Peak Oil News & Discussion

$100 a Barrel Oil

2007-11-10T06:02:00.000-05:00

Oil is almost $100 a barrel! It's been rising for years, more than doubling in the last few years, and the increases seems like they will never end.

I haven't updated this blog in a while, but updates will be posted soon, and hopefully I will be more reliable with my posts from now on.

Peak Oil Mentioned in Yahoo Article

2007-07-09T19:42:00.001-04:00

This little blurb appeared in a LiveScience.com story I saw on the fron of Yahoo.

"Separately, other scientists have argued that a looming peak in oil production could potentially generate conflict on a global scale as industrialized nations fight over dwindling petroleum supplies in an era of soaring demand."

http://news.yahoo.com/s/livescience/20070709/sc_livescience/globalwarmingcouldfuelwar

The majority of the article was about how global warming could fuel water wars, etc.

The Peak Oil Crisis: Preparing for Depletion

2007-05-31T21:19:00.000-04:00

Falls Church News-Press

By Tom Whipple
May 31, 2007

News on the gasoline stockpile situation was delayed this week due to the Memorial Day holiday. As gasoline consumption figures over the long weekend won’t be available until the middle of next week, we may get a better insight into prospects for this summer then. While waiting, however, it seems like a good time to start thinking a bit about the years ahead and what we should be doing to get ready for them.

There are two areas of energy consumption we, as individuals, can do something about: transportation and buildings. The cost and availability of our food is something that few of us have much control over. If food becomes too expensive, then we simply reduce or forego eating out; reduce our use of prepared, packaged, and expensive foods; or even reduce the quantity we consume until the costs of food meet our budget.

Commercial use of energy to make and distribute things will be sorted out by the market – here again, there is little most of us can do to effect change other than generally reducing consumption either because we are trying to save the world’s resources, or, more likely, we simply can’t afford to pay what stuff is going to cost.

Unaffordable gasoline will affect each of us differently depending on how dependent we are on our automobile and what our alternatives are. In the U.S. we have something on the order of 210 million cars and light trucks in service and, even if the resources are available to replace a fleet of this size, it will be many decades before they can be replaced with vehicles that use little or no gasoline. Worldwide, the situation is even worse.

It probably won’t be too long before we figure out whatever supplies of motor fuel are available will be better spent on growing and distributing food and maintaining vital-to-civilization systems such as water, sewers, electricity, and communications rather than being burned in private cars. For the immediate future though, unaffordable gasoline will be coped with through a combination of increased public transit and a lot more ride sharing.

Soon, there will be lots of room for changes in public policy as we tackle the job of reworking our transportation systems. For now, we are not ready to think seriously about changes, for the reality of imminent oil depletion is not widely recognized. Another three or four dollar increase in gasoline prices should do the trick.

Buildings, however, are another matter -- be they offices, factories, commercial space, or homes. In the developed world, most use prodigious amounts of energy. Although our electricity and natural gas bills currently are not increasing as fast as gasoline prices, price increases for other forms of energy won’t be many years behind. Unlike a gas guzzler which can be parked, used infrequently, or scrapped for a more efficient vehicle, few of us will have the opportunity to replace our buildings for more efficient ones.

A couple of hundred years ago most homes were heated and lit by wood plus a little candle wax. That’s obviously not going to work anymore. My guess is that most people’s access to firewood, if any, would be sufficient for a couple of days or, at best, a couple of weeks. For awhile, there will be a rush to huddling around electric heaters, but just as natural gas, oil, propane will soon be too expensive to for many to afford, large amounts of electricity will not be far behind. We are going to have to transition to solar and maybe a little wind energy to control our personal climates.

One of the redeeming features of our current living and work place arrangements is that we waste prodigious amounts of energy in heating, cooling and lighting them, so that there is a lot to be saved. We all know by now that eliminating incandescent bulbs and moving first to compact fluorescents and then, as they become more affordable, to LED’s most of the lighting costs in homes and offices can be eliminated.

Equally big jumps in household efficiency can be achieved by disconnecting clothes dryers and going back to clothes lines. Pulling the plug on the central air would be the third big energy saver.

Given the trends in fossil fuel availability, it is clear that our goal will have to be zero net energy for all our inhabited buildings. This means that the preponderance of the energy used in buildings will soon have to come from the sun, wind, water power, and perhaps a little biomass and will not be delivered in by pipe and power lines or in trucks.

The course from our current building stock to highly efficient ones will be long and difficult. Starting on this course is not difficult or particularly expensive. Plugging air leaks, adding some more insulation, and perhaps improving the window and doors is a good place to start provided one knows what to do, where to start and is physically and financially capable of taking action in the face of rapidly rising energy costs.

Later steps on the way to zero net energy buildings, such as major insulation and window upgrades, solar heating and electric panels, new heating and air conditioning equipment will be very expensive and perhaps unaffordable for many in an inflation-wracked world of depleting oil.

It is at this point that governments at all levels will need to get involved. First they must recognize that the bulk of our inhabited buildings will need to be overhauled to be useful in a world of very high priced energy. Cost/benefit ratios for steps to improve the efficiency for nearly every existing building need to be worked out.

Building codes will need massive overhaul to prevent further construction of buildings that are premised on cheap energy and that will have a very short useful lifetime. Construction of sub-divisions that do not take into account optimum sun angles should come to an immediate halt. Obsolete laws and covenants that frown on efficiencies from clothes lines to solar panels must be abolished as soon as possible.

There is much to be done and the time is growing short.

http://www.fcnp.com/index.php?option=com_content&task=view&id=1340&Itemid=35

The Peak Oil Crisis: Alarms Are Sounding

2007-05-17T10:10:00.000-04:00

Falls Church News-Press

By Tom Whipple
May 17, 2007

Across the world alarm bells are starting to clang. Above every gas station, a large sign is proclaiming that prices are on an unstoppable climb towards un-affordability. In Paris, the International Energy Agency has announced that the demand for oil is likely to exceed the supply later this year, unless, of course, OPEC steps up production. In the Middle East OPEC spokesmen reiterate time after time that all is well, there is plenty of oil, and there is no need to increase production.

In Ottawa, a parliamentary hearing on energy security broke up in turmoil last week when a distinguished professor pointed out that, unless Canada stopped selling 60 percent of its oil to the US, Canadians would soon be “freezing in the dark.” In Nigeria, Chevron is evacuating hundreds of employees to forestall the possibility that they too will be hauled off to the swamps as hostages in an increasingly bitter insurgency. The Chinese just announced that their April oil imports were 23 percent higher than last April’s. Iraq, Saudi Arabia, Venezuela -- everywhere you look – there are unmistakable warnings of troubles to come.

These, however, are issues for later. Right now, on the top of every American’s agenda should be the question of whether we are going to get through the summer without shortages and gas lines— opinions are mixed.

