDON, April 30 (Reuters) - Iraq will require soft loans possibly totalling billions of dollars from any firm succesful in its second bidding round for developing new oilfields, unless the oil price recovers to $70, the Iraqi oil minister said on Thursday.

International oil companies have already been requested to pay $2.6 billion in the first bidding round to develop existing fields, which Hussain al-Shahrastani said were required to plug the holes in Iraq's budget created by the sharp drop in the price of crude to around $50.

"These are not signature bonuses but soft loans that we expect the international oil companies to provide, that will be repaid by the oil produced," Shahrastani said.

Repsol Says Refinery Strike in Spain to Curtail Production (Bloomberg) -- Repsol YPF SA, Spain’s biggest oil company, said a strike at its domestic refineries will curtail operations.

Is food the last thing to worry about? Our food system is woefully dependent on petroleum, as writers such as Richard Heinberg and Michael Pollan have eloquently pointed out. Soaring food costs have brought on riots in some countries, and in unstable nations, famine continues to be a regular visitor. Fears of empty grocery shelves have made food security the centerpiece of many a post-Peak Oil plan, and among those watching energy descent, a common refrain is that the best way to guarantee your food supply is to buy a piece of land and grow your own.

Yet in the developed world, especially the breadbasket nations such as the US, Canada, and other food-exporting countries, the food network may be one of the last system to fail during energy descent. In developing a wise post-Peak strategy, assessing relative risks is critical. Devoting large amounts of time and resources to events that are less likely leaves us unprepared for more probable difficulties. I don’t want to discourage anyone from growing food — I’m a serious gardener myself and could list dozens of excellent reasons for doing it. But I think there are many reasons not to be focusing primarily on food as the system most likely to fail. This isn’t to say that industrial, oil-based agriculture is invulnerable, let alone sustainable. And we may see temporary shortages of specific foods. But there are many reasons why our fears of a food collapse—particularly when they lead us to a go-it-alone, grow-your-own response—may be distracting us from focusing on more immediate and likely risks.

Officials in Three States Pin Water Woes on Gas Drilling Norma Fiorentino's drinking water well was a time bomb. For weeks, workers in her small northeastern Pennsylvania town had been plumbing natural gas deposits from a drilling rig a few hundred yards away. They cracked the earth and pumped in fluids to force the gas out. Somehow, stray gas worked into tiny crevasses in the rock, leaking upward into the aquifer and slipping quietly into Fiorentino's well. Then, according to the state's working theory, a motorized pump turned on in her well house, flicked a spark and caused a New Year's morning blast that tossed aside a concrete slab weighing several thousand pounds.

...Dimock, the poverty-stricken enclave where Fiorentino lives, is ground zero for drilling the Marcellus Shale, a prized deposit of natural gas that is increasingly touted as one of the country's most abundant and cleanest alternatives to oil. The drilling here -- as in other parts of the nation -- is supposed to be a boon, bringing much-needed jobs and millions of dollars in royalties to cash-strapped homeowners.

But a string of documented cases of gas escaping into drinking water -- not just in Pennsylvania but across North America -- is raising new concerns about the hidden costs of this economic tide and strengthening arguments across the country that drilling can put drinking water at risk.

Exxon Has Biggest Profit Drop in 5 Years as Oil Falls (Bloomberg) -- Exxon Mobil Corp., the world’s largest company by market value, posted its lowest profit in more than five years after the global recession sapped energy demand, pulling down oil and gasoline prices.

Net income dropped 58 percent to $4.55 billion, or 92 cents a share, from $10.9 billion, or $2.02, a year earlier, Irving, Texas-based Exxon Mobil said today in a statement. Per-share profit was 3 cents lower than the average of analyst estimates compiled by Bloomberg. The earnings decline was Exxon Mobil’s biggest since 2002.

Oil earnings resilient despite oil price collapse LONDON (Reuters) - The oil and gas industry showed resilience to a collapse in crude prices, with most producers and service companies reporting better-than-expected profits on Thursday, leaving only Exxon Mobil (XOM.N) to disappoint.

Iraq's navy step up to protect oil exports US and UK forces today handed over to the Iraqi navy the responsibility for protecting one of the country's crucial floating oil export terminals.

UK sees new role in Iraq oil play The UK wants to get involved in protecting oil supplies from Iraq after its combat role there comes to an end, Prime Minister Gordon Brown said today.

Oil and the lucky country Australia has a reputation as being the “lucky country”. I am a firm believer that “luck” is simply where preparation meets opportunity. In other words, being lucky is no accident. If we are to remain the “lucky country” however, we need to adapt as circumstances change. Nowhere is this more pertinent than in adapting to Australia’s future oil supply.

Before we start considering this issue, it is vitally important to understand why energy is so important to our economy. Energy is important because it allows us to do work. Work is important because it is the basis of all economic activity. So the more energy we have, the more work that can be done and the greater the level of economic activity. If we continue to expand the amount of energy that is available then so too will the level of economic activity, resulting in what we call growth.

Of course, the opposite situation is also true. If the available energy declines, the amount of work that can be done declines as does economic activity. The result is economic contraction or what is commonly called a recession or depression.

Monbiot: The media laps up fake controversy over climate change Proof of paid-for climate denial at the Global Climate Coalition comes as no surprise, but it is no less depressing for that.

Chrysler to file for bankruptcy NEW YORK (CNNMoney.com) -- Chrysler LLC is going to file for bankruptcy, an administration official confirmed to CNN Thursday.

The filing comes after some of the company's smaller lenders refused a Treasury Department demand to reduce the amount of money the troubled automaker owed them.

Chrysler officials had no comment on the bankruptcy report. The company faces a Thursday deadline from the Treasury Department to reach deals with creditors who had loaned the company about $7 billion.

But the filing will not mean the halt of operations or liquidation for the troubled 85-year old automaker. Instead, the administration expects to use the bankruptcy process to join Chrysler with Italian automaker Fiat.

U.S. auto sales may have hit bottom, some experts say DETROIT — There are early signs auto sales may have hit bottom in the first quarter, industry leaders say, and even could recover in the second half if the government encourages car buying.

But experts such as Ford Motor CEO Alan Mulally also warn that optimism could turn to panic if major auto suppliers collapse.

"Clearly, the health of the supply base is the most critical issue as the government helps GM and Chrysler restructure," Mulally said in a conference call last week on Ford's first-quarter earnings.

PEMEX implements emergency plan to avoid swine flu CIUDAD DEL CARMEN, CAMPECHE: Mexican state oil company Petroleos Mexicanos (PEMEX) said that there are no cases of workers infected with swine flu on its offshore platforms and facilities. However, PEMEX has initiated its Plan for Health Emergencies in Sonda de Campeche and is implementing all medical recommendations of Mexico's federal government to avoid an outbreak among PEMEX employees.

Nigeria: Fuel scarcity hits airlines, causes flight delays Slight flight delays were experienced by some local airlines at the Murtala Mohammed Airport, Lagos on Wednesday, as the scarcity of JET A1, also known as aviation fuel, hits airiline operators.

Securing America’s Energy Independence Through Energy Diversification This time a year ago, the United States and the world were reminded of the devastating costs of a global energy crisis. Consumers, businesses, and industry leaders alike watched helplessly as crude oil prices skyrocketed to $147 per barrel, and the domestic consequences were reminiscent of the energy crisis of the late 1970s. Consumers suffered, costs of living soared, the auto industry contracted, proponents of domestic drilling gained momentum, and global oil companies raked in record profits.

But unlike in the aftermath of the first two energy crises, innovation and efficiency—not just conservation—have now taken the spotlight as the solution. In the past, as oil prices fluctuated, so did our commitment to energy independence. Not so today. With advancements in technology, conflicts in the Middle East, and the clear threat of climate change, America’s energy interests are no longer based on swings in oil prices. Efforts to reduce oil consumption and to develop alternative energy continue to grow, and they must do so.

Weaving a new Silk Road “Power is moving from West to East,” says a top Gulf investor as the Arab world, distrustful of the US, builds wide-ranging commercial links with Asia.

For more than 1,000 years, the Silk Road that ran for 11,000km from the Mediterranean across Asia to China brought east and west together and helped lay the foundations of the modern world. The fabled network circled the planet, until, in the 16th century, it faded into history as ships were able to transport goods cheaper and faster to far-off Cathay than over the hazardous land route that crossed some of the world’s most inhospitable terrain. Now, more than five centuries later, a new Silk Road is emerging, a commercial corridor that runs from the Middle East, with Dubai as its unofficial commercial capital, to Beijing, Shanghai and Hong Kong, Mumbai, Chennai, Kuala Lumpur, Singapore and Tokyo. Trade between the Gulf and Asia is mushrooming with oil, gas, petrochemicals, water technology and banking moving east, while consumer products, - migrant labour, energy investment, and so on, is moving west. This is establishing a new strategic link that is reviving the historic commerce of the ancient caravan network across the mountains, deserts and steppes of Asia.

National Grid loses fine appeal National Grid has lost an appeal against a record fine imposed by regulator Ofgem last year for hindering the roll-out of new "smart" meters.

The Competition Appeal Tribunal said National Grid abused its dominant position through contracts with energy suppliers which imposed penalties for replacing large numbers of its meters with cheaper or more advanced devices.

Sunset High senior may have solution to energy crisis Ashutosh Patra is doing his part to find efficient ways to tackle our energy crisis.

At 17, the Sunset High School senior has designed a low-cost microbial fuel cell, which produces electricity and forms clean water while treating wastewater in the process.

The fuel for the entire process is bacteria found in wastewater.

A potential breakthrough in harnessing the sun's energy New solar thermal technology overcomes a major challenge facing solar power – how to store the sun's heat for use at night or on a rainy day.

Scythe festival I first bought a scythe after meeting a smallholder who told me he'd raced to neighbouring farmers to mow identical areas of grass. He used a scythe, they used strimmers - and he won.

Climate crunch: A burden beyond bearing

In 2007, environmental writer Bill McKibben approached climate scientist James Hansen and asked him what atmospheric concentration of carbon dioxide could be considered safe. Hansen's reaction: "I don't know, but I'll get back to you."

After he had mulled it over, Hansen started to suspect that he and many other scientists had underestimated the long-term effects of greenhouse warming.

To meet climate goal, cut fossil fuels use: study PARIS (AFP) – Meeting a widely-supported goal to tackle global warming means that humanity will be able to burn less than a quarter of the proven reserves of fossil fuels by 2050, a study released on Wednesday said.

The paper, published by the British journal Nature, implies only a revolution in energy use can achieve the aim of limiting warming to less than two degrees Celsius (3.8 degrees Fahrenheit) above pre-industrial levels.

U.S. oil refineries a tough sell in a recession NEW YORK (Reuters) - U.S. oil companies may need to start pulling their unwanted refineries off the auction block if they want to avoid selling into the worst market for energy assets in more than six years.

The gloomy market is bad news for companies seeking to shrink their exposure to weak fuel demand in the recession-hit United States, but presents an opportunity for upstarts and national oil firms hoping to expand into a recovery.

"Clearly, the sellers are selling into what can only be called a distressed market," said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut.

Power sector worries slash Gazprom 2008 profit MOSCOW (Reuters) - Russian gas export monopoly Gazprom reported profits below expectations on Wednesday, reporting over $1 billion in writedowns as it braced for a slowdown in its key domestic power generation market.

"The negative macroeconomic background characterised by the slump in global oil prices in the second half of 2008 and an ongoing decrease in demand for fuel in export and domestic markets will have a significant impact on the group's financial results in 2009," Gazprom said in a statement.

Royal Dutch Shell's profits fall 58pc on oil price slide Royal Dutch Shell's profits more than halved in the first quarter as oil prices tumbled, forcing the energy group to increase its debt to support both the dividend and its investment programme.

Despite the 58pc fall in profits to $3.3bn on a current cost of supplies basis, which takes into account changes in the value of oil and distillate inventories, Shell beat consensus forecasts of $2.6bn. The group's performance for the three months to March reflected the oil price, which averaged $43.20 over the period compared with $97.86 in the first quarter of 2008.

Indian producers miss output target Indian upstream players missed the country's crude production target by almost 7% for the financial year ended 31 March, the Ministry of Petroleum & Natural Gas said.

In a statement released today, the ministry said oil companies in the country produced 33.5 million tonnes of crude oil from April 2008 to March 2009, with an almost 14% dip in production for March this year.

Woodside’s Vincent Oil Field to Restart By End-June (Bloomberg) -- Woodside Petroleum Ltd., Australia’s second-biggest oil and gas producer, expects to resume production at its fire-damaged Vincent oil project by the end of June, subject to regulatory approval.

Woodside will lose about 500,000 barrels of oil a month of output while the field off the northwest coast is shut down, the Perth-based company said today in a statement to the Australian stock exchange.

Shell CEO Expects to Cut Jobs This Year to Lower Costs, FT Says (Bloomberg) -- Royal Dutch Shell Plc Chief Executive Officer Jeroen van der Veer expects to cut jobs this year as the company reduces costs in response to lower oil prices, the Financial Times reported.

Iran: We Can Cope with US Fuel Trade Sanctions (IsraelNN.com) Iran would find gasoline supplies even if the United States imposes sanctions targeting companies that ship fuel to the Islamic Republic, a senior Iranian oil official said on Thursday.

Can China demand fuel energy majors' profits? With oil prices having more than halved from a year ago, the key question for investors in China energy is whether a recovery in China's fuel demand can offset that decline in crude prices?

World Oil Snapshot: Big Picture and Investable Advice As you can see from this chart, Saudi increase/decrease in oil production moves the total OPEC output almost barrel for barrel, moderating supply and demand fluctuations to accommodate buyers and to facilitate rolling supply agreements -- which explains why the US turns a blind eye to Saudi political repression and treats the Kingdom as a military ally. Here's a list of the weapons we sold and a recap of US strategic involvement.

Left to their own devices, the doofus Saudis would have collapsed Ghawar ten years ago. It's kept alive by Western engineers led by Dick Cheney's Halliburton (HAL). That's my first actionable stock pick at any price you like. I agree with Matthew Simmons that the Saudi reserves are in decline. All the more reason to buy and hold Halliburton.

Investors able to prop up $50 oil, for now Dietz argues one of two things has to occur: either oil demand has to increase or the price of oil has to fall. Dietz has calculated that the price of oil will fall, and is short oil, with numerous monthly contracts. He expects oil to retest lows below $40 by mid-year. Or as he puts it, "Reality will reappear soon."

Veteran oil analyst Matt Simmons, founder of Simmons & Co., a Houston-based investment bank, holds a different view. Simmons argues oil's price decline from record-highs has taken many oil fields out of production. That deceased production, plus aging oil fields and the credit crunch's impact on oil exploration, are likely to lead to a spike in prices, after both the U.S. and global economies resume growing. With the above in mind, investors seeking to "get ahead of the pack" or anticipate the economic recovery, are positioning themselves in oil now, which is boosting its price above where it would be, given current, relatively light demand conditions.

Gazprom may pre-pay Ukraine for gas transit MOSCOW, April 29 (RIA Novosti) - Russia could pay Ukraine in advance for the transit of Russian gas to enable Ukraine's Naftogaz to pay for Russian gas supplies, a source in the Russian delegation said Wednesday.

Advance payments "will enable Naftogaz of Ukraine to pay for April gas supplies," the source said.

Hyundai Heavy 1st-quarter net profit gains SEOUL, South Korea (AP) -- Hyundai Heavy Industries, the world's largest shipbuilder, reported a 12.7 percent rise in first quarter net profit on foreign exchange gains, but in a sign of tough times said it hasn't recieved a single new order in more than six months.

Petroleum Marketers Respond to Costco's Attempt To Settle 'Fair Fuel' Lawsuit ARLINGTON, Va. – When Costco last week agreed to settle a lawsuit over the sale of "hot gasoline" by installing automatic temperature compensation (ATC) equipment at the pump, the Consumer Watchdog group applauded the move. Other players in the gasoline industry, however, made a few other gestures.

12 slain in shooting at Azerbaijan oil academy BAKU, Azerbaijan – A gunman opened fire at Azerbaijan's prestigious oil industry academy on Thursday, killing 12 people and wounding 13 before turning the gun on himself, the government said.

Time to face the energy reality Imagine a world in which oil production is declining, and prices are rising with no end in sight. Sooner or later, that world will be a reality. Peak oil is the point at which 50 percent of the world's oil - the easiest 50 percent to get to - has been extracted. From that point onward, production will decline while prices rise. Almost no one disputes that peak oil is coming (if we haven't reached it yet). The only questions are how soon it will hit, and how painful it will be for society.

BLM, Forest Service sued over air pollution in NM ALBUQUERQUE, N.M. – Environmentalists claim in a lawsuit that federal agencies violated the law by approving plans that would expand oil and gas development in New Mexico's San Juan Basin — one of the nation's largest natural gas fields.

EPA raids Ill. city accused of using tainted water CRESTWOOD, Ill. – Federal agents raided a Chicago suburb's government offices Wednesday to look for evidence of any crimes related to allegations the village knowingly drew drinking water from a tainted well for decades.

Energy Sec. announces $193M for energy research GOLDEN, Colo. – The primary U.S. lab for renewable energy will receive $110 million in federal stimulus funds and another $83 million will go toward wind energy and other alternative power and efficiency projects, Energy Secretary Steven Chu said Wednesday.

"Wind energy will be one of the most important contributors to meeting President Obama's target of generating 10 percent of our electricity from renewable sources by 2012," Chu said.

Also on the administration's priorty list is making buildings more energy efficient.

French nuclear power plant evacuated in bomb alert PARIS (Reuters) – A nuclear power station at Chinon in central France was evacuated on Thursday after a phone call warning of a bomb, power supplier EDF said.

EDF said the anonymous phone call was made at 0355 GMT and that, while searches continued, the core areas of the plant had been secured.

The nuclear plant was still functioning, EDF added.

Tokyo Electric Loss Exceeds Estimates on Cost of Reactor Repair (Bloomberg) -- Tokyo Electric Power Co., Asia’s biggest utility, posted double the loss analysts had expected after it took a charge for repairing the world’s biggest nuclear plant that was shut after an earthquake in July 2007.

Three nuclear power sites bought Three nuclear power sites have been bought by European energy firms, the Department of Energy and Climate Change (DECC) has said.

Brazil slave labor complaints rise RIO DE JANEIRO – Reports of debt slavery reached record numbers in Brazil last year, and most of the cases were connected to the nation's booming sugarcane ethanol sector, according to a report released Wednesday by a watchdog group.

The report from the Catholic Land Pastoral, indicated there were 280 cases debt slavery reported in 2008, a 6 percent increase over 2007.

The report — relying on government data — also showed that 36 percent of those cases were linked to sugarcane production, which drives Brazil's much-lauded production of ethanol.

Debt slavery is common in Brazil's Amazon, where poor laborers are lured to remote spots where they rack up debts to plantation owners who charge exorbitant prices for everything from food to transportation and force the workers to sleep in cramped quarters.

Warming up to Sunshine It's a sign of the times. Once considered a niche technology embraced by the most eco-conscious consumers, solar thermal hot-water systems are now seen as an economical way to reduce the use of natural gas and electricity by extracting clean energy from the sun.

The systems, which range in price from $6,000 to $9,000 installed, don't produce electricity like their photovoltaic cousins. Instead, they use sunlight to preheat cold water before it enters the hot-water tank in your basement. The more heated water you get from the sun, the less natural gas or electricity you consume.

What does living 'green' look like? By this point, we all know we need to do something about climate change, but will switching lightbulbs or hauling groceries in a hemp sack really stop the Arctic meltdown? Sure, the Prius is kind of sexy, at least when Cameron Diaz drives it, but hey, the family SUV is paid off, and that big gas-guzzler feels safe. Lowering the thermostat makes sense — you cut heating bills and trim your carbon footprint. But just one long plane trip more than cancels out the carbon savings you achieved by freezing all winter.

Report: Shoreline at risk of global warming flood A new report by the state agency responsible for protecting the San Francisco Bay shows thousands of acres of shoreline may be in danger of flooding in coming decades if some climate change predictions prove correct.

The April 7 draft report of the San Francisco Bay Conservation and Development Commission includes maps of the Bay shoreline showing broad swaths of low-lying areas likely to be flooded by mid-century, and even greater areas by 2100, by rising sea levels due to global warming.

From Smokestacks to Your Tank IF the government regulates carbon dioxide emissions, power plants and other factories will probably start removing CO2 from their smokestacks and will have to pay to get rid of it. The conventional wisdom is that it will be sequestered underground.

But one audacious concept is to recycle the carbon by turning it into liquid hydrocarbon fuels.

Canada Plans Clampdown on Coal-Powered Plants, Globe Reports (Bloomberg) -- Canada plans to phase out traditional coal power for its electrical-generation industry as it seeks to lower greenhouse-gas emissions, the Globe and Mail reported.

Any new coal-powered plants would have to include technology to capture the emissions and inject them underground for permanent storage, the newspaper said today, citing an interview with Environment Minister Jim Prentice.

Soot new culprit in Arctic's rapid melt Greenhouse gases may not be the only reason the Arctic is thawing so rapidly.

A report released yesterday at an international meeting in Norway says scientists have discovered a new factor behind the surprisingly rapid meltdown – so-called "black carbon," otherwise known as soot.

Timeline: Earth's Precarious Future Humans will face widespread water shortages. Famine and disease will increase. Earth’s landscape will transform radically, with a quarter of plants and animals at risk of extinction.

While putting specific dates on these traumatic potential events is challenging, this timeline paints the big picture and details Earth's future based on several recent studies and the longer scientific version of the IPCC report. This timeline is an updated version of one first published by LiveScience in 2007.

Climate scenarios 'being realised' The worst-case scenarios on climate change envisaged by the UN two years ago are already being realised, say scientists at an international meeting.

In a statement in Copenhagen on their six key messages to political leaders, they say there is a increasing risk of abrupt or irreversible climate shifts.

Hit the brakes hard There is a climate splash in Nature this week, including a cover showing a tera-tonne weight, presumably meant to be made of carbon (could it be graphite?), dangling by a thread over the planet, and containing two new articles (Allen et al and Meinshausen et al), a "News & Views" piece written by two of us, and a couple commentaries urging us to “prepare to adapt to at least 4° C” and to think about what the worst case scenario (at 1000 ppm CO2) might look like.

At the heart of it are the two papers which calculate the odds of exceeding a predefined threshold of 2°C as a function of CO2 emissions. Both find that the most directly relevant quantity is the total amount of CO2 ultimately released, rather than a target atmospheric CO2 concentration or emission rate. This is an extremely useful result, giving us a clear statement of how our policy goals should be framed. We have a total emission quota; if we keep going now, we will have to cut back more quickly later.

'Safe' climate means 'no to coal' About three-quarters of the world's fossil fuel reserves must be left unused if society is to avoid dangerous climate change, scientists warn.

Climate countdown: Half a trillion tonnes of carbon left to burn The world has already burned half the fossil fuels necessary to bring about a catastrophic 2C rise in average global temperature, scientists revealed today.

The experts say about half a trillion tonnes of carbon have been consumed since the industrial revolution. To prevent a 2C rise, they say, the total burnt must be kept to below a trillion tonnes. On current rates, that figure will be reached in 40 years.

Catastrophic Climate Future: Are We That Stupid? Until the economic downturn late last year, actual emissions have been higher than those in the IPCC scenario. So without any mitigation, "that's the track we're on now," Schneider told LiveScience.

Schneider doesn't think emissions will continue on this path, however: "I don't think the world is going to be that stupid for most of the century," he said.

Eventually, as we see more of the effects of warming, Schneider thinks that people will be galvanized into action and begin implementing cleaner technologies and cutting emissions.

This is a guest post by Liz McLellan. Liz is the builder of hyperlocavore.com a free yard sharing community. After 25 years in the tech field as a user interface specialist and web strategist, Liz moved to the country. She describes herself as farm nerd. She likes to spend her time between gardening, geeking out and community building. Liz started hyperlocavore.com to encourage people to grow food with their friends, family and neighbors in yard sharing groups to build community and food security close to home. She's blogging about the experience of building the site, the community and all her about growing food and tending her beasties. (you can e-mail her hyperlocavore at gmail and tweet her @hyperlocavore...don't forget you can tweet us at @theoildrum !)

“Whatever you can do or dream you can, begin it. Boldness has genius, power and magic in it!”
— Johann Wolfgang von Goethe

One of the most useful things I have ever learned in my life is that the most effective way to deal with worry and anxiety is to act on those things in your life that you can control, and leave the rest up to the Universe. Some call it the “Serenity Prayer.” Whatever you believe in or do not believe in, knowing just what you can control in your life and what you cannot is the key to your joy. This much I know.

Everyday we are presented with immense immanent rolling overlapping catastrophes, environmental devastation, societal malaise and violence, running out of the stuff that we are told underpins our every creature comfort - oil. All of these things are true. That hand basket you’ve heard so much about, we riding in it!

How do we “carry on”, as the Brits used to say. Well, I’m not at all interested in “carrying on” actually. Nose down, joy in check, plodding and miserable. I want to thrive. I was raised with mighty high expectations of what this life can be, and I’m not giving those expectations up. I want to reach the top of Maslow’s heirarchy of needs. I want to love and live well. And I want to eat REALLY well. I got used to that in the 1990’s.

Well, first I would like to suggest some humility, for many on the planet, this rolling crisis has been their daily experience for as long as they have lived. It is nothing new. Check in with yourself. What are you grateful for? What have you been given in life by your community, your family, your beloveds, your friends and your neighbors, by this Earth? You can read this. There must be someone who taught you to read. Take a moment. Sit with your gratitude.

That’s where I began when I built hyperlocavore.com - a free yard sharing community, sitting with gratitude. I had just been laid off. It was April. I had been a tech strategy person at a 35 year old sustainability non-profit that had been fighting the good fight as long as I had been on the planet. I took an inventory…

OK. Stop. Honestly? I can’t lie. First, I felt terror. Then, blind rage with a dollop of total panic. Boiling blood, fist shaking, laying curses on all who had done me wrong - all that. That lasted for a few months, if I tell the truth. Then there was a substantial period of pouting and just feeling so sad for myself. My poor pitiful sorry self. That got old really fast. I bore easily. And I got bored with myself behaving that way, pretty quickly.

When I moved on, it was via gratitude. Sitting with and contemplating all that I was and am grateful for, after all the crying, bargaining and bemoaning had subsided. What did I have, well besides the sweatpants I had been wearing for a few weeks? I am literate and reasonably intelligent, if broke. I have knowledge that people can band together and build amazing fantastical giant things, cities even, because I’ve been part of a community that does that for more than a decade now. I speak of the Burning Man festival and year round astounding creative beautiful community made of doers. I believe I write well enough.

And I have an good idea that has been bugging me since I was about 5. I used to look at the inside of city blocks in San Francisco and wonder, why the heck were the yards all fenced off, in the middle and mostly unused. Why not, I thought way back then, tear those fences down and build a garden full of fruit trees, nut trees and veggie patches? Why don’t people grow food there?

I am grateful that I grew up in the Silicon Valley, a place that fed my voracious curiousity and kept me tinkering. I am grateful for growing up in the Bay Area, a place absolutely crammed with practical minded revolutionaries and doing daring dreamers. The rest of the country seems to think the only thing we gave them was tie-dye and 4 foot bongs, but they would be mistaken. The Bay Area is a place that teaches everyone “Why Not?” A society of people that does not let you just talk about a good idea without telling you, in chorus, to “DO IT!” It is tough to get away with a lot moaning and jaw flapping in a place like that.

Yard sharing is all about being grateful for what you have, not anxious about what you don’t. It’s about responding practically to chaos, to the known unknowns and the unknown unknowns. Never in all my life did I think I would quote Donald Rumsfeld but, there you are. These are strange days, indeed!

You do know these things for sure. You know you need healthy food and you know you need it cheap. So do all your friends and neighbors, the members of your faith communities, so does your slacker posse. So does your family. Doing for yourself, deepening your food security and your community resilience is the most direct thing you can do to bring your rational and general anxiety down to a manageable size. Sit down to a meal that you grew yourself from seeds which you saved, bread you baked, eggs you gathered, and you will know in your bones that you and yours will be alright.

We get new people signing up to the social network every single day, practical people looking to get down to business. I built the site because lots of people don’t have all resources or skills they need to grow their own. Some of us lack time, some lack space, some have physical limitations, or lack certain tools. Some have so little experience growing things that the task seems overwhelming. Where do you start? All of these issues can be minimized in a well gathered and tended yard sharing group, a healthy community.

Some folks are linking up yards and creating mini suburban farm/CSAs, like Kipp Nash in Boulder, Colorado. Each family gets a weekly box of the freshest produce and the rest he sells at the farmers market. If this looks like the job for you, come on by the site and find some farm clients and yards to tend! Kipp’s got eight yards he is farming. Will you ever look at a lawn again in the same way? When I see a sad lone Honey-Doer on a loud riding mower all I see is wasted space, wasted water and meaningless work.

Green thumbs will appear and share the secrets of plant whispering, food waste will be gathered from multiple households and make a formidable sweet smelling compost pile. Friends will band together to buy 3 year old apple trees, for a lifetime of apples. Abuelitas will pass on magic recipes and kids will coax worms to party in warm living soil. Their curiosity will catch fire! Streets will become neighborhoods, neighbors will become friends. No one will feel alone, frozen or powerless, because no one will be alone, frozen or powerless. Potlucks will abound! All will eat better.

This is the future we see, us hyperlocavores. We know it’s coming, because we’re building it right now. Who has time to fret? Pass the cornbread and fresh salsa. Look someone brought the boom box!

Our great great grandparents used to have victory gardens but, they also had rent parties. Londoners danced in underground tunnels as fire came down from the sky. They stayed put. They raised rent, barns and kids together. They didn’t just survive, many of them thrived. I hope we will all use this compound crisis as a reminder that the hard times are very often the very best of times. Take note of what you have, be grateful for your loved ones. Take note of those around you that may feel alone. They are not and you are not, alone.

We each of us every moment of the day will choose our responses to what’s happening. Some will choose to go numb, watch more TV, play more video games, surf mindlessly. Some will chose hate, rage, to nurse grievances and will choose take their pain out on the people around them, the people they love most in this world.

Will you choose another day of fear, of distrust, anger or powerlessness, of envy and isolation or will you choose the plentiful garden, the neighborhood, real community, real food and pleasure?

Yes.

Pleasure.

“There’s only two things that money can’t buy,
That’s true love and homegrown tomatoes!”

- Guy Clark
I would add ‘real community’ to that list of things money can’t buy.
I choose real community, dancing in the chaos, pleasure, delectable food and the edible and musical neighborhood.
Happy Digging!

When discussions arise about Climate Change, and the possibility that carbon dioxide and the other greenhouse gases are responsible for the rise in global temperatures, one prevailing argument is that “we cannot afford to take the risk of the AGW argument being right, without doing something.” However, in that discussion, there is rarely any mention of possible negative consequences to mitigating against increased levels of carbon dioxide in the atmosphere. The only positions mentioned are frequently the projections of dramatic rises in sea levels, the promise of worse storms, droughts and climate conditions and other projected severe costs of inaction. The costs of the actions themselves are not addressed, and the implications are that the world will be a better place if some of the current trends in Climate Change are, if nothing further, stopped from progressing further.

But there are costs to the required changes in lifestyle that a reduction in carbon dioxide production will require, and those potential impacts are rarely spelled out to the public, or to the politicians who must enact the legislation to put new laws in place. However politicians, particularly in those districts that are likely to be impacted by the changes in regulations, are already showing some sensitivity to the potential negative aspects of “cap and trade” and so it might be worth exploring the topic in a little more depth.

The Energy Summit in Columbia last week allowed some of the utility companies to spell out the levels of cost that will be incurred if cap and trade legislation is enacted, based on a projected cost for the allowance to generate a ton of carbon dioxide. But they largely built their discussion around the price of that portion of the electricity that they will still be allowed to generate. A cap and trade system, however, comes in two parts. The first part is to look at the overall production of carbon dioxide, say 6 billion tons/year, where the program cuts this back by, say 500 million tons a year. (This is the reduction in the capacity to produce or the “cap.”) For the sake of the following discussion I will assume that 1 ton of coal produces very roughly 3 tons of carbon dioxide to make the arithmetic easier.

The first argument of those who look at this problem of a reduced supply is to suggest that the gap can be met by improving efficiency of electrical use, and conservation. However the implementation of a cap and trade policy is not predicated on that efficiency change happening, but it will occur as a separate event. And Jevons Paradox will tell you that “improving energy efficiency increases energy consumption.” So that the savings in power required are unlikely to be realized.

Which means that if the utilities are restricted in the amount of power that they can generate with carbon-producing strategies, then they must have alternate supplies in place. Theoretically that may well be the case. The number of states that are including a “sustainable source” quotient in their mandated supplies is steadily growing. However, as Montana, for example, is discovering there may be a difference between the targets and the practical realities. As credit has become tight, available funds for new farms are becoming harder to raise, and without a perceived increase in demand, it is harder to justify a new investment in plant when the old coal plant is still producing at a relatively low cost. And without the lead time being used to produce the new energy sources that will be needed, when the time comes to flip that switch, it may not yet be connected.

The problem actually is a little worse that this. Because most of the coal-fired power plants are quite old, and while maintained to continue to produce power, they are less efficient and more polluting that the more modern plants that are planned to replace them. But with the anticipated change in regulation now that EPA has ruled on carbon dioxide, almost all the originally about 200 planned new coal-fired power plants are holding back on commitments and roughly half have cancelled or indefinitely postponed their planned construction. Thus the increased supply of power from new plants may not appear.

There are two additional thoughts to consider. The first is the proposed restriction on emissions from these new plants:
The (Waxman – Markey) proposal unabashedly bans new coal-fired electric plants. In 2009 new coal-fueled electric plants are limited to 1100 pounds of carbon dioxide per megawatt-hour (MWh) and 800 pounds after 2020. Present fossil-fuel electric plants emit the following pounds of CO2 per MWh: 2100 for coal, 1900 for oil, and 1300 for natural gas. . . . The bill that includes "security" in its title limits our plentiful secure coal supply to discharges of about one-half that allowed for oil and natural gas.

The second is that some parts of the country do not have the ability to tap into the wind and solar resources that are currently being suggested as the solution to the problem. (h/t Robert Rapier).

Productive wind is only available in a limited number of states and their regions, and similarly solar power cannot be relied on in a North-Eastern Winter. One cannot legislate an alternative technology that does not yet exist to fill in the gaps between what will be allowed from the power plants of yesterday, and the demands that a rebounding economy may place upon them. Mandating that the older suppliers of power close, before the new plants to replace them are installed will have significant consequences to the available jobs that can be supported, if the factories and industrial base begin to lose the reliability of the power sources that they have today.

Even, however, if they find some way of meeting the target for the renewable portion of their portfolio, the utilities won’t be out of the wood. Because the purchase of the allocation for the carbon dioxide they do admit will also bring additional cost. As noted at the Energy Summit a price of $50 per ton of carbon allocation would likely double electric bills in Missouri. If the price per allocation ton was raised to $200 per ton (which has been suggested as being necessary to support some alternate energy choices) this would raise the cost by a factor of five (i.e. a current electric bill of $200 would rise to $1,000 per month). In much the same way as Secretary Chu recognized at the EIA Conference that increases in the cost of oil contributed to the severity of the recession, one can equally imagine that a similar effect will be felt with an equivalent rise in the cost of electricity.

The current path forward, with a hesitation in construction of new power plants holds the risk that the United States will not have the power that it needs in the future to match industrial and domestic demands. In those cases it is often industry that is the first to see the cutbacks in supply when load shedding is needed. But the resulting drop in production, and international competitiveness, may well damage or destroy the recovering economy after this recession comes to an end. That too is a risk that should be protected against.

Tunnel's cost may fool us all A professor at Oxford University in England has done a compelling series of studies trying to get at why big public-works projects such as bridges, tunnels and light-rail systems almost always turn out to be far more costly than estimated.

"It cannot be explained by error," sums up one of his papers, matter-of-factly. "It is best explained by strategic misrepresentation — that is, lying."

The professor, Bent Flyvbjerg (pronounced flew-byair), has become a flash point in civic-planning circles. Some think he's a rock star; others say his analysis is too cynical.

It started seven years ago, when he published the first large study of cost overruns in 258 mega-transportation projects. He found that nine out of 10 came in over budget, and that the average cost overrun was nearly 30 percent. Rail systems had an average cost escalation of 45 percent.

Shell First-Quarter Oil, Gas Production Falls 3.6% (Bloomberg) -- Royal Dutch Shell Plc, Europe’s biggest oil company, said first-quarter crude and natural-gas production fell 3.6 percent because of reduced Nigerian output and OPEC restrictions.

Total output, including bitumen from oil sands, declined to 3.396 million barrels of oil equivalent a day from 3.522 million barrels a day a year earlier, The Hague-based Shell said today in a statement. Extraction in Nigeria fell about 90,000 barrels a day in the period because of security issues, Chief Financial Officer Peter Voser said today.

“The main item was the downtime of the Soku gas processing plant” in Nigeria, Voser said on a conference call with reporters. He declined to comment on when the unit will resume operations. “Pipelines have been damaged by significant illegal bunkering of condensate.”

Ont. government backs down on plan to require energy audit on home sales Ontario Energy Minister George Smitherman has backed down from a plan to require energy audits each time a house is sold.

A new amendment to the province's Green Energy Act will allow home buyers to waive their right to the $300 audit, as long as they do so in writing.

New England grid says power supplies OK for summer NEW YORK (Reuters) - Power grid operator ISO New England said Wednesday the six-state region should have adequate electric resources to meet consumer demand this summer.

The ISO also said current economic conditions will likely keep peak power demand relatively unchanged from 2008 levels.

China low-carbon path hard but doable - study Beijing - China must swiftly decouple its rapid economic growth from rising carbon dioxide emissions for global greenhouse gas levels to stay manageable, the authors of a new study said, urging sweeping support to help that transition.