First, all seem to agree that gasoline prices, which set new highs last week, will continue to rise. Even the Director of the Energy Information Agency, whose job it is to put a rosy spin on adverse developments, told a Senate Committee earlier this week that retail prices will go higher heading into the vacation season because not all of the recent rise in wholesale costs has been reflected in what consumers pay at the pump. So far high prices, which are approaching $4 a gallon in some places on the West Coast, seem to have done little to dampen demand although they may be cutting into WalMart sales.

Since significant cuts in US gasoline consumption don’t seem to be in the cards, at current price levels, then we are back to refinery output, gasoline imports, and our stockpiles to see us through.

Two years ago, before the hurricanes put so much stress on US refineries, they were being operated at 95 percent of capacity. We got through last summer by importing 1.5 million barrels of gasoline a day during May from foreign refineries. According to a senior EIA oil analyst, 800,000 barrels a day of US refining capacity is still shutdown. This translates into about 400,000 barrels of lost gasoline production each day or nearly 3 million barrels a week.

Last week the situation eased a bit. Although US refineries are still operating below 90 percent of capacity and processed only a trivial 30,000 barrels a day more of crude than in the previous week, our refiners managed to squeeze our more gasoline, so that production increased by 200,000 barrels a day to 9.1 million. The “good” news, however, is that gasoline imports jumped to 1.5 million which resulted in the first significant (1.7 million barrel) increase in our stockpiles in many weeks. However, 1.2 million of the 1.7 million barrel increase was on the isolated West Coast. The increase in gasoline stocks east of the Rockies was only 500,000 barrels last week – way lower than necessary to forestall problems later this summer.

The questions now become: Will this increased supply, which is based on imports of foreign gasoline be sustained over the summer; and are the stockpiles already so low that they will not be sufficient to meet the increased demands of the summer driving season which starts in about two weeks? Last year the demand for gasoline jumped from 9.1 million barrels a day in the spring to 9.6 million during the summer months. Unless very high prices start reducing demand for gasoline we will be looking at new highs this summer.

Earlier this week Matthew Simmons, of Twilight in the Desert fame, suggested that prospects for an uninterrupted summer of driving may be worse than government spokesmen have been letting on. Simmons notes that gasoline stockpiles at refineries are “works in progress” and that millions of barrels of gasoline moving across the country in pipelines and barges are not available for delivery to your gas station. Therefore, the drop in inventory that has taken place this spring is from local bulk terminals that supply your gas stations. In this case, the drop in “useful” stockpiles may be on the order of 30 percent and we could be very close to the point where shortages will develop.

Where does all this leave us? The short answer is, in an increasingly grim situation. When respected analysts say our gasoline situation is beyond the tipping point and that at least some of us are likely to be sitting in gas lines before Labor Day, we should heed the warning. Looking at the broader, worldwide picture, the situation is equally grim. When the normally staid International Energy Agency starts issuing a stream of dire warnings about shortages or much higher prices before the year is out, we should start thinking about a markedly different future.

http://www.fcnp.com/index.php?option=com_content&task=view&id=1284&Itemid=35

The Peak Oil Crisis: The Summer Ahead

2007-05-12T15:54:00.000-04:00

Falls Church News-Press

By Tom Whipple
May 9, 2007

Last week they began kidnapping foreign workers at an alarming pace —22 foreigners kidnapped in 36 hours— and overran offshore platforms and production ships. On Monday, the strongest militant group issued a chilling ultimatum. “All foreign and local nationals working with multinational oil companies and their contractor should vacate Ijaw territory (the oil producing region) immediately.” “All foreign embassies should withdraw their nationals from our homelands.” “Nothing can protect them --- No more hostages taking -- Any national caught shall be summarily dealt with.” By the way, these guys have a good track record for doing what they say they are going to do. The next morning, three major oil pipelines were bombed, shutting down another 150,000 barrels per day of oil production. Total production shutdown by the insurgency is now on the order of 900,000 barrels per day. The insurgents have demonstrated that they have the capability of shutting down most, if not all, of Nigeria’s oil production.

Should this happen, we might find our imports running a million barrels a day short this summer, unless we can outbid the Chinese. Replacing this much lost Nigerian oil production will be very expensive at the gas pump.

If we get through the stockpile and Nigerian situations, then it will be time to consider the situation in Venezuela. In case you missed it, President Chavez managed to expropriate about $30 billion worth of oil company processing facilities last week and is currently negotiating the terms under which the oil companies will remain in Venezuela. The negotiations do not seem to be going well and there seems to be a good chance one or more of the foreign oil companies will pull out and head for the courts. We have been importing about 1.4 million barrels of oil a day from Venezuela, which the government would gladly sell to China or nearly anybody but the US. The speed with which a breakdown of relations between Chavez and the oil companies will affect US oil imports is difficult to predict.

As the interaction between oil production and a hurricane is unknowable until a few days before it strikes, there is not much useful to be said other than that the oil companies are working hard to mitigate damage from future hurricane strikes in the Gulf and forecasters are predicting a banner year.

The future of Iraqi oil exports depends on the course of the insurgency. The US is currently getting about 400,000 - 500,000 barrels per day from Iraq, and so long as each of the insurgent groups gets to steal a share of the oil or revenue, nobody seems inclined to kill the golden goose. As there seems to be very little in Iraq not susceptible to being blown up, the current situation must be satisfactory to all concerned. Sooner or later, however, somebody will become discontented and precipitate a drop in production.

Finally, we will have to watch the slow-movers – declining Mexican production (we get 1.5 million barrels a day from there), lower Saudi production, and even the continuation of frenzied growth in China. All these seem destined to add a few, or a lot of, cents at the pump before the year is out.

So there you have it, from unusually low gasoline stocks in the spring to frenzied Chinese economic growth later in the year -- all seem destined to play a role in how much money you will be leaving at your favorite gas pump later this year.

http://www.fcnp.com/index.php?option=com_content&task=view&id=1241&Itemid=35

Post Peak Oil: Effects on the Stock Market and World Economy

2007-05-09T21:04:00.000-04:00

The Daily Reckoning (Australia)

James Howard Kunstler
May 10, 2006

Whenever somebody complains about “the lies that George Bush & Co. told to get us into the Iraq war” (as Frank Rich did in The New York Times recently), I wonder how those lies compare to the lies that the American public tells itself every day - for example, that America could get along without oil from the Middle East, or that hybrid cars will save Happy Motoring, or that the United States can have an economy without producing anything of value.

Meanwhile, the Dow Jones index went up over a hundred points the same day that 32 people were massacred on a university campus. And bear in mind that the massacre did not occur late in the day but literally around the same time that the New York Stock Exchange rang its opening bell - so that as the body counts mounted through mid-day, the stock markets only went higher! Then, the rest of the week, while the cable news Mommy-Daddies went through the familiar rituals of bewildered hand-wringing, and NBC released the trove of farewell videos sent in by shooter Seung-Hui Cho between killings, the Dow piled on another 250 points to close at an all-time record high just under 13,000.

Could the financial markets be more detached from reality, from life on the ground (or in a free-fire-zone classroom) in this nation?

Doug Noland over at Prudent Bear.com is right: we’ve entered a euphoric phase of financial arbitrage capitalism with extreme Ponzi overtones, a pyramid scheme of revolving credit rackets and percentage spread plays completely abstracted from any reality of fruitful activity. The reason we don’t even call “money” by its former name anymore is precisely because we realize at some semi-conscious level that “liquidity” is not really money. Liquidity is a flow of hallucinated surplus wealth. As long as it flows in one direction, into financial markets, valve-keepers along the pipeline, like Goldman Sachs, Citibank, or the hedge funds, can siphon off billions of buckets of liquidity. The trouble will come when the flow stops - or reverses! That will be the point where we will rediscover that liquidity really is different from money, and if we are really unlucky we’ll discover that the U.S. dollar is actually different from real wealth.

Noland and others recognize the severe distortions in the finance sector, and they are surely correct to flag the implied dangers. But even these clear-eyed observers survey the disturbing finance scene without factoring the global energy situation. In a nutshell: world oil production seems to have peaked about 10 months ago. Being just past peak, there is still a huge amount of oil going into world economies. But being just past peak oil we are now seeing how complex systems proceed toward instability and breakdown when the underlying energy flow turns toward contraction.

The situation in finance is particularly sensitive and acute because an overall contraction in available energy means the end of industrial expansion (a.k.a. “growth”) at “normal” rates of three to seven percent annually. More to the point, it means that certificates, contracts, deals, plays, and rackets pegged to the expectation of growth will lose their legitimacy. Meaning, stocks, bonds, collateralized debt obligations, hedges - anything that represents the hope and expectation for more-of-anything - will no longer be understood to represent real value.

The current euphoric hysteria should therefore be viewed as a form of disorder in its own right. The players in the markets are making their moves based on misunderstood signals. They think the world is awash in energy and prosperity. They believe Cambridge Energy Research Associates (CERA) and Ben Bernanke, the Chairman of the United States Federal Reserve. They believe that the mortgage fiasco and the associated imploding housing bubble are just a couple of temporary zits on the handsome face that Wall Street presents to the world. In the background, though, feedback loops are aligning to rock the systems we depend on for daily life in the real world. Capital will become unavailable. Food will grow scarce. Trade will be interrupted. Mobility will be constrained. And an awful lot of pissed-off people will be poised to fight over the table scraps of industrial civilization.

I got a letter last week from a reader complaining bitterly that the stock market hasn’t crashed and blaming me for predicting that it would. He didn’t say, but I hope he hadn’t been out there on a shorting spree. In case any of you haven’t noticed, 2007 is not over yet.

The markets have been on an extraordinary run. The Dow finished 23 out of the last 26 days on the upside - some of them pretty way on the upside. This is the biggest U.S. stock market up-streak since a 19 for 21 streak in July of 1929, prior to the October crash. Bill Fleckenstein points out a similar run on the Tokyo exchange - 32 upside trading days out of 38 - just prior to its 1989 tanking.

While this kind of behavior seems ominous, I’m not claiming it necessarily has predictive value. One can say that the financial markets per se are running in an impressive state of structural distortion and imbalance and that systems way out of balance do not stay that way forever. But I risk more opprobrium by stating the obvious.

I think the persistence of this gross imbalance can be accounted for in large part by the current global energy situation. The world is at peak energy, peak oil especially, and the world runs on oil. Peak is peak. The most. There are about 84 million barrels of oil a day flowing around the industrial economies of the world. It is running a lot of activity.

Now, I happen to think that oil production probably peaked about a year ago, but we are still so close to it that the net available energy remains immense. Even if 2007 averages out to 83.5 million barrels a day instead of 84 million, it will still seem like a lot. Markets may be dumber than we think. All they see is a vast amount of cheap energy for manufacturing plastic salad shooters, for powering tourist jet charters to Cancun, for running Wal-Mart, Walt Disney World, and Taco Bell. All that energy is here right now.

Among the many tragic elements in the human condition is this tendency toward short-term thinking, the inability to imagine how our arrangements will work in a time that is not right now.

Interestingly, the main effect of post-peak oil on markets and economies is that it will produce shocking instabilities in complex systems dependent not just on the energy itself, but on the expectation for continuity of the energy. Financial markets are especially sensitive because they operate on sheer expectations. The Dow Jones doesn’t manufacture salad shooters, or haul tourists to the Mexican beaches, or build suburban houses. It just relays a dumb signal that says “we expect more” and investors respond. The trouble will start when the signal changes to “we don’t expect more.” That moment will be when the recognition of peak oil galvanizes the public’s attention. It will manifest as a simple societal binary switching mechanism. When that happens, the markets will exhibit the dumb herd behavior that they are famous for.

Of course, I have argued previously that the stupendous run-ups of market indexes themselves represent a kind of instability (those distortions and imbalances), as do also the supernatural flows of “liquidity” and I would stick to that observation. After all, if the world is “high” on oil - and I would argue that it is zonked out of its mind - then it would naturally spring way up off the diving board before swan-diving into the empty pool below.

Me, I’m keeping my eye on things like the production figures coming out of Mexico, the North Sea, and the Kingdom of Saudi Arabia. They’re all sliding down. Mexico is especially interesting because it is our Number 3 source of oil imports and its production is crashing so hard that a couple of years from now it may not be able to send us a single drop of oil. What do you think of that? Maybe the Walton family will buy Iowa so they can keep Wal-Mart running on ethanol.

Meanwhile, U.S. oil refineries are running above 90 percent production capacity to keep up with the gasoline demand for Happy Motoring. The stress on these complex operations is unprecedented. It gives them no slack time for routine repairs. The results are liable to be interesting, too, between the Fourth of July and Labor Day.

Regards,
James Howard Kunstler
for The Daily Reckoning Australia

http://www.dailyreckoning.com.au/post-peak-oil/2007/05/10/

The Peak Oil Crisis: The Perfect Storm

2006-09-28T12:19:00.000-04:00

Falls Church News-Press

By Tom Whipple
September 28, 2006

Events move quickly these days. Two months ago oil was north of $78 a barrel and, nationwide, gasoline was above to well above $3. The Middle East was threatening a conflagration and another exciting hurricane season was in the offing. Even the concept of peak oil was starting to get some scattered but serious attention in the media.

Now here we are at the end of September. The price of crude is down nearly 25 percent. Gasoline is down 75 cents a gallon. The press is full of stories of a great new oil find in the Gulf that could show the way to a cornucopia of oil. The Dow is pushing an all-time high, and financial analysts are predicting lower inflation and solid growth in the year ahead. Finally, those who don't want to believe in peak oil are loudly proclaiming, "I told you so."

What happened? Is imminent peak oil still in the cards? Just where is reality?