The study from Britain's Tyndall Centre for Climate Change Research by Tao Wang and Jim Watson finds China can transform into a "low-carbon economy" with the right mix of clean energy, carbon storage technology and development policies.

But at the release of the report to officials and experts in Beijing on Wednesday, Wang said the task of turning the world's biggest greenhouse gas emitter into a green economy will be difficult, even in the easier scenarios.

‘Failing State’ Yemen May Send Terror to Gulf as Economy Fades Yemen, the poorest Arab nation, is seeing annual tourist numbers dwindle to the thousands from 100,000 two decades ago because of worsening security. This is ending government hopes that its historical landmarks, including the 3,000-year-old Queen of Sheba temple and four United Nations World Heritage sites, can generate revenue and jobs to diversify the oil- dominated economy.

The country’s 2.8 billion barrels of oil reserves, which fund 70 percent of the national budget, are forecast by the government to run out over the next decade. With little foreign aid, economic prospects are shrinking for a population that is expected to double by 2030 to 40 million.

The threat is rising of social unrest that could strengthen al-Qaeda as it seeks to use Yemen as a base to destabilize neighboring Saudi Arabia, the world’s largest exporter of crude. Somalia, across the Gulf of Aden, hasn’t had a functioning central government since 1991 and has become a breeding ground for pirates who attack shipping lanes.

Argentina’s energy sector under “persistent productive decadence” Since 2005 Argentina has consumed 25% of its natural gas reserves, 15% of oil reserves and the Mar Argentino (South Atlantic) which has “great possibilities remains virtually untouched”, reads a critical report on the outlook for the Argentine energy sector compiled by eight former Energy Secretaries from different governments.

Nigeria's dependence on oil, cause of energy crisis—Minister ENUGU—MINISTER of Power, Dr Rilwan Babalola has blamed the lingering energy crisis that has seriously stunted economic growth in the country on what he described as the over centralisation of the nation’s energy supply network and total dependence on crude oil.

He also announced Federal Government’s desire to diversify electricity supply in the country, saying this necessitated the development of coal-fired power plants and the revitalization of the country’s coal mining industry to provide enough fuel for power generation.

Oil Sands Cos Still Hesitate on Projects Despite Falling Costs Costs in Canada's pricey oil sands are starting to fall but nervous developers are still leery of giving the green light to stalled projects.

N.Y. Natural Gas Aims for Bottom Near $2.75: Technical Analysis (Bloomberg) -- Natural gas futures will probably tumble to a bottom near $2.75 per million British thermal units before rebounding, according to a technical analysis by Tom Orr, research director at Weeden & Co.

Shell, BP win from trading despite oil's collapse LONDON (Reuters) - Crude oil prices might have collapsed, but winning bets in energy trading helped Royal Dutch Shell Plc and BP Plc beat analysts' earnings forecasts this week.

Shell followed an oil industry trend of posting a sharp drop in first-quarter profit on Wednesday due to lower crude prices, but exceeded forecasts. [ID:nLS836370] A day earlier, its rival BP did the same.

"There is no doubt that the first quarter saw some very strong overall contributions from our supply and trading operations," BP's chief financial officer, Byron Grote, told analysts on Tuesday.

"It was about $500 million higher than what we would consider the normal range of quarterly volatility."

Shell says retendering some Port Arthur contracts LONDON (Reuters) - Royal Dutch Shell Plc (RDSa.L) is retendering some contracts for the expansion of its Port Arthur refinery in the U.S., but this will not lead to any delays in startup of the new capacity.

Zero return for Norway oil fund Norway's sovereign wealth fund, the oil fund, has had roughly a zero percent return on its investments in global stocks and bonds so far this year, its executive director said today.

"Markets were very weak in January, so the portfolio dropped further, but markets picked up and total returns are at around zero percent so far this year," Reuters quoted Yngve Slyngstad telling a hearing at the Norwegian parliament.

Nigeria: Fuel scarcity resurfaces as marketers ration product BARELY a week after the petroleum tanker drivers-induced fuel scarcity ended, long queues yesterday emerged at filling stations in some states of the federation. The development was, however, attributed to oil marketers rationing the products to retail outlets at the depots.

This rationing has led to drop in product allocations at both the Nigerian National Petroleum Corporation (NNPC) and independent fuel depots in Lagos and Ogun states.

Long queues were noticed at several filling stations in Lagos metropolis yesterday.

Malaysia: Appeal to use less electricity KOTA KINABALU: Worsening electricity shortage in Sabah has led to the following advice: reduce the use of air conditioners and switch off lights that are not needed for up to seven hours daily.

Sabah Electricity Sdn Bhd (SESB) is requesting consumers' cooperation in reducing consumption from 10am to 3pm and from 7pm to 9pm, as these are critical power load hours.

Re-Envisioning Electricity In The U.S. The electricity grid is a marvel of reliability, but, in many ways, a throwback to century-old technology. And for a future with more computers and gizmos of every kind — and more power from renewable sources — the grid is going to need some major work.

Congress Working to Toughen Sanctions on Iran WASHINGTON -- Congress is taking up a bipartisan proposal which would give the Obama administration more leverage over Iran by toughening economic sanctions on foreign oil and shipping firms that aid Tehran.

A group of Democrats and Republicans introduced legislation Tuesday that would give the president expanded authority to crack down on companies that export gasoline and other refined petroleum products to Iran.

Nuclear solution comes with a huge price tag COLUMBUS, Ohio — A ghost from the nuclear industry's early years has reappeared.

It is not public apprehension about safety or disposal issues this time, but the staggering cost of building nuclear reactors.

A wave of new reactors now in the works is intended to solve at least part of the nation's energy problems as it attempts to shift away from fossil fuels. But cost is likely to plague every upcoming nuclear project.

This month in Missouri the first of the next generation reactors was put on hold because of the $6 billion price tag.

Whether or not AmerenUE's Missouri reactor was a casualty of the current economic climate, the legal fight in several states shows how big the cost hurdle will be.

Companies that want to build new nuclear reactors A list of companies that have announced their intent to submit applications to the Nuclear Regulatory Commission for new plant licenses.

Pemex not affected by earthquake Mexican state-owned Pemex is operating normally despite an earthquake that hit Mexico yesterday and an outbreak of swine flu, said a company spokesman.

"We haven't seen any damage yet," said the spokesman, adding that the company is still checking for earthquake damage and it is premature to rule out any incidents.

Aramco to start H2 naphtha talks Saudi Aramco, Asia's top naphtha term supplier, will hold its July-December term negotiations with Asian buyers in London on May 11, coming at a time of weakening demand, traders said.

The last time the heavyweight supplier held talks in mid-December, the market was also struggling to emerge from its worst-ever slump due to poor Chinese demand.

Chicago area transit use jumps 9% over last 5 years, RTA says More area residents used public transit, and there was more public transit to use between 2003 and 2007, according to a Regional Transportation Authority report to be released today.

Both the number of miles of service available and the number of miles traveled by riders rose about 9 percent in those five years, the report found. The average number of annual rides taken per Chicago area resident also rose, from 69.6 in 2003 to 72.9 in 2007.

But the cost of keeping the buses and trains running rose faster than the rate of inflation, due to higher fuel, labor and health care costs. Capital funding sunk from $1.04 billion in 2007 to $345 million in 2007.

Residents unite for slice of the good life When climate change hits and oil reserves run dry, it will be business as usual in a quiet corner of North Yorkshire.

In Israel, solar power that won’t need subsidies Kvutzat Yavne, Israel - In a country that ranks among the world’s highest for average number of sunny days per year, solar energy has long been seen as a key natural resource here.

All the more fitting that on the eve of its Independence Day Israel launched what it said was the first solar farm of its kind, billed as a breakthrough that will make it affordable to reduce reliance on fossil fuels.

NASA scientist warns of climate change The effects can be seen today, Hansen said, at shrinking glacier fields and in bodies of water such as Lake Mead and Lake Powell that are at half capacity.

But Hansen isn't concerned about the hardships that global climate change may have on his life. They're almost nominal when compared with what his grandchildren will see, he said. That is why he wants mitigate the effects now and help preserve an adequate habitat for future generations.

"The Earth belongs to future generations," said Hansen, who heads NASA's Goddard Institute of Space Studies, "and we have the obligation of returning it to them in equal or better condition."

POLL - World oil demand to fall far more than thought LONDON/NEW YORK (Reuters) - World oil demand is forecast to fall this year by much more than previously expected, as growth stalls in emerging powerhouses China and India and fuel consumption declines in the developed world.

Estimates see oil growth re-emerging in 2010, but analysts remain divided about how severe this year's demand contraction will be, as the short-term global economic outlook remains clouded.

The latest Reuters poll of 11 analysts, banks and industry groups shows oil consumption will decline by an average of 1.56 million barrels per day (bpd) in 2009 to 84.10 million bpd.

Danger of having BP contractors over a barrel With oil prices stuck at less less than $50 a barrel, Tony Hayward, BP’s chief executive, is confronting perhaps the most difficult choice of his career. Should he cut the dividend and face the wrath of investors – and run the risk of losing his job – or curb the group’s spending plans at the expense of future production and growth?

Drilling slump weighs on Baker Hughes US oilfield services company Baker Hughes saw a 51% fall in first-quarter earnings as a slump in energy prices weighed heavily on drilling activity.

Vice Premier: China hopes for more oil cooperation with Kuwait China hoped to increase cooperation with Kuwait in the petroleum sector, Vice Premier Li Keqiang said Tuesday in a meeting with Kuwait's oil minister.

"We hope that our countries can expand cooperation in oil exploration, refining, processing and trade," Li told Minister Sheikh Ahmad Al-Abdullah Al-Sabah of Kuwait, one of the world's oil-producing giants.

Ukraine PM says gas tension with Russia easing (MOSCOW) - Ukrainian Prime Minister Yulia Tymoshenko on Wednesday said Kiev and Moscow had put behind them disputes over their vital energy trade, after cut-offs in January affected a swathe of EU states.

Meeting Prime Minister Vladimir Putin in Moscow, Tymoshenko said: "It is good that our cooperation is being fine-tuned.... It's good that the times when a certain confrontation was felt are becoming a thing of the past."

"The system of gas supplies in Ukraine has fully stabilized," she said.

Gazprom Fourth-Quarter Net Falls 84% to 37.5 Billion Rubles (Bloomberg) -- OAO Gazprom, Russia’s gas exporter, had net income of 37.5 billion rubles ($1.13 billion) in the fourth quarter, versus 232 billion rubles a year earlier, according to Bloomberg calculations based on full-year earnings released today.

Oil demand may take hit China's demand for oil may be dampened by the spread of swine flu, as the tourism and transportation sectors take the brunt of any possible pandemic, analysts said.

There would be further cuts in domestic fuel prices if global crude prices keep falling on fears that the spread of the epidemic could weaken global oil demand, they said.

"Cutbacks in international travel will compound drop in domestic jet fuel consumption," said Han Xiaoping, chief information officer of China5e.com, a website that tracks China's energy sector. "If the situation gets worse, non-freight public transportation such as buses and taxies will be affected, resulting in decreased oil consumption."

Sinopec Expects Higher Profit on Eased Price Controls (Bloomberg) -- China Petroleum & Chemical Corp., Asia’s biggest refiner, said profit may grow more than 50 percent in the first half after the government eased fuel-price controls and crude oil costs dropped from a record.

Oil and Gas Investor Presents 'Matt Simmons - The Webinar' on Thursday, April 30 at 10:00 a.m. CDT HOUSTON, April 28 /PRNewswire/ -- Renowned energy expert Matt Simmons will discuss the sobering state of the oil and gas industry -- from the natural gas glut to the Obama Administration's energy policy and the growing talent vacuum -- in a special Oil and Gas Investor presentation on Thursday, April 30, 10 a.m. CDT, from his remarks at the "Strategies for High Performance in Volatile Times" conference. (Note: Registration costs $100.)

The Green FDR: Obama's first 100 days make -- and may remake -- history The media just keeps missing -- or messing up -- the story of the century.

Future historians will inevitably judge all 21st-century presidents on just two issues: global warming and the clean energy transition. If the world doesn't stop catastrophic climate change -- Hell and High Water -- then all Presidents, indeed, all of us, will be seen as failures and rightfully so.

A Capitalist Solution to Climate Change and Peak Oil Amazingly half of the solution is already in place to tackle these two challenges. Half of that solution is our current market system. Over the past few years we have seen a dramatic increase in wind capacity as traditional fossil fuel source power generation has become more expensive. In the U.S. alone wind capacity rose 49.7% due to environmental awareness but mainly due to the economic factors that make renewable energy the most viable long-term energy solution. This stems from the fact that returns on oil exploration and production are falling dramatically not to mention the costs associated with importing oil and the transport energy required.

Interview: David Gard, Michigan Environmental Council Energy Program Director We're kind of in the same boat as everyone else these days, with other organizations, businesses and universities. Everybody is recognizing that we're in this period, with a lot of things up in the air. A lot of challenges we face: economically, I'm increasingly reading about peak oil, where we can no longer take for granted that we're going to have plentiful resources that we've never questioned. Especially as other questions around the world, their quality of living explodes and people are replicating the American Way of doing things around the world. These are really serious issues. The future of a group like us is leading people to understand the scope and severity of the challenges we face. The environmental movement started back in the late 1960s or 70s. Back then it was focused on things you could see: power plants and dirty cars, but that's where it needed to start. That was the front and center. But over time, I think the challenge has been once you get some of those solutions under control, the problems become more dispersed and harder to put your finger on. They all add up. The best example of that is climate change, because you can't see it, and it's got these big delays built into it. What our future holds to be really successful is to be good communicators and help people understand why this is relevant to our lives. Everyone is worried about the economy right now, and people aren't getting why the economy is wholly surrounded by the biosphere. It's all based on the resource space, the health of the air, the water resources, and all these things. All the trends are in the wrong direction. Take agriculture for instance. We've created an agriculture system that is very energy intensive. We throw all these fossil fuels into creating our food. We're depleting huge aquifers across the water table ... It's easy to ignore things like this when they're not eminent, but a lot of the trend lines are not favorable. To close that loop, people are thinking about the economy but we can't solve where we are right now and build a viable long term prosperous economy until we think about the other things and take into account and take care of the things that the others depend ... They don't factor in the whole cost all over the place. Energy prices might rise a bit, but over there, health care costs might dramatically reduce.

We don’t have an extra planet – so we must buy local Robert Wilkins, of the One Planet Worcester steering group, said: “If we went back 300 years, much of the food we ate would have been produced locally, within 20 or 30 miles. It would have been organic. It would have been seasonal.

“With cheap oil we’ve got used to having food from all over the world. The impact of such consumerism has been phenomenal and, for many people, is only just coming into focus.”

Airline jet fuel from oilseeds emits less greenhouse gas BILLINGS, Mont. — A new study says jet fuel made with the oilseed crop camelina could cut greenhouse gas emissions by up to 84% compared with jet fuel from petroleum.

The finding is expected to be used by the aviation industry as it weighs a number of alternative fuels with the potential to reduce costs and curb emissions.

Call for tougher building codes to beat climate change Björn Stigson, president of the WBCSD, said that without immediate action thousands of new buildings would be constructed without concern for energy efficiency, and millions of existing, inefficient buildings would still be standing in 2050.

“The market alone will not be able to make the necessary changes. Most building owners and occupants don't know enough and don't care enough about energy consumption, and inertia is reinforced by assumptions that costs are too high and savings too low. We are calling for a major, co-ordinated and global effort,” he said.

Oil Floods Rotterdam, Europe's Largest Port, as Demand Drops (Bloomberg) -- Rotterdam, Europe’s largest port, may be running out of space to store crude as global oil demand posts its first back-to-back annual drop in a quarter-century.

The harbor is Europe’s largest refinery center and a trading hub for refined products such as gasoline and diesel. Some ships have been diverted or are waiting outside the port until space is available, said Jeroen Kortsmit, manager for commercial affairs at Royal Dirkzwager.

“A lot of tanks are fully loaded,” Kortsmit said by phone from Rotterdam April 27. He joined the company, which provides shipping information to terminal operators around the port, 24 years ago and said he has never seen storage this full before.

Deepwater Oil Production Growth May Stagnate on Low Prices (Bloomberg) -- Crude oil output growth from deepwater areas may stagnate because current oil prices make it unprofitable to tap new deposits and large discoveries dwindle, a consultant said.

“The pace of growth will slow and then become flat for the next few years,” Michael Rodgers, a partner at PFC Energy, said in an interview at the Offshore Vessels conference in Singapore yesterday. “There were not a whole lot of large commercial discoveries in the last couple of years.”

Production from deepwater blocks grew 67 percent a year between 2005 and 2008 following discoveries off Angola and Nigeria. That beat a growth of 1.3 percent in total crude oil output during the same period.

Global deepwater oil production may peak at 7.5 million barrels a day in 2013, Rodgers said.

Shell profits plunge 62% with oil prices LONDON (AFP) – British energy group Royal Dutch Shell said Wednesday that first-quarter net profit plunged 62 percent to 3.488 billion dollars (2.645 billion euros) as oil prices slumped in an economic downturn.

"First quarter 2009 performance was affected by the weaker global economy, with a challenging upstream and downstream business environment," Chief Executive Jeroen van der Veer said in a results statement.

Cnooc’s Revenue Falls on Lower Oil Prices, Demand (Bloomberg) -- Cnooc Ltd., China’s biggest offshore oil explorer, said revenue dropped 42 percent in the first quarter because of lower oil prices and falling demand.

Sales declined to 13.95 billion yuan ($2.04 billion) from 24 billion yuan a year earlier, the company said in a statement to the Hong Kong stock exchange today. The realized oil price slumped 53 percent to $42 a barrel during the period, according to the statement.

Crude-oil processing dropped 3.3 percent in the first quarter because of declining fuel consumption, China Petroleum & Chemical Corp., the nation’s biggest refiner also known as Sinopec, said yesterday. Cnooc gets about 93 percent of its revenue from sales in China, whose economy grew at the slowest pace in almost a decade in the first three months.

Storing up a supertanker problem Oil industry participants and commentators of all creeds are forecasting prices will ultimately rise, perhaps even causing a supply squeeze, as lower prices stifle investment in future production.

Could we see a similar price spike in oil shipping prices as a result of cancelled and delayed orders? Bloomberg reports some shipowners and brokers are predicting prices could rise as soon as the second half of this year, and one of the key causes, they argue, would not be higher oil prices - which many do not expect until 2010 - but a decline in investment similar to what the oil market itself is expected to suffer.

Saudi king visits oil-producing area after unrest RIYADH (Reuters) - Saudi Arabia's King Abdullah visited the oil-producing Eastern Province on Sunday to launch development projects, following sectarian tension there among the kingdom's restive Shi'ite Muslim minority.

The visit "reflected the king's desire to have a first-hand knowledge of citizens' requirements and follow up on the progress of development projects," newspapers quoted local governor Prince Mohammed bin Fahd as saying.

More Suburbanites, Hobbyists Raise Chickens Backyard Chickens, a Web site that began to help city residents raise chickens, says its community of about 27,000 people is growing rapidly, with about 100 new members daily.

The Web site's owner, Rob Ludlow of Pleasant Hill, Calif., attributes the increased interest in raising suburban chickens to three factors: their relative ease of care as pets; increased interest in getting food from humane, local sources; and a desire by some to produce their own food in tough economic times.

Top lawmaker wants mileage-based tax on vehicles WASHINGTON (AP) — A House committee chairman said Tuesday that he wants Congress to enact a mileage-based tax on cars and trucks to pay for highway programs now rather than wait years to test the idea.

Rep. James Oberstar, D-Minn., said he believes the technology exists to implement a mileage tax. He said he sees no point in waiting years for the results of pilot programs since such a tax system is inevitable as federal gasoline tax revenues decline.

Obama's First 100 Days of Coal: A Few Honest Words, Please This much is clear: The Obama administration has ushered in a new era of democratic participation in the great energy debate, opening the door to discussions on coal and its dirty legacy for the first time in nearly a decade, and allowing the winds of change to air out Washington's coal dank corridors. No question about it: The Obama administration has clearly made great strides in the right direction to tackle the reality of climate destabilization and unchecked coal mining operations.

At the same time, it is also clear that the Obama administration does not have a road map for withdrawal from our disastrous dependence on coal, no grand plan for a regulated phase out of mountaintop removal or coal-fired plants. Instead, borrowing a page from the compromising policies of the Carter and Clinton wags, the Obama administration appears to be putting its faith in questionable regulations, albeit stricter, but still beholden to the coal industry and its inevitable crimes of extraction and indisputable impact on our children's future.

Clean coal infrastructure in U.S. estimated to cost 1 trillion:experts The cost of carbon capture and sequestration infrastructure in the United States that would include each of the coal-fired electricity plants in the country could cost over a trillion of dollars, industry experts told CBS news program "60 Minutes" in a segment that aired on Sunday.

"So, we're talking about hundreds of billions, to a trillion dollars or so, and every power plant needs to capture its greenhouse gases," Dan Kammen, a Berkeley physicist and energy said in an interview at the Basin Electric Power Co-Operative, a coal plant in North Dakota known as the only in America to capture CO2.

Study: Kan. could be exporter of renewable energy Kansas has the potential to become a major exporter of renewable energy, producing many new jobs and new tax revenue, a national study found.

Lt. Gov. Mark Parkinson and members of the American Council on Renewable Energy presented the report on Monday during a webcast. The study was by the Joint Coordinated System, a group of regional transmission operators including the Southern Power Pool, which Kansas is a part of.

Siemens Profit Beats Estimates on Cost Cuts, Energy (Bloomberg) -- Siemens AG, Europe’s largest engineering company, reported a bigger-than-expected jump in earnings after accelerating a cost-cutting program and tapping demand for transformers, turbines and medical scanners.

Economic woes may speed Asian deforestation KUALA LUMPUR/JAKARTA (Reuters) -- Growing economic pain may increasingly force consumers to turn to palm oil, one of the cheapest cooking oils, a move that could scupper nascent plans to slow deforestation in Southeast Asia.

With rising output in Indonesia, the world's biggest palm oil producer and home to the eighth largest expanse of forests, and tight land supplies in Malaysia, the world's second largest supplier, conservation's economics look even less appealing.

Report: Most Americans in areas with unhealthy air LOS ANGELES – Sixty percent of Americans live in areas with unhealthy air pollution levels, despite a growing green movement and more stringent laws aimed at improving air quality, the American Lung Association said in a report released Wednesday.

In Climate Change Debate, It's All About Jobs As House leaders launched an aggressive push on global warming legislation last week with four days of intensive hearings, the focus was squarely on jobs and the economic impact of trying to limit greenhouse gas emissions. Indeed, the deepening recession has emerged as arguably the most formidable hurdle to congressional action.

China, India Seek $200 Billion in Climate-Change Aid (Bloomberg) -- China, India and South Africa, three of the developing world’s biggest greenhouse-gas producers, said industrialized nations should contribute at least $200 billion a year to help them fight global warming.

The demand, equal to at least 0.5 percent of rich nations’ economic output, was proposed by the three countries to the United Nations, which is leading negotiations for a new climate- protection treaty. No U.S. proposal has been posted on the UN climate agency’s Web site. The deadline was April 24.

Germany Sees Hottest Weather Ever as ‘Climate Train’ Speeds Up (Bloomberg) -- Germany, Europe’s biggest economy, is experiencing the warmest weather since record-keeping began in 1890, the country’s weather agency said.

Six of the 10 warmest years on record occurred during the past decade, said Wolfgang Kusch, president of the agency. April this year, with an average temperature of 11.5 degrees Celsius (52.7 Fahrenheit), has been the warmest ever, Bild newspaper reported today, citing the agency’s statistician, Reik Schaab.

“The climate train is not only rolling along, it’s going even faster,” Kusch told reporters in Berlin yesterday, blaming higher atmospheric levels of carbon dioxide, a greenhouse gas produced by burning oil and coal. “It’s questionable whether we can limit the average global temperature increase to 2 degrees” Celsius, he said.

Some progress at U.S. climate talks WASHINGTON (Reuters) – U.S.-hosted climate talks with the world's biggest greenhouse gas polluters concluded on Tuesday with signs of progress but sizable differences as nations work toward a deal this year to fight global warming.

Al Gore calls for prompt action on melting ice OSLO – Al Gore said Tuesday the world must act quickly to slow the melting of the world's polar ice packs and glaciers before it reaches a critical rate for global warming.

"We have to act and we have to act quickly because we don't want to cross this tipping point," the Nobel peace laureate and former U.S. vice president told a meeting of foreign ministers, experts and scientists from the most affected countries.

Huge ice sheets melting faster, expert warns OSLO - The ice sheets of Greenland and Antarctica have awakened and are melting faster than expected, a leading expert told peers ahead of a conference of ministers from nations with Arctic territory.

Dorthe Dahl-Jensen, an expert with the Center for Ice and Climate at the University of Copenhagen, told the conference in the Arctic town of Tromsoe that the need for a wake-up call was genuine for the polar and glacial regions.

"Antarctica and Greenland have been sleeping until now," she said. "Now they are awakening giants."

The flow of melting ice into the oceans has picked up, and at the current pace sea levels will have risen by three feet by the end of the century, she added. The U.N. backed Intergovernmental Panel on Climate Change had earlier estimated sea levels would rise by a foot over the century.

Oil 101, by Morgan Downey, is without a doubt the most detailed and comprehensive book I have ever read on the oil industry. In fact, I am not aware that another book like this even exists. This is not an opinion piece, nor is it a peak oil book. It is a collection of factual information covering all aspects of the industry. From oil in the ground to product in the tanks (and everything in between) - this book contains everything you could ever want to know about the industry. I like to think I know quite a bit about different areas of the industry, but I still managed to learn a lot from this book.

It doesn't matter if you are a complete novice or already know quite a bit about the industry; there is something for everyone in this book. Downey displays a deep understanding across all sectors of the industry. For instance, if I didn't know better I would have guessed that the refining chapter was written by someone who had spent an entire career in the refining industry. The only books on refining that I have read that were more comprehensive were those written specifically as technical guides for running a refinery. Other areas are covered in similar detail.

There is no aspect of the industry left uncovered. The book starts with a brief history of oil, and then dives into fundamentals like assays, chemistry, exploration and production, refining, transport, storage, and reserves. There is a separate section on the oil markets that really gets into layers of the onion that I didn't even know existed. One thing this section did for me was disabuse me of any notion that I ever want to trade oil futures (unless of course I have someone like Morgan Downey advising me).

The material in the book has already generated a number of essay ideas for me, as I learned a lot of new information. A few examples:

• There are 500,000 producing oil wells in the U.S., 80% of which produce 10 bpd or less. Still, this accounts for 20% of U.S. production.
• There are 1600 retail stations selling compressed natural gas (CNG) in the U.S., which is in the same range as the number of stations selling E85.
• 20% of new transit buses in the U.S. run on CNG.
• There is an actively traded freight forward market, in which you can purchase tanker routes (e.g., Ras Tanura to Yokohama)
• Valero, the largest U.S. refiner, is not a member of the API.

One of the things that surprised me is that I didn't spot more factual errors in the book. After all, this book is primarily a collection of a great many facts. With so many facts listed, I expected to find quite a few errors. I did not, although I did find a couple.

On page 194, Downey writes that the RVP of ethanol is 19 psi and is much more volatile than conventional gasoline. Actually, the RVP of ethanol is 2.3 psi. However, when blended with gasoline, ethanol behaves as if it had a much higher RVP. The reason for this is that ethanol is slightly polar, and doesn't mix ideally with nonpolar gasoline. This means that ethanol does raise the RVP of gasoline when it is blended, contrary to what would be expected for a nonpolar blending component with a 2.3 psi RVP. So one could argue that when you are doing blending calculations the "effective RVP" of ethanol in gasoline is much higher than gasoline - but the true RVP is quite a bit lower.

In that same section Downey shows a table (Table 9-10) that states that the nationwide RVP for winter gasoline is 11.5 psi. However, in places where winter temperatures are quite cold, the allowed winter RVP is as high as 15 psi. (Since atmospheric pressure is about 14.7 psi, that means that your winter gasoline can boil if kept until summer). I covered some of these issues in Refining 101: Winter Gasoline.

There are a couple of other items to note. First, the book is not referenced, which meant I was often left wondering about the source of a specific fact. (Presently, this involves me e-mailing Morgan and asking for a source). Second, while the book is almost exclusively just factual information, there were a couple of occasions in which Downey injected his opinion. One instance occurs on page 277, where he is discussing oil shale, and writes that it is "a clear net waste of energy." Another case occurs on page 317 where he writes "the so called hydrogen economy is mere hype..." While I happen to agree with him on both counts (at least the way things presently stand), these were instances where he departed from the agnostic style employed throughout the rest of the book.

Others Agree

As I write this, there are 17 reader reviews of this book at Amazon. All 17 gave the book 5 Stars, which is pretty impressive. These reviews are a testament to the wealth of information in the book. Dave Summers (Heading Out) reviewed the book here a couple of months ago, and wrote that this book would be one of the select few to occupy a spot on his desk "because it has a vast reservoir of the small, but invaluable, snippets that provide that useful addenda that help in understanding a story."

Last month David Henson, President of Choren USA, came to visit me in Dallas and I happened to have the book sitting on my kitchen table. David picked it up several times, and finally said in his charming Australian accent "This is really great stuff! I have to pick up a copy." I told him that I hadn't read it yet, but in the three weeks since then I managed to finish it (I read when I fly, and over the 3 weeks I have flown a lot). To this date I have never known of David to be wrong on an issue pertaining to energy, and found his assessment of the book to be spot on as usual.

Conclusion

To conclude, if you want to understand the oil industry, Oil 101 will tell you what you need to know. In fact, "Oil 101" will be my stock answer from now on for anyone who wants to learn more - whether you know nothing or already feel like you are well-informed. Likewise if you want a very good reference book that deals with even the most esoteric information (e.g., like the differences in various grades of asphalt, or the differences between hydraulic fracturing and thermal recovery). In fact, I would even strongly recommend the book to anyone who had just gone to work for the oil industry and wanted a detailed understanding of how the entire oil supply chain works.

The joy of mechanized agriculture. Image (1971) courtesy of Stefan Landsberger

Both in the capitalist and in the socialist world, tractors have been seen as machines of freedom, symbols of progress and modernization. Indeed, mechanized agriculture has been a worldwide revolution that has freed a large part of humankind from the Biblical curse of hard work. However, with the reserves of fossil fuels being slowly depleted, can we keep tractors running? The RAMSES project proposes an answer: a new model of agricultural mechanization based on battery powered vehicles and renewable energy sources.

[break] Today, agriculture in the industrialized world is a task for a minuscule fraction of the workforce; people whose job is to operate heavy machinery powered by fossil fuels. But, with peak oil arriving, or perhaps already arrived, we are going to see big changes. In itself, mechanization does not affect agricultural yields, but higher costs of fossil fuels are already affecting food prices. And, without power from mechanical engines, farming would have to go back to the old ways; relying again on human and animal muscles. Richard Heinberg has spoken of the need of "50 million farmers" for agriculture in the USA. But that would imply transforming overweight and under-excercised office workers into the kind of lean and fit peasants who are the typical workforce of countries where the industrial revolution has not arrived yet. It won't be easy, especially if we were forced to do it in a short time.

When the issue of powering agricultural machines is raised, the usual answer is in terms of biofuels. But that is not a very good idea unless we can develop some new and much more efficient way of making biofuels. In their present form, biofuels need too much land, need artificial fertilizer and, more than all, are in competition with food production. Other, exotic forms of fuel, hydrogen for instance, are too expensive and complex for agriculture, at least for the time being.

As it is often the case, the solution of a difficult problem can be found thinking "out of the box". Here, we are often locked to the concept that what we need is some kind of fuel, possibly in liquid form, to operate traditional engines. But the internal combustion engine is very inefficient; the only reason why it has had so much success is because fossil fuels have been extremely cheap so far. With that condition becoming rapidly obsolete, we need to move to more efficient systems. Modern renewable technologies (mainly photovoltaics and wind) are much more efficient than biofuels in terms of land needed per unit energy produced. In addition, most renewable sources produce electric power, compatible with cheap and efficient electric motors. These advantages are offset, in part, by the need of storing electric power in heavy and expensive batteries. Nevertheless, battery powered electric vehicles are making a comeback on roads and there exist light electric tractors available on the market. Can we think of electric motors and vehicles taking a major role in agriculture?

The RAMSES project About three years ago, Ugo Bardi (your author) and Toufic El Asmar (agronomist at the University of Florence, Italy) sat together and conceived the idea of a complete, renewable energy system that would provide both electric and mechanical power for agriculture. We gave it the name of "RAMSES", an acronym that stands for something like "renewable multipurpose agricultural systems for farmers". But, actually, "Ramses" is an ancient Egyptian word that means "born of the sun-god Ra" and that seemed to us an auspicious name for the idea (later on, we learned of another vehicle named "Ramses"; a modern Egyptian battle tank).

The idea of the RAMSES system is to couple a renewable energy source (in this case a photovoltaic plant) with a multipurpose, battery powered agricultural vehicle. The system also includes a stationary battery pack for energy storage. The energy produced can be used in the farm, stored in the vehicle's batteries, in the stationary batteries, or sold to the grid. The batteries of the vehicle can also be used for powering the farm if needed. It is a complete energy system that makes the farm - potentially - independent from fossil fuels.

Once we had thought of all this, we assembled a team able to build the system and we submitted the project to the European Commission which financed it under the 6th framework program. RAMSES is a multinational effort which includes four European countries (Italy, Poland, Spain and UK) and three Mediterranean ones (Jordan, Lebanon and Morocco). After almost three years of work, a complete prototype system has been assembled.

Below, you can see the RAMSES 12 kWp photovoltaic plant, based on monocrystalline silicon cells. It has been built at the final destination where the system will be tested: the monastery of Mar Sarkis and Bakhos, in Lebanon, about 35 km from Beirut. The plant was built by the Lebanese company ADMElectric.

Here is an image of the power storage system: a pack of lead batteries capable of storing about 2000 Ah, complete with inverters for providing standard electric power to the farm. All the batteries for the RAMSES project were provided by Tudor (Spain).

And, finally, here is the RAMSES vehicle. It was built in Italy, by OELLE. Here, however, you see it in the snow, in Poland. It was moved there for adding a number of accessories (by the Krukowiak company) and for testing by IBMER, the institute of agricultural mechanization and electrification.

The RAMSES vehicle is a multi-purpose light truck powered by a 12 kW electric motor. For ease of use and ruggedness, we used standard lead-gel batteries as on-board storage. Although the vehicle doesn't look like a traditional tractor, it has many of the capabilities that normally are found on tractors. Its 4-wheel transmission lets it run on or off-road. It can be used for transportation with its ability of carrying about 1 ton load and a maximum speed on roads of about 45 km/h. It is not designed for very rough terrains or for heavy agricultural work, such as plowing all day long. But its hydraulic three points hitch permits to link it to a variety of agricultural machinery for such tasks as watering, spraying, fruit collecting, seeding and many others. In the following figure, you can see the vehicle equipped with a 200 liters agricultural sprayer.

Assessment A prototype is a nice toy to play with but, eventually, we need to answer a few crucial questions about the RAMSES system:

1. Is it really environmentally friendly?

2. How much does it cost?

3 Can it replace conventional systems?

With the prototype still under test, we can't answer these questions with absolute certainty. But we carried out simulations and we can already give some answers.

In terms of environmental impact, there is no doubt that the RAMSES system is a winner. Our LCA calculations show that it is better than its conventional competitors on almost all pollution counts, from greenhouse gases to local pollutants. This is not surprising, since the system relies on renewable energy and it doesn't use fossil fuels except as source of energy for the manufacturing of the system itself. It turns out that the main source of pollution of the RAMSES system are the lead batteries during the manufacturing and recycling process; but lead release in the environment is truly minimal.

Cost is a critical question: how does it compare with conventional systems? If we calculate the external costs (pollution and global warming) the RAMSES system has a significant advantage. However, these external costs are not paid directly by farmers and, despite the fact that the RAMSES system does not need fuel, there are monetary costs in terms of investment and in terms of the periodic replacement of batteries and other parts. Our calculations indicate that the RAMSES system in its present configuration is slightly more expensive than a conventional, diesel powered system over a life cycle of 30 years. In order to have the same life cycle costs for the two cases - RAMSES and conventional - diesel fuel would have to cost more than 1.5 EUR/liter. That is higher than the present cost at the pump, even without considering subsidies given to farmers. Nevertheless, this result is encouraging. In the future, the cost effectiveness of the system may be improved eliminating the stationary batteries and relying only on the grid as storage, but at present this is not possible in Lebanon because of the local regulations. The advantage of the RAMSES system, anyway, goes beyond a simple cost comparison: it lies in being independent from fossil fuels and therefore not sensible to supply interruptions and oil price spikes.

Then, there is the question whether the use of the RAMSES vehicle will be practical for agriculture. Agricultural vehicles come in many kinds and many shapes; some as large combine harvesters and some as small, hand operated cultivators. The RAMSES vehicle doesn't pretend to be compared to giant agricultural machines. It has been conceived and designed to be used in a specific environment: in a farm in Lebanon where the main product is olive oil. Here, the vehicle will be used for a variety of light agricultural tasks. Because of the specific climatic conditions there, we assume that the vehicle will work for 2-4 hours in the morning, then it will be recharged over midday, when the temperature is so high that it is impossible to work in the fields. In the afternoon, the vehicle will be used again for 2-4 hours and will be recharged again overnight. In the present configuration, the vehicle is expected to be able to perform these tasks, but modifications may be needed for different conditions. If more endurance is needed, for instance, there is space in the present prototype for adding more on-board batteries.

The final question is whether an all-electric, renewable agriculture is really possible. Can we think of an electric combine harvester? Can we plow the fields with electrical tractors? The answer is, "yes, but..." In principle, it is perfectly possible to design and build heavy electric agricultural vehicles such as tractors and combines. But, if we use lead batteries and we want the machine to keep working all the day long, we need a very large battery pack and that would be very expensive. There are many technological possibilities to improve on lead batteries and perhaps in the future the problem of storage will be solved with new possibilities. But, if we have to stay with current technology, we must think of battery powered mechanized agriculture as something more limited than the kind of mechanization we are used to.