The first thing to remember is that the price of oil has had a great run-up in the last five years. Way back in 2002 oil was circa $20 a barrel. Although there are many factors that go into the price of oil, they sort of group into three general categories: 1) Underlying supply and demand for the product including genuine hedging; 2) Technical factors that stem from the nature of commodity speculation: overbought, oversold, charting, stop loss orders, margin calls, etc.; 3) The sum of all the speculators' ideas as to whether the price will go up or down— the fear factor. All of these factors are present all of the time. The eternal argument is over how much of the current price is due to which influence.

Every jump in the price of oil earlier this year brought forth remarks about the "fear factor." Speculators were constantly afraid something so bad was about to happen that the price of oil would soon be over $100 a barrel so the current price was a great bargain.

A couple of months back this was not a bad idea to have. The forecasters were talking about a third year of giant hurricanes tearing up the Gulf. The Iranians were firing off missiles and muttering about closing the Straits of Hormouz. In Nigeria, a foreign oil worker a week was being dragged off for ransom. Israel and Hezbollah were hard at each other and were threatening to trigger a wider war. It would have been hard for a speculator not to conclude that at least one of these looming problems would result in higher oil prices.

But then the great pendulum of events reversed. One by one the fears began to melt. Diplomacy quieted much of the Middle East. The hurricanes of 2006 curved towards Europe where they harmlessly watered the fields of Ireland. Nigeria turned quiet. Chavez kept threatening, but the speculators no longer listened.

Fear factor after fear factor diminished into a perfect storm of good news. Week after week the good news for oil prices kept coming. US stockpiles continued to build. Cooler weather reduced the use of natural gas for air conditioning. A giant oil find was made in the Gulf of Mexico. Even the US economy cooperated by showing some signs of slowing, thus raising the specter of reduced demand for oil.

As the price fell, the normal technical factors of speculating came into play. The bulls bailed out. Margin calls were made. Overcommitted hedge funds went bust.

Now what does all this have to do with peak oil? The short answer is, so far, very little. Naturally, higher or lower prices will affect demand and therefore exacerbate or mitigate the supply situation. Tight supplies already are reflected in the base price of oil before we get to the speculative factors. This is how we got from $20 to $60 a barrel. If the price stabilizes in the neighborhood of $60 after the speculative premium is wrung out of the market, then we will have some idea of where simple supply and demand for oil prices the product.

Behind all the good news for oil prices, however, depletion of the world's finite oil supply continues at 85 million barrels per day, day after day, after day. Bad news for the future of oil production continues to come out, but it is lost in the shuffle or not recognized for its importance. Many now hold that the good news of a great new oil find deep beneath the Gulf of Mexico is, in reality, bad news. If ultra deep-sea oil, which is very expensive and may take many years to exploit, is all we have left, then we are close to the end of cheap oil.

During the last few weeks, slippages in major oil exploration projects have came to light. Of particular note is the BP's great Thunderhorse platform, which seems to have developed metallurgical problems associated with extracting oil from great depths. If this turns out to be a generic problem, then the new frontier of ultra deep-sea oil wells may be a while in coming.

The bottom line remains that peak oil is still very real and, if anything, the news from recent weeks suggests the peak may be moving closer rather than receding.

An interesting sidelight to the last few weeks has been the paranoia surrounding rapidly dropping gasoline prices. According to a Gallup poll, 42 percent of Americans, mostly Democrats, believe that the administration is deliberately manipulating gasoline prices to improve their chances in the November elections. As noted above, there are numerous factors that are more than adequate to drive down prices to current levels. Prominent among these factors is the normal drop in demand between the summer driving season and the winter heating season.

In 2005, gas and oil prices experienced a similar drop after the spike caused by the summer hurricanes.

Therefore, the message of the last few weeks is not to confuse lower gas prices with any lessening of the threat from peak oil. The peak is still out there and is moving inextricably closer. In the meantime, enjoy low gas prices while they last. OPEC is already wildly signaling that its members can't live with oil below $60 and that production restrictions are coming shortly.

For readers who are seriously concerned about the imminence and consequences of peak oil, the US branch of the Association for the Study of Peak Oil, ASPO-USA, is holding a World Oil Conference in on 26 and 27 October. For more information or to register, their website is www.aspo-usa.com.

http://www.fcnp.com/index.php?option=com_content&task=view&id=285&Itemid=33

The Peak Oil Crisis: Hyping Jack No. 2

2006-09-14T12:20:00.000-04:00

Falls Church News-Press

By Tom Whipple
September 14, 2006

The story broke the morning after Labor Day, when the Wall Street Journal ran a front-page piece reporting that Chevron along with two partners had announced the results of a major oil production test in the Gulf of Mexico. The partners Chevron, Statoil, and Devon Energy ran the test on a well known as Jack No. 2 that was drilled last year in the Lower Tertiary zone of the Gulf of Mexico. This zone is about 80 miles wide, 300 miles long and is located about 175 miles off shore. The well was unusual in that it went to a depth of 28,000 feet and the drilling began under 7,000 feet of water.

Released details of the test noted that a number of technical breakthroughs had been achieved. By using the latest technology, Chevron was able to discern and drill into promising geological structures that had previously been hidden below a layer of sound-absorbing silt. The test, which achieved flow rates of 6,000 barrels per day (b/d), established that oil could be extracted at acceptable rates from very deep deposits. It also set several records for extracting oil under conditions of extreme pressures and temperatures.

Although no formal estimate as to the size of this particular find was announced, background briefers spoke of the possibility that the zone could contain from 3 to 15 billion barrels of oil in scattered deposits. If this speculation were to prove true, it would put the Lower Tertiary in a class with Alaska’s Prudhoe Bay and increase domestic US oil reserves by 50 percent.

The news of this great “discovery” naturally was replayed by nearly every newspaper and TV network in the country. Katie Couric ran a segment about the discovery on her first evening news show. Most reporting emphasized the possibility that the US might have found another 15 billion barrels of oil in its own backyard, but tempered the jubilation with the news that the find would have no immediate impact on gasoline prices.

A few, mostly financial journalists, took the announcement as an opportunity to disparage the idea of imminent peak oil. These writers are aware that should world oil production go into decline within the next decade the world’s economy would be in a lot of trouble, not to mention the credibility of those who make a living by forecasting decades of growth ahead. Therefore, they eagerly accepted the dubious premise that this one test proves that plenty of oil can be found by drilling deeper so long as oil prices remain high enough to support the costs of ultra-deep oil production; advanced technology is used to the fullest; and environmental restrictions are lifted. Several pronounced peak oil a dead issue.

As the week wore on however, knowledgeable geologists and petroleum engineers began to question all the euphoria. First they noted that the Jack No. 2 test was not conducted on a single oil field that might contain 15 billion barrels oil. Rather, it was one test of a well in a zone that extends for hundreds of miles under the Gulf of Mexico. Whatever producible oil the zone contains will likely be found in numerous smaller deposits.

A number of wells have already been sunk in the Lower Tertiary. Some were dry holes and a few struck oil bearing rock, which may have the potential to produce oil profitably. So far, only a handful of these exploratory wells have struck deposits of light oil, which may be possible to produce. Others have struck thicker oils that may be impossible to extract from extreme depths at acceptable rates.

What seems to be turning up in the deeper waters of the Gulf are a series of smaller oil fields — some of which may someday be profitable to produce and some of which probably won’t. Extrapolating this situation to a major new discovery that will delay the onset of peak oil is clearly a reach.

To extract oil from 20,000 feet below the surface, where the pressures run to 20,000 pounds per square inch (psi) and the temperature of the oil is in the order of 200 degrees centigrade, is going to be a major technical challenge. Wells drilled to these depths will cost in the range of $100 million each. To drill and set in place the production equipment for The story broke the morning after Labor Day, when the Wall Street Journal ran a front-page piece reporting that Chevron along with two partners had announced the results of a major oil production test in the Gulf of Mexico. The partners Chevron, Statoil, and Devon Energy ran the test on a well known as Jack No. 2 that was drilled last year in the Lower Tertiary zone of the Gulf of Mexico. This zone is about 80 miles wide, 300 miles long and is located about 175 miles off shore. The well was unusual in that it went to a depth of 28,000 feet and the drilling began under 7,000 feet of water.

Released details of the test noted that a number of technical breakthroughs had been achieved. By using the latest technology, Chevron was able to discern and drill into promising geological structures that had previously been hidden below a layer of sound-absorbing silt. The test, which achieved flow rates of 6,000 barrels per day (b/d), established that oil could be extracted at acceptable rates from very deep deposits. It also set several records for extracting oil under conditions of extreme pressures and temperatures.

Although no formal estimate as to the size of this particular find was announced, background briefers spoke of the possibility that the zone could contain from 3 to 15 billion barrels of oil in scattered deposits. If this speculation were to prove true, it would put the Lower Tertiary in a class with Alaska’s Prudhoe Bay and increase domestic US oil reserves by 50 percent.

The news of this great “discovery” naturally was replayed by nearly every newspaper and TV network in the country. Katie Couric ran a segment about the discovery on her first evening news show. Most reporting emphasized the possibility that the US might have found another 15 billion barrels of oil in its own backyard, but tempered the jubilation with the news that the find would have no immediate impact on gasoline prices.

A few, mostly financial journalists, took the announcement as an opportunity to disparage the idea of imminent peak oil. These writers are aware that should world oil production go into decline within the next decade the world’s economy would be in a lot of trouble, not to mention the credibility of those who make a living by forecasting decades of growth ahead. Therefore, they eagerly accepted the dubious premise that this one test proves that plenty of oil can be found by drilling deeper so long as oil prices remain high enough to support the costs of ultra-deep oil production; advanced technology is used to the fullest; and environmental restrictions are lifted. Several pronounced peak oil a dead issue.

As the week wore on however, knowledgeable geologists and petroleum engineers began to question all the euphoria. First they noted that the Jack No. 2 test was not conducted on a single oil field that might contain 15 billion barrels oil. Rather, it was one test of a well in a zone that extends for hundreds of miles under the Gulf of Mexico. Whatever producible oil the zone contains will likely be found in numerous smaller deposits.

A number of wells have already been sunk in the Lower Tertiary. Some were dry holes and a few struck oil bearing rock, which may have the potential to produce oil profitably. So far, only a handful of these exploratory wells have struck deposits of light oil, which may be possible to produce. Others have struck thicker oils that may be impossible to extract from extreme depths at acceptable rates.

What seems to be turning up in the deeper waters of the Gulf are a series of smaller oil fields — some of which may someday be profitable to produce and some of which probably won’t. Extrapolating this situation to a major new discovery that will delay the onset of peak oil is clearly a reach.

To extract oil from 20,000 feet below the surface, where the pressures run to 20,000 pounds per square inch (psi) and the temperature of the oil is in the order of 200 degrees centigrade, is going to be a major technical challenge. Wells drilled to these depths will cost in the range of $100 million each. To drill and set in place the production equipment for one of these fields may cost on the order of $1.5 billion, or more, as the cost of oil production equipment is inflating rapidly.

Add to this the problem of what to do with very hot oil and the associated natural gas as it comes flowing to the top of a well 7,000 feet under the Gulf and 175 miles from shore. The decision to attempt production from these ultra-deep fields will not be taken lightly by the oil companies involved.

Although there are no geopolitical problems or nationalistic governments involved in producing oil from the Gulf of Mexico, the fields are right in its center — out where the Category 4 and 5 hurricanes really get wound up. On top of this there are questions of how much oil can be extracted from an ultra-deep field with extreme pressures. Although the recent test produced 6,000 barrels a day, for a month, a knowledgeable old geologist opined that he would like to see a test run for a year or more before committing billions to a whole new regime of oil production.

Assuming that producing oil from the Lower Tertiary turns out to be economically and technically feasible, will new production from the region have anything to do with delaying peak oil? The answer is an emphatic NO.

Knowledgeable observers who have commented on the issue agree that even if all goes well, it is unlikely that more than 300-500,000 b/d of production could come into production from all the possible fields in the Lower Tertiary over the next five to seven years. In the meantime, the world will have burned another 150 to 200 billion barrels of oil and US production from existing fields will decline from the current 5 million b/d to somewhere around 4 million b/d.

This suggests that it will take some spectacular and unlikely gains from new production to offset the natural decline currently underway in the US. Of still greater concern is production from Mexico’s giant 2 million b/d Cantarell oilfield, most of which is exported to the US. Creditable reports suggest that Cantarell is entering very rapid depletion and may be producing at a fraction of its current level five years from now. It would be virtually impossible for this level of new production from the Lower Tertiary to come online in the next five years.

So long as the world continues to consume some 31 billion barrels of oil a year, there is still nothing in sight that can forestall imminent peak oil.

http://www.fcnp.com/index.php?option=com_content&task=view&id=223&Itemid=33

Peak Oil Forecasters Win Converts on Wall Street to $200 Crude

2006-09-14T11:59:00.000-04:00

Bloomberg

By Deepak Gopinath
August 31, 2006

Aug. 31 (Bloomberg) -- On a sweltering Tuesday in mid-July, in the fields outside Pisa, Italy, Willem Kadijk scribbles notes as a ragtag troupe of doomsayers predict the end of the Oil Age.
With his shaved head, jeans and sandals, Kadijk, 48, blends into a crowd gathered under a white tent to hear of the coming calamity. The death of cheap, abundant crude, the forecasters warn, might unleash war and plunge the world into a second Great Depression.

That's not the prophecy of some apocalyptic cult. Kadijk, a hedge fund adviser, had flown from Amsterdam to attend a conference on a geologic theory known as peak oil.

Proponents of this controversial idea say global oil production is now at or near its zenith. Once the flow crests and starts to decline -- and some geologists say it already has -- oil will no longer be able to slake the world's growing thirst for energy. The result will be the oil shock to end all oil shocks. The price of a barrel of crude will spiral to $200 -- and keep rising. To the peaksters, today's energy crunch is nothing next to the pain that will follow.