It is unavoidable, anyway, that future agriculture will be something very different from what it is today. The problem with modern agriculture is not just that of powering tractors and vehicles. It lies with the need of artificial fertilizers and pesticides, with the erosion of the fertile soil and, not the least, with the emissions of greenhouse gases and the resulting climate change that may damage agricultural yields. For the future, we must think of an agriculture which will not destroy the fertile soil, which will need less (or no) artificial fertilizers and pesticides, and which will be, in general, less polluting and more sustainable. It will not be anymore the kind of large scale, heavily mechanized enterprise we are used to but, likely, a smaller scale operation, more based on local resources. Maybe it will be something like the "50 million farmers" that Heinberg has proposed. But it may not necessarily need human beings as engines, as it was the use before the industrial revolution. The results of the RAMSES project show that using renewable electric power is a concrete possibility to break away from the present dependency on fossil fuels in agriculture.

Technical data

The all-electric, battery powered RAMSES agricultural vehicle shown at its first appearance on roads, in Modena, Italy, in 2008. From left, Toufic El Asmar, Paolo Pasquini, and Ugo Bardi; respectively: project coordinator, vehicle designer, and coordinator of the vehicle team. At this link you can also see short movies of the vehicle in action

RAMSES doesn't claim to be the first electrical vehicle in agriculture, but it is an original idea under several respects: it has been designed from scratch as an electric vehicle, not as the retrofitting of an existing vehicle. Also, it was conceived with production in series in mind, not as destined to remain a single prototype. Finally, it is not just an electric vehicle, but a complete energy system designed for use in a world where fossil fuels are destined to become less and less abundant.

The RAMSES vehicle uses standard components which can be serviced or replaced with a minimum effort. It is powered by a 96 V, 12 kW dc brushed motor located in the center, in a position protected from damage. An auxiliary, on board 12 kW motor is used for powering external agricultural equipment and the hydraulic system. The motors are powered by 16 6V 180 Ah lead-gel batteries. The two battery packs can be connected in series at 96 volts, for street use, or in parallel, at 48 V, for the highest torque for off road use. This set of batteries is expected to be able to power the vehicle for a range of about 70-80 km on roads and for 2-4 h of work in the fields. The maximum speed on roads is around 45 km/h. The vehicle weighs 1700 kg, including the driver and has a capacity of about one ton load.

The photovoltaic plant that powers the vehicle has a maximum power of 12 kW and is based on monocrystalline, silicon panels. The stationary energy system is based a lead-acid battery pack of total storage capacity of 2000 Ah.

Acknowledgment I would like to thank first of all the European Commission, which has financed the RAMSES project as No. 32447 of the 6th framework program. Then, I'd like to thank all the partners of the RAMSES project; you may find a full list of them at the Project site . Thanks are also due to the University of Tehran, department of agricultural machinery engineering, and in particular to professor Alireza Keyhani and to Mr. Hossein Mousazadeh, who has performed the LCA evaluation of the system (see references). Special thanks are due to Mr. Paolo Pasquini who has given to the project a decisive contribution with his great experience in electric vehicles (see also his Boxel vehicle).

References More data on the RAMSES system can be found in this article:

Environmental assessment of RAMseS multipurpose electric vehicle compared to a conventional combustion engine vehicle . by Hossein Mousazadeh, Alireza Keyhani, Hossein Mobli, Ugo Bardi, Ginevra Lombardi and Toufic el Asmar, Journal of Cleaner Production, Volume 17, Issue 9, June 2009, Pages 781-790

The "fifty million farmers" 2006 essay by Richard Heinberg can be found at this link

Has “Peak Oil” Peaked? It is always interesting to watch what happens when the media latches onto a given issue and then, as the reality on the ground evolves — sometimes radically — the media fails to catch up to, or even monitor, the changes. This means the public is stuck with an outdated version of conventional wisdom which, even if it were true in the first place, is no longer so.

With oil prices falling by more than two-thirds last year before a slight rebound, the “peak oil” frenzy seems to have abated for now. Even its proponents must admit that high oil prices were driven in large part by a huge spike in demand (which has now fallen) and not just scarcity (whether real or sinisterly implied by those who hold oil reserves).

But even though the hysteria has died down, new technologies march on, quietly changing the rules of the debate (if, that is, there still were a debate).

Ramirez threatens oil service companies Venezuela's Oil Minister Rafael Ramirez has threatened to take over oil service companies that fail to agree on new rates for their services, in one of several comments made to oil workers.

"To those contractors who stopped work during the 2002 oil strike, we've told them it's time to settle accounts and rates, change our relationship, or we will take over those companies," Ramirez told PDVSA employees during a videoconference last Friday, according to a full transcript of the speech published today.

Russian, Bulgarian premiers iron out disagreements on South Stream gas pipeline MOSCOW (AP) — Prime Minister Vladimir Putin said Tuesday that Russia and Bulgaria have set aside their differences over the proposed South Stream gas pipeline to Europe, paving the way for an agreement within the next couple of weeks.

"We have no disagreements left," Putin said at a televised news conference with his Bulgarian counterpart. "Our earlier disagreements were purely technical."

Valero Energy Profit Rises on Higher Refining Margins (Bloomberg) -- Valero Energy Corp., the largest U.S. oil refiner, said first-quarter profit rose 18 percent on increased margins for processing crude into gasoline and other petroleum products.

Net income rose to $309 million, 59 cents a share, from $261 million, or 48 cents, a year earlier, San Antonio-based Valero said today in a statement. The per-share results beat by 9 cents the average of 18 analyst estimates compiled by Bloomberg. Sales fell 50 percent to $13.8 billion.

Saskatchewan could produce more conventional oil than Alberta: Boyd Saskatchewan could soon surpass Alberta in conventional oil production, Saskatchewan's energy minister says.

"The positive trend line for Saskatchewan is increasing and Alberta is going the other direction ... and it's great news for the province," Energy and Resources Minister Bill Boyd said Monday at an oil industry conference in Regina.

Utica part of statewide 'hydrogen highway' plan Utica is part of a plan being worked out between General Motors and the state to develop a “hydrogen highway” of filling stations across New York.

The line of stations would allow fuel cell cars now under development to drive from one end of the state to the other.

Utica is the site of one of several planned filling stations. Other possibilities include Buffalo and Syracuse. Stations already exist near New York City, Rochester and West Point. There are about 100 stations nationwide.

Two Cal professors to get $30M from DOE for carbon capture work The Department of Energy will pay $30 million over five years to two professors at the University of California, Berkeley, for research on cleaning up power plant pollution.

Professors Berend Smit and Donald DePaolo will get $2 million and $4 million a year, respectively, to seek better ways to clean carbon out of the emissions from power plants and natural gas wells and to put it underground.

BP Delays First Oil Production From Sunrise Project With Husky (Bloomberg) -- BP Plc, Europe’s second-largest oil company, delayed production of the first heavy oil from the Sunrise oil-sands project in Alberta, its joint venture with Husky Energy Inc., for at least a year.

The partners are now expecting to start producing bitumen in 2013 or 2014, the London-based company said today in an update posted on its Web site. The companies plan to sanction the project in 2010.

Petrobras ‘Comfortable’ Starting Presalt at Current Oil Prices (Bloomberg) -- Petroleo Brasileiro SA, Brazil’s state-controlled oil company, is “comfortable” starting production at the country’s pre-salt oil fields at current oil prices, the company’s refining unit head said.

Qatari Jumbo Tanker Sails to U.K. Port, Depressing Gas Prices (Bloomberg) -- The U.K. will get its biggest shipment of liquefied natural gas next week as a jumbo tanker from Qatar arrives at the South Hook LNG import terminal, depressing fuel prices after earlier gains today.

A South Hook spokeswoman said the expected arrival time is “on or around May 5” for the Mozah, a so-called Q-Max tanker with a capacity of 268,000 cubic meters of liquefied gas. That’s almost enough to supply all of the U.K.’s gas on a summer day.

Sinopec Profit Soars 85% as Fuel-Price Controls Ease (Bloomberg) -- China Petroleum & Chemical Corp., Asia’s biggest refiner, said profit jumped 85 percent in the first quarter after the government eased fuel-price controls and crude oil fell from a record.

Kuwait, China hope to agree on refinery location Kuwait's oil minister said Tuesday he hoped to reach a final agreement with China on a long-stalled project to build a $9 billion refinery and petrochemical venture in the Asian nation's south.

Iraq owes Kuwait 25.5 bln dlrs in war damages KUWAIT CITY - Iraq owes Kuwait 25.5 billion dollars of war reparations for the 1990 occupation of the oil-rich emirate by Saddam Hussein’s forces, a Kuwaiti official said on Tuesday.

The compensation claims, approved by the United Nations, have yet to be paid by Baghdad, head of Kuwait’s Public Authority for Compensation Khaled al-Mudhaf was cited as saying by the KUNA news agency.

Geothermal explosion rocks green energy hopes The bid to produce green power on a commercial scale using heat mined from subterranean rocks – or "hot rocks" – has suffered a major setback, with the breach of a four-kilometre-deep well on Friday in the Cooper Basin in South Australia.

BP solar profits slump BP has reported a slump in sales of solar panels and falling profits at its alternative energy division. Overall, BP group profits fell by almost two-thirds in the first three months of the year compared with the same period last year. The company mainly blamed lower oil prices and higher taxes at its Russian subsidiary TNK-BP.

Icebergs break away from Antarctic iceshelf PARIS (AFP) – A huge iceshelf that has wrenched away from the Antarctic peninsula has started to fracture into icebergs, the European Space Agency (ESA) here said on Tuesday.

"Satellite images show that icebergs have begun to calve (break away) from the northern front of the Wilkins Ice Shelf -- indicating that the huge shelf has become unstable," it said in a statement.

Bill McKibben: Waste Not, Want Not There's waste that comes from doing something that manifestly doesn't need doing. A hundred million trees are cut every year just to satisfy the junk-mail industry. You can argue about cutting trees for newspapers, or magazines, or Bibles, or symphony scores—but the cascade of stuffporn that arrives daily in our mailboxes? It wastes forests, and also our time. Which, actually, is precious—we each get about 30,000 days, and it makes one a little sick to calculate how many of them have been spent opening credit card offers.

Wind farm firm cutting 1,900 jobs Wind turbine-maker Vestas Wind Systems is to cut 1,900 jobs - mainly in the UK and Denmark - despite reporting a 70% rise in quarterly profits.

It will be closing its UK turbine plant on the Isle of Wight, cutting 450 jobs.

The Danish firm blamed the headcount reduction, which represents 9% of its workforce, on market oversupply.

Clean Coal: Not Ready for Prime Time Yet The battle over coal is basically a battle over two equally dramatic points of view: Coal opponents such as NASA scientist James Hansen say, essentially, either we quit the coal habit or the planet gets it. Energy types such as Mr. Rogers respond, if we try to quit coal now, the economy gets it.

Some Economic Implications of Peak Oil World oil production probably peaked in 2008. Liquid fuel production, including oil, is indicated by the OPEC data to have reached a peak in July 2008 at about 86 million barrels per day, with its price peaking at about the same time. ASPO International agrees, as indicated on the chart page of their recent newsletters.

Peak oil has profound economic implications, most of which are unwelcome. There is good evidence indicating that peak oil triggered the global economic crisis; that oil price was the limiting factor that broke the momentum as the global economy tried to keep expanding.

Pound-the-Table Time? There is an old lawyer's saying, "When the facts are against, you argue the law. When the law is against you, argue the facts. When the law and the facts are both against you, pound the table."

For the advocates of holding on to the old fossil fuel economy, last week strongly suggested that as the science and the economics move decisively against them, it is table-pounding time.

Italian magazine interviews Richard Heinberg Consapevole: Why hasn't peak oil entered the political agenda yet? Is it because of the opposition of the oil industry, or simply because it is an unspeakable truth?

Heinberg: The oil industry has played a role in preventing discussion of peak oil by understating the challenges of maintaining production growth given the decline in discovery of new oilfields, as well as the declining rates of production in existing giant oilfields. However, it is also the case that new issues require time to be understood by the media, policy makers, and the general public. It is only within the past five years that general discussion of peak oil has emerged. By comparison, climate change has been a significant topic for well over a decade.

The United Nations Must Manage a Global Food Reserve In this paper, we examine the underlying causes of the recent rice crisis and assess the effectiveness of the Association of Southeast Asian Nations (asean) Emergency Rice Reserve, the East Asia Emergency Rice Reserve, and the South Asian Association for Regional Cooperation (saarc) Food Security Reserve in addressing past and present world rice crises. In addition, we provide some recommendations for a global food reserve as an alternative to the existing regional rice reserves. We also suggest measures to improve rice productivity in rice-producing countries, strengthen market information in order to increase stocks, and better determine the production capacity and demand for each participating country and their consequent contribution to the global food reserve.

An economics addition to The Transition Handbook Since the first edition of the Transition Handbook was published, huge and far-reaching changes have begun unfolding in the world economy. For many, they are seen as the outcome of the end of the age of cheap oil, the inevitable result of the inability of a global economy addicted to oil unable to get its fix, and in particular a result of the oil price spike of July 2008, with speculators escalating oil to a high of $147 a barrel, a price at which, quite clearly, the world economy as we know it is unable to function.

A useful place to start in an exploration of what exactly is happening to the global economy, in particular in the light of how it relates to peak oil and climate change, is with a look at what are the assumptions we have made thus far about the economy. Do they still hold after the events of recent months? Did they ever actually make sense in the first place? What are the assumptions about the economy and the financial system, as well as about the basic resources, both natural and cultural, on which we have based our decisions for the last 50 years - are they still valid?

Petrobras Increases Gas Flaring Due to Drop in Demand Brazilian state-controlled oil giant Petrobras has increased gas flaring, or the burning of natural gas, in recent months due to a drop in demand for the fuel, the Folha de Sao Paulo newspaper reported Sunday.

Petrobras burned some 8.1 million cubic meters per day of natural gas at its offshore platforms in February, or an amount equivalent to about one-third of the gas currently imported daily from Bolivia, the newspaper said, citing Energy and Mines Ministry figures.

Oil demand to pick up in 2010 The collapse in oil prices could end up cutting the growth in future oil supply in half from what would have been anticipated during the high price period, according to a study from Cambridge Energy Research Associates (CERA), an IHS company. The Long Aftershock concludes that about 7.6 million barrels per day (mbd) out of total potential future net growth of 14.5 mbd from 2009 to 2014 are “at risk.”

“The inventory of potential new oilfield developments, including fields that could be developed and brought online during the next five years, remains adequate to meet likely demand in the medium to long term,” says CERA senior director Peter Jackson, an author of the report. “This, however, depends on sufficient and timely investment.”

Aramco sells May Jubail lot to Vitol Saudi Aramco, the world’s top oil explorer, has sold 90,000 tonnes of cracked 380-centistoke (cst) fuel oil from Jubail for lifting on May 12 to Vitol at similar discounts to previous deals, traders said.

...Fewer arbitrage barrels are expected to land in Asia in May -- falling about 18-20 per cent from April -- as European refiners slash capacity on poor margins.

Middle Eastern supplies are also shrinking in line with the peak summer demand season, soaking up fuel oil for domestic power generation.

India: Steel sector to get priority in gas allocation from KG basin The steel industry will be accorded priority in allocation of natural gas from Reliance Industries Krishna Godavari basin once the initial fuel production exceeds 40 mmscmd, official sources said.

Nigeria: Inside Abuja's Flourishing Fuel Black Market Prices of fuel in Abuja's black market rose astronomically when queues appeared at filling stations across the city penultimate week as the speculation of impending fuel shortage made the rounds.

Investigation by Daily Trust revealed that most black marketers who had before the fuel scarcity sold their products for 100 naira per litre now sell for as high as 350 and 450 naira per litre. The price could be more or less and the differences in price depend on many considerations. The sharp-minded fuel racketeers size you and your car up, the status of the particular part of the city, the length of the queues by the surrounding fuel stations, and so on, before they bill you.

Saudi Aims to Attract Vehicle Manufacturers DUBAI - Saudi Arabia is seeking to attract vehicle and consumer goods manufacturers to build factories as the kingdom seeks to benefit from cheap crude oil to expand its economy and create jobs, according to state-run 
Saudi Aramco.

Rally in Hawaii pushes for power plant ban Supported by Hawaii's Republican governor, environmentalists cheered for a proposal Monday that would force Hawaii to break its oil addiction by banning construction of new fossil fuel power plants.

More than 100 people at the rally in the Hawaii Capitol rotunda - complete with a solar-powered sound system - urged state lawmakers to pass the bill, which is being debated this week.

Many majority Democrats in the Legislature support the spirit of the measure, but they say it probably won't pass because of worries that an outright ban on additional fossil fuel generating capacity could limit the state's options in an energy crisis.

Simmons: Energy industry facing enormous challenges “At the peak of the boom everyone prospered,” he said at the April 22 event in Wichita Falls, presented by the Texas Alliance of Energy Producers. “High prices created the first genuine win-win-win we ever had, but too many people were saying these high prices will hurt the economy. Then came the collapse.”

By his assessment, Simmons said that for two decades the prices of gas and oil were so low that the energy consumers were the only winners.

“The energy consumers were living in a fool’s paradise,” he said. “…But the consumer party had to end. As oil and gas prices rose the consumers got angry. There was a period of time last year that I think every single morning that I saw the Today Show on the first story was ‘Pain at the Pump.’”

Commutes Speed Up as Fewer Drive

CHICAGO -- As unemployment rises and discretionary income shrinks, millions fewer Americans are driving. For commuters, that means some of the worst bottlenecks in the country are easing.

Americans drove 8.6 billion fewer miles in January and February than during the same months in 2008, according to the U.S. Department of Transportation. Mileage has been declining since the end of 2007.

Mideast growth to halve as oil falls: World Bank WASHINGTON (Reuters) - Economic growth in the Middle East and North Africa is set to halve to 3 percent this year with the collapse of oil prices, demand and worker remittances, a senior World Bank official said on Tuesday.

Daniela Gressani, World Bank vice president for the region, said countries outside the Gulf such as Iran, Syria and Algeria, which have expensive state subsidy programs, will be hit the hardest by lower oil prices.

Swine flu could hit already ailing fuel demand NEW YORK (Reuters) - The widening outbreak of swine flu could further quash already weak jet fuel demand if it grows to rival the SARS epidemic that hit global travel six years ago.

Mexico's Woes: Quakes, Flu and Oil Production Collapse Reluctantly I’m going to briefly cover Mexico today. Your RSS newsreader and your Bloomberg however are already, no doubt, filled up with reports from Mexico’s Flu Zone. Or Quake Zone. Or both. Instead, I lightly suggest you turn your attention away from these acute conditions, to something more chronic: the relentless crash in Mexico’s oil production.

Student Speakers Call for Proper Energy Use DUBAI - Collapse of civilisation, unemployment and dangerous consumption of oil were some of the foreboding predictions made at an environmental speaking series presented on Monday at Knowledge Village in Dubai.

Instead of policy makers or environmental advocates, the speakers were 13 and 15-year olds from high schools in the UAE, participating in the ninth oratory competition held by Emirates Environmental Group.

The speech prompts — ‘reducing water-energy footprint’ and ‘is this the peak oil era?’ — touched on issues particularly critical to the UAE, which uses costly desalination to obtain drinking water and is a net exporter of oil.

Saudi Investing to Boost Oil Production, Finance Minister Says (Bloomberg) -- Saudi Arabia, the Arab world’s largest economy, is investing to increase oil production capacity to provide for the global economy when it starts to recover from the economic crisis, the finance minister said.

“Saudi Arabia is the only country in the world that’s now investing in oil capacity and more refining capacity,” Finance Minister Ibrahim Abdel Aziz al-Assaf said at a conference in Washington today. “I’m sure that this investment will come in handy when the world economy starts recovering.”

PetroChina to raise storage capacity for Russian oil BEIJING (Reuters) - PetroChina's largest Daqing oilfield will add eight large crude oil storage tanks by 2010 after having installed two such tanks for offloading Russian oil, the official Xinhua news agency reported.

The 10 tanks alone, with planned capacity of 150,000 cubic metres each, will boost Daqing's crude oil storage capacity by nearly 10 million barrels, as China is set to ship in more Russian oil following the recent oil-for-loan deals between the two countries, Xinhua said in a report over the weekend.

BP, Chevron Managers Leave Kuwait as Projects Delayed (Bloomberg) -- Chevron Corp. and BP Plc are withdrawing top executives from Kuwait after more than a decade of negotiations failed to gain access to the world’s fourth- largest crude oil reserves.

Khursaniyah 'under starter's orders' The central gas processing facility at state oil giant Saudi Aramco's 500,000 barrels per day Khursaniyah oilfield is expected to begin operations by October, according to reports.

The plant had been due to come on stream in December 2007, but construction had been delayed due to a shortage of labour and materials, a source said.

"The gas plant has two trains. The first one will be ready to start operations in July and the second train by October," a source told Reuters.

Ex Central Bank director believes that Venezuela may sell Citgo Domingo Maza Zavala, the former director of the Central Bank of Venezuela, said on Monday that Venezuela may ponder the possibility of selling Citgo, Pdvsa's oil refining branch in the United States, because of the decline of revenues.

Maza Zavala told Venezuelan radio station Unión Radio that the Venezuelan government would even negotiate the Orinoco Oil Belt and some state assets to get funds and survive another year.

Can science save the oil sands? FORT McMURRAY, ALTA. — If Selma Guigard is right, an elusive key to reducing the oil sands' emissions could lie in the science of the super-critical molecule.

Solving The Chalk Mystery To Generate Billions In Additional Income For Oil Industry ScienceDaily — A piece of chalk in a laboratory at the University of Stavanger in Norway may be the key to unlock a great mystery. If the mystery is solved, it will generate billions in additional income for the oil industry. Associate Professor Merete Vadla Madland at the Department of Petroleum Engineering at the University of Stavanger is leading a group of geologists, petroleum engineers, rock mechanics, physicists, mathematicians and chemists who are now switching between modelling and experimental testing at the chalk laboratory.

China’s Petro-Shopping Spree Armed with loads of ready cash, China has been on a shopping spree for oil resources. Over the past few months, Chinese companies have committed tens of billions of dollars as part of a government-sponsored oil and petrochemical stimulus plan to secure energy supplies.

Petro-Canada Posts Quarterly Loss on Oil’s Decline (Bloomberg) -- Petro-Canada, the Canadian oil company that agreed last month to a takeover by Suncor Energy Inc., posted a first-quarter loss on lower crude prices, higher costs and charges from deferring an oil-sands project.

The net loss was C$47 million ($38.4 million), or 10 cents a share, compared with net income of C$1.08 billion, or C$2.20, a year earlier, the Calgary-based company said today in a statement. Petro-Canada cut its investment target for the year.

BP profit tumbles 62% on sliding oil prices LONDON (AFP) – Oil major BP on Tuesday reported a 62-percent slide in first-quarter net profits to 1.639 billion pounds, as the price of crude halved.

The data excludes changes in the value of oil held in stock, a key measure for the industry, and compared to net profit totalling 4.279 billion pounds in the first quarter of 2008.

South Dakota hearings start on crude oil pipeline SIOUX FALLS, S.D. (AP) -- Western South Dakota residents get their chance Monday and Tuesday to speak out about a planned crude oil pipeline that could one day carry 900,000 barrels of oil a day through the state.

Fla. House passes bill to allow offshore drilling TALLAHASSEE, Fla. -- The promise of money and jobs and the desire to reduce dependence on foreign oil beat out arguments that offshore drilling could harm the environment and hurt tourism as the House passed a bill Monday that could allow wells three miles off Florida's coast.

The governor and three-member Cabinet would be able to approve drilling leases in state waters between three and 10.5 miles from shore under the plan.

Peak Oil as a Function of Earth's Volume So the fraction then of the stuff we kind of know about is ~0.1% of the earth's volume if my decimals are correct. Even if my math is bad, I think the conclusion is sound that we basically have very little idea what all is down there. There could be huge reserves of black gold just waiting for the right technology. Even just the "black smokers" discovered so far emit 17,000 million watts of energy roughly equivalent of the amount of energy that humans consume each year. (As quoted on the Discovery channel anyway).

A key energy industry nervously awaits its 'rebirth' One of the biggest question marks in the nation's energy and climate policy is the future of nuclear power. In the past, the United States has made a major commitment to it. The U.S. nuclear power industry is the world's largest. The nation's 104 operating plants produce 20 percent of its electricity, making them, by far, the largest source of electricity that does not result in greenhouse gas emissions.

If a cap and a price are imposed on carbon dioxide emissions, these plants could be among the biggest economic winners in the vast economic shifts that would be created by greenhouse gas regulations.

Little power price impact seen from U.S. renewable mandate NEW YORK (Reuters) - A proposed federal mandate to force power companies to provide up to 25 percent renewable energy by 2025 is likely to have little impact on electric prices though 2020 and negligible impact after 2030, the Energy Information Administration said in a study Monday.

The largest impact would likely be seen in 2025 when the renewable electricity standard would go into effect, boosting average prices by up to 2.9 percent, EIA projected.

Putting A Price On Smart Power An improved electric grid could potentially make electricity more reliable, more efficient, cleaner and perhaps even cheaper. But what would it cost to actually build it, and how much would it save?

The answer isn't simple. It's difficult to put a price tag on a new grid, and almost impossible to quantify the potential savings.

Solar powered airports? It could happen Jet contrails may be adding to global warming but on the ground, many airports are getting very green. During last week's Earth Day celebration air travelers could get free recycling tips at Seattle-Tacoma International Airport's energy fair, free tote bags at Denver International Airport, and free plantable postcards embedded with wildflowers at Boston's Logan Airport. And all during April, aka Earth Month, airports around the country trumpeted their successes with recycling, solid-waste reduction, hybrid vehicle adoption, air quality improvement programs, and other eco-friendly actions. One exciting trend: solar and wind power projects that may eventually allow some airports to operate off the grid. Here are just some of the airports generating their own juice.

How to turn greenhouse gas into a clean fuel CONVERTING a greenhouse gas into a clean-burning fuel offers two benefits for the price of one. That's the thinking behind a novel process for converting carbon dioxide into methanol at room temperature, developed by a team at the Institute of Bioengineering and Nanotechnology in Singapore.

With high-speed rail, Obama is on the right track Every now and then I get a strange sense that sanity is beginning to prevail in the world. It happened last week when I heard of Barack Obama's plan to spend $13 billion to establish high-speed passenger rail corridors throughout the United States.

I can only hope Canada will follow the American lead on this one.

An Open Letter to President Obama on Biofuels Many individuals, universities and companies have been working diligently to help create renewable biofuels to meet the strategic needs of our country. The U.S. Department of Energy (DOE) has announced the selection of numerous research projects and provided technology investment agreements or cooperative agreements to help develop at least 15 commercial or demonstration facilities since start of 2007. Despite this, recent forecasts indicate that, unless we do something different, we will fail to meet the renewable fuel standards (RFS) set forth in the Energy Independence and Security Act (EISA) of 2007.

Numerous studies have been released on this topic. One such study reported that, "Even at high oil prices, 2nd generation biofuels will probably not become fully commercial nor enter the market for several years without significant additional government support." What is needed is an immediate, comprehensive study to determine requirements for the full commercialization cycle. Once these requirements are known, we can apply them to those projects whose completion is necessary to meet our needs. The need is urgent, as 3 of the 15 funded projects that received DOE awards have already stopped plans to go forward. Unless something radically different is done, more projects are likely to drop out.

Lifting the ban on importation of palm oil Today in Malaysia, palm oil brings export earnings worth US$ 6.2 billion, only trailing crude oil exports. But compared to crude oil, palm plantations create considerably more jobs, currently employing around 14% of the countries entire workforce. Around half of all palm oil is still produced by smallholders, that is, by individual farming families. In short, the Malaysian economy and society as a whole benefits immensely from the African palm.

Given these numbers, it is not difficult to understand why many developing countries are looking into replicating Malaysia's success story. With Peak Oil around the corner, and continuously rising energy prices, the temptation to massively use one's land to cultivate the energy crop is strong.

Philippines to slash coal use The Philippines plans to reduce its energy dependence on coal over the next five years to lessen carbon emissions which contribute to climate change, an official from the Department of Energy (DoE) said Tuesday.

"Part of the plan is to reduce the share of coal in the total energy generation mix from more than 20 percent at present to a range of 10 to 15 percent in five years," said Energy Undersecretary Zamzamin Ampatuan.

Obama seeks reversal of mountaintop mining rule WASHINGTON (AP) — The Obama administration is taking steps to reverse a last-minute Bush-era rule that allows mountaintop mining waste to be dumped near streams.

Interior Secretary Ken Salazar said Monday the administration will ask a federal court to abandon the rule that made it easier for coal mining companies to dump waste near streams. If the court agrees, the Obama administration could start drafting a new regulation that better protects waterways and communities sooner than if it sought to rewrite the measure itself.

The next seafood frontier: The ocean Now the 29-year-old entrepreneur is trying the same model on a global scale. Starting this June, his latest company, Open Blue Sea Farms, aims to fly 30,000 live baby cobia every month from Miami to Panama City in the cargo hold of a Boeing 757. After being placed in tanks near the famous canal, the fish will travel by boat to their new home, a floating wire mesh globe as tall as a six-story building that will be moored to the Atlantic Ocean floor, 220 feet below.

If O'Hanlon succeeds in selling fish bred in this unique structure, dubbed the AquaPod, he could revolutionize an industry in crisis. Fish stocks are being rapidly depleted the world over. Consumer demand seems bottomless, and industrial fishing fleets have become too efficient for their own good. Ocean stocks of large fish - such as tuna, cod and halibut - have declined by 90% in the past 50 years, according to a recent study published in the science journal Nature.

Scientists warn that the oceans could be completely fishless in less than 40 years - a catastrophe for all life within them.

Green Agenda May Shift Farm Policy Democratic Party control of the House of Representatives, Senate and White House means that action to reduce greenhouse gas emissions is likely--perhaps as early as this year. Agricultural producers and agribusinesses are concerned about the impact of new regulations on their industry, because it appears increasingly unlikely that it will be exempt from new rules. However, instead of resisting climate change reforms, many agricultural lobby groups have shifted their emphasis to a pro-active examination of how to position the sector to benefit from climate change legislation.

How to Live with Ecological Intelligence Trying to be "green" quickly becomes tricky. A simple question like "Paper or plastic?" can lead to a complicated analysis of deforestation and water use versus peak oil and persistent pollution.

That's why Daniel Goleman, best-selling author of Emotional Intelligence in 1995, has returned to the subject, but with an environmental angle.

Death knell sounds for Europe's beekeepers BRUSSELS (Reuters) - Europe's beekeeping industry could be wiped out in less than a decade as bees fall victim to disease, insecticides and intensive farming, international beekeeping body Apimondia said on Monday.

"With this level of mortality, European beekeepers can only survive another 8 to 10 years," Gilles Ratia, president of Apimondia, told Reuters.

Diarrhoea near epidemic in Bangladesh heatwave DHAKA (AFP) – Cases of diarrhoea in Dhaka are reaching epidemic levels, according to a health expert, as the Bangladeshi capital is facing record temperatures, a severe water shortage and power cuts.

U.S. pledges to make up for lost time in climate fight WASHINGTON (Reuters) – The United States gathered China, India and the world's other top greenhouse gas polluters in Washington on Monday to "make up for lost time" and lay the groundwork for a U.N. deal to fight climate change.

The meeting, which U.S. President Barack Obama called last month, groups countries that produce about 75 percent of the world's greenhouse gas emissions to find ways to help seal a global warming pact this year.

Time low in global warming fight: Prince Charles ROME (AFP) – Time is quickly running out in the battle against global warming, and history will judge the world's response to the crisis, Prince Charles of Britain told Italian lawmakers Monday.

"If we are to bequeath to our children a world that is fit to inhabit, then I fear we must act now," said Charles during a visit to Rome. "What on earth is the point of procrastinating?

"History will judge us by how we respond to climate change. Do we want our children and grandchildren to ... see this as the time we allowed a new darkness to sprawl across our future?" he asked Italian lawmakers and other government leaders.

Arctic CO2 levels growing at an 'unprecedented rate', say scientists "It is not the level of CO2 that is the problem, because the earth will adapt. What is very worrying is the speed of change. Levels [here] are now increasing 2-3ppm a year.

"The rate of increase is much faster than only 10-20 years ago. You can almost see the changes taking place. Never before have CO2 levels increased so fast," he said.

This is a guest post by Nawar Alsaadi. Nawar currently lives in Canada, but lived in Iraq until 1990. He still has close ties to the country, and has been following the situation closely there.

Investors and global oil companies such as Shell Petroleum, Eni, China National Petroleum, and Exxon Mobile betting on Iraq are certain to be disappointed.

Ever since the fall of Baghdad in April 2003, we have heard about the unlimited potential for the Iraqi oil. Often news reports mention that Iraq has the third largest oil reserves in the world, and that Iraq's oil ministry has a goal of producing 6 million barrels/day of oil over the medium term.

However, six years after the fall of Baghdad, the country is nowhere close to producing 6 million barrels a day. As a matter of fact, the country is still not producing at the same level it did before the war (2.2m bpd vs 2.5m bpd before the war). It is worth noting that the pre-war level was achieved despite years of war and crippling economic sanctions. Yet despite current access to capital and technology, the country could not yield better results than oil production under the Saddam regime in the midst of war and sanctions.

There are several reasons why Iraq has failed to rise to the occasion, and in this article I will attempt to address some of them:

• Endemic corruption
• Political reserves
• Bad management
• Political rivalry and foreign oil company stalemates
• Political insecurity

Endemic Corruption

As of last year, according to the corruption ranking of Transparency International, Iraq ranked 2nd worst in the world. It was slightly higher then Somalia and in line with Myanmar. Actually if we were to follow the survey from 2003 to 2008, we see the following erosion in the country corruption score (10 being the highest, and 1 the lowest):

Based on analysis of Transparency International

Thus despite the Iraqi government assurances that it is doing its best to combat corruption, it seems that corruption is growing at an alarming rate, taking Iraq to the path of overtaking the failed state of Somalia in the near future.

Political Oil Reserves

It is often claimed that Iraq has the third largest oil reserves at 113 billion barrels. The source for these numbers is rarely discussed. Thus it is worth looking at the origin of those claims.

Iraq nationalized the oil industry in 1972 when it took full control of the western controlled Iraq Petroleum Oil Company (IPOC). At that time Iraq’s oil reserves stood at 35.9 billion barrels according to the IPOC and were reported by Baghdad to be at 30 billion barrels as recently as 1982. However, interestingly enough, as the Iraq-Iran war raged and Iraq’s need for additional revenues to finance the war grew, Iraq’s oil reserves jumped to 41 billion in 1983, followed by a jump to 48 billion in 1987 and finally they topped 100 billion by the end of the war in 1988. However after the complete halt of exploration due to the 1991 gulf war, Iraq oil reserves jumped to 112.5 Billion in 1995, and this is where they stand today.

Iraq was not alone in significantly increasing its reserves, several OPEC nations did the same, one reason is that OPEC production quotes at the time where determined by the country’s declared proven reserves, thus we see a race between the OPEC members to increase reserves within this period:

Data from Dr. Colin Campbell, in SunWorld, 1995 (Click here for references)

Furthermore none of the above nations allow for any decrease in reserves to account for the already produced oil, as of 1995 when Iraq declared an increase of its reserves to 112.5 Billion, the U.S. Geological Survey calculated that at least 22 billion barrels of Iraq oil reserves have already been produced by that date, and if we were to update those number to 2009, we can safely add an additional 10 billion barrels produced in the last 13 years.

So what is a reasonable estimation for the remaining Iraqi reserves?

According to Dr. Colin Campbell a prominent oil geologist and founder of the Association for the Peak Study of Oil and Gas (ASPO) Iraq oil reserves stand at about 60 billion barrels, or about half the official estimates.

Bad Management

Since the fall of Baghdad and the start of the “democratization” process, the country has lost thousands of technocrats under the pretext of the their Baath political affiliation. This has opened the door to mainly political appointments at key Iraqi ministries including the Ministry of Oil. The lack of oil industry experience by the appointed, combined with the surging levels of corruption has conspired to limit the growth in the Iraqi oil production since 2003. This failure is amplified by the ministry’s failure to bring production back to 2002 levels six years after the regime change.

However, what is more worrisome after several years of miss-management is that Iraqi oil production is on the verge of witnessing a sharp decline in production to possibly under 2 million barrels a day, as indicated from recent news reports:

February 24th 2009

A Guardian newspaper article talked about a 250,000 barrels/day decline in Iraqi oil output, and the alarm of the oil ministry in regard to the issue:

Pressure problems at two southern oilfields are the main reason for a decline of 250,000 barrels per day. That, on top of oil's $100 a barrel price collapse since July last year, has already forced Iraq to cut its budget twice.

Alarmed by the loss of output from its reliable southern oilfields, Baghdad sent a high-powered committee to investigate and devise a quick fix.

April 17th 2009

Creeping water cut levels, this second article from the Guardian indicates an aggressive plan by the Iraqi oil ministry to deal with wet crude through the issuance of several tenders to deal with the issue:

It has issued a blitz of tenders recently for degassing and dehydration plants, valves, control systems, pumping software, pumps, storage tanks, and equipment for treating wet crude -- oil mixed with high levels of ground water.

For those who don’t know the significance of wet crude, as oil wells age, the extracted oil is often mixed with water. An increased water to oil ratio indicates an imminent production problem and can lead to a total collapse in production, if not treated adequately.

The most dire warning came on April 23th 2009, as reported in this MEED article:

The sources tell MEED the country's oil output could drop by up to 10 per cent by December 2010 as production from state-run South Oil Company (SOC) falls by 220,000 barrels a day (b/d) as a result of a deterioration in the productivity of its wells at fields including South and North Rumaila, West Qurna and Missan.