``Peak oil is a reality,'' says Kadijk, a senior equity salesman at Kepler Equities, an Amsterdam-based brokerage. He plans to start a fund to capitalize on what he sees as a looming crisis for the world's fossil fuel-based economy and the ultimate bull market in oil.

As energy prices soar and violence convulses the Middle East, the peak-oil movement -- an unlikely alliance of geologists, physicists, oil industry consultants and environmental activists -- is winning converts. Peak-oil ideas are bubbling up from scientific journals and offbeat Web sites, much the way warnings of global warming did a decade ago. For the first time, the peaksters have begun to grab the attention of Washington and Wall Street.

Congressional Caucus

U.S. Energy Secretary Samuel Bodman, former boss of Boston- based Cabot Corp., an oil and chemicals company, has asked the National Petroleum Council, which advises him, to investigate whether oil supplies can keep pace with demand. The U.S. Government Accountability Office, the nonpartisan congressional watchdog, is due to release a study on peak oil this November. Rep. Roscoe Bartlett, a Maryland Republican, has formed the Congressional Peak Oil Caucus to sound the alarm.

``The world has never faced a problem like this,'' Bartlett says.

Everyone agrees we'll run out of crude eventually. Oil, after all, is a finite resource: The Earth holds only so much of it. The controversial issue is when a global peak will occur -- and what will happen then.

Colin Campbell, a British geologist who popularized the peak- oil theory in his book ``The Coming Oil Crisis'' (Multi-Science Publishing Co. and Petroconsultants SA, 1997, 210 pages) says world production of conventional oil, the kind that comes from gushing wells, is reaching its apex.

End of Oil Age

Society isn't prepared for the consequences, Campbell, 75, says. It's too late to develop alternative sources of power, such as solar cells, nuclear reactors and windmills, to fill the oil gap before energy prices soar, says Campbell, who has a doctorate in geology from the University of Oxford and more than 40 years of experience in the oil industry.

``We have come to the end of the first half of the Oil Age,'' Campbell says.

Nonsense, says Russ Roberts, a spokesman for Exxon Mobil Corp., the world's largest oil company. Exxon Mobil, which has reaped record profits as the price of oil has surged, has taken out ads dismissing peak oil in U.S. newspapers such as the New York Times.

The Irving, Texas-based oil giant says the peaksters are being alarmist. In all, the world probably has 4 trillion barrels of oil left, four times the amount we have used so far, the ad says.

Time to Think

``The world is nowhere near running out of oil,'' Roberts says. Exxon Mobil geologists believe global oil production will keep rising through 2030, he says.

Cambridge Energy Research Associates, whose chairman, Daniel Yergin, is a leading peak-oil critic, says production will reach an ``undulating plateau'' sometime in the future.

``Our outlook goes to 2020, and we see no evidence of a peak,'' CERA geologist Peter Jackson says. ``Eventually, we will start to see a decline. There is still time to think about alternatives.''
Predictions of an imminent oil famine are as old as the industry itself. When production at the first U.S. wells, located in western Pennsylvania, began to decline in the late 19th century, some people predicted the country would soon run out of oil. Then crude was discovered in east Texas, whose oil fields yielded so much black gold that the Texas Railroad Commission capped production to support prices.

Peak Moment

In the past, Campbell or his disciples have forecast the oil peak down to the year or even the day only to push back the fateful moment. In 1997, Campbell said it would occur in 2001. Now, he says total production, which includes oil from deep-water wells and fuel derived from natural gases, will reach its height sometime after 2010.

Kenneth Deffeyes, a geologist and professor emeritus at Princeton University, first pinpointed Nov. 24, 2005, as the peak- oil date and then revised it to Dec. 16, 2005.

Campbell says the exact day or year isn't important. What matters is that peak oil is coming, and soon. Almost a century and a half after the first U.S. wells were drilled in Titusville, Pennsylvania, production has begun to decline in more than a dozen countries, including the U.S., according to the BP Statistical Review of World Energy. Production at the giant Cantarell oil field in Mexico is likely to decline 8 percent this year, according to Mexican state oil monopoly Petroleos Mexicanos.

U.S. Addiction

At a time when U.S. President George W. Bush has urged the country to break its addiction to foreign oil, the fact is, the U.S. is becoming ever more dependent on overseas crude. U.S. oil production peaked 36 years ago, in 1970, at 11.3 million barrels a day. Since then, output has fallen 39 percent, to 6.8 million barrels a day, or 8 percent of the world total, in 2005, according to BP.

Investors have started to listen to the peaksters. Billionaire Boone Pickens says he's a peak believer. So does Peter Thiel, who co-founded PayPal Inc. and now runs Clarium Capital Management LLC, a $2.1 billion hedge fund firm. Pickens, Thiel and other investors are positioning themselves to profit from what they say will be the biggest oil squeeze of all time.
Even some oil companies and industry veterans sound nervous. Chevron Corp. has run a series of full-page ads in U.S. newspapers that highlight surging oil consumption and declare, ``The era of easy oil is over.''

Chicken Littles

Thierry Desmarest, chief executive officer of Paris-based Total SA, told the World Gas Conference in Amsterdam in June that global oil production would peak in 2020. Matthew Simmons, whose Houston-based investment bank, Simmons & Co., trades oil and gas stocks, says Saudi Arabia's production may decline soon.

Alex Cranberg, chairman of Denver-based independent oil company Aspect Energy LLC, calls the peaksters Chicken Littles -- misguided souls who think the sky is falling.

In fact, Cranberg hired two people to dress in chicken costumes and hand out fliers dismissing peak oil at the conference Kadijk attended in July.

Like many oil-industry vets, Cranberg, 51, says market forces and technological advances will ultimately cure our energy ills. As oil prices rise, companies will be more willing to hunt for crude and extract it. They'll invest in expensive deep-water wells and new technologies to wring more oil from existing fields. Consumers will start conserving energy. Even now, stock market investors and Silicon Valley venture capitalists are pouring billions of dollars into companies developing ethanol, solar power and other alternative sources of energy.

$3-a-Gallon Gas

More and more, however, the peaksters are drowning out everyone else, Cranberg says. ``You can't turn around without seeing or hearing these ideas,'' he says. ``I think they are gaining.''
You don't have to be a geologist to understand why. The price of crude has tripled since 2000. In the U.S., $3-a-gallon gasoline has sapped consumers' confidence. Nearly half of Americans believe the economy is doing poorly, according to a July 28-Aug. 1 Bloomberg/Los Angeles Times poll. Fifty-nine percent of Americans expressed a negative view of Bush's handling of the economy.

``If oil was still at $20, no one would be talking about peak oil,'' says Manouchehr Takin, senior petroleum upstream analyst at the Centre for Global Energy Studies, a London-based consulting firm.

High oil prices are only part of the story, however. The world is straining to feed its energy habit. Today, we consume 85 million barrels of oil a day, according to the U.S. Energy Information Administration (EIA). By 2030, the world will devour 118 million barrels a day, as China and India emerge as economic superpowers.

Big Question Mark

No one knows for sure how much oil the world has. That's a big question mark because the peaksters say production will max out once half of the oil has been pumped. So far, we've extracted about 1 trillion barrels in all. In 2000, the U.S. Geological Survey estimated global resources at 3 trillion barrels, enough to push peak production out to 2037, according to the EIA. Campbell puts the total lower, at 2.5 trillion barrels.

Oil is certainly getting harder -- and more expensive -- to find and extract. Oil discoveries plummeted to 5 billion barrels in 2005 from 90 billion barrels in 1964, according to Campbell.
``Discovery is in long-term decline, and spending more money won't increase it,'' says Chris Skrebowski, editor of the London- based Petroleum Review, an industry journal.

OPEC's Stash

Oil companies have to find enough crude to offset dwindling production at existing fields, which can decline by more than 8 percent a year, and to keep pace with rising demand. Most of that increase will have to come from members of the Organization of Petroleum Exporting Countries, which are often cauldrons of discontent, war and terror.

The cartel's members -- Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela -- together sit atop 75 percent of the world's reserves and account for about 42 percent of total production, according to BP.

OPEC countries are hardly paragons of economic and political stability. Most of the terrorists who attacked the U.S. on Sept. 11, 2001, came from Saudi Arabia. The war in Iraq has hurt that country's ability to pump oil. Bush says Iran is trying to develop nuclear weapons. In Venezuela, President Hugo Chavez has said he wants to diversify oil exports away from the U.S.

In its 2005 Energy Outlook, Exxon Mobil says the combined production of non-OPEC countries will peak sometime from 2010 to 2020. OPEC will be able to fill the gap, the report says. OPEC produced about 30 million barrels a day in 2005; by 2030, OPEC would have to churn out 47 million barrels a day -- almost 57 percent more than it did last year -- to satisfy the world's needs, the report says.

Meeting the Call

``We believe the resource base will support this increase, assuming that investments in development are made in a timely fashion,'' the report says.

OPEC countries will invest a combined $100 billion in the five years through 2010 so they can increase output, OPEC spokesman Omar Ibrahim says. ``We are set to meet the extra call on OPEC to 2030,'' Ibrahim says.

Yet even now, OPEC nations are struggling to keep up. Since 2000, OPEC has gradually lost the spare pumping capacity its members can use as an emergency reserve to moderate prices. The cushion has dwindled to about 1.5 million barrels a day from 6 million barrels a day, Takin says.
What's more, neither the peaksters nor oil industry executives know for sure how much oil OPEC has and how much it can actually produce. OPEC countries haven't been transparent about their reserves or production capacity, says Mike Rodgers, a partner at PFC Energy, a Washington-based oil industry consulting firm. ``OPEC is the big unknown,'' he says.

Overstated Reserves

Many energy analysts believe OPEC nations began overstating their resources in the 1980s, when the cartel linked members' production quotas to the size of their reserves, says Mamdouh Salameh, an independent oil economist. In the late '80s, cartel members raised their reserve estimates by a combined 300 billion barrels even though none of them had actually found much more oil.

In his 2005 book ``Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy'' (John Wiley & Sons, 448 pages, $24.95), Simmons says the Saudis have pumped so much oil so fast that the country's biggest oilfields face declining output.

``Saudi Arabia is keeping everything in the dark,'' Simmons, 63, says.

Saudi officials have dismissed peak-oil theorists and suggestions that their country is running on empty.

Saudi Assurances

``We currently manage approximately 260 billion barrels of oil,'' Abdallah Jum'ah, CEO of Saudi Aramco, the government-owned oil giant, said at an oil and gas conference in June. ``We continue to expand our reserve base, and conservatively estimate our additional potential of recoverable oil to be in the range of 200 billion barrels. At Saudi Aramco's present production levels, that means we will have well over a century's worth of oil to produce.''

Herman Franssen, former chief economist at the Paris-based International Energy Agency, says some OPEC members, such as Iran, Iraq, Kuwait and Venezuela, may be reluctant or unable to produce more oil even as prices soar, largely for political reasons.

``We may never see the volumes of conventional oil production that we see in official forecasts,'' says Franssen, who's now an oil industry consultant in Chevy Chase, Maryland.

Sadad al-Husseini, who spent 35 years working for Saudi Aramco, says Saudi Arabia's reserves are sound but that Kuwait, which says it has reserves of 101.5 billion barrels, probably has half that much. Iran, with official reserves of 132.5 billion barrels, has likewise overstated its reserves, says Husseini, who was an executive vice president at Saudi Aramco before retiring in 2004.

Assume the Worst

``Even with high prices, it will be very difficult for world production of conventional oil to exceed 90 million barrels per day within the next 10 years,'' he says. That's millions of barrels a day short of what the EIA says the world will need in 2015.

Political leaders, business executives and investors should assume OPEC won't be able to satisfy future demand, Rodgers says. ``From an energy-security point of view, if you believe in a non- OPEC peak and OPEC is not being transparent, we have to assume they don't have it,'' he says.
The precarious balance of supply and demand in the oil markets became even clearer in early August when London-based BP Plc announced it would temporarily shut down its Prudhoe Bay oil field on the North Slope of Alaska because of pipeline corrosion. The news drove already-high oil prices up more than $2 to almost $77.

Alaskan Decline

Prudhoe Bay, the largest oil field in the U.S., is part of the peak-oil story. The field was discovered in 1968 and came onstream in 1977. Since then, it has yielded more than 11 billion barrels of oil.

Yet even before the August mishap, this vast field had begun to die. Its output has fallen 73 percent to 400,000 barrels a day from a height of 1.5 million barrels a day in 1989.
Prudhoe Bay is following the life cycle of oil fields across the U.S. and around the world, a phenomenon known as the Hubbert Curve, which takes its name from M. King Hubbert.
Fifty years ago, Hubbert, then a geologist at Shell Oil Co.'s research lab in Houston, postulated that U.S. oil production would follow a bell-shaped curve.

At the 1956 meeting of the American Petroleum Institute in San Antonio, Hubbert predicted that total annual U.S. output would climb steadily, level off sometime between 1965 and '70 and then decline after about half of the country's reserves had been depleted.

Hubbert's Peak

The U.S. reached what geologists now refer to as Hubbert's Peak in 1970. Hubbert died in 1989 at the age of 86.

It wasn't until the late 1990s when Hubbert's ideas, which had percolated for decades in academia and oil circles, began to reach a wide audience via Campbell, the British geologist.
Now in his eighth decade, Campbell is a grandfatherly man with a shock of gray hair. He hardly comes across as a doom- monger. He works out of a two-story house in Ballydehob, a village on the western edge of Ireland.