SOC suffered a 100,000 b/d fall in production in 2008. The sources say the company will suffer further 100,000-b/d drops in both 2009 and 2010.

The drop in production has already forced SOC to cut supplies to local refineries to meet crude export requirements.

Furthermore:

"The reality is that there is a crisis in the making," says one executive from an international oil company that has attended meetings with SOC to address the problem.

"Everyone is used to focusing on security and infrastructure problems whenever something is not going right in Iraq, but this time it is down to physics."

Jabbar al-Luaibi, a former head of SOC who now advises the Oil Ministry on all oil projects in southern Iraq, says the collapse in production is due to Baghdad falling behind with its drilling programme over the past six years and the declining productivity of its existing wells.

"It has got to the point where we have 300 wells not flowing in some of our biggest fields, and that means a lot of work just to get us back on track to where we were a few years ago," says Al-Luaibi.

"We know there has been a 100,000-b/d decline in 2008 and we will see the same drop from the production platform in 2009 and 2010. After that, we could be looking at even sharper falls."

Al-Luaibi says the problems in production can be attributed to a delay in the maintenance of existing wells, reservoir management problems and the amount of water leaking into the reservoirs.

As indicated from recent news reports, Iraq oil industry seems to be in a dire state, and the country is scrambling to maintain oil production at current levels. However, if the performance of the Iraqi government over the past few years is any indication, their current efforts are unlikely to solve the issue.

Political Rivalry and Foreign Oil Company Stalemates

One of the main issues blocking the development of the Iraqi oil wealth is the political rivalry and mistrust between the various political factions governing the country. The greed and the competition for power has lead to a multi-year stalemate in the passage of the key hydrocarbon law introduced in 2006 and revised four times so far. And it does not seem that a passage is near, based on this April 17th 2009 headline:

Kurdish minister 'not very optimistic' oil law soon passed

This headline is of key significance, since the Kurds are considered to be the stumbling block for the approval of the law mainly due to issues related to exploitation of the rich Kirkuk oil fields. Thus, such a comment from Ashti Hawrami the Kurdish natural resources minister does not indicate a change in their stance anytime soon.

In light of the unlikely passage of the key hydrocarbons law, the oil ministry started looking for ways to invite oil companies into Iraq without the passage of the law, under what is called “technical” oil contracts. The first plan for awarding such two-year service contracts to western oil companies was undertaken in 2007, with a goal of increasing the country’s oil production by 500,00 barrels/day through signing five 100,000 barrels/day contracts. However, by 2008, no such contracts were signed, and the terms where changed to one-year. But due to growing political opposition to such no-bid contracts, the whole plan was scrapped by the end of the year.

Yet the Iraq oil ministry led by Mr. Hussain al-Shahristani was determined to sign deals with foreign oil companies. It went ahead and signed a gas deal in September 2008 with Shell Petroleum to exploit Iraqi gas, which is estimated to be burned at a rate of $7 billion per year for lack of gas processing facilities. However the $4 billion deal has faced opposition almost from the start, and as of April 17th 2009, Mr. Jabir Khalifa Jabir, secretary of the Iraqi parliament's oil and gas committee announced the following:

"We are going to do everything we can to revoke this deal and to push Shell out," Jabir told Reuters. "Both these deals are illegal because they didn't go through parliament”.

“The companies and their lawyers knew the old Iraqi oil law very well," he added, saying that any new deals Baghdad signs in bidding rounds under way with BP and others would also be subject to revocation.”

More recently, Iraq announced the opening of the Nassiriyah oil field for bidding to foreign oil companies, in an effort to produce 100k barrels/day. A decision was supposed to be made by the end of April; however, by April 23rd 2009, the deadline was pushed back to the end of June:

Abdul Mahdy al-Ameedi, deputy director general at Iraq's Petroleum Contracts and Licensing Directorate, said the ministry had asked the three companies to review their previously submitted technical and commercial offers according to "new requirements" made by the ministry.

I believe one must wonder if the “new requirements” made by the ministry has anything to do with the corruption index highlighted in the start of the article!

So what does Iraq have to show for its efforts in inviting in foreign oil companies? The sole signed and progressing contracts are with an unheard of British oil firm named Mesopotamia Petroleum Company, and a $3 billion contract with China's CNPC, a contract that was initially signed in 1997 under the Saddam regime. Like the Shell Petroleum deal, the Iraqi parliament considers this contract also illegal.

Thus as indicated from the above issues, Iraq is facing significant political problems in its efforts to invite oil companies. The Kurds and the central government are locked in a war to control Kirkuk oil; the Kurds are unlikely to allow the passage of the oil law unless they have more control on Kirkuk; while the Iraqi government is unlikely to allow any Kurdish oil to be fully developed or exported unless the Kurds submit to its wishes. Meanwhile, the oil ministry is in a constant struggle with the politically driven parliament, as all of its plans are systematically blocked for political reasons and on suspicion of corruption.

Political Instability

2008 was a year of relative calm in Iraq. However, it seems that 2009 is turning to be a year of further instability. To better understand the current instability, it is worth looking into why 2008 was relatively stable.

2008 witnessed a weakening of the insurgency, largely due to the successful American efforts of recruiting 90,000 ex-insurgents in what is called the Awakening Councils, which are nothing more then Sunni armed militia’s funded by the US at a rate of $300 per member/per month. The US introduced this program in an opportune moment as Al-Qaeda’s bloody methods and thirst for control created a significant rift within the insurgency. This rift within the insurgency and the financial and armed support for the councils created a relative level of stability in the former hot spots such as Anbar, parts of Baghdad and Diyala.

In addition to the above, the Iraqi government was profiting handsomely from the explosion of oil prices to above $100 a barrel for most of 2008. This windfall in wealth helped the government fund an overly large security force and the creation of a massive welfare state where close to 80% of the population is dependent one way or another on the government for employment, housing or food. As a matter of fact, the government got so wealthy that Mr. Nouri al Maliki was walking down Baghdad’s streets in the summer of 2008 handing out dollars.

The situation is much changed in 2009. The US passed the control of the Awakening Councils to Baghdad, but the Iraqi government has refused to incorporate more then 20% of the members of the councils into the police and army, and only a handful have been recruited to the official security forces to date. Furthermore, recent reports indicate that the government is arresting members of the councils. By March 28th we had the following news reports:

On March 28, clashes erupted in Baghdad’s Fadhil district after Iraqi troops arrested the leader of the local Awakening Council, Adil al Mashhadani, one of many former Sunni insurgents who had allied with American forces in the fight against al Qaeda-inspired Salafi militants in Iraq. Mashhadani’s men staged a two-day uprising, which was put down by Iraqis with considerable help from American troops fighting against their former allies.

A few days later on April 7th 2009, there was a wave car bombs attributed to the councils' growing distrust of the government:

Seven car bombs exploded across Baghdad yesterday in a surge of violence linked to growing dissatisfaction among the Sunni militias that helped turn the tide against al-Qaida and other insurgent groups

And as recently as April 24th, several bloody attacks of a sectarian nature took place on Shia pilgrims, with the most dangerous aimed at the holy Khadamiya Shrine in Baghdad killing 65 people, and bringing memories of the Golden Dome in Samarra attack in February 2006, which lead to a massive escalation in inter-ethnic violence in 2006 and 2007.

To compound the above problem, the Iraqi government is running out of money due to the collapse in both oil prices and oil production. As a result, the country’s budget was revised down three times--down to $58 billion from $80 billion a few months earlier. It is likely to be reduced again, as the current budget is based on $50 oil. (Iraqi oil trades at a discount to WTI.) This situation prompted Iraq to consider an IMF loan.

The collapse in Iraqi revenues has significant implications with respect to the security situation. The most obvious impact is the freezing of security forces hiring, which was announced on March 20th 2009. This freeze directly affecting the hiring of the ex-insurgent Awaking Council members. Furthermore, the lowered revenues are curtailing significantly much needed investment in crumbling civil infrastructure, social services and much-needed investments to boost oil services.

In the midst of the above challenges, the current US administration is marching ahead with its plans to withdraw from Iraq, a move that will likely create a vacuum that will further weaken the Iraqi government and may very well lead to a civil war between the rival factions.

There are many questions that remain unanswered in Iraq. The fate of Kirkuk remains illusive. The recent UN report on Kirkuk was received coldly in Iraq, and the Kurds consider their parliament as the only appropriate venue to solve the issue. The Sunnis remain deeply distrustful of the Shia, and today the Sunnis have well trained and well organized militia to defend their interests, while the Shia remain divided between loyalty to Iran by some and loyalty to the country by others.

The above discussion offers only a glimpse of the political, physical and operational limitations on Iraq's ability to produce any significant amount of oil in the next few years. These issues are an indication that Iraq is likely going to experience a sharp decline in production (or perhaps stagnation at best) in its production levels over the foreseeable future.

The implications of this discussion are of great significance to investors in the oil industry, as Iraq is often looked at as one of the potential bright spots for increased oil production over the medium term. It is even more important within the context of an expected oil supply shortage starting in 2013, as often repeated by the IEA.

Hence, while it might be profitable to invest in oil over the next few years, it might be wise for the oil industry and oil investors to await more stability and clarity in Iraq before moving into that country.

Disclosure: The author has no positions in any of the above mentioned companies.

Sources:

http://www.transparency.org/policy_research/surveys_indices/cpi ,
http://www.brookings.edu/papers/2003/0512globalenvironment_luft.aspx
http://peakenergy.blogspot.com/2008/11/iraqs-oil-greatest-prize-of-all.html
http://www.accessmylibrary.com/coms2/summary_0286-30641028_ITM
http://www.oilcrisis.com/debate/polrsrvs.htm
http://www.energybulletin.net/node/13009
http://www.guardian.co.uk/business/feedarticle/8459767
http://www.meed.com/news/2009/04/baghdad_faces_fall_in_oil_production.html
http://www.guardian.co.uk/business/feedarticle/8460280
http://www.foxnews.com/story/0,2933,384903,00.html
http://online.wsj.com/article/BT-CO-20090423-708943.html
http://www.mesopotamiapetroleum.com/
http://www.huffingtonpost.com/2008/07/12/iraq-pm-al-maliki-handing_n_112...
http://www.thenational.ae/article/20090424/REVIEW/704239996/1042/TRAVEL
http://www.guardian.co.uk/world/2009/apr/07/iraq-bombs-baghdad
http://steelguru.com/news/index/2009/04/25/OTE2NjQ%3D/Iraq_eyes_up_to_US...
http://abcnews.go.com/International/wireStory?id=7134373
http://www.kurdishglobe.net/displayArticle.jsp?id=1833CE30B5E155727F55CC...
http://www.google.com/hostednews/afp/article/ALeqM5iWJ77tU5I3V7ZqrFfg7gd...
http://www.bloomberg.com/apps/news?pid=20601087&sid=abnkGOUOzC3w&refer=home
http://www.business24-7.ae/articles/2009/4/pages/tollfromiraqdoublesuici...

This article was published Aril 26, 2009 in Seeking Alpha. It has been edited for clarity.

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China's oil demand fell by nearly 6% in Q1 of 2009 China's oil demand fell by nearly six per cent year-on-year in the first quarter of 2009, Energy Intelligence (EI), the US-based energy advisory firm has said.

In a new update, EI said that Chinese net crude imports and domestic production averaged 7.39 million barrels per day. That is 5.6 per cent lower than the corresponding figure in 2009.

EI did not take into account stockpiles that the Chinese government has allegedly been building to make use of the low oil prices. The statistics exacerbates the widespread fear among analysts that oil demand, and therefore oil prices may seriously suffer this year because of low "actual demand".

PetroChina Profit Slips 35% PetroChina Co., the largest listed Chinese oil firm by capacity, said Monday its net profit in the first quarter fell 35% from a year earlier on lower oil prices and weaker energy demand.

Net profit for the three months ended March 31 was 18.96 billion yuan ($2.78 billion), down from 29.31 billion yuan in the year-earlier period. Revenue fell 30% to 181.58 billion yuan.

The International Energy Agency expects China's oil demand to contract by 0.8% this year, revising a forecast made earlier for growth of 0.6%.

Mexico oil operations normal despite flu - Pemex MEXICO CITY (Reuters) - Mexico's state oil company Pemex said on Monday all of its operations were normal despite the outbreak of a swine flu epidemic in the country that has claimed at least 103 lives.

The Need To Redefine OPEC Regulatory Policy The global economic crisis has struck the energy and oil markets hard. Oil prices have declined, and the intensity of the crisis in the oil market is such that even the recent decisions taken by OPEC to cut crude production rates, and in particular the organization's 19 December 2008 consensus to cut production significantly from the beginning of January 2009, have failed to contain the slide. Had it not been for interruptions in the supplies of Russian natural gas to Europe and the severe cold winter in that region, one could have expected even lower oil prices.

This economic crisis will not last for ever. However, the notion of guaranteed supplies of energy is a strategic and long-term issue, which has been pursued by the industrialized countries permanently ever since the 1970s. The experience of the past several years, before the emergence of the recent economic crisis, suggests that future energy crises will be serious and unavoidable. The upward trend of global prices of crude in recent years, before the current crisis, was a result of such factors as supply and demand imbalances and in particular a shortage of supply capacity .

OPEC's Badri suggests visiting Russia for oil talks: source Moscow (Platts) - OPEC secretary-general Abdalla el-Badri may visit Moscow soon to discuss cooperation between the oil producers' group and Russia, currently the world's biggest oil producer, a source in the Russian government said Monday.

The talks would address possible mutual steps to support oil prices, the source said.

Cook Inlet Wells Still Shut Down, Some May Not Restart Production remains suspended on offshore platforms in Cook Inlet due to continued volcanic activity at Mount Redoubt, on the Inlet's west side, and operating companies now think that it will be difficult to restore production in some of the shut-in wells.

"We anticipate we would have difficulty on a number of wells," when operations are resumed, Roxanne Sinz, spokeswoman for Chevron Corp., said in an April 21 e-mail. "Overall production will be less after the shut-in period as opposed to just before the loss of all oil production."

Aramco priming Nuayyim pumps Saudi Arabia's 100,000 barrels per day Nuayyim oilfield should be ready to start production by the middle of June, according to reports.

The field is one of three Saudi schemes due for completion by the middle of this year to boost the country's oil production capacity to 12.5 million bpd. Nuayyim's oil will be Arab Extra Light crude, which is prized by refiners for the ease with which it can be transformed into transport fuels.

Energy sources key to solving auto crisis It was evident during the opening of the Society of Automotive Engineers conference in Detroit last week that questions about where to get energy for vehicles still vexes carmakers both foreign and domestic.

Energy efficiency: Beat the bust by going green Spend money on energy efficiency during a recession? It's a much brighter idea than you think.

Kunstler: The Joker Even if the Mexican swine flu turns out to be something of a false alarm, it will require billions of dollars in unexpected new outlays for prevention operations here in the USA -- reinforcing the false idea that the nation has bottomless resources (the same idea that has been driving the bail-out fiesta). My guess is that the fear emanating from the story will be a potent generator of paranoia in the meantime, leading to widespread closures of things, canceling of events, restrictions on travel (official or otherwise), and a sell off in the financial markets. And that's if the flu turns out not to amount to anything.

Squeeze That Sponge Often stymied in their quest for new crude, Western oil companies are squeezing more out of the reserves they already have.

Despite the engineering advances of the past century, nearly two-thirds of crude still gets left in the ground. So oil companies are raising the ante, investing billions of dollars in cutting-edge technology to increase the amount of crude they can tap.

The potential rewards are huge: Raising the average recovery rate world-wide to 50% from 35% would boost the world's recoverable oil by about 1.2 trillion barrels -- equal to the whole of today's proven reserves, the International Energy Agency says.

Crude futures plunge as flu scare rekindles economic worries (Platts) - Global crude futures started the week on a significantly lower note Monday, dragged down by concerns about the impact of the swine flu outbreak on the world economic recovery and comments by Algerian oil minister Chakib Khelil that it may not be necessary for OPEC to further cut output, market sources said.

"The falls are driven by the outbreak of the [swine] flu, which is also driving equities lower," a crude trader said. He also pointed to signs that OPEC could refrain from further cutting its crude output target at its next meeting in late May.

Cost of gas barely budges in last two weeks NEW YORK - The average price for a gallon of gasoline in the United States rose less than a penny in the past two weeks as the economic downturn help to keep a lid on retail prices, according to the Lundberg survey released on Sunday.

Governments Must Cooperate for "Power-Down" as Oil Runs Out Oil production is expected to fall by around 3% per year, beyond the oil peak. To avert catastrophe, oil-producing nations must agree to reduce their production by 3% per year and oil-importing nations to reduce their imports by an exactly matching amount. Production will fall and must be planned to fall, while consumers take-up the slack in supply.

Some stockpiling to prepare should times turn perilous Ammo. Canned goods. Vegetable seeds. Fortified water by the case.

They are reportedly flying off the shelves, these staples of the stockpile crowd.

“Survivalist” isn’t the right term, not in a downturn that has got everyone nervous. “Preparedness” or “self-sufficiency” — that is what they are saying.

What will we tell the next generation? LAST month, the chief scientific adviser to the British Government, Professor John Beddington, predicted a global catastrophe by 2030 on the simple premise that while global demand for food, water and energy is escalating, the supply of these three essentials is diminishing.

He predicted civil unrest and international conflict.

If this scenario was to come true, I can imagine a voice in the future asking us — particularly those of us who had the privilege and responsibility of a public voice — the following questions.

Shell, BP Profits May Drop Most in Five Years on Oil (Bloomberg) -- Royal Dutch Shell Plc and BP Plc, Europe’s largest oil companies, may post the biggest drop in quarterly earnings in at least five years after the recession dragged down crude prices.

Iran can make more of its energy riches: U.S. envoy SOFIA (Reuters) - Iran could make more of its vast resources if relations with the west improve enough to allow more investment in its energy sector, the United States' new Special Envoy for Eurasian Energy, Richard Morningstar, said on Saturday.

The world's fourth-largest crude producer also sits on the world's second-largest gas reserves but U.S. sanctions imposed by the Bush administration have hindered gas export growth.

The Impending Mother of All Oil Shocks The other day I had an interesting conversation with someone who decides how much a small but significant portion of the world's oil reserves gets pumped.

I asked a question, "So long as the revenue from the oil that you pump is enough to meet the immediate needs of your country, why pump more?"

My point was that as the prospect of running out of easy-to-extract oil starts to hit the collective consciousness, and as demand creeps up (as it will), oil will spike again, and again. So why not just wait?

China Agrees to Buy LNG From Exxon’s Papua New Guinea Venture (Bloomberg) -- China, the world’s second-biggest energy user, has agreed to buy liquefied natural gas from Exxon Mobil Corp.’s $11 billion venture in Papua New Guinea, said two people with knowledge of the transaction.

A state oil company signed an agreement to buy 2 million metric tons of LNG a year, about 32 percent of the project’s proposed output, under a multiyear contract, said the two people, declining to be identified because the talks are confidential.

Mystery of Kazakhstan’s bigest private oil producer In the purchase by Kazakh national company KazMunaiGas (KMG) and China National Petroleum Corporation CNPC of 100 percent stock of the largest private oil producing company Mangistaumunaigas (MMG,) the most desired asset - the Pavlodar Petrochemical Plant (PPP or the Pavlodar refinery) - has remained untouched. KazMunaiGaz and CNPC Exploration and Development Company Ltd. (CNPC E&D) have signed an agreement to purchase 100 percent of Mangistaumunaigas common stock from Central Asia Petroleum Ltd (CAP,) KMG press service reported. However, the report is silent on the value of the future acquisition of Kazakhstan’s largest private-owned oil producer (the recoverable oil reserves of its fields are over 180 million tones.)

OPEC to Reduce Production If Needed, El-Badri Says (Bloomberg) -- OPEC, supplier of 40 percent of the world’s oil, will reduce oil production if necessary to support prices, Secretary General Abdalla el-Badri said.

“I am sure if at the May meeting there is a need to cut, they will take that decision,” el-Badri said today in an interview in Algiers. “In OPEC member countries, 35 projects have been delayed because of falling oil prices.”

3 Reports That Should Indicate Continued Firming of Oil Prices Seasonal demand is picking up steam. To confirm this I look to statistics from the Federal Highway Administration. February saw an increase in US motorists average daily driving, which is the first increase in 15 months, or approx the length of the current recession. Daliy mileage during February rose 2.7% from a year earlier, not to mention that this year had one day less due to the leap year calendar.

Too early to tell? Yes, it is too early to tell if the trend will continue. What is important is that the direction of the tide has shifted and a temporary floor for gas prices has been put in. We will need to see March numbers to confirm that the trend is continuing. In the meantime, quantitative easing should put pressure on the greenback. Along with contango demand, this should provide price support.

Is There Enough Natural Gas? The US alone has enough natural gas reserves to power home heating, industrial demand, 50% of its cars and trucks, and to replace 50% of the coal-fired plants with natural gas generation! This is, indeed, wonderful news. So, I stand by my recommendation that Energy Secretary Chu step down, or, be fired.

“Is Our Transportation System Sustainable?” Even though America only accounts for 5% of the world’s population, it uses about 20,680,000 barrels of oil per day. Despite US peak oil production during the 1970’s, consumption and net imports have always been on the rise, while the domestic production rate has been declining tremendously. The US imported about $246 billion worth of oil in 2007, which is $468,000 per minute. Most of the imported oil comes from OPEC, and 68% of all petroleum is consumed by transportation, 25% industries, 4% residential, 1% utilities, and 2% commercial.

Kuwait to pursue production target of 4mbpd for 2020: Sheikh Ahmad (KUNA): Kuwait will proceed with planned oil investment and expansion projects with an eye to achieve its production target for 2020 at 4 million barrels per day (bpd), Kuwaiti Oil Minister Sheikh Ahmad Al-Abdullah Al-Ahmad Al-Sabah reaffirmed on Sunday. Addressing Asia’s major oil producers and consumers at a one-day meeting here, Sheikh Ahmad said that Kuwait sticks to a plan to build a refinery in China with a capacity of 300,000 barrels per day (bpd) by teaming up with Asia’s top oil refiner Sinopec Corp, as well as a 200,000-bpd refinery in Vietnam through joint venture with Japanese firms and Petrovietnam. “Kuwait recognized the growing long-term demand in the developing countries, especially in Asia, and consequently the necessity of expanding the upstream and downstream capacity,” he said at the Third Asian Ministerial Energy Roundtable Meeting, co-hosted by Japan and Qatar.

ExxonMobil tenders for five LNG carriers ExxonMobil has sent out tender documents to shipowners and yards for up to five LNG newbuildings to serve its Papua New Guinea (PNG)-based liquefaction project. Shipbuilding sources say they are reviewing a tender for vessels of between 150,000 cbm and 180,000 cbm. Four or five ships will be required, depending on the size selected.

Supertanker Rates to Jump on Losing Single-Hull Ships (Bloomberg) -- The worst market for supertankers since the 1973 Arab oil embargo is setting the stage for prices to double by the fourth quarter as ship owners scrap aging vessels and delay orders for new ones.

Prices on the benchmark Saudi Arabia to Japan route will rise to at least $32,000 a day in the fourth quarter, from $16,007 now, Oslo-based Fearnley Consultants A/S estimates. That’s more than the $26,994 shown by freight derivatives, contracts used by investors to speculate on future rates.

Brazil’s Tupi Oil Field May Be Hurt by Rig Shortage (Bloomberg) -- Petroleo Brasileiro SA, Brazil’s state-controlled oil company, may be hurt by a rig shortage as it begins development of the Tupi field, the largest discovery in the Americas since 1976, according to Jefferies & Co. Inc.

The company expects to almost double the numbers of rigs operating in deepwater offshore Brazil to 68 by 2012, from 38 today, according to Jefferies analyst Jud Bailey.

It’s “questionable” whether six of these rigs can even be built because the contractors are “small marginal´´ players, Bailey said April 24 in an interview from Houston. Others rigs may be delivered as much as a year late, he said.

General Synfuels to Test Oil Shale Technology in Wyoming and Colorado Company predicts breakthrough technology will drastically cut oil shale recovery costs and minimize environmental impacts.

Province should start investing more in green, not nuclear energy Ontario is facing not one, but three major crises, all interrelated. The economy has slowed to a crawl. Global warming is threatening to undermine world stability and we appear to be reaching, or are past, peak oil production.

Yemeni forces free oil tanker, arrest 11 pirates SAN'A, Yemen - A Yemeni security official said on Monday that coast guard forces had freed a hijacked Yemeni oil tanker and arrested 11 pirates.

You've bought your last car Actually, you've probably bought the last of a lot of things, but I remember being struck when I first heard James Howard Kunstler say, "Most Americans have bought their last car." So I'm going to use the example of cars to demonstrate why that is and why we won't get off of fossil fuel in time.

Dr. Mark Jaccard - Sunday, 26 April 2009 (podcast) Dr. Mark Jaccard, a professor at Simon Fraser University's School of Resource and Environmental Management and a former member of the Intergovernmental Panel on Climate Change, discusses the essay he contributed to the Thomas Homer-Dixon edited book Carbon Shift: How the Twin Crises of Oil Depletion and Climate Change Will Define the Future (Random House, 2009), as well as the current provincial election campaign especially the NDP's plan to axe the carbon tax, with Joseph Planta.

Honda May Develop Plug-In Autos as Obama Alters U.S. Policy (Bloomberg) -- Honda Motor Co., the only company selling hydrogen-powered cars to U.S. drivers, may also develop plug-in models as U.S. policy shifts to favor battery-powered autos.

Honda, which began leasing hydrogen fuel cell FCX Clarity sedans in Los Angeles last year, still sees hydrogen as the best long-term alternative to gasoline as a fuel that can cut carbon exhaust tied to global warming, President Takeo Fukui said in an interview. Still, the company will respond to a push by the Obama administration for carmakers to sell plug-ins, he said.

Qantas May Cut Business Class Seats as Demand Plunges (Bloomberg) -- Qantas Airways Ltd., the Australian carrier that says it invented business class 30 years ago, may remove some premium seats as companies force executives to fly coach or stay at home.

Chrysler wins union concessions UAW says it reaches agreement on modifications in collective bargaining accord needed to keep automaker out of bankruptcy.

GM to cut 21,000 U.S. jobs, confirms it is scrapping Pontiac brand by end of 2010 DETROIT - General Motors said Monday it will cut 21,000 U.S. factory jobs by next year and phase out its storied Pontiac brand as part of a major restructuring effort needed to get more government aid.

The struggling automaker also says it will offer 225 shares of common stock for every $1,000 in notes held by bondholders as part of debt-for-equity swap.

Searching for Deeper Pockets Amid tight credit and tough market conditions, clean-technology companies without large backers are looking to better-capitalized suitors. This trend became apparent in the solar-power industry over the past few weeks.

Tailwinds for the wind industry The president spent Earth Day at an Iowa factory that makes wind turbine towers and announced new regulations for offshore wind farms. Meanwhile, Interior Secretary Ken Salazar has been talking up the potential of offshore wind to generate as much as 20% of the eastern seaboard’s electricity that is now provided by coal-fired power plants.

But such scenarios won’t come to pass unless the administration seriously tackles the transmission grid problems that are keeping wind from becoming a nationwide source of green energy, according to panel of wind industry executives who spoke at Fortune Magazine’s Brainstorm Green panel this week.

Surf's Up Scotland is placing big bets on tidal and wave power. The outcome is still very much in doubt.

Rallying to run Boulder's coal plant without the coal BOULDER, Colo. — Boulder is progressive, many say. Boulder is green. Boulder is striving to meet the Kyoto Protocol.

And Boulder has a coal plant within its city limits.

True, the Valmont power plant is owned by Xcel Energy, and true, the electricity feeds into the grid and doesn't necessarily power homes in Boulder. But still, the three tall smokestacks on the eastern side of town have, for a growing number of residents, become a symbol of the old energy economy where fossil fuels are king.

Smart Meter, Dumb Idea? New devices promise to cut energy use by giving consumers more information. Critics say they aren't worth the cost.

Going the Distance China wants to use melting snow on the Tibetan Plateau to power neon lights more than a thousand miles away in Shanghai. And to make that vision a reality, it is dusting off a 40-year-old technology for moving electricity -- ultra-high-voltage power lines.

Moore’s Law and the Law of More It is not an exaggeration to say that the team that President Obama appointed to promote his green agenda is nothing short of outstanding — a great combination of scientists and policy makers committed to building an energy economy that is efficient, clean and secure. Now there is only one vacancy left for him to fill. And it’s one that only he can fill: Green President. Is he ready to do that job with the passion and fight that will be required to transform America’s energy future? Hope so. Not sure yet.

Poll: Jobs over ecology For the first time in more than a decade, Americans surveyed by the Gallup Organization said they care more about stimulating the economy even if that means the environment suffers to some extent.

In a March 2009 telephone poll of 1,000 Americans, 51 percent said they believed America should put more of a priority on jobs and industry. For more than a decade, Gallup has been asking that question and the environment had always held the lead, until now.

The Green House of the Future What will the energy-efficient house of the future look like?

It could have gardens on its walls or a pond stocked with fish for dinner. It might mimic a tree, turning sunlight into energy and carbon dioxide into oxygen. Or perhaps it will be more like a lizard, changing its color to suit the weather and healing itself when it gets damaged.

A Full Agenda LamarMcKay, BP's new head of U.S. operations, talks about the Obama administration's policies, the future of biofuels and more.

Food bowl on brink of $5bn catastrophe THE nation's key food bowl, the Murray Darling Basin, is on the verge of economic collapse as the value of production plunges by at least $5 billion, experts say.

Drought and declining irrigation water have plunged inland Australia's heartland into crisis with the loss of at least one third of the basin's $15 billion annual income. Worse is predicted for the coming financial year if the drought continues.

Galapagos Penguins Need ‘Condos’ With Global Warming (Bloomberg) -- The Galapagos Islands, renowned for rare animals that inspired Charles Darwin’s theory of evolution, may have to create special shelters to save species from global warming and rising sea levels.

Scientists who met there last week decided the indigenous penguin needs “condos” built in cooler, higher areas to nest more safely, Giuseppe Di Carlo, marine climate-change manager at Conservation International, said in an interview. Shadier bushes would protect plants and animals such as birds and tortoises that produce too many of the same sex in hotter weather.

Report: Climate change bodes ill for SE Asia BANGKOK—Southeast Asia will be hit particularly hard by climate change, causing the region's agriculture-dependent economies to contract by as much as 6.7 percent annually by the end of the century, according to a study released Monday.

The Asian Development Bank study focused on Indonesia, the Philippines, Thailand and Vietnam. Those countries are especially vulnerable because they have large coastal populations facing rising sea levels and rely heavily on rice and other agriculture products which could suffer from water shortages as well as floods. Vietnam was found to be the most vulnerable.

Irish temperatures to rise 1.8C by 2050 A new report has predicted climate change will have significant impacts on Ireland within a matter of decades.

This will include far more intense rainfall and an increased number of droughts.

Research conducted at NUI Maynooth and published by the EPA projects winter rainfall will increase by 10%, while summer rainfall will drop by up to 17% by 2050.

Washington forum draws worst greenhouse polluters WASHINGTON (Reuters) – Diplomats from the world's biggest greenhouse gas polluters including the United States, China and India are set to take part in a forum on Monday at the U.S. State Department aimed at getting a U.N. agreement to curb global warming.

The two-day meeting of so-called major economies is meant to jump-start climate talks in advance of a December deadline, when the international community meets in Copenhagen to find a follow-up agreement to the Kyoto Protocol, which limits climate-warming greenhouse emissions and expires in 2012.

Obama's Democrats drag feet as US opens international climate talks Washington - The Obama administration will try its hand starting Monday at finding a consensus among 17 leading economies on climate change as the US State Department sponsors the "Major Economies Forum on Energy and Climate" in Washington. The week-long talks, which include India and China, are part of the process leading up to a major world meeting in Copenhagen at year's end that is to forge a follow-up to the Kyoto Protocol on global warming, which expires in 2012.

But US President Barack Obama's government goes into the meeting with a hand weakened by his own majority centre-left Democratic Party in Congress, where legislators are already debating whether to scale back a far-reaching proposal introduced last month that would boost incentives for renewable energy and for the first time force companies to pay for pollution that is blamed for global warming.

Shaping the post-carbon economy The good news is that we can achieve what's needed, we can afford to do it, and we can do it all without curtailing growth. The latest version of the McKinsey global carbon abatement cost curve identifies opportunities to stabilise emissions by 2030 at 1990 levels, or 50% below the "business as usual" trend line.

Making these reductions would cost about €200-350 billion annually by 2030 – less than 1% of projected global GDP in 2030. The total up-front financing would be €530 billion by 2020 – less than the cost of the current US financial-sector bailout plan – and €810 billion by 2030, which is well within range of what financial markets can handle.

Selling The Green Economy Few things are more appealing in politics than something for nothing. As Congress begins considering anti-global-warming legislation, environmentalists hold out precisely that tantalizing prospect: We can conquer global warming at virtually no cost.

Utilities amp up lobbying over climate debate WASHINGTON — Fifty of the nation's largest electric utilities amped up spending on lobbyists by 30% late last year to influence the debate in Congress just underway on one of the biggest issues facing lawmakers: climate change.

From Duke Energy, with 4 million customers, to American Electric Power, which sells energy in 11 states, the companies spent a total $51 million in the last six months of 2008, $12 million more than the same period in 2007, a USA TODAY review of lobbying reports shows.

This is a link to a televised speech by Dmitry Orlov, called Social Collapse Best Practices. A transcript of the first part of the speech can be found below the fold. (The speech is a little long for a post.) This is the description of the speech:

With vintage Russian black humor, Dmitry Orlov describes the social collapse he witnessed in Russia in the 1990s and spells out its practical lessons for the American social collapse he sees as inevitable.

The American economy in the 1990s described itself as "Goldilocks" - just the right size - when in fact is was "Tinkerbelle," and one day the clapping stops.

As in Russia, the US made itself vulnerable to the decline of crude oil, a trade deficit, military over-reach, and financial over-reach.

Good evening, ladies and gentlemen. Thank you for showing up. It's certainly nice to travel all the way across the North American continent and have a few people come to see you, even if the occasion isn't a happy one. You are here to listen to me talk about social collapse and the various ways we can avoid screwing that up along with everything else that's gone wrong. I know it's a lot to ask of you, because why wouldn't you instead want to go and eat, drink, and be merry? Well, perhaps there will still be time left for that after my talk.

I would like to thank the Long Now Foundation for inviting me, and I feel very honored to appear in the same venue as many serious, professional people, such as Michael Pollan, who will be here in May, or some of the previous speakers, such as Nassim Taleb, or Brian Eno -- some of my favorite people, really.

I am just a tourist. I flew over here to give this talk and to take in the sights, and then I'll fly back to Boston and go back to my day job. Well, I am also a blogger. And I also wrote a book. But then everyone has a book, or so it would seem. You might ask yourself, then, Why on earth did he get invited to speak here tonight? It seems that I am enjoying my moment in the limelight, because I am one of the very few people who several years ago unequivocally predicted the demise of the United States as a global superpower. The idea that the USA will go the way of the USSR seemed preposterous at the time. It doesn't seem so preposterous any more.

I take it some of you are still hedging your bets. How is that hedge fund doing, by the way? I think I prefer remaining just a tourist, because I have learned from experience--luckily, from other people's experience--that being a superpower collapse predictor is not a good career choice. I learned that by observing what happened to the people who successfully predicted the collapse of the USSR. Do you know who Andrei Amalrik is? See, my point exactly. He successfully predicted the collapse of the USSR. He was off by just half a decade.

That was another valuable lesson for me, which is why I will not give you an exact date when USA will turn into FUSA ("F" is for "Former"). But even if someone could choreograph the whole event, it still wouldn't make for much of a career, because once it all starts falling apart, people have far more important things to attend to than marveling at the wonderful predictive abilities of some Cassandra-like person. I hope that I have made it clear that I am not here in any sort of professional capacity. I consider what I am doing a kind of community service. So, if you don't like my talk, don't worry about me. There are plenty of other things I can do.

But I would like my insights to be of help during these difficult and confusing times, for altruistic reasons, mostly, although not entirely. This is because when times get really bad, as they did when the Soviet Union collapsed, lots of people just completely lose it. Men, especially successful, middle-aged men, breadwinners, bastions of society, turn out to be especially vulnerable. And when they just completely lose it, they become very tedious company. My hope is that some amount of preparation, psychological and otherwise, can make them a lot less fragile, and a bit more useful, and generally less of a burden.

Women seem much more able to cope. Perhaps it is because they have less of their ego invested in the whole dubious enterprise, or perhaps their sense of personal responsibility is tied to those around them and not some nebulous grand enterprise. In any case, the women always seem far more able to just put on their gardening gloves and go do something useful, while the men tend to sit around groaning about the Empire, or the Republic, or whatever it is that they lost. And when they do that, they become very tedious company. And so, without a bit of mental preparation, the men are all liable to end up very lonely and very drunk. So that's my little intervention.

If there is one thing that I would like to claim as my own, it is the comparative theory of superpower collapse. For now, it remains just a theory, although it is currently being quite thoroughly tested. The theory states that the United States and the Soviet Union will have collapsed for the same reasons, namely: a severe and chronic shortfall in the production of crude oil (that magic addictive elixir of industrial economies), a severe and worsening foreign trade deficit, a runaway military budget, and ballooning foreign debt. I call this particular list of ingredients "The Superpower Collapse Soup."

Other factors, such as the inability to provide an acceptable quality of life for its citizens, or a systemically corrupt political system incapable of reform, are certainly not helpful, but they do not automatically lead to collapse, because they do not put the country on a collision course with reality. Please don't be too concerned, though, because, as I mentioned, this is just a theory. My theory. I've been working on this theory since about 1995, when it occurred to me that the US is retracing the same trajectory as the USSR.

As so often is the case, having this realization was largely a matter of being in the right place at the right time. The two most important methods of solving problems are: 1. By knowing the solution ahead of time, and 2. By guessing it correctly. I learned this in engineering school--from a certain professor. I am not that good at guesswork, but I do sometimes know the answer ahead of time. I was very well positioned to have this realization because I grew up straddling the two worlds--the USSR and the US.

I grew up in Russia, and moved to the US when I was twelve, and so I am fluent in Russian, and I understand Russian history and Russian culture the way only a native Russian can. But I went through high school and university in the US .I had careers in several industries here, I traveled widely around the country, and so I also have a very good understanding of the US with all of its quirks and idiosyncrasies. I traveled back to Russia in 1989, when things there still seemed more or less in line with the Soviet norm, and again in 1990, when the economy was at a standstill, and big changes were clearly on the way. I went back there 3 more times in the 1990s, and observed the various stages of Soviet collapse first-hand.

By the mid-1990s I started to see Soviet/American Superpowerdom as a sort of disease that strives for world dominance but in effect eviscerates its host country, eventually leaving behind an empty shell: an impoverished population, an economy in ruins, a legacy of social problems, and a tremendous burden of debt. The symmetries between the two global superpowers were then already too numerous to mention, and they have been growing more obvious ever since. The superpower symmetries may be of interest to policy wonks and history buffs and various skeptics, but they tell us nothing that would be useful in our daily lives.

It is the asymmetries, the differences between the two superpowers, that I believe to be most instructive. When the Soviet system went away, many people lost their jobs, everyone lost their savings, wages and pensions were held back for months, their value was wiped out by hyperinflation, there shortages of food, gasoline, medicine, consumer goods, there was a large increase in crime and violence, and yet Russian society did not collapse. Somehow, the Russians found ways to muddle through.

How was that possible? It turns out that many aspects of the Soviet system were paradoxically resilient in the face of system-wide collapse, many institutions continued to function, and the living arrangement was such that people did not lose access to food, shelter or transportation, and could survive even without an income. The Soviet economic system failed to thrive, and the Communist experiment at constructing a worker's paradise on earth was, in the end, a failure. But as a side effect it inadvertently achieved a high level of collapse-preparedness.

In comparison, the American system could produce significantly better results, for time, but at the cost of creating and perpetuating a living arrangement that is very fragile, and not at all capable of holding together through the inevitable crash. Even after the Soviet economy evaporated and the government largely shut down, Russians still had plenty left for them to work with. And so there is a wealth of useful information and insight that we can extract from the Russian experience, which we can then turn around and put to good use in helping us improvise a new living arrangement here in the United States--one that is more likely to be survivable.

The mid-1990s did not seem to me as the right time to voice such ideas. The United States was celebrating its so-called Cold War victory, getting over its Vietnam syndrome by bombing Iraq back to the Stone Age, and the foreign policy wonks coined the term "hyperpower" and were jabbering on about full-spectrum dominance. All sorts of silly things were happening. Professor Fukuyama told us that history had ended, and so we were building a brave new world where the Chinese made things out of plastic for us, the Indians provided customer support when these Chinese-made things broke, and we paid for it all just by flipping houses, pretending that they were worth a lot of money whereas they are really just useless bits of ticky-tacky.

Alan Greenspan chided us about "irrational exuberance" while consistently low-balling interest rates. It was the "Goldilocks economy"--not to hot, not too cold. Remember that? And now it turns out that it was actually more of a "Tinker-bell" economy, because the last five or so years of economic growth was more or less a hallucination, based on various debt pyramids, the "whole house of cards" as President Bush once referred to it during one of his lucid moments. And now we can look back on all of that with a funny, queasy feeling, or we can look forward and feel nothing but vertigo.

While all of these silly things were going on, I thought it best to keep my comparative theory of superpower collapse to myself. During that time, I was watching the action in the oil industry, because I understood that oil imports are the Achilles' heel of the US economy. In the mid-1990s the all-time peak in global oil production was scheduled for the turn of the century. But then a lot of things happened that delayed it by at least half a decade.

Perhaps you've noticed this too, there is a sort of refrain here: people who try to predict big historical shifts always turn to be off by about half a decade. Unsuccessful predictions, on the other hand are always spot on as far as timing: the world as we know it failed to end precisely at midnight on January 1, 2000. Perhaps there is a physical principal involved: information spreads at the speed of light, while ignorance is instantaneous at all points in the known universe.

So please make a mental note: whenever it seems to you that I am making a specific prediction as to when I think something is likely to happen, just silently add "plus or minus half a decade." In any case, about half a decade ago, I finally thought that the time was ripe, and, as it has turned out, I wasn't too far off. In June of 2005 I published an article on the subject, titled "Post-Soviet Lessons for a Post- American Century," which was quite popular, even to the extent that I got paid for it. It is available at various places on the Internet.

A little while later I formalized my thinking somewhat into the "Collapse Gap" concept, which I presented at a conference in Manhattan in April of 2006. The slide show from that presentation, titled "Closing the Collapse Gap," was posted on the Internet and has been downloaded a few million times since then. Then, in January of 2008, when it became apparent to me that financial collapse was well underway, and that other stages of collapse were to follow, I published a short article titled "The Five Stages of Collapse," which I later expanded into a talk I gave at a conference in Michigan in October of 2008.

Finally, at the end of 2008, I announced on my blog that I am getting out of the prognosticating business. I have made enough predictions, they all seem very well on track (give or take half a decade, please remember that), collapse is well underway, and now I am just an observer.

But this talk is about something else, something other than making dire predictions and then acting all smug when they come true. You see, there is nothing more useless than predictions, once they have come true. It's like looking at last year's amazingly successful stock picks: what are you going to do about them this year? What we need are examples of things that have been shown to work in the strange, unfamiliar, post-collapse environment that we are all likely to have to confront.

Stuart Brand proposed the title for the talk--"Social Collapse Best Practices"--and I thought that it was an excellent idea. Although the term "best practices" has been diluted over time to sometimes mean little more than "good ideas," initially it stood for the process of abstracting useful techniques from examples of what has worked in the past and applying them to new situations, in order to control risk and to increase the chances of securing a positive outcome. It's a way of skipping a lot of trial and error and deliberation and experimentation, and to just go with what works.

In organizations, especially large organizations, "best practices" also offer a good way to avoid painful episodes of watching colleagues trying to "think outside the box" whenever they are confronted with a new problem. If your colleagues were any good at thinking outside the box, they probably wouldn't feel so compelled to spend their whole working lives sitting in a box keeping an office chair warm. If they were any good at thinking outside the box, they would have by now thought of a way to escape from that box. So perhaps what would make them feel happy and productive again is if someone came along and gave them a different box inside of which to think--a box better suited to the post-collapse environment.

Here is the key insight: you might think that when collapse happens, nothing works. That's just not the case. The old ways of doing things don't work any more, the old assumptions are all invalidated, conventional goals and measures of success become irrelevant. But a different set of goals, techniques, and measures of success can be brought to bear immediately, and the sooner the better. But enough generalities, let's go through some specifics. We'll start with some generalities, and, as you will see, it will all become very, very specific rather quickly.

Here is another key insight: there are very few things that are positives or negatives per se. Just about everything is a matter of context. Now, it just so happens that most things that are positives prior to collapse turn out to be negatives once collapse occurs, and vice versa. For instance, prior to collapse having high inventory in a business is bad, because the businesses have to store it and finance it, so they try to have just-in-time inventory. After collapse, high inventory turns out to be very useful, because they can barter it for the things they need, and they can't easily get more because they don't have any credit.

Prior to collapse, it's good for a business to have the right level of staffing and an efficient organization. After collapse, what you want is a gigantic, sluggish bureaucracy that can't unwind operations or lay people off fast enough through sheer bureaucratic foot-dragging. Prior to collapse, what you want is an effective retail segment and good customer service. After collapse, you regret not having an unreliable retail segment, with shortages and long bread lines, because then people would have been forced to learn to shift for themselves instead of standing around waiting for somebody to come and feed them.

If you notice, none of these things that I mentioned have any bearing on what is commonly understood as "economic health." Prior to collapse, the overall macroeconomic positive is an expanding economy. After collapse, economic contraction is a given, and the overall macroeconomic positive becomes something of an imponderable, so we are forced to listen to a lot of nonsense. The situation is either slightly better than expected or slightly worse than expected. We are always either months or years away from economic recovery. Business as usual will resume sooner or later, because some television bobble-head said so.

But let's take it apart. Starting from the very general, what are the current macroeconomic objectives, if you listen to the hot air coming out of Washington at the moment?

First: growth, of course! Getting the economy going. We learned nothing from the last huge spike in commodity prices, so let's just try it again. That calls for economic stimulus, a.k.a. printing money. Let's see how high the prices go up this time. Maybe this time around we will achieve hyperinflation.

Second: Stabilizing financial institutions: getting banks lending--that's important too. You see, we are just not in enough debt yet, that's our problem. We need more debt, and quickly!

Third: jobs! We need to create jobs. Low-wage jobs, of course, to replace all the high-wage manufacturing jobs we've been shedding for decades now, and replacing them with low-wage service sector jobs, mainly ones without any job security or benefits.

Right now, a lot of people could slow down the rate at which they are sinking further into debt if they quit their jobs. That is, their job is a net loss for them as individuals as well as for the economy as a whole. But, of course, we need much more of that, and quickly! So that's what we have now.

The ship is on the rocks, water is rising, and the captain is shouting "Full steam ahead! We are sailing to Afghanistan!" Do you listen to Ahab up on the bridge, or do you desert your post in the engine room and go help deploy the lifeboats? If you thought that the previous episode of uncontrolled debt expansion, globalized Ponzi schemes, and economic hollowing-out was silly, then I predict that you will find this next episode of feckless grasping at macroeconomic straws even sillier.

Except that it won't be funny: what is crashing now is our life support system: all the systems and institutions that are keeping us alive. And so I don't recommend passively standing around and watching the show--unless you happen to have a death wish. Right now the Washington economic stimulus team is putting on their Scuba gear and diving down to the engine room to try to invent a way to get a diesel engine to run on seawater. They spoke of change, but in reality they are terrified of change and want to cling with all their might to the status quo.

But this game will soon be over, and they don't have any idea what to do next. So, what is there for them to do? Forget "growth," forget "jobs," forget "financial stability." What should their realistic new objectives be?

Well, here they are: food, shelter, transportation, and security. Their task is to find a way to provide all of these necessities on an emergency basis, in absence of a functioning economy, with commerce at a standstill, with little or no access to imports, and to make them available to a population that is largely penniless. If successful, society will remain largely intact, and will be able to begin a slow and painful process of cultural transition, and eventually develop a new economy, a gradually de-industrializing economy, at a much lower level of resource expenditure, characterized by a quite a lot of austerity and even poverty, but in conditions that are safe, decent, and dignified.

If unsuccessful, society will be gradually destroyed in a series of convulsions that will leave a defunct nation composed of many wretched little fiefdoms. Given its largely depleted resource base, a dysfunctional, collapsing infrastructure, and its history of unresolved social conflicts, the territory of the Former United States will undergo a process of steady degeneration punctuated by natural and man-made cataclysms.

Food. Shelter. Transportation. Security. When it comes to supplying these survival necessities, the Soviet example offers many valuable lessons. As I already mentioned, in a collapse many economic negatives become positives, and vice versa. Let us consider each one of these in turn.

The Soviet agricultural sector was plagued by consistent underperformance. In many ways, this was the legacy of the disastrous collectivization experiment carried out in the 1930s, which destroyed many of the more prosperous farming households and herded people into collective farms. Collectivization undermined the ancient village-based agricultural traditions that had made pre-revolutionary Russia a well-fed place that was also the breadbasket of Western Europe.

A great deal of further damage was caused by the introduction of industrial agriculture. The heavy farm machinery alternately compacted and tore up the topsoil while dosing it with chemicals, depleting it and killing the biota. Eventually, the Soviet government had to turn to importing grain from countries hostile to its interests--United States and Canada--and eventually expanded this to include other foodstuffs.

The USSR experienced a permanent shortage of meat and other high-protein foods, and much of the imported grain was used to raise livestock to try to address this problem. Although it was generally possible to survive on the foods available at the government stores, the resulting diet would have been rather poor, and so people tried to supplement it with food they gathered, raised, or caught, or purchased at farmers' markets. Kitchen gardens were always common, and, once the economy collapsed, a lot of families took to growing food in earnest. The kitchen gardens, by themselves, were never sufficient, but they made a huge difference.

The year 1990 was particularly tough when it came to trying to score something edible. I remember one particular joke from that period. Black humor has always been one of Russia's main psychological coping mechanisms. A man walks into a food store, goes to the meat counter, and he sees that it is completely empty. So he asks the butcher: "Don't you have any fish?" And the butcher answers: "No, here is where we don't have any meat. Fish is what they don't have over at the seafood counter."

Poor though it was, the Soviet food distribution system never collapsed completely. In particular, the deliveries of bread continued even during the worst of times, partly because has always been such an important part of the Russian diet, and partly because access to bread symbolized the pact between the people and the Communist government, enshrined in oft-repeated revolutionary slogans. . .

Tonight's guest essay from Chuck Burr, brought back memories of a similar message, (after reading Daniel Quinn's "Ishmael" many years ago), that jettisoned me from my more=better individual trajectory. Quinn's books were among the first I read suggesting our current cultural norms were not the preordained destination for our species, and caused me to read far and wide about what was happening to our planet and the general intersection of more demand/ less supply. In a related vein, Chuck Burr's essay takes a very wide boundary view of our options as a culture encountering multiple resource limits but weighed down by huge existing fixed infrastructure. I don't agree with all of it, as we may have been 'Takers' all along just with lower tribal populations, but his essay raises some interesting and important issues. Tonight's Campfire questions are: How WOULD we just walk away from the existing social and built infrastructure? Is it desirable? Is it possible?

Osama BinLowRider - It's All the Same Culture

Our political discussions and media coverage are far too shallow to be useful. We must go deeper and much further back to understand the world today and learn how to get where we want to go.

Almost everyone misunderstands what culture is. Most think it is soda pop, pop stars, blue jeans, language, and TV. Some think it is capitalism, communism, or progressivism. Some see culture as Western culture or Eastern culture.

Look at the motorcycle picture. The motorcycles will fool you. All of the people above belong to the same culture as does a soccer mom in a Chicago suburb. Keep guessing. This makes a huge difference in how we understand what is happening today and where we are going.

The answer is, that we are all Takers. We all belong to the same culture, tea-to-tiler or Taliban, one culture. The Dali Lama or Duncan Donuts cop, one culture. Our Taker culture began 10,000 years ago with the agricultural revolution when they locked up the food, began the population–food race, invented war, started privatizing land, and ended the formerly one universal religion of animism. It was forgotten in just a few generation that there used to be probably 10,000 unique Leaver cultures before our now universal Taker culture—The Great Forgetting.

Some suggest that modern progressive exuberance has replaced Christianity as the modern culture or religion. The “here and now” and a better life for each generation from technology replacing faith in an “unseen unknown afterlife” culminating in a technological singularity that will save humanity.

They are right to identify exuberance, but today’s exuberance is the same that caused a tribe of agriculturalists between the Euphrates and Tigris rivers to start overtaking their Leaver neighbors in an unending conquest that is now largely complete. The age of Enlightenment, the Renaissance, and Manifest Destiny are past examples of the same exuberance. The ultimate hubris was inventing one god in a human form. Today, all but one or two million Leavers, versus of 6.8 billion Takers, are left alive or are not yet assimilated.

It’s Pointless To Discuss Anything Else

Peak oil and financial collapse seem important because they immediately affect us and are within our lifetime scale. But, they are just noise along the way of our 10,000 year Taker cultural odyssey. Nothing will change for our children until our culture ends. It will be one rise and fall, migration and conquest, resource war after resource war on and on until our culture is completely replaced with a resilient diversity of many new cultures. Until then we are just building and operating the Taker prison for ourselves and our children. Only when our culture ends, will the earth be allowed to start healing itself. A change of leadership of the same culture is also a waste of time.

Here comes the important part of the essay: discussing anything else today except walking away from our culture is pointless. This has to do with the difference between programs and vision or story. When Columbus invaded Haiti, he brought with him the greatest virus of all, a new cultural story.
The story of Leaver cultures before the agricultural revolution was, “Humanity belongs to the earth.” The Taker cultural story is, “The earth belongs to man.” This has been the crux of the creation and perpetuation of our culture for the last 10,000 years. We have had technology since the digging stick, technology has nothing to do with culture. It is how you value humanity in relation to “our relations” or the earth and what you do with the technology that matters.

A program is doing more of the same. If the effort in Afghanistan is failing, send more troops. If test score are falling, spend more on a failed educational system. If the banks are failing, send them more money.

A program is like a stick in the river of our culture. Programs run contrary to the cultural story. Recycling is a program to combat our consumer economy. Smart grids are a program to combat our excessive use of cheap fossil fuel energy. Green building is a program to combat urban sprawl. Food aid is a program to combat the population–food race. Organic farming is a program to combat industrial totalitarian agriculture.

Programs are fruitless efforts to combat the symptoms of our cultural story that the world belongs to man. Until the story is reversed, all programs are a complete waste of time. If you truly want peace, social justice, and Ecotopia, you have to starting living under the remembered story that humanity belongs to the earth.

The Problem is Not Humanity

Humanity has lived on the earth for three or four million years. For millions of years we lived in harmony or symbiosis with the ecosystem. We had a stable population. A “give it to them as good as you get” it erratic retaliator strategy existed instead of war. Tribalism and animism were the universal human organizational structures and religion. Tribalism is the one and only evolutionarily proven human social organizational system. Tribalism is to humans what herds are for deer, pods are for whales, schools are for fish, and hives are for bees. The problem began 10,000 years ago when our culture was created.

You Cannot Invent a New Social Organizational System

Here is the rub. You just can’t invent a new social organizational system like a tribe. We have been trying to perfect a new social organizational system called civilization for 10,000 years. But, civilization continues to fail more each year for more people and species. If civilization was going to create world peace and plenty for all it would have done so already. It never can because a story based on one species taking everything it can gets its hands on will never work. We even treat members of our own species as poorly as we do all other species we exploit.

The Great Remembering

The only solution worth discussion is developing new cultures that live by the original story that humanity belongs to the earth. Going green is not enough. Driving a hybrid and having a backyard vegetable garden is not going to get you there. It’s deeper than that. I am beginning to think we are going to have to start depaving, give up our iPods, and start making music for ourselves. I am not sure how far this is going to have to go. But I do know that it has to go back to a level in which our population and method of consumption allows the earth to start rebuilding biodiversity and topsoil.

We will have to remember our relationship with the cultivars, how to give support to get support, how to live on local sunlight, and we might even have to remember animism. We have a long way to go. I am starting the journey for myself and my children.

Hierarchies have strong defenses for attacks from below. However, they have no defense from abandonment. The point is we have to create new cultures that borrow from what we can from the present that fits within the structure of the past. This is the only way we will make a difference. We have to become the change we want to see, find like minded friends, and start our own local tribes. We must develop a high enough level of group self reliance that will allow us to walk away. We need doers, not talkers, not surfers, and not bloggers. We need to be walking toward something better, not away from something we don’t like. Its time to start living your truth.

Original essay by Chuck Burr here
Notes:

Daniel Quinn
Ishmael

Ernest Callenbach
Ecotopia

Marija Gimbutas
The Civilization of the Goddess: The World of Old Europe

Dan Piraro
Bizarro

depave.org
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Groups See Added Risks From Change in Climate The effects of climate change, especially rising seas, threaten trillions of dollars’ worth of coastal property, and flood-hazard maps, zoning laws, building codes and insurance rates in the United States do not accurately reflect the risk, an unusual coalition of groups reported Thursday.

The coalition — organized by the Heinz Center, a research organization that focuses on environmental issues, and Ceres, an organization of environmentally conscious investor, insurance and other groups — said the nation had failed to take “reasonable steps” to reduce economic losses and protect residents of the coast.

In a report, it urged that government flood-hazard maps be updated and that local land-use policies bar people from building or rebuilding in areas at high risk of flooding.

Does understanding complexity beget a tragic view of life? Sheer exuberance is often enough to carry the young into the most daunting and dangerous of endeavors. But as we age, experience can make us more hesitant. Many people discover that the universe can sometimes be arbitrary, that completely unforeseen events can ruin careers and even end lives, that, in short, life is tragic.

But paradoxically the tragic view of life doesn't beget mere glumness. Instead, it teaches prudence which can be a good thing and occasionally a lifesaver. It actually inculcates a more profound appreciation of those moments of happiness and bliss, for the tragic view of life cautions us that these are not the products of will and planning, but rather mostly the result of serendipity. Those with the tragic view do not believe that everything must end in tragedy; rather, they believe that tragic endings are an ever present possibility.

Contagion on a Small Planet Disaster experts have been warning that the world, because of the fast-rising density of human populations, needs to work now to avoid high death tolls in inevitable natural disasters. Public health experts similarly warn that vigilance and speed in tracking and responding to disease outbreaks will be vital to limit the chances of a pandemic...

Disaster experts have been warning that the world, because of the fast-rising density of human populations, needs to work now to avoid high death tolls in inevitable natural disasters. Public health experts similarly warn that vigilance and speed in tracking and responding to disease outbreaks will be vital to limit the chances of a pandemic.

Women bear brunt of African hunger crisis Ancient traditions and modern circumstances often combine to place the burden on women to feed their poor families. Researchers say women do as much as 80 percent of the farm work in poor countries. And, with food and fertilizer prices rising, and AIDS and the global financial meltdown taking their toll, women like Ndwandwe are straining under growing responsibilities.

A Workers’ Paradise Found Off Japan’s Coast “Hime Island is North Korea, just a livable version,” Naokazu Koiwa said with a laugh. Mr. Koiwa, 32, repairs fishing boats.

Unsurprisingly, the current mayor, Akio Fujimoto, flatly rejects the North Korean comparison. Rather, he and most other islanders call Hime a repository for traditional Japanese values, like economic egalitarianism and social harmony. They say the rest of the nation has lost these in an embrace of more competitive capitalism, especially under the prime ministership of Junichiro Koizumi from 2001-6.

“Our thinking is, ‘let’s all share the economic pie and get along, instead of giving all of it to the rich,’ ” said Mr. Fujimoto, whose father, Kumao Fujimoto, devised the work-sharing system in the 1960s. “Avoiding competition is the traditional Japanese way.”

Baghdad Bombings: Is Iraq Unraveling Again? At least five bomb attacks in Iraq in the past 48 hours have left some 140 people dead, wounded dozens more and raised fears that the country may be returning to the sectarian violence from which it has only just emerged. On Thursday three bombs in central Baghdad and areas northeast of the capital killed at least 80 people and wounded more than 100. On Friday, a double suicide bombing at the most important Shi'ite shrine in Baghdad killed another 60 and injured 125 more. The bombs went off as people gathered for Friday prayers at the mosque and tomb where the prominent Shi'a saint Imam Mousa al-Kazim is buried. Last weekend, a pair of mortars or rockets slammed into the Green Zone, the first such attack since mid-January. The number of murders across Iraq that appear related to insurgent violence has also risen over the past few weeks.

Americans Accused of Stealing Fuel in Iraq In a confidence game that made a mockery of the United States military’s most secure compound in Iraq, a ring of Americans posing as contractors and their Nepalese drivers used tanker trucks, forged documents and sheer brazenness to steal at least $40 million worth of jet and diesel fuel from an Army depot, according to an indictment returned by a federal grand jury in Virginia on Friday.

Holdouts for Humble Bulb Defy a Government Phase-Out TUNBRIDGE WELLS, England — On a quaint lane called Camden Street, the sidewalk easel stands out for its apocalyptic tone: “100-WATT BULBS IN STOCK. (FOR HOW LONG WE DO NOT KNOW)”

“Let some government official come in and tell me I can’t sell these,” Jonathan Wright, who has owned Classic Lighting for 40 years, said defiantly as he surveyed his warren of upscale light fixtures and shelves filled with neatly stacked bulbs. “I’ll find them wherever I can get them and sell them for whatever they cost. People are buying in bulk because they want them.”

IEA Sees Oil-Supply Crunch by 2013 on Slow Investment (Bloomberg) -- The International Energy Agency said the world may face a crude oil shortage by 2013 because of slower investments in oil exploration and production by OPEC members and other producing countries.

“I can’t rule out the possibility of an oil supply constraint in 2013 and 2014,” Nobuo Tanaka, Paris-based IEA’s executive director, said in an interview in Tokyo today. “Investments have dropped, and if this continues, an oil crunch would emerge.”

Gulf OPEC sees $50 oil price pragmatic for now Gulf oil producers said on Sunday they can tolerate moderate crude prices for longer to help revive global growth, but shared a concern with consumer nations that a prolonged period of low prices could sow the seeds of a future fuel price spike.

Qatar says low oil price threatens Middle East economies Tokyo: The drop in oil prices is reducing income in the Middle East and threatening the economic stability of producing countries, Qatar’s oil minister said on Sunday.

"For the first time in a quarter century, world demand for oil is falling; the price has collapsed since July 2008," Abdulla Bin Hamad Al Attiyah said at the Asia Ministerial Energy Roundtable in Tokyo.

"Companies almost everywhere are freezing investment and re-evaluating energy projects based on high prices," he said.

Oil Price Volatility Has “Serious” Risk, Naimi Says (Bloomberg) -- The volatility in oil prices “poses serious risks” of future spikes as then global recession curbs investment in energy projects that would boost future supply, Saudi Arabia’s oil minister said.

“Price extremes have been unjustifiable and unsustainable,” Ali al-Naimi said in the text of a speech delivered at the 3rd Asian Ministerial Energy Roundtable in Tokyo today. “I have often cautioned that if prices remain too low for too long, they can carry the seeds of future price spikes and volatility.”

Iran Meeting More Than 90% of OPEC Quota Target, Official Says (Bloomberg) -- Iran, OPEC’s second-largest producer, is now meeting “more than 90 percent” of its output target as part of the group’s commitment to reduce exports, said Hossein Noghrekar Shirazi, a deputy minister at the country’s Ministry of Petroleum.

“What we have committed, we are performing,” said Shirazi, on the sidelines of the 3rd Asia Ministerial Energy Roundtable today in Tokyo. “As for the reports by some of the secondary sources, we have said that some of them are not reporting accurately for various reasons.”

Chinaoil emerges as major force in crude trading SINGAPORE: Chinaoil, trading arm of state refiner PetroChina, has been the most active player on crude oil during the Asian Platts window this month, signalling its aim to become a major market force, rivalling peer Unipec.

Thoughts on the Current Restructuring of Global Oil Demand The global financial crisis may be hastening a process that’s been underway the entire decade: the restructuring of global oil demand. Western OECD oil demand has been much slower the past 15 years and its growth rate started to stall out again as early as 2004. The more spectacular leg of the advance in the price of oil was therefore built in large part on non-OECD demand. Of course. While this looks like a tidy and easy-to-read set of circumstances, however, it’s actually a bit more complicated than merely splitting the world in two.

David Strahan: A Government still addicted to petrol Some applauded policies such as the extra subsidy for offshore wind and investment in building efficiency, but attacked overall funding of £1.4bn as miserly in comparison to the enormity of the climate crisis and recent financial bailouts.

But for those who are more worried about oil depletion, the Budget was utterly hollow. The car scrappage scheme came without efficiency conditions attached, the return to inflation-plus fuel duty increases was welcome but timid compared to the escalator that was killed off by the petrol protests of 2000, and tax breaks for North Sea operators will do little to stem the decline in output. Production has halved since its peak in 1999, and is now dropping at 7 per cent a year, dragging Britain ever deeper into import dependency.

Ban petrol cars from 2015, says Norway's Finance Minister Kristin Halvorsen A PROPOSAL to ban sales of new petrol-powered cars in Norway from 2015 could help spur struggling carmakers to shift to greener models, Finance Minister Kristin Halvorsen said.

"This is much more realistic than people think when they first hear about this proposal," she said, defending a plan by her Socialist Left Party to outlaw sales of cars that run solely on fossil fuels in six years' time.

Reports of Pontiac's end sadden fans of muscular brand (CNN) -- Pontiac owners around the United States are feeling nostalgic amid reports that cash-strapped General Motors will end one of its most coveted brands.

Crude May Rally to $70, Shuaa’s Effat Says: Technical Analysis (Bloomberg) -- Oil may break free from its trading range in the third quarter and rally to $70 a barrel, according to technical analysis by Shuaa Capital PSC, the United Arab Emirates’ biggest bank.

Oil in New York is in a “bottoming process,” bound in a range between $38 and $55, according to Nabil Effat, Dubai-based Shuaa’s chief technical analyst. Crude futures reached a year- to-date high of $54.66 on March 26.

“Clearing the $55-a-barrel resistance should trigger more buying with a target area of $65 to $70 a barrel,” Effat said in a telephone interview from Dubai.

Oil Minister stresses importance of investment in oil sector Kuwait will proceed with planned oil investment and expansion projects with an eye to achieve its production target for 2020 at 4 million barrels per day (bpd), Kuwaiti Oil Minister Sheikh Ahmad Al-Abdullah Al-Ahmad Al-Sabah reaffirmed on Sunday.

Addressing Asia's major oil producers and consumers at a one-day meeting here, Sheikh Ahmad said that Kuwait sticks to a plan to build a refinery in China with a capacity of 300,000 barrels per day (bpd) by teaming up with Asia's top oil refiner Sinopec Corp., as well as a 200,000-bpd refinery in Vietnam through joint venture with Japanese firms and Petrovietnam.

Talisman to invest $1.1 bil. in Vietnam oil fields Canada's Talisman Energy plans to invest US$1.1 billion to develop commercial production of two offshore oilfields in Vietnam, a newspaper reported Friday.

Dau Tu newspaper quoted Michael Horn, Talisman's representative in Vietnam, as saying the company would make the investment in Hai Su Trang and Hai Su Den fields.

Reveal carbon risks, oil firms told Oil giants involved in the exploitation of tar sand fields face calls this week to disclose future carbon liabilities. Co-operative Financial Services (CFS) and environmental charity WWF-UK are launching a campaign for a legal requirement for companies including Shell and BP to include this information in financial reporting.

Oil worker released by militants A British oil worker kidnapped by militants in Nigeria has been released by his captors.

The man is believed to be 27-year-old Alan Preston, from Edinburgh, who was seized in Port Harcourt three weeks ago.

The armed group who took him hostage also killed Mr Preston's police guard.

West traps Russia in its own backyard When he addressed the Munich security conference in February, Biden offered to reset the button in US-Russia relations. However, despite many positive signals and an overall lowering of rhetoric, the moves so far have been by and large symbolic. Across Eurasia, the signs are to the contrary. The Great Game is picking up momentum. The sharp fall in oil prices has complicated Russia's economic recovery, which in turn would disrupt the dynamics of the integration processes under Moscow's leadership - political, military and economic - in the post-Soviet space.

US Proposes "Variable Geometry" CARACAS (IPS) - The United States will work on energy issues with the other countries of the Americas based on "a variable geometry," allowing governments to choose to cooperate in some areas but not others, said Jeremy Martin, head of the energy programme at the Institute of the Americas at the University of California San Diego.

This "a la carte" approach would make it possible to work with Venezuela on the heavy crudes in its Orinoco Belt and with Brazil on ethanol, or with Mexico and Brazil on the reduction of greenhouse gas emissions, because the marriage of energy and climate change means Washington can no longer talk about one without the other, the U.S. expert said at a forum in Caracas.

Kjell Aleklett: Colin Campbell and 100 months of Peak Oil Colin Cambell has now written newsletters for 100 months. 100 months is a long tenure. In his first letter he introduced the world to a new term, ”Peak Oil”. I first made contact with Colin by email in the autumn of 2000 when I needed a little information for a figure and I believe that it was in December of the same year that I first spoke with him by telephone. He was then writing that which would become newsletter number 1. He spoke about the idea of an organisation that would study the peak of oil production and the name ”Association for the Study of the Oil Peak” was mentioned. But the acronym ASOP did not roll off the tongue in the right way so the suggestion to swap the words around to say Peak Oil was discussed. The acronym became ASPO and the term ”Peak Oil” was coined.

A Lean, Green Detroit American tastes dominated the world's automotive market for a century, but all that's changing now. Today it's the increasingly well-to-do Chinese car-buyer that industry wants to woo and win, thanks to this incredible fact—China has, over the last three months running, surpassed the U.S. in terms of volume sales of automobiles. Ever wonder why Ford's new Fiesta has an instrument panel that looks like a cell phone? Because that's what's familiar to its target audience of 20- and 30-something Chinese.

My money's on China to produce world-changing electric car Once in a while an invention comes along that changes the world: Gunpowder. Printing press. Steam engine. Telegraph. Telephone. Model T Ford. Television. Computers - first mainframes, then PCs. The Internet. And now - maybe - the electric car.

I'm not talking hybrids here. I am talking a pure electric that runs on batteries, travels 200 kilometres on one charge, drives fast, consumes electricity equivalent to the cost of a gasoline engine getting 240 mpg, needs a one-hour charge for each travel hour - yet costs less than $25,000 and can be fixed by the local electrician and bicycle repairman.

'Smart grid' presents great promise, complications WASHINGTON - One warm August afternoon in 2003, a power failure originating in Ohio coursed through the northeastern section of the electrical grid, sparking the nation's largest blackout ever and leaving millions in eight states without air conditioning, traffic lights or cell phone service.

A "smart grid" might have averted a shutdown that cost an estimated $6 billion.

That new grid - a digital network allowing utilities, consumers and alternative sources of renewable energy to "talk" to one another - could steer electricity to where it is needed most, avert cascading energy bottlenecks and promote power from alternative sources.

Republicans push nuclear energy to lower costs WASHINGTON (AP) — The U.S. should build 100 more nuclear plants rather than spend "billions in subsidies" for renewable energy if it is truly committed to lowering electric bills and having clean air, the Republicans say.

California rule could end ethanol's honeymoon NEW YORK (Reuters) - California's newly adopted low-carbon fuel standard may mark the beginning of the end of ethanol's coveted status as the sole U.S. alternative motor fuel.

Making every hour an Earth Hour On the subject of motorised transport, we've also made a commitment not to upgrade our at-times troublesome VW Golf. We have no intention of ever trading it in for a newer model, and we now don't bother getting dents and scratches repaired. We keep up the maintenance and road costs, but that's it.

As long as it goes, right? If the peak oil theorists are right, there seems little point buying a newer car when the one we have could be obsolete in our lifetime.

Winds of change blow for offshore power operators It's official: it's getting windier down south. This unexpected quirk of climate change has given a much needed boost to offshore wind-farm developers.

For those struggling to make the economics of hugely expensive wind farms work, more wind equals more money.

Protester 'offered cash by police' Matilda Gifford, 24, a member of a group arrested at a demonstration at Aberdeen airport in March, recorded conversations with two men said to be members of Strathclyde Police. A possible financial deal was discussed that could have helped Ms Gifford with her student loan fees. "You wouldn't pay any tax on it. So you could do with it what you want," she was told.

Greenhouse Gases Continue To Climb Despite Economic Slump ScienceDaily — Two of the most important climate change gases increased last year, according to a preliminary analysis for NOAA’s annual greenhouse gas index, which tracks data from 60 sites around the world.

'Climate change' forces Eskimos to abandon village (CNN) -- The indigenous people of Alaska have stood firm against some of the most extreme weather conditions on Earth for thousands of years. But now, flooding blamed on climate change is forcing at least one Eskimo village to move to safer ground.

Levees can't save New Orleans from floods: report HOUSTON (Reuters) - Bigger, higher and stronger levees cannot save New Orleans from the worst floods and the city remains vulnerable to a repeat of Hurricane Katrina, the National Academy of Sciences said on Friday.

...Authorities should discourage settlement in flood-prone areas and encourage voluntary relocation away from them, the report said.

Sometimes a new message can't be heard or a new idea understood because compelling reasons for change are not apparent enough. If the old ways of doing things still bring enough money into bank accounts, keep cars filled with gas, roofs over heads, lights on with the flip of a switch, and plates heaped with food, then why bother doing anything differently?

But with Thomas Friedman, popular promoter of globalization, questioning the prevailing economic paradigm and reports that India is doing better than other countries because it is less connected to the global market and has a strong locally-oriented agrarian economy, I thought this essay written nearly a couple of years ago could finally resonate.

What do readers think? Are you finding that resistance is weakening when you try to bring up subjects that were formally considered wacky? Is disillusionment an opportunity? Will everybody now hang on my words because I have basically made some great calls over the past few years, as in: "Get out of the stock market because it is a bubble," "Energy and food prices are soon going to skyrocket," and "Don't permit that new suburban subdivision because you will have trouble selling new homes soon?"

Introduction

Here are a few of my predictions: Many trends of the last century or more, made possible by cheap and abundant energy sources, are going to be reversed. These trends include population growth, centralization of political and economic power, vastly increased quantity of global trade, and mass tourism.

I am not giving dates of when these indicators of a shift from global to the more local will occur, except to say sometime during the 21st century, likely during the first half even. My initial point of view is not from any particular group with a political or social agenda, but as a scientist who makes deductions based on the laws of physics and ecology.

However, information from the natural world does eventually have political and policy implications that I am aware of, and have opinions about. The ability of a culture to accept information and respond timely and rationally will likely hinge on the entrenched mindsets of the populace, institutional norms, and their ability to willingly change expectations, organizational structures, and behaviors. Perhaps with prudent planning, measures of quality of life or conditions of happiness may not decline.

People may be scared or shocked and depressed by predictions of change that could lead to environmental and social disruption, but for the most part I see indifference, and that is more concerning. How people respond emotionally to facts and deductions is important too, but ultimately if people and institutions are unable or unwilling to accept information because it makes them feel badly or goes against current norms then positive change is not possible. The greatest hope, in my opinion, rests in the ability to honestly accept the reality of a difficult situation and then make the best of it before it becomes a crisis.

This is why I want to draw attention towards a global movement forming to challenge the existing economic and political systems in light of energy constraints, threats from pollution, degradation of ecosystems, the social costs of mass consumerism, and a living arrangement designed around automobiles. I am referring to the strategy of “relocalization” as promoted by the Post Carbon Institute, a think tank, media outlet, and networking and support organization for local citizens’ groups around the world.i The crises we face require altering some of the basic operating assumptions of global consumer culture, politics and finance.

[Note: The Relocalization program of Post Carbon Institute has merged with Transition Towns.]

Relocalization may be a new term, but conceptually it has long roots. Some related recent precursors include E.F. Schumacherii, Ted Traineriii, Garrett Hardin,iv and Wendell Berryv as well as what are called the “anti-globalization” movement, the “slow food” movement, the “voluntary simplicity” movement, the “back to the land” movement, “new urbanism,” and the “environmental movement.” In general, common themes include decentralization of political and economic structures, less material consumption and pollution, a focus on the quality of relationships, culture and the environment as sources of fulfillment, and downscaling of infrastructural development.

Purpose

This paper will describe relocalization (also sometimes referred to by the related but not always identical terms “economic localization” or simply “localization”vi) by contrasting it with what we have now. It is crucial to understand the basic assumptions of our current economic and social arrangements, and to develop a new set of premises for guidance. I will argue that the premises behind relocalization are sound, being grounded in good science and common sense. By contrast, the assumptions of most dominant economic and social models only hold for a short historic period and have led to our current environmental and resource predicaments. Many proponents of current economic policies may be well intended, but often we end up with unsound rationalizations to justify short-term, often individual interests. What has been lost is a sense of the common good, future generations’ needs, and non-human welfare.

The case for relocalization will be made in the context of responding sensibly to two problems facing societies right now: climate change and peak oil and gas. Both problems are a result of our dependency on fossil fuels, but some solutions to one will only exacerbate the other. This is why a new approach, that of relocalization, is necessary.

Relocalization is based on a systems approach that doesn’t solve one set of problems only to make another problem worse.

Ecological Economics

During the era of cheap energy, which roughly corresponds to the entire 20th century, the study of economics became divorced from an understanding of how human systems are connected to systems of planetary ecology. Not surprisingly, the nearly free energy available from fossil fuels, and the rapid technological advances they fostered, made people in modern industrial societies believe they were no longer constrained by tangibles like food, energy, water, and the weather. We are now entering an age of disillusionment. The hubris of our recent past is being revealed and many are searching for a more honest and realistic reckoning of our place on Earth.

A helpful place to look for such honesty is the discipline called Ecological Economics.vii A conceptual model based on Ecological Economics is useful both to comprehend the current economic system and its vulnerabilities, and to guide the development of a sustainable alternative.

Predominant economic thinking usually distorts or fails to fully understand the fundamental interconnectedness of “the economy” and “the environment.” In recent decades economists have begun to give more attention to the environmental or ecological dimensions of human productive activity. But even so, their formulations are typically partial or misguided from a vantage point that takes the global environment seriously.

For example, in discussions of sustainability, the relationship between the economy and the natural environment is often framed as a “balance.” This connotes the idea that somehow more of the economy means more of the environment too. After all, if two things are in balance, they are of equal weight. But any empirical study of what economic growth means today discovers that it intrudes on the environmentviii Wealthy and purportedly environmentally-responsible nations are sometimes touted as examples of how economic growth and stewardship of the planet go hand in hand.ix However, while local measures of air quality, forest cover, and water cleanliness may be high, the damage is simply occurring elsewhere. All wealthy nations are importers of much of their environmental carrying capacity, whether it is raw materials or finished industrial products, and these imports are possible because of fossil fuels used to mine, harvest, manufacture and transport goods. Wealthy nations protect their own environment while outsourcing the harm caused by over consumption to other places.

In the Ecological Economics model, the Human Economy is a subset of the Earth System, and therefore the scale of the Human Economy is ultimately limited. The Human Economy depends upon the throughput or flow of materials from and back into the Earth System. Just pick up any trinket in your possession and ask: What is it made of? Where did these materials come from? How much energy was used? What happens to the waste products?x Limits to the size of the Human Economy are imposed by the interactions among three related natural processes:

1. The capacity of the Earth System to supply inputs to the Human Economy (Sources),
2. The capacity of the Earth System to tolerate and process wastes from the Human Economy (Sinks), and
3. feedbacks caused by too much pollution.

For example, mining coal makes available a “source” of energy for industry that produces pollution, including sulfur dioxide, which causes acid rain. Too much acid rain degrades built infrastructure, and overwhelms the capacity of natural “sinks” such as forests, killing them or slowing their growth. This damage to forests not only affects our ability to use them for lumber. The loss of highly functioning ecosystems also creates new costs to society that were previously done “free of charge” through ecological processes. Air and water filtering, climate stabilization, and species interactions that moderate outbreaks of pests and disease are all “ecosystem services” that are compromised when we damage those ecosystems. Now, instead of benefiting from free ecosystem services, the human economy must provide these services itself through expensive technologies such as pollution control devices, flood control walls and canals, pesticides and medicines, and so on.

Fig. 1. The Ecological Economics Model of the relationship between the Human Economy and the Earth System highlighting the importance of sources, sinks, feedbacks and scale.xi

The current Human Economy is clearly unsustainable because it relies heavily on non-renewable raw material sources, the use of which produces tremendous pollution, leading to many negative feedbacks that impair ecosystems and disrupt climate. In contrast, a sustainable economy would need to run on the income from solar energy and not degrade ecosystems through the build up of wastes or the mining of nutrients.

This model can also be understood in the classical terms of different forms of capital. The Earth System can be viewed as the Natural Capital and all other forms of capital are nested within and dependent upon it. Population can be thought of as Human Capital, referring not just to population size, but also to people’s education, skill sets, norms, standards and laws. Industry can be more broadly thought of as the tool sets people use, including their homes and transportation networks, which are also known as Built Capital. Ecological Economics views Human Capital and Built Capital as subsets of Natural Capital. Furthermore, these different forms of capital cannot easily be substituted for one another but are instead complimentary.

In the common framework of what is called neoclassical economics (think of Alan Greenspan), these different forms of capital are viewed as potential substitutes for one another. With this line of thinking, less Natural Capital is not so bad as long as you have plenty of Built Capital and/or Human Capital. These different forms of capital are called “factors of production.” Production can remain high and Natural Capital can be exhausted as long as enough Built and Human Capital are around. Of course, at its theoretical extreme this would result in a rather absurd world: cars and drivers with no gas, ovens, kitchen utensils and cooks with no food, and chair lifts, ski instructors and season passes with no snow.

Relocalization is based on an ethic of protecting the Earth System--or Natural Capital-- knowing that despite our cleverness, human well-being is fundamentally derived from the ecological and geological richness of Earth.

Overshoot

If the scale of the Human Economy is too large relative to the Earth System, the Human Economy is in a state of overshoot. This means that the environmental load of humanity on the planet is greater than the long-term ability of the planet to support it. Overshoot means we are above carrying capacity. This environmental load will eventually be reduced through declines in some combination of population, resource consumption and pollution. Either we tactfully manage to reduce our environmental load, or resource constraints and pollution will limit it for us­ unpleasantly.xii

The concept of overshoot can be confusing. You may ask: How can a population go beyond the carrying capacity of the environment to support it? Won’t a population simply increase until it reaches carrying capacity and then stabilize? Isn’t the human population projected to stabilize this century? Sophisticated modeling of resource, pollution, and consumption dynamics provides answers to these questions that support the reality of overshoot.

Fig. 2. Human demographic models of population show a plateau this century (solid is approximate historic and demographic projected), whereas systems models show a decline (dashed). The difference exists because human demographic models do not include negative feedbacks from either resource scarcity or pollution, whereas systems models do.

Population biology is the science of how population size changes due to factors such as mating patterns, resource availability, environmental quality, and interactions with other species, such as disease, competition and predation. Homo sapiens can be studied and modeled just like any other species with respect to these factors, though the high variance among people with respect to consumption and waste amounts complicates the analysis.

Population overshoot happens in a few different ways:

1. Resource windfall and drawdown,
2. Release from negative species interactions,
3. Demographic momentum, and
4. Fluctuating carrying capacity

These mechanisms of overshoot are not exclusive, and in fact, they can feed positively on one another. Here is one example of how these mechanisms have interacted (1-3) using the current human population, and what the results may be sometime this century (4):

1. People discovered a dense and versatile energy source with fossil fuels, especially oil. The use of fossil energy freed up resources, especially land and labor. Without the need to feed draft animals to power equipment, more land was available to grow food for humans.
2. With fossil-fuel powered equipment, fewer humans were needed for manual labor, enabling extended educational opportunities and a shift of resources into fields such as public health and medicine. Increased attention to public health and medicine, and corresponding technologies like vaccines, antibiotics and sanitation, increased human life expectancy.
3. A rapid increase in the human population led to a surge in the number of people within the reproductive window of life, who then reproduced also, leading to an even larger population.
4. As this population became very large it began to impact the world around it substantially. Toxic emissions built up that harmed the basic life support systems humans depend on, eventually making it more and more difficult to provide essentials, such as food. As food production declined, so too did the population.

Experts in the field of human demography project that the human population will stabilize around the middle of the 21st century.xiii Most people accept this analysis from population experts without knowing the underlying assumptions. Unfortunately, most studies of human population are akin to most studies of the human economy. The broader environment is not factored into models of growth. If you have ever asked yourself, “How are we going to feed 9 billion people when the soils are eroding, the aquifers are depleting, the climate is changing, deserts are expanding and oil and natural gas are going to be in short supply?” then you have stumbled upon this disconnect between most human population models and the physical world. Biologists studying any population would include those environmental factors in their models, whereas human demographers do not.

However, models exist that do incorporate the human population and our well-being into a dynamic study of resource availability, pollution levels and even climate change and the fate of ecosystems. The classic example is the World3 model developed by the authors of “Limits to Growth,” where the baseline scenario shows human population declining after 2020.xiv Another model is GUMBO from the University of Vermont’s Gund Institute of Ecological Economics.xv These models are not perfect, and are not presented as predictions, but they at least begin with the right premises and tell us what to be careful about.

Relocalization starts from the premise that the world is a finite place and that humanity is in a state of overshoot. Perpetual growth of the economy and the population is neither possible nor desirable. It is wise to start planning now for a world with less available energy, not more.

Peak Oil and Implications for a Transportation-Dependent Economy

Much of the relocalization movement was sparked by concerns about “peak oil.”xvi

Petroleum is a fossil fuel derived primarily from ancient deposits of dead algae and so is in essence “ancient sunlight.” The age of oil deposits can be determined from analysis of decaying radioactive isotopes and most are 10’s to 100’s of millions of years old. The biological origin of fossil fuels is clear from its association with “fossils” and the ubiquity of certain kinds of carbon chains.

Given that oil is finite, then at some point in time less is going to be available to us than in the past. That is the meaning of peak oil. It doesn’t mean oil “runs out,” but it does mean the cheap and easy oil is gone, and that what remains is more costly to produce, both energetically and financially, and is extracted at a progressively slower rate. The rate of decline of oil after peak is difficult to predict, but scenarios range from 1% to 8% per year. The peak may be somewhat “flat” (a plateau), giving a slow initial decline, which accelerates over time towards the higher end of the depletion rate range. How human societies respond to the post-peak environment will likely be as important a factor as geology in determining what is available to societies. Do we cooperate or fight over dwindling resources like cats in a sack?

Going back to the Ecological Economics model, peak oil is a “source” issue. Several source problems face the human economy, including peak natural gasxvii and peak water. Greater expansion of the human economy requires greater inputs, and, aside from the ecosystem services provided by nature, oil is probably the single most important economic resource on the planet.

Oil is critical for at least two reasons: energy density and versatility.

The energy output of a single person doing manual labor over a period of days gives about 200-300 British Thermal Units (btus) per hour. A single gallon of gasoline contains about 150,000 btus of potential energy, roughly equivalent to 500 to 750 hours of hard human labor.xviii The energy density of oil has not simply permitted a life of leisure and travel for those with access to it—it has in fact greatly expanded the short-term carrying capacity of the human population. By harnessing the energy of oil (and other fossil fuels), our species has been able to out compete others for space and resources. The expansion of industrial agriculture and “green revolution” technologies are based on oil and natural gas feed stocks and energy. Construction of large dams, water diversion systems, and pumps for ground water and water delivery to fields and cities depend upon plentiful fuel. Land, water and other resources that in the past had been available to a diversity of species are being funneled towards the appetite of one—hence the biodiversity crisis.

Oil is versatile because it is a liquid, making it is easier to extract and transport than coal and natural gas. Oil is more readily available as a fuel for a global market because it can be put into pipelines and tankers without requiring special treatment. Natural gas, by contrast, needs to be cooled and pressurized for tanker travel, and coal needs to be pulverized into slurry to be piped, or put on freight cars or barges for long-distance transport.

Because oil can be delivered anywhere, modern transportation systems have become reliant on it. A few buses and cars use natural gas, and some trains run on electricity, but the vast majority of transportation applications on the planet, over 90%, use oil in the form of gasoline, diesel or kerosene (jet fuel).

Consequently, modern economies are extremely vulnerable to shortages in transportation fuels for a few reasons.

The relative stability of the oil market over the past several decades has led to the development of “just-in-time” delivery of products, and commercial linkages across the globe. Local and regional warehouses are uncommon now, with stores and businesses relying on frequent shipments to maintain a low overhead. Before the era of cheap transportation, each town and city had a full complement of craftspeople who relied on each other. Nowadays, businesses are connected through vast transportation networks, with a manufacturing company in California, for example, relying on components shipped in from Asia and Europe.

The food economy is perhaps the finest example of the insecurity that is now bred into normal societal infrastructures. Markets selling food are typically restocked daily with only a few days supply available in the store, leading many people concerned about peak oil to reason: no fuel, no trucks; no trucks, no food. The shifts in agricultural practices over the past thirty to forty years make it difficult to quickly switch to a less transportation-intensive food system. Many agricultural regions are overly specialized to serve global markets. For example, a place where fifty years ago granaries, dairies, vegetable farms and ranches coexisted is now dominated by premium wine grapes.

As modern economies have become addicted to oil, they now find themselves in an ecological trap.

Cheap petroleum-fueled transportation has increased the geographic range over which economies can import resources not available locally, a phenomenon called “scope enlargement.” The beneficiaries of scope enlargement were able to increase local carrying capacities by overcoming the limitations of local ecologies. Unfortunately, this situation now makes us very vulnerable since a fundamental concept of ecology is Liebigs Law of the Minimum, which states that the growth of a population will be limited by whatever single factor of production is in short supply, not the total amount of resources. The expression “for the want of a nail” captures Liebigs Law, and is exemplified historically by the practice of 19th century nations importing guano from South America and Pacific islands to shore up local agriculture.

Potential shortages of guano supplies were supplanted in the 20th century by fossil-fuel based fertilizers. Some argue that our economy has a nearly unlimited ability to find substitutes for scarce resources, like fertile soil. More realistically, for many resources no substitutes exist. As an obvious example, living beings require a certain proportion of mineral nutrients to thrive. We can’t substitute elemental phosphorus for some other atom in the DNA structure of bacteria, fungi, plants and animals--no matter how much Human Capital we have. Nothing can replace simple water either.

Cheap energy makes adaptation to resource scarcity possible, by pumping water from deeper wells or extracting nitrogen out of the air, for example, but expensive energy can make substitutions unworkable.

Because oil possesses a unique combination of attributes, finding suitable substitutes is no easy task. Current products such as ethanol, biodiesel and hydrogen are under consideration to wean us from polluting and increasingly scare oil. However, nearly all of these fail the test of Energy Returned on Energy Invested (EROEI).xix For an energy source to be useful to society, it must deliver more energy than it takes to find, harvest and distribute the source. Our economies have become addicted to energy sources like oil with EROEIs of 100:1 to 20:1, whereas biofuels, tar sands, and many renewable energy technologies range from about 10:1 to 1:1 or less. If a fuel has an EROEI of 1:1 it may be useless because as much energy goes into producing the fuel as the fuel delivers. A complex society will probably require substantial EROEI profit ratios, such as 5:1 or greater. Energy policies need to be devised based on sound EROEI analyses, which are currently difficult to find, and in any case it is probably wise to restructure our society to be less dependent on high EROEI energy sources.

In the U.S., a high EROEI energy source permits about 1% of the population to feed the other 99%. In places without widespread access to fossil fuels for agriculture, such as Afghanistan, over 90% of the working population is engaged in growing food. Agriculture is, in essence, a means of capturing solar energy through investment in planting, maintenance and harvesting. While the Afghan agricultural system looks inefficient from a labor point of view, it is actually far more efficient from an EROEI perspective than U.S. agriculture. The extensive use of fossil fuels in industrialized food systems makes them energy sinks. Highly industrialized food systems require about 10 times more energy to grow, harvest, process and distribute the food than is contained in the food itself—an EROEI of 1:10.xx

Climate Change and Need to Eliminate Fossil Fuel Use

While peak oil is a “source” problem, climate change is a “sink” problem.

During the most recent ages of geologic history, Earth has cycled between ice ages and intervening warm periods. These cycles are primarily driven by orbital variations, both with respect to the angle of tilt of the Earth towards the Sun and the shape of Earth’s orbit around the sun.xxi Carbon dioxide fluctuated as a result of how ecosystems responded to changes in Earth’s temperature, which then amplified those changes. In systems theory, this is known as a positive feedback loop.

Currently, carbon dioxide and other greenhouse gas concentrations are rising not because of orbital changes, but from the use of fossil fuels and landscape changes usually caused by human activities. The pre-industrial level of carbon dioxide in Earth’s atmosphere was 280 parts per million (ppm) and is now about 387 ppm. Fossil fuels are ancient deposits of carbon and hydrogen chains that are being liberated from storage through combustion. The burning of fossil fuels (oxidation) not only releases stored energy, but increases the concentration of carbon dioxide in the atmosphere. Carbon dioxide allows visible light from the sun to pass through to the Earth’s surface, but reflects infrared light (also known as heat) back to Earth that would otherwise go out into space. This is why climate change is sometimes called “global warming.” The general tendency is for Earth to become hotter, on average, because of the “greenhouse” effect induced by the “blanket” of extra carbon dioxide. If our eyes were sensitive to infrared light we could see the changing color of the sky, which might serve as a constant reminder of the problem.

Consider that 100 ppm is what separated the ice age from the warm, stable climate of the past several thousand years, and that the temperature transition from ice age to a warm climate took about a thousand years. By comparison, over the past 30 years nearly half the energy used in the history of the industrial revolution has been consumed, and global average temperatures are rising about 100 times faster than during transitions out of ice ages.

Changes in greenhouse gas concentrations are only partly responsible for the changes in temperature between an ice age and today. Much of the rise in temperature as an ice age ends is due to the loss of ice sheets and their influence in cooling the planet through enhanced reflection of sunlight. The current rate of change in the chemistry of Earth’s atmosphere and oceans is only comparable to a few previous mass extinction episodes over the past several hundred million years that appear to be related to radical, rapid climate change.xxii The rate of change is perhaps more important to the climate system and life on Earth than is the amount of change. A slow rate of change is akin to gently applying the brakes to stop at a light, while a fast rate of change is akin to hitting a brick wall. Both take the vehicle and a passenger from 60 to 0 mph, only one does it more quickly.

Nobody really knows what this means for the climate system, the acidity of the oceans, the physiology of plant growth, and many aspects of the global ecosystem. Policy-makers ask scientists how much pollution can be tolerated before “dangerous interference” occurs. Unfortunately, answering how much is too much is not possible, and in all probability we have already passed some very dangerous thresholds that will only become apparent as the future unfolds.

There are many reasons why a precise answer to “how much is too much” is not possible. Consider that for any factor that goes into a model, scientists (1) work with what they know, (2) try to incorporate plausible ranges for what they know they don’t know, and (3) obviously exclude what they don’t know they don’t know. Some would argue that because we can’t be sure climate models are correct, we should do nothing. Would “do nothing” skeptics be as cavalier about uncertain dangers if the food being served their children had possibly been contaminated by a deadly poison? What you don’t know can kill you. Given the stakes, many advocates for energy policies leading to a curtailment of greenhouse gas emissions take a precautionary stance.xxiii After all, if the U.S. is so concerned about security that it is willing to spend about half a trillion dollars a year on the military, what is it worth to help secure our climate?

Computer power limits the ability of models to capture many of the details of climate change. For example, models can’t scale to the future climate of a single town, making it difficult, perhaps, for local officials to understand the implications of global models. Nor can models usually identify critical thresholds in a complex system with much accuracy. Systems can remain remarkably stable over long periods under stress until something snaps, like a balloon expanding until it pops. The Earth system has been remarkably tolerant of the stresses it is under, but when something finally gives it will probably be “loud.” Recent studies of the pace of change in Greenland and Antarctic ice sheets underscore the fact that thresholds can be difficult to detect, and that current models may often underplay the true threats of climate change.

Although climate models have these limits, they also do an incredible job accurately modeling the past climate. For example, when comparing images from weather satellites to the most advanced climate models, one can even see how well models match the actual formation and movement of storm clouds around the globe. One of the tests climate modelers perform to decide whether human-induced changes in the atmosphere are causing climate change is to run climate models for the 20th century as if we hadn’t burned so much fossil fuel. The rise in global temperatures and the shifts in rainfall patterns seen during the 20th century can be accurately modeled only when fossil fuel induced greenhouse gas emissions are included.

Beyond any reasonable level of doubt, natural variations in solar radiation and the shape of the Earth’s orbit around the sun do not account for recent climate change. Climate change is a problem with known causes related directly to known human behaviors such as driving cars, flying in airplanes, heating and cooling homes and businesses, manufacturing products, mining, harvesting, pumping water, removing wastes, and producing food using big machines, among others. The most pressing question of our time is: How can societies function without pumping more greenhouse gases into the atmosphere? If we don’t make answering this question our top priority there’s a good chance the planet may become uninhabitable for the current generation of children.

While we can’t know future threats precisely, scientists do agree that creating a carbon-cycle neutral economy should be the dominant task occupying our minds. This is exactly what Relocalization aims to do.

Relocalization: A Strategic Response to Overshoot

Economic and population growth was made possible by the synergies permitted by cheap energy. The limits of productivity in one locality (i.e., Liebigs Law) could be overcome by importing something in excess elsewhere. A global economy advocating that each place seek its comparative advantage and specialize in what it produced for the market place required that money, governance, and even customs be more homogenized worldwide. As free trade agreements became the norm and social barriers to trade were reduced, the power of resource synergies permitting more economic growth became apparent to more and more people in the world. Most only saw its benefits and few worried about the long-term liabilities it imposed.

There are a few flawed assumptions behind globalization, but one in particular is glaring: the assumption that transportation costs will always be low, both in terms of fuel availability and the environmental externalities associated with their use.xxiv If that assumption is false—and certainly peak oil and climate change makes it appear false—then localities should not be specializing to trade globally. For example, I live on the edge of premium wine country. There are far more grapes here than the local population can eat, but we lack just about every other kind of food production in sufficient quantity. As long as we can sell our wine to a global market and buy the other stuff we need this situation seems reasonable. But a peak oil perspective makes us feel vulnerable, and a climate change perspective calls this irresponsible.

Because all localities that have bought into the global market place have specialized to some extent, all could face shortages of some set of basic goods. In the past, global trade was for luxury items, like silk or spices, or key resources that permitted basic items to be made at home more efficiently, like organic fertilizer and metals. The loss of a trade partner would be problematic, but probably not catastrophic.

Relocalization advocates rebuilding more balanced local economies that emphasize securing basic needs. Local food, energy and water systems are perhaps the most critical to build.xxv In the absence of reliable trade partners, whether from peak oil, natural disaster or political instability, a local economy that at least produces its essential goods will have a true comparative advantage.

When many analysts consider peak oil or climate change they start from the position of “keep the current system going at any cost.” Rather than envision an alternative that doesn’t have the same liabilities, these “solutions” only perpetuate a problem.

A classic case of this kind of thinking is the Department of Energy sponsored “Hirsch Report.”xxvi The Hirsch Report is great for understanding the economic consequences of peak oil given how integrated the global economy is. But its call for a crash program to develop new sources of liquid fuels using non-conventional fossil fuels without any broader context, such as what this would do to soils, air, and water are misguided. A wise perspective would at least acknowledge that these choices involve painful tradeoffs.

Relocalization takes a different perspective altogether. Instead of working to keep a system going that has no future, it calls us to develop means of livelihood that pollute as little as possible and that promote local and regional stability. Since much of our pollution results from the distances goods travel, we must shorten distances between production and consumption as much as we can.

Summary

Responding appropriately to the problems of climate change and peak oil and gas requires an understanding based on a systems perspective. From this angle, clear limits exist for the ability of our society to maintain growth in both resource consumption and pollution. However, most of our economic and social norms do not recognize these limits, and therefore find it difficult to respond to current threats.

Relocalization recognizes the liabilities of fossil fuel dependency and promotes greater security through redevelopment of local and regional economies more or less self-reliant in terms of energy, food and water systems. Many social benefits might accrue to a relocalized society, including greater job stability, employment diversity, community cohesion, and public health.
The laws of physics and ecology will drive economic incentives that begin to unwind some forms of global trade. However, as the “Stern Review Report”xxvii on climate change and the “Hirsch Report” on peak oil make clear, the market alone will not make this happen quickly enough or smoothly. Given our advanced state of ecological debt and the long social lag times involved in changing so many fundamental patterns of behavior, only sound and consistent government policies can succeed in setting up the right incentives for rapid, sustained change.

In any case, an easy or painless transition is highly unlikely. But nobody is guaranteed an easy life and sometimes during our greatest challenges we also find a profound sense of purpose, and a focus on what makes life worthwhile, such as meaningful work, camaraderie and beauty.

i http://www.postcarbon.org/

ii http://www.schumachersociety.org/

iii http://socialwork.arts.unsw.edu.au/tsw/

iv http://www.garretthardinsociety.org/

v http://www.brtom.org/wb/berry.html

vi See for example: http://www.baylocalize.org/

vii A college-level text book by Herman E. Daly and Joshua Farley titled “Ecological Economics: Principles and Applications” (2004, Island Press) exists. Also look for popular books by Herman Daly, Brian Czech and Richard Douthwaite.

viii See measures like the Ecological Footprint (http://www.footprintnetwork.org/) and the Genuine Progress Indicator (http://www.redefiningprogress.org/projects/gpi/)

ix See recent reviews of the “Environmental Kuznets Curve” such as http://www.ecoeco.org/publica/encyc_entries/Stern.pdf

x A great book that leads the reader through this process for several consumer items is: John C. Ryan and Alan Thein Durning, “Stuff: The Secret Lives of Everyday Things.” New Report No. 4, January 1997, Northwest Environment Watch, Seattle.

xi This graphic was developed based on the principles discussed in Chapter 2 of Daly and Farley “Ecological Economics: Principles and Applications” (2004, Island Press)

xii The book “Overshoot: The Ecological Basis of Revolutionary Change” by William R. Catton, Jr. gives a thorough overview of ecological and social mechanisms and consequences of overshoot.

xiii A great place to review standard population projections and the underlying assumptions is through the United Nations Population Division web site: http://www.un.org/esa/population/unpop.htm and http://esa.un.org/unpp/

xiv Donella Meadows, Jorgen Randers and Dennis Meadows, “Limits to Growth: The 30-Year Update.” Chelsea Green Publishing, White River Junction, VT, 2004.

xv http://www.uvm.edu/giee/research/publications/Boumans_et_al.pdf

xvi Literally dozens of books, websites and article about peak oil exist. Richard Heinberg, “The Party’s Over: Oil, War and the Fate of Industrial Societies.” New Society Publishers, Gabriola Island, BC, 2005 (second edition) is highly recommended. On the web try: http://www.energybulletin.net/ and http://www.theoildrum.com/

xvii Much less has been written specifically about natural gas, but see: Julian Darley, “High Noon for Natural Gas: The New Energy Crisis.” Chelsea Green Publishing, White River Junction, VT, 2004.

xviii For a slim but comprehensive book on energy and conversion factors see: John G. Howe, “The End of Fossil Energy and the Last Chance for Sustainability.” McIntire Publishing Services, Waterford, ME, 2005 (second edition).

xix An important book covering EROEI and agriculture is John Gever, Robert Kaufmann, David Skole and Charles Vorosmarty, “Beyond Oil: The Threat to Food and Fuel in the Coming Decades.” Ballinger Publishing Company, Cambridge, MA, 1986. The website http://www.eroei.com/ is a good online reference.

xx A comparison of the energy balance of different food systems is provided by David Pimental and Marcia Pimental, eds, “Food Energy and Society.” University Press of Colorado, revised 1996.

xxi http://en.wikipedia.org/wiki/Milankovitch_cycles

xxii Dozens of references are possible for climate change. A good recent book, written by a scientist, is: Tim Flannery, “The Weather Makers: How Man Is Changing the Climate and What It Means for Life on Earth.” Atlantic Monthly Press, NY, 2005. On the web see this site run by climatologists: http://www.realclimate.org/

xxiii http://en.wikipedia.org/wiki/Precautionary_principle

xxiv In addition to the Limits to Growth series, a few books do a fine job discussing both “source” and “sink” problems with fossil fuels, including: Thom Hartmann, “The Last Hours of Ancient Sunlight: Waking Up to Personal and Global Transformation,” Jeremy Leggett, “The Empty Tank: Oil, Gas, Hot Air, and The Coming Global Financial Catastrophe,” James Howard Kunstler, “The Long Emergency: Surviving the Converging Catastrophes of the Twenty-First Century,” and David Holmgrem, “Permaculture: Principles and Pathways Beyond Sustainability.”

xxv Books addressing the benefits of a local economy focused on basic needs include: Richard Douthwaite’s, “Short Circuit: Strengthening Local Economies for Security in an Unstable World,” and Michael Shuman’s, “Going Local: Creating Self-Reliant Communities in a Global Age.”

xxvi http://www.netl.doe.gov/publications/others/pdf/Oil_Peaking_NETL.pdf and http://en.wikipedia.org/wiki/Hirsch_report

xxvii http://www.hm-treasury.gov.uk/independent_reviews/stern_review_economics_climate_change/sternreview_index.cfm

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Richard Heinberg: A beguiling veneer of normalcy Are we at the beginning of an epic Depression, or at the bottom of a nasty recession with brighter days only months away? It would seem to be a matter of perspective. Recent bank earnings reports and stock market activity have led many analysts to claim that the economy has indeed reached the bottom of the trough, and that while the recession is not over the worst has passed.

...The indicators to which I pay attention lead me to a different conclusion. We are indeed seeing a let-up in the frighteningly rapid financial collapse that began to unfold late last summer. That’s to be expected: all the trillions that are being spent on bailouts and stimulus packages must have some effect—though ultimately it will only be to provide a brief interlude before the storm returns in far greater force.

Will recession spark global food crisis? Like millions of farmers around the world, David Start is slashing the amount of potash he uses on his Ontario farm and the impact is rattling the agricultural industry.

Mr. Start has cut his potash use by 75 per cent because the price of the fertilizer is just too high. He hopes that by using a limited amount of potash he'll still produce the same amount of corn, beans and wheat.

"If you can't afford the input, then you have to start to strategize," he said from his farm near Woodstock.

Farmers across Canada, the United States and elsewhere are making similar decisions and holding off on fertilizer purchases in the hope prices will fall. Their collective action has sent fertilizer sales into an unprecedented nosedive and pummelled the bottom lines of agriculture giants like Potash Corp. of Saskatchewan Inc., Viterra Inc., Bunge Ltd. and Terra Industries Inc.

Cantarell field in Mexico falling fast as gas cap expands down structure Cantarell, discovered in 1979, by 1981 was flowing 1.156 million bbl/day from 40 wells. An average well in 1981 would produce 29,000 bbl/day. Development continued with production coming from many of the fields including Ixtoc, but as flow rates fell, gas lift equipment was installed. By 1995, the average well would produce 7,000 bbl/day. The gas lift program was expanded and by 1999, total production from the complex was 1.4 million bbl/day. But reservoir pressure continued to decline. Had there been no pressure maintenance installation, by 2004, production per well would have been about 3,200 bbl/day. Under that regime, production would continue for many years at ever declining rates.

U.S. ‘Soft Power’, Dollar Standard and the Banks There is every reason to believe the US presence in the Middle East has far more to do with preserving a strangle-hold over the world’s largest remaining reserves of cheap energy than any compelling need of the US economy. The new Great Game being played with Russia over control of pipelines from the oil-rich provinces of the FSU to Europe reinforces the likelihood the focus of US diplomatic strategy has been and continues to be hegemonic control over the world’s energy supplies. Is this an insurance policy to guarantee the world will continue accepting US dollars? Is this rather than the naked power of US oil companies, the reason President Reagan promptly removed the solar panels from the White House when he assumed office – a wink and a nod to Saudi allies, the military-industrial complex, Wall Street and the banks and a stern reminder to our ‘allies’?

B.C. projected to rival Alberta for gas production EnCana Canadian Foothills division president Mike Graham said improved technology is setting off a "renaissance" of natural gas production in North America, and B.C. is poised to benefit from it.

The province has large-scale reserves that are only now beginning to be developed as a result of sophisticated new extraction methods. And they are coming into production at a time when natural gas is gaining favour as an alternative to heavier fossil fuels, Graham said.

Oil should rise to $70-80/bbl in 2010: Russian minister SOFIA (Reuters) - Oil prices of around $50 a barrel are not high enough to ensure exploration and production but crude prices should rise to $70-80 within 12-18 months, Russian Energy Minister Sergei Shmatko said on Saturday.

"We are interested in a fair price ... The current oil prices does not ensure sufficient funds for continuous oil production, extraction or the implementation of new technologies," he said, when asked by Reuters what price the world's second largest oil producer needed to get for its crude.

OPEC, Asian Ministers May Call for Curbs on Speculation in Oil (Bloomberg) -- OPEC and 13 Asian countries may call for measures to curb speculation in crude oil to prevent a surge in prices once the global economy recovers from the worst recession since World War II.

Ministers participating in an energy roundtable in Tokyo may seek increased oversight of over-the-counter trades in oil and its derivatives, according to a draft of a statement to be released by the chairmen after today’s meeting, a copy of which was obtained by Bloomberg News. The document, which may change, calls for limits on speculative positions in oil futures.

Saudi Arabia, Japan agree to promote energy cooperation TOKYO (KUNA) -- Japan and Saudi Arabia have agreed to promote bilateral cooperation in renewable energy and conservation of power, as well as support for bilateral small businesses, Japanese officials said Saturday According to the officials, and during talks with Japanese Economy, Trade and Industry Minister Toshihiro Nikai here, visiting Saudi Oil Minister Ali Al-Naimi underscored cooperation the two countries conducted, particularly in the energy field and increased investments by Japanese companies in the kingdom.

We’ll ensure gas supplies: Emir DOHA/Sofia: Qatar yesterday assured the world of consistent gas supply and reiterated that its plans to produce 77 million tonnes per annum (mtpa) of liquefied natural gas (LNG) in two years were on track.

“The stability and security of energy supplies globally are our prime concern and that’s one of the reasons why we are focusing on further developing our vibrant natural gas industry,” The Emir HH Sheikh Hamad bin Khalifa Al Thani told a key Energy Summit in Bulgaria yesterday.

Venezuela is the only one in the hemisphere suffering a recessive adjustment In the face of a global crisis that has cut the demand of exported goods; turned the financing tap off in the international market and evaporated foreign investment, the governments that command the main Latin American economies, except for the Venezuelan government, have embarked upon a number of policies to circumvent recession and mitigate its impact on people.

Militant camps destroyed in Niger Delta LAGOS (AFP) – The Nigerian military on Saturday said it had raided and destroyed two militant camps in the volatile Niger Delta as part of efforts to end violence in the oil-rich region.

Govt Order Averts Oil Strike in Argentina The federation of Argentine oil workers' unions called off a strike planned for Thursday, heeding a 15-day "mandatory conciliation" order issued by the Labor Ministry.

As part of the government intervention, a meeting was to be held Thursday between the unions and the companies to resolve the labor dispute, Argentine media outlets reported.

Schlumberger CFO: Another Headcount Reduction Likely Schlumberger's Chief Financial Officer, Simon Avat, said Friday the oilfield services major will likely reduce its employment levels in the coming months, Dow Jones reports.

The world's largest oilfield services company, Schlumberger cut some 5,000, or 6%, of its 84,000 global employees in the first round of layoffs announced in January amid a worldwide downturn in oil and gas activity and weakened crude prices.

Alberta wary of California low-carbon fuel rule HOUSTON (Reuters) - Canada's biggest energy-producing province, Alberta, is wary of the new California low-carbon fuel rule and its potential effects on exports of oil sands production, the province's energy minister said on Friday.

Mel Knight, Alberta minister of energy, said the new rule -- and rules being considered by other states -- are a potential threat to exports of upgraded oil from Canada's oil sands, but Alberta will continue to try to participate in discussions to help shape such rules.

H2O Smart Dawn Heffernan faces a big challenge. Her southern Alberta town will max out its water supply this year. Since there is no prospect of getting more, there is only one solution: conservation.

On your trike! The main innovation with the modern trike is that the two wheels are at the front rather than the back, on either side of a box containing a seat (and a seatbelt) for children. The particular model I am training on comes with seven gears, a hydraulic handbrake at the front and an old fashioned coaster brake at the rear. There is also a continental style-frame lock that immobilises the back wheel.

Ocean power surges forward Wave power and tidal power are still experimental, but may be little more than five years away from commercial development.

Al-Naimi Says Saudi Oil Output Below Target; Stockpiles to Fall (Bloomberg) -- Saudi Arabia, OPEC’s biggest oil exporter, is producing less crude than its target and global stockpiles are likely to decline, according to Oil Minister Ali al-Naimi.

The country is producing less than 8 million barrels of crude a day, al-Naimi told reporters today in Tokyo, where he is attending a meeting of Asian energy ministers. Stockpiles “will come down eventually,” he said.

IMF: Mideast under strain despite oil wealth CAIRO (AP) — The world's worst economic recession in about six decades is hammering the nations of the Middle East, with falling commodity prices severely straining economies and wealthy oil producers digging deep into savings to sustain spending.

Kuwait Min Says Worried Budget Gap If Oil $30-$40/Bbl TOKYO (Zawya Dow Jones)--Kuwaiti Oil Minister Sheikh Ahmad Abdullah Al Sabah said Friday the government is worried it will incur a budget deficit if the oil price falls to an average of $30-$40 a barrel this year.

However, he added that it would be comfortable if the oil price averages $50-$60 a barrel in 2009 and $70/barrel or more over the next three years.

"I'm not worried till I see oil hitting $30-$40 because that would mean a deficit in the Kuwaiti budget. Oil is a depletable commodity and we can't afford to sell it at this price but have to conserve it. Nobody likes to see deficit in his budget," Sheikh Sabah told Zawya Dow Jones in an exclusive interview.

Natural Gas Is Going to 1997 Levels and is Going to Stay There for A While In the middle of this decade, E&P companies were spurred on by rising commodity prices and easy credit to find and develop new sources of domestic natural gas–most notably shale gas. The forces that enabled this phenomenal growth in domestic gas production–the great asset and credit bubble–have vanished into air, into thin air. Now, Shale-gas companies may have been impaled on their own bayonets. Yet some would have us believe that natural gas prices are poised for a great comeback–that all the fret and worry is for nothing because prices are going to come right back up and justify the development of all the shale in the country, and then some. They are wrong: demand will continue to be weak and supply will not be nearly as sparse as the some of the gas-bulls would have us believe. Instead, the story of 2009, 2010, and beyond will be not only how much farther natural gas prices will fall, but also how long prices will stay in the basement, and who will be counted among the casualties.

Policymakers and the Depression Well, it means that in a hyperinflationary period, you could have plummeting stock and bond prices (in real terms) AND rising food, energy, and other prices (in real terms). So don’t go buy that house just because you think inflation is going to boost house prices. In real terms, a hyperinflation destroys value. It doesn’t add it.

Here’s the thing to remember: all the physical capital stock that gets built in an inflationary boom doesn’t go away. The factories are still there. The houses are still there. The capital goods are still there. And the cars are still there. But the value of that capital stock has to fall once the inflationary boom goes bust.

Dutch Firms to Build Network of Charging Stations for Electric Cars Dutch electricity grid companies have agreed to build a national network of charging stations for electric cars to encourage the purchase of this type of clean vehicles, Dutch media reported on Friday.

Kazakhstan Bank Stops Repaying Foreign Debt MOSCOW — The largest bank in the Central Asian nation of Kazakhstan, whose economy soared when oil prices were high, announced on Friday that it could no longer repay $11 billion in foreign debt.

The bank, BTA, said it would pay only interest to foreign creditors, who lavished the country with loans during the commodity boom. The move underscored the growing financial instability in countries all across the former Soviet Union.

Cost of oil bucks conventional wisdom, rises NEW YORK - Oil prices appeared again to buck traditional market fundamentals, rising for the third straight day Friday despite a huge surplus and weak global demand.

Concerns that the U.S. bank bailout will spark a wave of inflation sent money flowing into hard assets like oil.

California's low-carbon fuel standard has oil companies anxious In car-crazy California, a new fuel standard ordered by state officials to curb greenhouse gases could dramatically change how vehicles run.

It also could have a huge effect on cost.

The petroleum industry and some economists say the new standard adopted by the state Air Resources Board on Thursday will cost motorists billions, because blending gasoline will become considerably more complicated.

But state officials and environmentalists say the "low-carbon fuel standard" will actually save Californians money by reducing oil consumption and ushering in a competitive new era of biofuels and electric vehicles.

New California fuel rule may violate NAFTA: lawyer CALGARY, Alberta (Reuters) – California's new low-carbon fuel rules may be a violation of NAFTA and World Trade Organization provisions because they would unfairly limit exports of crude from Canada's oil sands to the state, a prominent Canadian trade lawyer said on Friday.

Alaska's drilling debate moves offshore The coast around Prudhoe Bay is already dotted with drilling operations such as British Petroleum's Liberty project, which, when completed, will have the world's longest diagonal wells -- reaching eight miles out from facilities near shore. In contrast, the proposed Chukchi Sea leases would start 25 miles offshore and reach 200 miles out.

Obama administration officials have said they will weigh the nation's energy needs against the desire to protect crucial resources. But with active North Slope fields reaching the end of their production life, the allure of an estimated 27 billion barrels of oil and 132 trillion cubic feet of natural gas off Alaska's shores is strong.

Gov. Sarah Palin has warned that without new drilling, the 800-mile-long trans-Alaska oil pipeline could be forced to shut down in as little as 10 years -- crippling America's hopes for energy independence, not to mention her state.

Venezuela Oil Company Cuts Costs As Prices Fall CARACAS, Venezuela (AP) — Venezuela announced plans Friday to slash salaries and spending at its state oil company in a bid to save cash for refinery upgrades and other projects as oil income falls.

OPEC chief plays down possible output cut VIENNA - OPEC chief Abdalla Salem El-Badri does not expect the oil cartel to cut production at a key meeting next month, Dow Jones Newswires reported Friday.

Despite signs of even weaker crude demand and swelling oil inventory in big energy consuming nations, the Organization of Petroleum Exporting Countries first needed to fully implement an agreement announced in December to remove 4.2 million barrels a day from world markets, El-Badri said in an interview.

CNPC tightens its belt China National Petroleum Corporation (CNPC) said it will lower oil and gas operational costs by 5% this year and project investment costs by 10% as part of a package of measures designed to help the company cope with the spreading global financial crisis.

In a statement published on its website, CNPC said it could potentially lower costs related to its normal purchases of about 200 billion yuan ($29.30 billion) for materials and equipment each year.

Saudi giant oilfield to start in June State oil giant Saudi Aramco will launch in June the largest new field in its plan to raise crude capacity to 12.5 million barrels per day (bpd) by the end of this year, Al-Hayat newspaper reported on Saturday.

"The Khurais oil project will open as scheduled in June," Al-Hayat newspaper quoted an unidentified source as saying.

Kuwait committed to joint venture with Japan in Vietnam''s refenery Kuwait Petroleum International (KPI), an international unit of Kuwait Petroleum Corporation (KPC), established the joint venture in April last year with Japanese major refiner Idemitsu Kosan Co. and Mitsui Chemicals Inc., as well as state-owned PetroVietnam.

"The project will utilize Kuwait's stable crude oil supply and Japanese firms' oil refining and petrochemical business experiences in Vietnam, where demand for oil products is rapidly increasing," said Shiekh Ahmad.

Iran says no gas to UAE until price 'corrected' Iran will not start delivering natural gas to the United Arab Emirates until the price has been 'corrected' in a contract with Crescent Petroleum, Oil minister Gholamhossein Nozari said on Saturday.

Profits of China's major oil companies rise as demand recovers BEIJING (Xinhua) -- China's top five oil companies saw profits up 13.2 percent in March from the same period a year ago, as stimulus package pushed up energy demand, according to a report released by the China Petroleum and Chemical Industry Association.

Three Reasons to Be More Bullish on Natural Gas than on Oil 1. Chesapeake Energy Corp. announced plans to cut natural gas production further while also resuming some oil production. When producing natural gas becomes uneconomical and enough production is cut, prices will eventually have to rise. If production of oil is resumed after being previously cut, then it likely means that the production of oil is becoming economical again.

Report: Iran discovers new oil, gas resources TEHRAN (Xinhua) -- Iran discovered a new oil layer and a gas field in the southwest and central parts of the country, Iran's Press TV reported Saturday.

A Natural Gas Centric Strategic Long-Term Comprehensive Energy Policy One of America’s biggest competitive strengths is its 2.3 million mile natural gas pipeline grid. This grid supplies natural gas to every major metropolitan area in the US. The grid connects 63,000,000 US homes where 130,000,000 cars and trucks could be refueled every night in the garage while their drivers sleep. America’s natural gas reserves combined with her natural gas pipeline grid is the best weapon the US has in the war on foreign oil addiction. Natural gas is the only US domestic fuel that can be scaled up over the next decade to meaningfully reduce foreign oil imports. The US simply needs to make the decision to do so and get it done.

How the Media Misleads Us on "Energy Independence" When journalists cover the news they tell more stories than they know. What they leave out conveys as much what they put in. In an interdependent world, the shorthand simplifications no longer approximate reality. One case in point: "energy independence." The phrase is quite literally nonsensical.

Fuel-cell cars have a long way to go Hydrogen fuel cell vehicles, such as General Motors Corp.'s retooled Equinox — displayed at the St. Louis Science Center last weekend — rely on a reaction between oxygen and stored hydrogen to create electricity.

They are the future, automakers say. But when that future will arrive depends on whom you ask.

Bulgaria Signs Deal To Import Natural Gas From Egypt SOFIA (AFP)--Bulgaria signed a deal Saturday to import liquefied and compressed natural gas from Egypt in an attempt to wean itself off Russian deliveries, on which it is almost entirely dependent.

Japan honours 'Limits to Growth' science author TOKYO (AFP) — Japan on Thursday awarded its top science prize to a US researcher who decades ago predicted that rapid economic and population growth on a finite planet would lead to the collapse of civilisation.

Professor Dennis Meadows led a research team that in the 1972 study "The Limits to Growth," using a computer model called World3, forecast that on current trends humanity was headed for doom by 2100.

The Land of the "Meadow": A Look at the Predicament of Suburban Ancaster Of course, one of the main issues with suburbanization is the idea of the commuter culture. Automobile use is practically a must in communities such as Meadowlands due to the vast, low-density housing and the inefficient use of the land.

Being situated at the cusp of what many would term the "climax of peak oil", it is difficult to justify wasting natural resources in such a self-centred manner. Perspective seems to have been largely skewed somewhere along the line; image has overtaken ethical considerations for living.

Europe & America: Enviromental Fallout The United States is certainly one of the cleanest, more environmentally responsible nations in the world. Virtually no European country can boast cleaner waters, more pristine rural landscapes or air quality. Even Los Angeles, the butt of all environmental jokes in the United States, is cleaner than 95 percent of all major cities in the world. But the environment has been used as a means to politicize economic progress. Environmentalist organizations, many of them the offshoot of anti-establishment, radical movements of the 1960's, have grown to wear a suit and tie but still show a stark aversion to any development. There is no energy project, no highway, no power plant, no harbor and no airport of which Greenpeace, Friends of the Earth or the Worldwide Wildlife Fund would approve.

Hungry Girl Recipes Bring Lisa Lillien To National Spotlight Here's a taste of Lisa Lillien's unfathomable food wisdom, from the Washington Post article: "Lillien knows she has critics out there. "People are hypocrites," she says. "They say 'shop the perimeter of the store, never eat anything that's not organic,' but it's B.S., because people can't live like that forever."

What have we come to? Just four generations ago, 75% of Americans lived on farms. By default, all food was local and organic and seasonal. 80 years ago, only the elite could eat out-of-season food from far away- it was prohibitively expensive for ordinary folks to eat, say, oranges in August. That out-of-season orange was the ultimate display of food elitism. Now, food elitism is eating organic, in-season food, and cooking it yourself. It's come to this: eating real food is elitist.

What shade of green is your building? From this architect’s point of view it seems more and more fashionable, marketable, and finally cost effective in terms of building life cycle to build green. I joined the United States Green Building Council (USGBC)a few years back and quit after I found out that they had recently approved some products made of plastic. Somehow that didn’t quite fit into my definition of green. Maybe I was wrong in thinking that we should be more concerned with our carbon footprint. Maybe my studies in homestead sustainability from 35 years ago got in the way. Maybe I was just wrong and uninformed. Anyway, my middle ground was joining the Florida Green Building Coalition (FGBC). It was more local, I like that about an organization in which I am a member.

Gore’s, Gingrich’s views clash on greenhouse gases WASHINGTON — Former Vice President Al Gore, the leading American voice on climate change, urged lawmakers Friday to overcome partisan differences and take action to reduce greenhouse gases. But Democrats and Republicans sparred even more vigorously over the cost of dealing with global warming.

Saving the planet by numbers Maybe if we all do a little, we'll achieve only a little. Newspapers and television programmes are full of suggestions on how we can be more green. But how can we tell what works?

U.S. seeks reins in new set of climate talks WASHINGTON (Reuters) – The United States hopes to take the reins of international efforts to battle global warming next week with a meeting of major economies aimed at facilitating a U.N. pact to cut greenhouse gas emissions.

'Future Earth: Journey to the End of the World' The world is always coming to an end on cable news, where panic is the fallback position. And so it does, hypothetically, in the first of four MSNBC specials on our tottering globe, “Future Earth: Journey to the End of the World.” Partly a report on an expedition to study the changing Arctic environment and in (small, but endlessly teased) part a CGI disaster mini movie, it is not quite the adventure the material promises. But it works well enough as a primer on the effects of global warming on Arctic ice and why you will miss it when it's gone (not least because it is beautiful to behold).

This post relates to an article written by my advisor Charles Hall and a close friend of his. The article is available from American Scientist (paywall) or from Professor Hall's web site.

There are only finite resources in the world, but population continues to grow. How will this situation resolve itself? This was a question a group of scientists (Meadows et al), commissioned by the "Club of Rome," attempted to answer back in 1972, in a book called Limits to Growth. The model they presented predicted growing resource scarcity, increasing pollution, and eventual population decline, all prior to 2100.

Charles A. S. Hall and John W. Day revisit these predictions in an article published this month in American Scientist called Revisiting the Limits to Growth After Peak Oil. Their analysis indicates that the predictions from 1972 were surprisingly accurate, considering how long ago they were made:

According to Hall and Day, "The values predicted by the limits-to-growth model and actual data for 2008 are very close."

Hall and Day immediately acknowledge that the academic world has paid most attention to human impacts on biodiversity and climate change and not enough on general resource issues. They believe that there are numerous resource issues related to peak oil that are “coming home to roost” and that all of these issues were laid out quite accurately in 1972 in the Limits to Growth model. They write:

As many continue to dismiss what those researchers in the 1970s wrote, there is growing evidence that the original “Cassandras” were right on the mark in their general assessment, if not always in the details or exact timing, about the dangers of the continued growth of human population and their increasing levels of consumption in a world increasingly approaching very real material constraints. It is time to reconsider their arguments in light of new information, especially about peak oil.

According to the authors, there has been widespread belief that the original 1972 forecast was incorrect:

Economists particularly disliked the perspective of the absolute scarcity of resources, and they wrote a series of scathing reports directed at the scientists mentioned above, especially those most closely associated with the limits to growth. Nuclear fusion was cited as a contender for the next source of abundant, cheap energy. They also found no evidence for scarcity, saying that output had been rising between 1.5 and 3 percent per year. Most importantly, they said that economies had built-in, market-related mechanisms (the invisible hand of Adam Smith) to deal with scarcities.

An important empirical study by economists Harold J. Barnett and Chandler Morse in 1963 seemed to show that, when corrected for inflation, the prices of all basic resources (except for forest products) had not increased over nine decades. Thus, although there was little argument that the higher-quality resources were being depleted, it seemed that technical innovations and resource substitutions, driven by market incentives, had and would continue indefinitely to solve the longer-term issues. It was as if the market could increase the quantity of physical resources in the Earth.

But analyses since then have proven these arguments false. According to the authors,

For example, Cutler J. Cleveland, an environmental scientist at Boston University, reanalyzed the Barnett and Morse study in 1991 and found that the only reason that the prices of commodities had not been increasing—even while their highest quality stocks were being depleted—was that for the time period analyzed in the original study, the real price of energy had been declining because of the exponentially increasing use of oil, gas and coal, whose real prices were simultaneously declining. Hence, even as more and more energy was needed to win each unit of resources, the price of the resources did not increase because the price of energy was declining.

Of course, the time period since the study has been very different, with less growth in resources and higher prices, showing that Barnett and Morse's conclusions did not hold for the long term.

Another reason that some believed Limits to Growth was wrong was confusion over what one summary graph showed. The graph shows dates only at the two end points--1900 and 2100--so was somewhat confusing to read. A graph of the forecast, with more intermediate dates, is shown below:

According to Hall and Day, this forecast is "largely accurate" to date. "We are not aware of any model made by economists that is as accurate over such a long time span." We cannot know at this time how accurate future projections will prove to be.

Another reason people have been reluctant to believe forecasts predicting shortages is because the forecast of Thomas Malthus back in 1798 proved wrong. Malthus predicted that population would grow more rapidly than food supply, resulting in starvation. A major reason he was wrong was because of the growth in the use in fossil fuels, and the resulting increase in food production.

Looking to the future, the authors see peak oil to be a key issue:

. . . a key issue for the future is the degree to which fossil and other fuels will continue to be abundant and cheap. Together oil and natural gas supply nearly two-thirds of the energy used in the world, and coal another 20 percent. We do not live in an information age, or a post-industrial age, or (yet) a solar age, but a petroleum age. Unfortunately, that will soon end: It appears that oil and gas production has reached, or soon will reach, a maximum. . .

Most environmental science textbooks focus far more on the adverse impacts of fossil fuels than on the implications of our overwhelming economic and even nutritional dependence on them. The failure today to bring the potential reality and implications of peak oil, indeed of peak everything, into scientific discourse and teaching is a grave threat to industrial society.

Charles Hall can be reached at "chall at esf dot edu"; the author of this post, Dave Murphy (aka EROI Guy), can be reached at "theoildrumeroi at gmail dot com".

Recently a debate has arisen here at ETH Zurich centering on the question whether the envisaged "2000 Watt Society" is inevitable. Why shouldn't we be allowed to use more energy? Wouldn't it be more important to limit greenhouse gas emissions? A report about the new energy strategy of ETH Zurich was published in the Oil Drum in May 2008.

In this presentation, we discuss whether the 2000 Watt Society is at all sustainable, and if so, what it will take to keep energy supply at that level after the end of ample and cheap fossil fuels. What are the implications of energy deprivation to our society? Can we stave off famine? How can we maximize our chances of getting through the emerging world-wide crisis relatively unscathed? What are the pitfalls in designing and implementing a strategy that helps us achieve these goals? How much time have we got left?

Predictions are notoriously difficult, especially when they concern the future. So, how sure can we be that our predictions are correct? How can we convince the public at large that there is a real and present danger looming in the not too distant future, despite the fact that at this point in time few signs of any problems are noticeable yet here in Switzerland, and particularly, as the crude oil price has recently fallen to one fourth of the value it was at in early July of last year?

This paper is based on a talk presented by the author at the Zurich Physics Colloquium a few days ago. The talk is available on the net both as a Powerpoint presentation and as a podcast.

A Sankey Diagram for Switzerland

Let us start by analyzing the current energy situation here in Switzerland. This is best represented by a so-called "Sankey" (energy flow) diagram:

Fig.1: Sankey diagram of Switzerland - source: Dr. Michael Piot, Swiss Federal Office of Energy

The diagram shows on the left hand side the produced and procured (imported) sources of energy. Different types of energy are marked in different colors. The brown energy at the top represents wood. The wood is grown in Switzerland. The red energy below represents crude oil that is being imported and refined in Switzerland. The most prominent orange energy represents refined oil imported into the country. The yellow energy denotes gas. Gas is also imported. The green energy denotes nuclear fuel. Although we have currently five nuclear power stations in Switzerland to convert the nuclear fuel to electricity, the fuel rods themselves are being imported. The blue bar represents water power. It is available locally and is converted to hydro-electric power in turbines here in Switzerland. The thin dark blue energy source at the bottom represents everything else: solar, wind, geothermal. Together they make up only about 1% of the total energy mix currently consumed in Switzerland.

On the right hand side, the diagram shows the consumed energy. At the top, the private homes are being depicted. The dominant form of energy consumed in households is heating oil, as most private homes in Switzerland are still being heated by central oil heating systems. Hence if we decide to save electricity by exchanging our light bulbs for fluorescent lamps, we do relatively little to alleviate the peak oil problem, even if we save substantial amounts of electricity. Below are shown industrial buildings. These consume much less energy, and they have already been fairly well optimized. Not much can be done to improve their energy consumption further. Below, the diagram shows the service sector including all government buildings, schools, hospitals, etc. They are similar to the private homes in their energy consumption pattern. Yet below is the transportation sector. This is the largest consumer of fossil fuels in Switzerland. The narrow blue line represents the electricity consumed by our railway system. The unconnected bottom block shows the energy consumption by agricultural enterprises. It is important to have this information, as we must produce food for our population. This by itself turns out to be highly problematic.

Per Capita Power Consumption

Let us add all of the sources of produced and procured energy together and divide this number by the total population of Switzerland. The data are summarized in Fig.2.

Fig.2: Total energy production/procurement in Switzerland

Switzerland produces and procures a total of 1.12 EJ of energy per year. Of this total amount, 20.2% are produced locally, whereas 79.8% are imported. Dividing this energy by the number of seconds in a year, we obtain 35.576 GJ/sec = 35.576 GW of consumed power. Dividing this number by the total population of 7.85 million people, we obtain a total per capita consumption of 4.53 kW.

This number is considerably lower than what BP list as Swiss power consumption in their annual statistical energy review. The BP statistics are referenced frequently, because this is the most comprehensive collection of energy data publicly available today. Where does the discrepancy come from? BP is an oil company, and as such, they don't consider water power as a "primary" source of energy. To them, only stuff that is dug out of the ground is "primary" energy. Hence they are asking themselves, how much oil Switzerland would have to buy from them and burn in order to produce as much electricity as we are getting out of our water turbines. They rate the efficiency of fossil fuel burning electric power plants at 33%, and therefore assign a "handicap" to Switzerland by bumping the "primary" energy numbers for our water power up by a factor of three. The so modified statistics are shown in Fig.3.

Fig.3: "Corrected" energy production/procurement in Switzerland

So, now Switzerland is consuming 1.38 EJ/yr, corresponding to 43.88 GW in total, or 5.5887 kW per capita.

These numbers are still somewhat skewed, because neither the Swiss Federal Office of Energy (SFOE) nor BP consider material flows other than those of primary energy carriers. Switzerland imports lots of goods from foreign countries (including food) that consume energy for their production. This is called grey energy, and grey energy has not been included so far in the energy statistics. Whereas Switzerland is an export nation in monetary terms (we earn more money by selling stuff and services to other countries than we spend on buying stuff and services from them), we are an import nation in terms of grey energy, i.e., we are importing considerably more grey energy than we export.

There are no hard numbers available to quantify the amounts of surplus grey energy imported, but it is generally accepted that this corresponds to roughly 1/3 of the accounted energy. Thus adding the grey energy into the energy balance, Switzerland consumes between 7-8 kW of power per capita (using BP accounting methods).

How Much Energy Is Our "Fair Share"?

Let us try to answer that question in a round-about way. To this end, we shall first look at the so-called ecological footprint, produced for the Swiss Government by the Global Footprint Network:

Fig.4: Ecological footprint – source: Living Planet Report 2006

The graph shows on the vertical axis the amount of land area used per capita to support the life style of the average inhabitant in different countries, and on the horizontal axis the so-called Human Development Index (HDI), an index measuring the living standard in these countries.

The countries of this planet follow a banana-shaped curve starting on the lower left with people, mostly from sub-Saharan African nations, consuming very few resources while living under dismal conditions, and ending on the upper right with the U.S. and the U.A.E., two countries whose inhabitants consume exorbitant amounts of resources while leading very good lives.

Switzerland uses 5.1 hectares per person and consumes 5.5 kW of power per capita. The U.S. uses 9.6 hectares per person and consumes 9.8 kW of power per capita. The two measures are almost proportional to each other, i.e., we can mark the vertical axis in kW of consumed power instead of hectares of used land, and the curve will remain almost unchanged.

Using hectares as a measure of consumption has the advantage that we can add up the entire usable surface of our planet and divide it by world population. In this way, we obtain an available land area of 1.8 hectares per person. We are currently using on average 2.2 hectares per person, i.e., we cannot continue to use as much as we currently do in a sustainable fashion.

In order to allow developing nations to improve their living standards, we must allow them to use up more of the world's resources. We cannot do so in a sustainable fashion, unless the rich nations give up some of their own usage.

Our goal should be to bring all countries into the orange area at the lower right corner of Fig.4, where they can lead a life of acceptable comfort, while not charging the resources of our planet in an unsustainable fashion. Currently, there is only one country in that area: Cuba. Thus, if President Obama is serious about his commitment to sustainability, then his slogan should no longer be "Ich bin ein Berliner," but rather "Soy un Cubano."

If Switzerland wants to bring its ecological footprint down to 1.8 hectares per person, it needs to reduce its energy consumption to roughly 2 kW per capita. This is how the idea of the 2000 Watt Society was first created.

Unfortunately, Switzerland may under those conditions not be able to maintain the same living standard that Cuba currently enjoys, because Cuba is a tropical island that can grow food year round, whereas Switzerland needs to either spend real energy to store food for the winter months or spend grey energy to import food during those months, and in all likelihood, Switzerland will need to do both.

How Much Power Can Switzerland Consume in a Sustainable Manner?

Let us now analyze how much power Switzerland can consume in a sustainable fashion. To this end, we shall now look at the consumption side of the Sankey diagram. This is summarized in Fig.5.

Fig.5: Energy consumption in Switzerland

We consume considerably less energy than we produce and procure because of the losses in energy conversion. Our current nuclear power plants have an efficiency of only 30%, and also hydro-electric power was charged with an (artificial) efficiency factor of 33%.

In Fig.6, I displayed the numbers of Fig.5 graphically.

Fig.6: Energy consumption in Switzerland today and tomorrow

A large majority of the Swiss people are not in favor of nuclear power. The licenses of our five current nuclear power plants will expire within the next 20 years. Unless we replace them by new nuclear power stations, and at least until now, there is no will to do so, this power will simply go away.

The oil and the gas will no longer be available in significant amounts, thus we cannot rely on having those still at our disposal by 2050. Assuming that we aggressively increase all alternative types of energy (solar, wind, geothermal) by a factor of ten, which may be difficult but doable, we will have only 2 kW per capita available by 2050.

Hence the 2000 Watt Society makes sense also from an entirely different angle: not as a lower limit of how much we may consume with a good conscience, but rather as an upper limit of how much will be at our disposal after the availability of cheap and ample fossil fuels has drawn to a close.

When Will We Run Out of Oil?

The United States Geological Survey (USGS) predicted in 1998 that world oil production would peak around 2003:

Fig.7: Peak oil prediction – source: L. Magoon, U.S. Geological Survey

The measurement data end in 1997, because the graph is already more than 10 years old. An updated graph of a similar nature depicting both oil and gas together is shown in Fig.8.

Fig.8: Peak oil and gas – source: C. Campbell, ASPO Ireland

Colin Campbell predicts oil and gas together to peak by 2010. These predictions are based on a method developed more than 50 years ago by M. King Hubbert. Hubbert predicted that world oil would peak around the turn of the century.

The technique is very simple. Each individual oil and gas deposit exhibits similar production patterns. First the production increases over time, then it peaks, and thereafter, the production decreases rapidly. All of these deposits together must, as a consequence of the law of large numbers, follow essentially a Gaussian distribution. The integral of the bell-shaped Gaussian distribution (the error function) can be approximated by a logistic curve:

dP/dt = a • P - b • P2

where P(t) denotes the total production up to time t.

We can use past measurement data of P, and perform a least squares fit to determine the best values of the unknown parameters a and b. This can be done either using global data directly, or for different regions of the globe separately. The final value:

Pmax = a / b

represents the total amount of oil (and/or gas) that will ever be produced.

I applied this method to the last 22 years of global oil production. The results of the curve fitting effort are shown in Fig.9.

Fig.9: Curve fitting past oil production data. The measurement data are plotted in black as curve (a); the Gaussian (Hubbert) prediction is shown in blue as curve (b); a constant exploration model is depicted in red as curve (c); and a continued exponential growth model is given in green as curve (d). Explorations (c) and (d) come to an end, when the total oil according to Hubbert's method has been produced.

BP tell us that, according to their best estimates, we still have enough conventional oil for 40 years. The prediction is made under the assumption of a continued constant exploration. This corresponds to the model (c) of Fig.9. Their statement is thus in fairly good agreement with the Hubbert model, as the two areas between the red and the blue curve are of equal sizes.

Luckily, BP's assumption of continued constant exploration won't hold. The law of large numbers gets in the way. The low-hanging fruit has already been harvested. Fig.10 shows new oil discoveries over time, in accordance with USGS.

Fig.10: New oil discoveries – source: L. Magoon, U.S. Geological Survey

The new oil discoveries follow quite well an exponential decay curve. This is how BP are able to estimate the remaining not yet discovered oil.

It is very fortunate that BP won't be able to keep the production up until the end, because an abrupt termination of oil production after another forty years would mean the end of the world as we know it. Exponential decay is bad enough, but an abrupt termination is equivalent to driving a car into a brick wall at 100 miles per hour. The ride is beautiful while it lasts, but the end is not pretty.

BP calculated their reserve estimates at a sales price of $80/barrel. If the price is much lower, then many of the remaining deposits cannot be exploited economically. If it is higher, then more oil deposits will become economically exploitable. Thus, we may actually have more oil available than currently predicted by BP, but not much more, as I shall demonstrate. In either case, the year of the peak doesn't change by much. Peak oil is not going to occur in the distant future. It is happening now.

What About the Oil Price?

Before peak oil, we are living in a buyers' market. Different oil producers compete for customers, and only those who offer the best prices can sell their product. The price of oil is dictated by production cost, and oil is consequently cheap.

After peak oil, we are living in a sellers' market. Different customers vie for oil, and only those who are willing and able to offer the highest price will be able to buy. The price of oil is dictated by market forces, and oil is consequently expensive.

Last summer, we came into the vicinity of peak oil, and consequently, the price of crude was rising rapidly. In the mean time, the world economy tanked for reasons that I don't wish to explore. Some people believe that the economy tanked because of high oil prices, but the reason is actually irrelevant to the analysis.

As the economy turned sour, fewer goods were produced, and consequently, less oil was needed. The demand for oil shrank by a few percentage points, and this sufficed to drive the oil market back into pre-peak territory. Consequently, the oil price came down once more.

Yet, our fortune won't last. Because of the current low oil prices, several new oil projects have already been delayed, as these deposits cannot be exploited economically at a price of $50/barrel. This drives the oil supply down.

As soon as the economy will start to recover, the demand for oil will rise again, which will drive the oil market immediately back into post-peak territory. It may take a few more months or possibly a year for this to happen, but the low oil prices are not to stay.

As we move down the Hubbert curve, no reduction in demand due to a shrinking world economy can keep the oil price down.

We are still consuming oil at almost the maximum rate, and much more than what we are using now is simply not in the cards.

Even worse, as oil becomes a scarce commodity, the oil producing nations will satisfy their own needs first before they export. Consequently, the international oil trade will shrink even faster than oil production.

The Curse of Shrinking EROEI

Most of the cheap oil has already been produced. The remaining oil is more difficult to get at, and therefore, its production is more expensive. Yet, this is not only a question of price. It is also a question of energy consumed in the process of developing these deposits. We need to take into account the Energy Returned On Energy Invested (EROEI). Unfortunately, the EROEI of oil is shrinking rapidly.

Charlie Hall has compiled a list of EROEI values for different energy sources. It is reproduced here as Fig.11.

Fig.11: EROEI for different energy types – source: C. Hall, The Balloon Diagram and Your Future

U.S. domestic oil had an EROEI value of around 100 in the early years of oil exploration. You dug a hole somewhere in Pennsylvania, and the oil came gushing out. By 1970, the EROEI of U.S. domestic oil had already shrunk to a value of about 30. Oil imported into the U.S. today has an EROEI value of below 20.

As the EROEI shrinks to a value of 1, it no longer makes any sense to produce it irrespective of its price. Why would anyone want to burn one barrel of oil to produce one barrel of oil in return?

Charlie Hall estimates further that energy produced at an EROEI value of below 5 cannot support our society sustainably. The reasons for this claim will become clear in due course.

Notice that bio-fuels of the first generation (such as the bio-fuels produced from corn in the U.S. and those produced from sugar cane in Brazil), shown in the lower-left corner of the graph, have EROEI values in the vicinity of 1. The EROEI of U.S. bio-fuels is reduced by irrigation needs and by highly automated production involving large plantation machines that consume lots of diesel fuel. The EROEI of Brazilian bio-fuels is reduced by the need to destroy (burn) large areas of rain forest first followed by a rapid degradation of the land.

Second generation bio-fuels, especially those produced from algae, may have higher EROEI values, but it is too early to know already, where their EROEI will be. Also, just like in the case of the first generation bio-fuels, they cannot be produced in sufficiently large quantities to solve our energy problem. They may help, but they are no cure.

The Dynamics of Our Energy Economy

Charlie Hall plotted a series of Sankey diagrams depicting the dynamics of our energy economy. Fig.12a shows the situation in 1949.

Fig.12a: Energy and economy diagram for 1949 – Source: C. Hall, Economic Implications of Changing EROI Ratios

The economy is driven by several feedback loops. The black feedback loop at the bottom denotes the EROEI. Energy needs to be invested to produce more energy. By 1949, the EROEI is high, and therefore, the feedback is drawn as a relatively narrow vector.

The production of energy also costs money. This is shown by the dark blue feedback loop at the top. Money is also spent for maintaining the infrastructure, as shown in clear blue. Some money is furthermore invested in improving the infrastructure. This is shown in red as discretionary investment.

Some of the money generated by our economy is not re-invested but spent. Some money is spent on food. This is shown in clear brown. The remaining money is used for discretionary spending, such as flying to the Maldive islands on a vacation.

Fig.12b shows the same Sankey diagram for 2007.

Fig.12b: Energy and economy diagram for 2007 – Source: C. Hall, Economic Implications of Changing EROI Ratios

What has changed is that the EROEI of energy production has shrunk dramatically. Consequently, the black feedback loop is now much thicker. However, the overall economy has grown, and therefore, there is still a lot of money available for discretionary spending. We are in fact more wealthy than in 1949.

Fig.12c shows the same Sankey diagram as estimated by Hall for the year 2030.

Fig.12c: Energy and economy diagram for 2030 – Source: C. Hall, Economic Implications of Changing EROI Ratios

What has changed is that peak oil is now behind us. Consequently, the oil has become very expensive, and a much larger percentage of our wealth is required to acquire energy. Consequently, the dark blue feedback loop is now much thicker as well. Therefore, less money is now available for discretionary spending, and we have all become poorer again.

Fig.12d shows the same Sankey diagram, now projected to the year 2050.

Fig.12d: Energy and economy diagram for 2050 – Source: C. Hall, Economic Implications of Changing EROI Ratios

The EROEI of energy has shrunk further, and the cost of energy has increased some more. The black and the dark blue feedback loops now consume all of our resources that aren't needed to simply stay alive. The amount available for discretionary spending has shrunk to zero.

As the amount available for discretionary spending turns negative, the infrastructure falls apart, as we can no longer maintain it. Consequently, we can no longer feed the entire population, and the die-off begins.

Hall's model may actually be a bit conservative, as it doesn't take into account the uneven distribution of wealth in different regions of the planet. Comparing Asian Americans in California with African Americans in Mississippi, we notice a difference in life expectancy of 15 years. African Americans in the Southeast of the U.S. die 15 years younger on average simply because of economic conditions.

For this reason, it must be feared that the die-off will begin much earlier than 2050 in some regions of the world.

What Does This Mean For Switzerland?

Switzerland is in a relatively comfortable position as far as electricity is concerned. We produce almost none of our electricity from fossil fuels. Hence I do not expect our grid to disintegrate permanently any time soon. Brownouts and blackouts may become more frequent than they are now, but they will not lead to a complete breakdown of the grid.

Yet, we nevertheless import 70-80% of our overall energy (depending on the accounting method), and most of our imported energy is based in fossil fuels: oil and gas. Therefore, we will have to learn to live on considerably less energy than we have available today.

What Can Switzerland Do?

The most cost-effective way of countering energy shortage is through energy savings.

Switzerland should aggressively push for minergy housing. Neighboring regions, such as Vorarlberg, for example, have done so in recent years much more effectively than Switzerland. In Vorarlberg, almost all new houses are now built to minergy standard. The government pushes this technology aggressively and offers subsidies to new home builders to make it more attractive economically to built to minergy standard. In contrast, only about 20% of new houses in Switzerland are built to minergy standard. The Swiss government needs to do more, much more in fact, to push energy-efficient homes.

Switzerland needs to push for more fuel-efficient lighter vehicles. The weight of the average passenger car in Switzerland has risen in the last 15 years from 1200 kg to 1500 kg. Quite clearly, the Swiss government has failed to educate the population about the bad consequences of wasting energy on equipment that is unnecessary and doesn't even improve the quality of life in a significant way.

Most governments spend currently millions and millions of Dollars trying to reactivate their stalling economies. Investing in energy infrastructure, e.g. through government incentives directed at measures that promote energy savings, may do so much more effectively than throwing money into the fangs of money-hungry investment bankers.

Energy saving measures alone can reduce the Swiss energy consumption by 40% without sacrificing the life style of its inhabitants to a significant extent.

Switzerland should furthermore invest in infrastructure for a more robust grid, thereby reducing the risk of repeated brownouts and blackouts.

More incentives should be offered to let people use electricity during off-peak hours.

A refrigerator or freezer doesn't need to consume electricity on a 24/7 basis. It would make sense to install a smart sensor between a refrigerator and the wall outlet that senses instability in the grid and temporarily switches off the device whenever the grid becomes more unstable.

The same holds for electric heat pumps. They can also be temporarily switched off. Smart controllers can optimize electricity consumption by heat pumps to occur primarily during off-peak hours.

Switzerland should invest aggressively in solar and wind power. These alternative sources of energy won't be able to replace the energy currently imported in the form of fossil fuels in their entirety, but every bit helps. We'll need all that we can get.

Switzerland needs one more generation of nuclear power stations. Switzerland should pursue the construction of one new nuclear power station at every one of the five current locations to pick up the load when the licenses expire for the old power stations. Otherwise the pressure will be large to keep the old power stations running beyond the time they can be used safely.

Nuclear power in its current form is not sustainable either. We'll also run out of uranium. Yet, new nuclear power stations will take some pressure off the energy situation by buying us more time to transition to sustainability.

Hopefully by the time the new nuclear power stations need to be shut down, we shall have come up with other sources of energy to pick up the remaining load. If we are lucky, we'll have these new sources of energy on-line even earlier, and in that case, we may be able to retire our nuclear power stations even before their licenses expire.

As we still have not solved the final nuclear waste storage problem, as we still don't know what to do with the used nuclear fuel rods, I recognize that I advocate adding a few more IOUs to an already large stack, but the alternative looks even worse.

Switzerland can't go it alone.

Switzerland currently imports 40% of its food. Switzerland cannot feed a population of close to 8 million people from food produced locally. Switzerland is in fact the worst of all European nations in this respect. We rely heavily on food imports beside from energy imports.

As the economic situation deteriorates, Switzerland's dependence will become more critical, as we won't have as many surplus financial resources available to ensure imports.

Durable agreements with the EU nations are therefore very important.

Switzerland is in a relatively comfortable position with respect to greenhouse gas emissions. The reason is that Switzerland uses hardly any coal at all. For this reason, our per capita CO2 emissions are about half of those produced by other Western European countries.

Yet, greenhouse gas emissions are a veritable problem, and Switzerland needs to contribute to its solution, primarily by helping developing nations to invest in cleaner technologies.

Conclusions

When I walk through the streets of Zurich and look into the windows of the shops, I don't notice any change yet. There is no shortage of anything. Energy is cheap and amply available. The inflation rate has come down. Unemployment hasn't picked up yet. It is still below 3%.

For this reason, I cannot blame the average Swiss for walking through life with blinders on. Life is good, they think. There isn't a worry in the world. Those who predict doom are just that: doomers. There is no reason to listen to them, let alone take them seriously.

With this article, I hope to wake some of my compatriots up from their sleeping-beauty slumber. Problems that lie ahead don't need to be obvious and visible in order to make them predictable.

Peak oil is taking place as I write. An immediate and inevitable effect of peak oil will be rapidly rising energy prices, and those are accompanied by a further downturn of the economy. This is going to happen irrespective of what we do.

Yet, this does not mean that we cannot prepare ourselves and thereby soften the impact of these events on the Swiss population. In fact, we should have started preparing much earlier, as we have known about these problems for more than 30 years already. The longer we wait, the more difficult and costly it will be to avert the worst. If we do nothing, we'll experience the full brunt of peak oil and its consequences, unmitigated and merciless.

US natural gas rig count again hits new 6-year low NEW YORK (Reuters) - The number of rigs drilling for natural gas in the United States fell 18 to 742 last week, its lowest level in more than six years, according to a report issued Friday by oil services firm Baker Hughes Inc in Houston.

U.S. natural gas drilling rigs have been in a steady decline since peaking above 1,600 in September and now stand about 731 below the same week last year, the lowest level since Feb. 7, 2003, when there were 734 gas rigs operating.

Near record-high gas production last year and a deepening recession that sharply cut demand led to a severe oversupply that collapsed gas prices to about the $3.50 per mmBtu level currently from their peak above $13 last July.

PDVSA struggling to pay debt Venezuela state-owned PDVSA, plagued by financial problems related to the collapse of oil prices, has paid only about 5% of its outstanding debt to oil service companies and suppliers so far this year.

US company Helmerich & Payne has not received any payment from PDVSA, despite the fact that it halted operations in four platforms.

The company halted four rigs in Venezuela after the expiration of the contracts for 14 drills that the US service company has in the South America country due to a payment dispute. Helmerich intends to continue shutting down rigs as contracts expire.

North Sea companies welcome tax breaks North Sea oil and gas companies have welcomed new tax breaks in the Budget designed to stimulate investment, which has been battered by falling oil prices and a shortage of finance.

However, some companies in the sector warned that the measures were likely to have only a marginal effect, given the severity of the squeeze on the industry, and have urged the government to go further in future.

Petrobras sets monthly oil record in March Brazil’s Petrobras has set a new monthly oil production record of 1.99 million barrels per day for the month of March surpassing the previous month of 1.94 million bpd.

The company said the 52,000 bpd difference was mainly from the entrance of new wells in the platforms FPSO Cidade de Niteroi, P-53 (Marlim Leste) and P-54 (Roncador).

Iraq, Syria agree on plan to repair Kirkuk-Banias oil line Iraq and Syria, following broad-ranging talks between Iraqi Prime Minister Nuri Al-Maliki and his Syrian counterpart Mohammed Naji Otri, have agreed on a new plan to repair the bomb-damaged Kirkuk-Banias oil pipeline.

"Discussions led to a strategic agreement in the areas of oil, gas, power, and trade," said Al-Maliki, adding, "The two sides also reached agreement on repairing the pipeline across Syria."

GM to pull the plug on Pontiac The brand credited with originating the muscle car will not be part of GM's future.

Ford posts $1.4 billion first-quarter loss DEARBORN, Mich. - Ford Motor Co. reported a first-quarter loss of $1.4 billion Friday and said it used less of its cash, emphasizing that it doesn’t expect to seek any of the government assistance that is keeping the rest of the Detroit Three alive.

The nation’s second-largest automaker said it spent $3.7 billion more than it took in during the first three months of the year, far less than the $7.2 billion it spent in the fourth quarter of 2008.

Jamaican army deployed ahead of tax increase KINGSTON (Reuters) - Jamaica's government put police and the army on alert to prevent violent demonstrations as it prepared to announce tax increases on gasoline, cigarettes and other consumer items on Thursday.

Police and soldiers were deployed at what the government called "strategic" locations across the Caribbean island to quell any violent protests. Finance and Planning Minister Audley Shaw was expected to announce the tax increases during a budget debate later on Thursday.

Earth Day and the Elephant In the Room Well, another Earth Day has come and gone. And amid all the articles and blogs, symposia and TV specials about all the things we can do to save the planet, once again it was hard to find any substantive discussion of the single biggest threat to the environment.

Namely, the staggering rise in global population.

San Jose street lights get smarter With expectations of cutting energy costs up to 40 percent, the city unveils plan for a "smart light" system.

Ivory Coast activists scupper palm oil project ABIDJAN (AFP) – Ivory Coast's main palm oil company, Palmci, on Friday announced it was abandoning a major plantation scheme in the south of the country after opposition by environmentalists to destruction of a forest.

"Palmci has decided to abandon this project in the face of the refusal of certain NGOs to accept the coexistence of environmental preservation and the development of economic activity," the firm said in a statement.

A Defense of the Incandescent Light Bulb Howard Brandston, an award-winning lighting designer, has worked on a number of high-profile projects in his career — from a makeover of the Statue of Liberty in the 1980s to helping to develop the nation’s first standards for energy-efficient building design.

Now, amid a growing raft of legislation around the globe aimed at phasing out the standard incandescent light bulb (and in some corners, popular resistance to that idea), Mr. Brandston is stepping out of retirement and into the debate over energy-efficient lighting.

Specifically, Mr. Brandston accuses “energy zealots” of using faulty science to determine the efficiency of light bulbs, and he says that simplistic lumens-per-watt comparisons obscure questions of how well different bulbs do what they’re supposed to do: light up a room.

Blame oil, not banks, for recession “What was the mechanism by which U.S. problems were supposedly spread to other countries?” Mr. Reynolds asks. “It wasn't by international trade. The dollar value of U.S. imports didn't start to fall until August, 2008, and imports of consumer goods didn't fall until September – many months after Japan and Europe fell into recession.” Further, U.S. bank failures didn't occur until September, 2008, almost a year after Europe slipped into recession.

Mr. Reynolds does not deny the U.S. housing boom, and eventual bust, of 2002 to 2008. He simply argues that it wasn't the housing boom that set off the global meltdown. “What really triggered this recession should be obvious,” he says, “since the same thing happened before every postwar U.S. recession save one (1960).” The real cause, he says, was the spike in the price of crude oil. The original article by Alan Reynolds can be read here.

T. Boone Pickens offers energy answer He calls himself an environmentalist, which may raise the eyebrows of those familiar with his long ties to conservative causes.

In 2004, he gave $2.5 million to Swift Boat Veterans and POWs for Truth, which bought ads criticizing the military record of Sen. John Kerry, then the Democratic presidential nominee.

Nowadays, he says cheap oil has allowed presidents of both parties to drift away from ubiquitous campaign promises to wean the country off foreign oil. There's been no energy plan.

The New Gospel of Less I started noticing new talking points oozing out this past week. Rather than cite specifics, I’d like to encourage you to be on alert for them. They all have to do with the new gospel of less.

Not Every Oil Company Is Hurting Deep-water drillers take advantage of tight supply and long contracts.

US Ex-Im Bank okays $900 million loan to Pemex WASHINGTON (Reuters) - The U.S. Export-Import Bank on Thursday said it had approved $900 million in direct long-term loans for Mexico's state-owned oil company Pemex to import more than $1 billion worth of U.S. goods and services to help develop oil and natural gas projects.

Volcano Idles Oil Platforms, Facility 'Indefinitely' Oil platforms in Alaska's Cook Inlet have been idled indefinitely because the nearby Redoubt volcano is still active and potentially explosive, officials said.

The Anchorage (Alaska) Daily News reported Wednesday that the oil platforms had to be closed because the Drift River oil terminal has not been restarted.

American Electric Profit Falls Less Than Estimated (Bloomberg) -- American Electric Power Co., the biggest U.S. producer of coal-fueled electricity, said first- quarter profit fell 37 percent as the recession eroded industrial electricity demand.

Monbiot: Miliband's coal decision is cynical and meaningless If coal plants go ahead on the condition that their emissions will one day be abated through carbon capture and storage technology, then emissions are a certainty.

James Schlesinger and Robert L. Hirsch: Getting Real on Wind and Solar Why are we ignoring things we know? We know that the sun doesn't always shine and that the wind doesn't always blow. That means that solar cells and wind energy systems don't always provide electric power. Nevertheless, solar and wind energy seem to have captured the public's support as potentially being the primary or total answer to our electric power needs.

Solar cells and wind turbines are appealing because they are "renewables" with promising implications and because they emit no carbon dioxide during operation, which is certainly a plus. But because both are intermittent electric power generators, they cannot produce electricity "on demand," something that the public requires. We expect the lights to go on when we flip a switch, and we do not expect our computers to shut down as nature dictates.

Russia sees no need for oil cuts as shortage looming MOSCOW (Reuters) - Russia believes global oil output cuts will have a short-lived effect and made no sense given a looming global supply shortage in the medium term, Energy Minister Sergei Shmatko said on Wednesday.

"According to various estimates, there will be a serious shortage of oil supply, maybe in one, maybe in two-three years," Shmatko told reporters.

The Peak Oil Crisis: Capping Carbon Seventeen years after the Kyoto Protocol was drafted, it appears that the U.S. is moving toward taking action to limit the nation's emissions of greenhouse gases.

Last week, with White House blessing, the U.S. Environmental Protection Agency issued a preliminary decision that carbon-dioxide emissions from burning fossil fuels constitutes a danger to the public. The ruling was in response to an April 2007 Supreme Court decision that said the government could restrict the emission of heat-trapping gases under the Clean Air Act if it found them a danger to health and welfare.

US urges Central Asia to boost gas export routes ASHGABAT, Turkmenistan – A recent crippling gas pipeline blast in Turkmenistan, which the government blamed on Russia's gas monopoly Gazprom, is proof that energy-rich Central Asian nations need to diversify their export routes, a senior U.S. diplomat said Friday.

Russia currently controls most natural gas export routes out of the region, but that grip is coming under growing pressure from China and the West.

Summit seeks secure gas deliveries for Europe SOFIA, Bulgaria — Energy projects that aim to guarantee secure gas deliveries for Europe will be discussed at a two-day summit of energy producing and consuming countries, starting in Sofia today.

But the absence of a key player — Russian Prime Minister Vladimir Putin, who unexpectedly canceled his participation amid disagreement over a pipeline project with Bulgaria — fueled doubts about what might be accomplished.

China, Russia oil pipeline to start operation at end-2010: CNPC An oil pipeline linking Russia's far east to China's northeast is set to start operation by the end of 2010, Zhou Jiping, deputy general manager of the China National Petroleum Corp. confirmed here at a conference Thursday.

The pipeline would run from Skovorodino, Russia to China's northeastern city of Daqing.

China’s Government to Fund Overseas Oil Acquisitions (Bloomberg) -- China, which agreed last week to acquire a share in a Kazakh oil producer, will provide financing for overseas asset bids by domestic oil companies taking advantage of slumping energy prices, an industry official said.

The government will take up stakes in overseas oil projects that it will help to acquire, the official, who declined to be named, said in Shanghai today. The government will announce the financing plan as part of its oil and petrochemical stimulus package, due within a week, he said. The size of the energy stimulus, approved in February, is yet known.

Interview with Matt Badiali: Time to Buy Oil Service Companies Massive, massive depletion. Don't get me started on peak oil. The peak oil theory is based on engineering data. What the engineers never figured on is that we'd find oil and gas in places we never thought we'd find them, like off of South America right now. Nobody anticipated finding the oil that we're going to find in the sub-salt areas there.

Schlumberger profit tumbles 30% as drilling drops Schlumberger Ltd. said today its first-quarter earnings tumbled about 30 percent as oil and natural gas companies cut back on exploration and drilling due to lower prices and demand.

The world’s largest oilfield services company said net income in the January-to-March period fell to $938.5 million, or 78 cents per share. That compared with $1.34 billion, or $1.09 per share, a year earlier.

The result topped the average estimate of Wall Street analysts polled by Thomson Reuters, who expected earnings of 73 cents a share.

Automakers teeter on verge of industry shutdown While General Motors was prepping its workers and suppliers for extended plant shutdowns, Chrysler bondholders were readying a second counteroffer to help slash Chrysler's debt.

Both automakers are teetering on the verge of bankruptcy. Chrysler has just six days to complete a deal with Italian automaker Fiat or be cut adrift without government support. President Obama has said that if the two can't hammer out the details — which include a deal with creditors to cut Chrysler's debt load — he won't approve further loans for Chrysler, and it will end up in bankruptcy court.

Vermont must rebuild public transit Americans spend almost one-fifth of their income on transportation. Instead, public investments in trains and buses could be saving us money to spend at local stores and events. Aside from the contribution it makes to the community and economy, public transit is already at work reducing our impact on climate change, traffic congestion, and air pollution, and it may be a necessary "insurance policy" to survive peak oil.

Lighting a fire under self-reliance Vermont ranks last among all 50 states in its demand for petroleum products, and emerges second only to Hawaii in least consumption of natural gas. Still, nearly 3/5 of Vermonters use fuel oil as their primary source of home heating. Furthermore, in January 2009, the state paid on average $0.315 more per gallon of Number 2 heating oil than the rest of the nation. Vermonters are not blind to this state of affairs. In Addison County, residents have acted to allay their concerns, establishing the ACORN Energy Co-Op.

"Essentially," said Greg Pahl, president of the organization's interim board of directors, "the Co-Op is a peak oil and global warming response initiative."

Mexican icon becoming a vanishing breed Mexico's donkeys are quickly being replaced by pickups and tractors even in the poorest areas, prompting efforts to save the animals.

Losing Its Cool at the Mall This spring, spending by teenagers, a closely studied but rarely understood segment of the population, is off by 14 percent, a direct reflection of the economy, according to a report this month by the investment bank Piper Jaffray. And that is having a profound effect on an already unraveling mall culture, where deep discounters and stores known for heavy promotions are suddenly the popular destinations and aspirational brands are struggling to fit in.

Slump Creates Lack of Mobility for Americans Joseph S. Tracy, research director of the Federal Reserve Bank of New York, said the lack of mobility meant less income for movers and the people they employ and less spending on renovation and on durable goods like appliances. But, Dr. Tracy said, the most troubling prospect is that people were no longer able to relocate for work.

“The thing that would be of deeper concern is if job-related moves are getting suppressed and workers are not getting re-sorted to the jobs that best use their skills,” he said. “As the labor market started to improve, if mobility stays low, you can worry about the allocation of workers.”

Survey: Americans reclassifying luxury, necessity in recession A few years back, the list of "gotta-haves" for many Americans included a car, TV, microwave, home air conditioning and dishwasher.

Now, not so much.

A Pew Research Center survey released Thursday finds that the recession has changed Americans' minds about many items that used to seen as necessities.

Recession, health concerns get Americans gardening DALLAS (Reuters) - Alison Baum of San Antonio, Texas hopes to save money and eat better by getting her hands dirty.

She is joining the swelling ranks of Americans who have started backyard fruit and vegetable gardening, a trend rooted in a desire to cut costs as the recession bites, fears about the safety of commercial food supplies and popular views that organic food is better for you.

There is also a growing sense in these tough economic times that food security starts at home.

"This recession got me thinking that if things turned out like the Great Depression then it would be better to grow your own stuff and be in control. I've even ordered baby chicks," the medical intern told Reuters in a telephone interview.

Website connects needy to the charitable The site was founded in 2007 by Dave Girgenti, a Cherry Hill, N.J., creative director inspired by what he calls the heroic acts of ordinary people after the 9/11 attacks and Hurricane Katrina.

Its largely anonymous members have granted more than 30,000 of about 46,000 wishes since its inception, according to a running meter on the website. Since the economic meltdown began, wishes have increasingly been pleas for groceries and gas money, Girgenti says.

"During major national disasters, it was people who came to the rescue first," says Girgenti, 37. "People want to help people."

U.S. May Raise Cap on Grants for High-Tech Power Grid The Energy Department might revise its guidelines for $4.5 billion in smart grid grants after major electric utilities complained that the proposed $20 million-per-grant limit was too low to encourage commercial-scale deployment of advanced technologies.

The smart grid spending is supposed to both create jobs and improve the efficiency and reliability of the electricity grid by lowering peak demand, reducing energy consumption, integrating more renewable energy sources and easing the pressure to build new coal-fired power plants. A variety of devices may qualify, including meters, grid management software and other equipment.

Lab finds new method to turn biomass into gasoline WASHINGTON (Reuters) - U.S. scientists have combined a discovery from a French garbage dump with breakthroughs in synthetic biology to come up with a novel method for turning plant waste into gasoline, without the need of any food sources.

A synthetic biology lab at the University of California San Francisco identified a compound able to use biomass to produce a gas that can be converted into a gasoline chemically indistinguishable from fossil-fuel based petroleum.

Peru Mulls New Reserves To Protect Amazon Tribes LIMA - Peru's government, which is encouraging energy companies to develop the resource-rich Amazon, is considering creating five new reserves to protect jungle tribes that are living in voluntary isolation.

Advocacy groups have been pressuring Peru to balance indigenous and environmental rights demands with those of foreign investors as the country tries to boost energy output.

Chevron is denied compensation of $500,000 for trial over Nigerian shooting In rejecting the request, a federal judge cites the income disparity between the oil giant and the villagers who lost a suit for alleged human rights violations in a 1998 incident.

Greenland's 'good news' methane finding Ice core research has revealed that a vast, potential source of the potent greenhouse gas, methane, is more stable in a warming world than previously thought.

BBC sends `Ethical Man' on global warming quest Some of the family's new habits stuck; they still don't own a car or use the dryer, for instance. But Rowlatt and his wife were disappointed, after a year, that they only reduced their carbon footprint by about 20 percent.

"It was obvious that individuals alone can't do it," he said. "We were nowhere near a solution. And that's why we wanted to come to America, to explore these larger questions about what we can do as a society. America was kind of the obvious place to go because America has the kind of lifestyle to which everyone in the world aspires."

Top polluters in final round of climate talks SYRACUSE, Italy (AFP) – Environment ministers of the world's top polluters entered a final round of climate change talks Friday with agreement expected on stemming the loss of biodiversity.

The three days of talks in Sicily, buoyed by a sea change in US environmental policy, have also found new momentum towards a landmark deal to fight global warming at the end of the year.

California to limit greenhouse gas emissions of vehicle fuels California took aim Thursday at the oil industry and its impact on global warming, adopting the world's first regulation to limit greenhouse gas emissions from the fuel that runs cars and trucks.

The Air Resources Board voted 9 to 1 in favor of the complex new rule, which is expected to slash the state's gasoline consumption by a quarter in the next decade. It seeks to expand the market for electric and hydrogen-fueled vehicles and jump-start a host of futuristic biofuels to replace corn-based ethanol, as well as oil.

Climate heavy-hitters to address House panel WASHINGTON – Hearings on a massive bill to curb the gases blamed for global warming are drawing to a close with some star power.

After three days of panels and testimony and more than 50 witnesses espousing on the nitty-gritty details of the 648-page draft, the grand finale on Friday will feature former Vice President Al Gore, former House Speaker Newt Gingrich and former Virginia Sen. John Warner.

Democratic Group Wants Utilities to Get Pollution Credits Free (Bloomberg) -- A group of Democrats on the House Energy and Commerce Committee want to give utilities free permits for all their existing carbon emissions, according to people familiar with a plan sent to the committee’s chairman.

Forest Fires Mostly Overlooked by Climate Modelers (Bloomberg) -- Forest fires worsen global warming and make it harder for societies to adapt to drought and higher temperatures, scientists said.

Trees and brush set ablaze, by accident or through slash- and-burn farming in the tropics, fuel hotter weather, said Jennifer Balch, a researcher at the National Center for Ecological Analysis and Synthesis in Santa Barbara, California. That’s because smoke adds more carbon dioxide to the atmosphere.

“We don’t think about fire correctly,” Balch said. “It’s very intrinsic to the planet.”

Rich nation greenhouse gas emissions rise in 2007 LONDON/OSLO (Reuters) - Greenhouse gas emissions from industrialized nations rose by nearly one percent in 2007, led by strong gains in the United States, official data showed.

Carbon emissions from countries signed up to the Kyoto Protocol climate pact edged up by 0.1 percent in 2007, mainly due to rises in Japan and Canada.

Views on Global Warming Relate to Energy Efficiency Gallup data collected in 127 countries in 2007 and 2008 reveal a relationship between the percentage of citizens who believe global warming is a result of human activities and the amount of GDP produced for every unit of energy consumed.

Industry Ignored Its Scientists on Climate For more than a decade the Global Climate Coalition, a group representing industries with profits tied to fossil fuels, led an aggressive lobbying and public relations campaign against the idea that emissions of heat-trapping gases could lead to global warming.

“The role of greenhouse gases in climate change is not well understood,” the coalition said in a scientific “backgrounder” provided to lawmakers and journalists through the early 1990s, adding that “scientists differ” on the issue.

But a document filed in a federal lawsuit demonstrates that even as the coalition worked to sway opinion, its own scientific and technical experts were advising that the science backing the role of greenhouse gases in global warming could not be refuted.

This is a guest post from Steve from Virginia.

Last week, Dave Murphy (EROI Guy) explored how increasing energy prices during the run up to 2008's $147 bbl peak affected purchasing power of consumers and subsequently the solvency of the establishment that relied on that purchasing power. He mentions James Hamilton:

Hamilton acknowledges early on in his report that the proportion of income spent on energy is an important determinant of consumer spending patterns. The theory is fairly simple: if energy expenditures rise faster than income, then the share of income for other things besides purchasing energy must decline, such as spending on mortgage payments for a second home in Las Vegas. In other words, rapid, large increases in energy prices may curtail consumption enough to trigger larger financial problems – like the bursting of a housing bubble – that when aggregated across an economy may cause or contribute significantly to a recession.

I will show an even greater connection between energy prices, interest rates, and the financial sector, based in large part on a review of minutes of the Federal Reserve Open Market Committee (FOMC) from the end of 2002 to 2007. It appears the Fed’s inflation expectations were very closely linked to petroleum prices. Because of this, the rise in oil prices led the Fed to raise interest rates in an attempt to control inflation, which in turn had unintended consequences.

The US and the world's finance system uses an operating approach called Structured Finance. This is a system for the management of credit using assets such stock and real estate as collateral for highly leveraged lending. The products of this lending are 'Structured' into securities. This finance system makes money by borrowing funds at low rates such as LIBOR + 1 percent (2.5%) and lending at higher rates such as 6%. The system keeps the difference.

Here is a graph illustrating the relationship between the Funds target rate which represents the lowest- cost borrowed money and the 30 year conventional mortgage rate.

Figure 1

The difference or spread between the funds and mortgage rates at any given time represents return to the finance system. When the spread narrows as it did from 2005 - 2007, there is danger to the system. Rates follow a 'yield curve': lowest rates are short term and the higher rates are longer term. There is substantial risk that the system may be 'underwater' if short term rates rise after longer term loans are made at a low rate. The return from the longer termed security is inadequate to service the system's short-term money costs.

Structured finance is organized around the flow of funds. It applies the pricing effect of 'velocity of money' to capital assets rather than to consumables. Velocity of money is the rate of turnover of transactions within any given place and time. Repeat transactions have the same effect as a proportionate increase in the money supply. This effect was observed and described as the 'Quantity of Money' theory by Irving Fisher, derived from Ludwig von Mises, John Stuart Mill and originating with Copernicus:

If changes in the quantity of money affect prices, so will changes in the other factors—quantities of goods and velocity of circulation—affect prices, and in a very similar manner. Thus a doubling in the velocity of circulation of money will double the level of prices, provided the quantity of money in circulation and the quantities of goods exchanged for money remain as before ...

Raising the price of small items by virtue of everyone in town buying them repeatedly requires pocket change. Raising the price of millions of houses by tens or hundreds of thousand of dollars each or raising share prices of gigantic multinational corporations requires tremendous financial horsepower -- which is the end purpose of structured finance. By raising asset prices, collateral values are also raised. This allows more lending against that increase in collateral -- which then drives prices even further in a virtuous cycle.

Clever American financiers invented a sort of financial perpetual motion machine.

The Funds rate is a target set by the Federal Reserve system which is tasked with managing the nation's money supply. Its most important role is to control inflation. Eight times a year, the Federal Reserve Open Market Committee (FOMC) which is made up of the seven members of the Board of Governors, the president of the New York Fed and four presidents of other Fed system banks meets in Washington to examine the performance of the economy and set short term interest rate targets. Records are published of these meetings and made public. These records are available online and a relevant summary is also posted on my blog.

Figure 2

Figure 2 illustrates the Fed's response to inflation by its raising short-term interest rates. Increases act as a governor on demand by increasing the cost of credit. In recessionary periods, the Fed decreases credit rates in order to stimulate lending. The 'Open Market Desk' at the New York Fed performs this job by trading Treasury securities to commercial banks.

The background of our current situation lies in the remarkable period prior to 2002. Fed Governor (at the time) Ben Bernanke mentioned this period in remarks given in 2004:

Several writers on the topic have dubbed this remarkable decline in the variability of both output and inflation "the Great Moderation." Similar declines in the volatility of output and inflation occurred at about the same time in other major industrial countries, with the recent exception of Japan, a country that has faced a distinctive set of economic problems in the past decade.

A component of this Great Moderation was low and stable petroleum prices.

Figure 3 based on EIA Data

As can be seen, from 1990 until the end of 2001, energy prices remained within a volatility range between $20 - 25 with short periods lower or higher. The average price for the period was $21.04.

Energy prices and interest rates have a lengthy historical relationship. Figure 4 plots short term interest rates from 1955 alongside US recessions with energy prices in constant 1982 dollars.

Figure 4 Created by superimposing oil prices in 1982 dollars from here on graph by research.stlouisfed.org

The Fed is careful to watch energy prices as price increases directly contribute to inflation. As can been seen in the plot, rising interest rates and energy prices have preceded US recessions since 1973. Even the 1991 'Mystery Recession' was accompanied by a spike in energy prices after Iraq's invasion of Kuwait.

During FOMC meetings from 2003 - 2006 the committee cited rising energy prices and the inflationary effects of this rise at almost every meeting. Beginning in 2004, the Fed steadily increased the Funds rates starting in June. The year over year increase in energy cost can be seen in Figure 3: 2002 average price was $26.11, 2003 average was $31.12 and the 2004 period was set to average $41.44. This remark from the December 29, 2002 meeting is typical of the period. Note that the Fed uses different methods to gauge inflation:

Core consumer price inflation, as measured by the consumer price index (CPI) and the chain-weighted personal consumption expenditure (PCE) index, continued to edge lower through the end of the year. However, the sizable run-up in energy prices last year boosted overall consumer price inflation somewhat on a year-over-year basis. At the producer level, core prices for finished goods declined in November and December, but for the year as a whole the jump in energy prices pushed overall producer prices for finished goods up slightly. (Per- barrel price at the time of the meeting was $29.46) http://www.federalreserve.gov/fomc/minutes/20030129.htm

Overall inflation in 2003 was low with the exception of a steady rise in energy prices that are noted in all but one of the FOMC meetings. The Funds rate for 2003 was an extraordinarily accommodative 1.25 - 1%:. :

Total twelve-month consumer inflation was unchanged over the period owing to accelerations in food and energy prices. ($43.15) http://www.federalreserve.gov/fomc/minutes/20031209.htm

Total consumer price inflation, however, was boosted in January by a surge in energy prices.($36.75) http://www.federalreserve.gov/fomc/minutes/20040316.htm

In the United States, the core consumer price index advanced at a faster rate in the first quarter than it had in the fourth quarter, reflecting the pass-through of higher energy prices and a leveling off of goods prices after sizable declines last year. ($40.28) http://www.federalreserve.gov/fomc/minutes/20040504.htm

At the June, 2004 meeting the Governors voted to increase rates by 0.25%. They would do so at each subsequent meeting.

In light of the strength of economic activity and recent indications of somewhat increased price pressures, the members focused particular attention on the outlook for inflation. They referred to statistical and anecdotal evidence that on the whole pointed to some recent acceleration of consumer prices and to some increase in near-term inflation expectations. Factors cited in this regard included large increases in prices of energy and intermediate materials, both of which appeared to be passing through at least in part to core consumer prices. ($38.03) http://www.federalreserve.gov/fomc/minutes/20040630.htm

A year and a half later, in February 2005, the acceleration of inflation was an increased concern. Energy- cost for that year would average $51.62 a barrel. Rate increases had not slowed the increase in fuel prices but begun to constrain housing, which is credit sensitive. The emphasis at meetings was on sharply higher crude oil prices. The first hints of softening in the housing sector was noted in February 2005:

Moreover, the recent rebound in spot crude oil prices, and especially the substantial advance in prices of crude oil futures contracts for delivery well into the future, suggested that a significant unwinding of higher energy costs might not be in prospect. Several participants indicated that, in current circumstances, they viewed an upside surprise to inflation as potentially more harmful than an equivalent downside surprise, partly because such an outcome could well impart additional upward momentum to inflation expectations. ($54.19) http://www.federalreserve.gov/fomc/minutes/20050322.htm

In August, Katrina had hit the Gulf coast and its effects were noted in the minutes along with consequential energy price increases. Participants questioned the effect of higher energy prices on business investment. Inflation was a concern. The Funds rate was 3½ percent:

Participants' concerns about inflation prospects generally had increased over the intermeeting period. The surge in energy prices, in particular, was boosting overall inflation, and some of that increase would probably pass through for a time into core prices. This posed the risk that there could be a more persistent influence on inflation should inflation expectations rise. Indeed, some recent survey evidence on such expectations had been troubling, and widening federal deficits were mentioned as a factor that could further stir inflationary concerns. ($65.59) http://www.federalreserve.gov/fomc/minutes/20050920.htm

By the end of 2005 the increase in oil and energy prices had become a preoccupation of the Federal Reserve. The end of 2005 turned out to be the peak of the housing bubble: The funds rate had increased over the year from 2.25 to 4%. Here, the Fed makes one of its rare acknowledgments of the effects of its interest rate increases on housing:

Activity in the housing market remained brisk despite a rise in mortgage interest rates. Starts of new single-family homes dropped back somewhat in October from September's very strong pace, but permit issuance remained elevated. New home sales reached a new high in October, and existing home sales eased off only a little from the high levels recorded during the summer. Other available indicators of housing activity were on the soft side: An index of mortgage applications for purchases of homes declined in November, and builders' ratings of new home sales had fallen off in recent months. In addition, survey measures of home buying attitudes had declined to levels last observed in the early 1990s. ($59.41) http://www.federalreserve.gov/fomc/minutes/20051213.htm

At the January 31, 2006 meeting, there was more comment on interest rate effects on mortgage lending. Keep in mind that loan originations are by non- bank businesses that do not report to the Fed: After this meeting, Ben Bernanke replaced retiring Alan Greenspan as Fed Chairman:

In some areas, home price appreciation reportedly had slowed noticeably, highlighting the risks to aggregate demand of a pullback in the housing sector. For instance, the effects of a leveling out of housing wealth on the saving rate were difficult to predict, but, in the view of some, potentially sizable. Rising debt service costs, owing in part to the reprising of variable-rate mortgages, were also mentioned as possibly restraining the discretionary spending of consumers. ($65.49) http://www.federalreserve.gov/fomc/minutes/20060131.htm

In subsequent meetings during 2006 the steady rise in energy prices was noted: "registering a large increase in January that was driven mostly by a spike in energy prices.", "retail gasoline prices surged, leading to a jump in overall energy prices for the month", "sharp increases in the prices of petroleum-based products". At the July 29, 2006 meeting the funds rate was raised 5¼%. At this point, FOMC meetings contained two narratives, the steady increase in fuel prices and the ongoing deterioration in the housing sector:

In their discussion of the major sectors of the economy, participants observed that housing construction activity had declined notably in recent months as indicated by lower housing starts and permits; moreover, higher inventories of unsold homes, a sharp rise in cancellations of new home sales, and reports from construction companies suggested that the weakness was likely to be extended. Several participants pointed out that the decline was broadly in line with expectations in light of the tightening in monetary policy and the rapid run-up in home prices and residential construction in recent years. Participants also observed that the evidence to date indicated that the slowdown was orderly but were mindful of the possibility of a sharper downturn in the sector.

The growth of consumer spending had dropped off significantly in the second quarter from a robust pace earlier in the year. The slowdown was attributed in part to higher energy prices and also to a likely downshift in home price appreciation and higher interest rates. A reduction in the attractiveness of home equity borrowing was mentioned as possibly contributing to the slowdown. ($70.95) http://www.federalreserve.gov/fomc/minutes/20060629.htm

At the Treasury Department, the likelihood of a displacement was under discussion as early as 2005. The focus was both the effects of rising rates as well as a fuel price spike:

Secretary Paulson on this arrival in summer 2006 (DATE) told Treasury staff that it was time to prepare for a financial system challenge. As he put it, credit market conditions had been so easy for so long that it was inevitable that credit problems had built up that would lead to problems if conditions reversed.

From summer 2006 Treasury staff had worked to identify potential financial market challenges and possible policy approaches, both near term and over the horizon. The longer-range policy discussions eventually turned into the March 2008 Treasury Blueprint for Financial Markets Regulatory Reform that provided a high-level approach to financial markets reform. Consideration of near-term situations included sudden crises such as terror attacks, natural disasters, or massive power blackouts; market-driven events such as the failure of a major financial institution, a large sovereign government default, or huge losses at hedge funds; or slower-moving macroeconomic developments such as energy price shocks, a prolonged economic downturn that sparked wholesale corporate bankruptcies, or a large and disorderly movement in the exchange value of the dollar that led to financial market difficulties. None of these were seen as imminent in mid-to-late 2006, and particularly not with the magnitude that would eventually occur in terms of the impact on output and employment. http://www.econ.yale.edu/seminars/macro/mac08/Swagel-090409.pdf

That impact would be considerable; in February, 2007, Freddie Mac stopped accepting certain sub-prime mortgage securities for purchase. The crisis was officially underway: A barrel of West Texas Intermediate in Cushing, Oklahoma cost $59.28. http://timeline.stlouisfed.org/index.cfm?p=timeline

A number of conclusions can be drawn from these documents. One is that energy contributed to Fed actions. Another is that the current crisis has developed similarly to other US recessions. Even the geopolitical background - Mideast tension and war - is similar to other recessionary periods. The sequence of events is:

A rise in energy prices -> increased inflation -> higher short term interest rates -> a slowdown in credit-sensitive sectors of the economy such as housing and lending -> a general slowdown in the economy as a whole.

Mr. Bernanke outlines the sequence in his 'Great Moderation' address quoted previously. The large difference this time compared to other 'energy crises' is that there are no gas lines or odd-even rationing which would focus public attention on energy rather than on finance. In the past, inflation was constrained by punishingly high short term money costs along with new petroleum supplies introduced from North Sea and Prudhoe Bay sources. Currently, inflation has been constrained by punishingly high energy costs. The yearly average price for crude in 2008 was $90.89! This would imply short term rates of 15.25%.

Oil from a new North Sea or North Slope does not appear available, today. The current year (2009) average is a relatively inexpensive $42.91 for the first three months. What is troubling is the absence of the mention of energy anywhere in the public discussion. Outside of relatively obscure records of Fed policy making, it is difficult to find 'oil prices' or even 'interest rate increases' in statements or announcements by either the Federal Reserve, its officers or the Treasury. I will leave to others whether this absence is in the public interest.

A significant difference between the current crisis and recessions past has been the growth of and reliance upon structured finance. An "unintended consequence" is its demonstrated vulnerability to what has to be considered a routine increase in short-term interest rates.

The housing bubble and the follow-up 'petroleum bubble' illuminates one flaw--it works too well! It inflates asset prices to levels unsupportable by fundamentals. One reason for the 2008 oil price acceleration was the flow of funds or quantity of money' effect on the fuel market. The turnover or velocity of transactions in both the spot and futures markets by hedge funds and other structured finance participants had a large inflationary effect. As in housing, once the velocity of transactions slowed - due to unsupportable pump prices stifling demand - the inflating effect of the turnovers was removed and prices reversed.