Campbell spent 40 years exploring for oil for Amoco Corp. and other companies. He helped Amoco search for oil in Ecuador and then, during the 1980s, led its exploration in Norway. He later joined PetroFina SA, the oil exploration company now owned by Total.

After retiring from PetroFina in 1990, Campbell joined forces with Jean Laherrere, a retired French geophysicist who had spent 25 years working at Total, to analyze production profiles for the world's countries.

Campbell says he and Laherrere, now 75, looked at their data and concluded global oil production was approaching its zenith. In 1998, they co-wrote an article for Scientific American magazine titled ``The End of Cheap Oil'' that helped popularize their cause.

Coming Crunch

``The world is not running out of oil -- at least not yet,'' Campbell and Laherrere wrote. ``What our society does face, and soon, is the end of the abundant and cheap oil on which all industrial nations depend.''

In 2000, Campbell founded the Association for the Study of Peak Oil and Gas, an informal organization for fellow travelers. Now known as ASPO International, the group has sponsored five annual conferences, including the one in Pisa in July, which drew more than 230 people. It's now run by Kjell Aleklett, a physics professor at Uppsala University in Sweden. Twenty independent national ASPO groups have sprung up around the world, from Australia to France, to the U.S.

Many peaksters are driven by a moral imperative to spread the word. Campbell says he's a scientist, not a social or environmental crusader. Even so, he says he's worried that oil has harmed human society and the planet. Since the Oil Age dawned, nearly 150 years ago, the Earth's population has soared six-fold, he says.

Man Alone

``Man is the only animal that uses external energy,'' Campbell says.

Asked why he has championed the peak-oil theory, Laherrere quotes Antoine de Saint-Exupery, author of ``The Little Prince'': ``We don't inherit the Earth from our ancestors; we borrow it from our children.''

Activists have jumped on the peak-oil bandwagon and added their own, often strident, voices to the debate over the future of oil.

Jim Kunstler, a writer-activist who lives in Saratoga Springs, New York, says peak oil will ultimately destroy suburbia and plunge the U.S. into a violent dark age of feudalism.

``The question is, Can we run our shit the way we are running our shit?'' Kunstler, 57, says. In 2005, Kunstler wrote ``The Long Emergency: Surviving the Converging Catastrophes of the Twenty-First Century'' (Atlantic Monthly Press, 320 pages, $23), which warns of the havoc to come.

Dieoff.com

Lifeaftertheoilcrash.net, a Web site run by lawyer and peak- oil entrepreneur Matt Savinar, warns, ``Civilization as we know it is coming to an end soon.'' The site sells peak-inspired books and products, including an investor's guide to peak oil.

Another site, dieoff.com, says wars over oil and other natural resources will eventually erupt and millions of people will be wiped out.

Stephen Andrews, a Denver-based energy consultant who founded ASPO-USA in June 2005, says the alarmists have hurt the peak-oil movement.

``The peak-oil tent has different voices -- some shrill, some more sober -- reaching different conclusions from the same facts,'' Andrews, 59, says.

Andrews has attracted more-sober voices to the movement. Last November, Denver Mayor John Hickenlooper helped co-sponsor a two- day peak-oil conference organized by Andrews.
``I think the people most exuberant about peak oil underestimate how much unconventional sources of oil will help flatten the peak, but to say that there is no peak is shortsighted,'' Hickenlooper says.

Crash Program

The world would have to embark on a crash mitigation program 20 years in advance to prevent peak oil from hobbling the global economy, says Robert Hirsch, a senior energy program adviser at San Diego-based research and engineering firm Science Applications International Corp. ``And I consider myself an optimist,'' says Hirsch, 71, who included his findings in a 2005 study on peak oil for the U.S. Department of Energy and estimates such a program would cost the world $1 trillion a year.

Some investors and analysts see lots of opportunities in a post-peak world.

Charles Maxwell, senior energy analyst at Weeden & Co., an independent research firm based in Greenwich, Connecticut, says high oil prices will spur companies to invest in unconventional sources. Few people, however, realize how much such projects will cost or how long they will take to come onstream, he says.

Take the Canadian oil sands. This region in Alberta holds 175 billion barrels of oil, according to the Canadian Association of Petroleum Producers (CAPP), the world's second-largest reserves.

`Really Big'

``It's big. It's really big,'' Neil Camarta, senior vice president for oil sands at Calgary-based Petro-Canada, says of the region. ``It can keep America going for 25 years.''
The oil sands hold vast stores of bitumen, a tarlike substance that is mined, rather than pumped, and then processed into oil that can be refined. The process is expensive -- and getting more so. Rising operating and capital costs have driven the price of mining and upgrading bitumen to as much as $40 a barrel, Camarta says.

By 2020, Canada's oil sands will yield 4 million barrels a day, almost four times what they do now, according to CAPP. That sounds like a lot until you realize that 4 million barrels is just over a third of what Saudi Arabia produced per day in 2005.

Pickens, who built Mesa Petroleum Co. into one of the world's largest independent oil and gas producers, says he sees trouble -- and opportunity -- in peak oil. Pickens, who collected a degree in geology from Oklahoma State University in 1951, has called for the construction of more nuclear power plants and the promotion of alternative energy. He says he's invested in the Canadian oil sands.

Pickens's Picks

``I'm a disciple of Hubbert,'' Pickens, 77, says. ``I think we've peaked and we are going to see an undersupply of oil.''

Clarium Capital's Thiel says he began thinking about peak oil in 1999. As the Internet bubble grew that year, Thiel, 38, says he started to wonder about other risks that investors might be ignoring and seized on the uncertain future of oil.

``Energy will be systematically undervalued until peak oil is priced in,'' Thiel says. He's bought shares of Calgary-based EnCana Corp., which has invested in exploration and new production, and of oil services companies like New York-based Schlumberger Ltd. and Houston-based Weatherford International Ltd., which stand to profit as explorers hunt for oil and drill wells. Thiel says he's leery of U.S. oil majors, such as Exxon Mobil, because they may become targets of new taxes once the government wakes up to peak oil.

Thiel himself says the peak will come by 2008 -- if it hasn't already. ``Geology will trump technology,'' he says.

Coal, Uranium

Eric Sprott, CEO of Toronto-based Sprott Asset Management Inc., says he became a peak-oil convert after hearing Campbell speak in 2004. Sprott, who helps manage 3.6 billion Canadian dollars (US$3.2 billion), says the bull market in energy has only just begun. He's invested 36 percent of his firm's assets in a variety of areas that could benefit from peak oil. His flagship hedge fund returned 41 percent in 12 months ended July 31, he says.

Sprott's investments include St. Louis-based Arch Coal Inc. and Brisbane, Australia-based Macarthur Coal Ltd. His oil and gas picks include Halifax, Nova Scotia-based Corridor Resources Inc.; Denver- based Delta Petroleum Corp.; and Houston-based Ultra Petroleum Corp. He has also invested in Australian uranium companies Energy Resources of Australia Ltd. and Paladin Resources Ltd.

Midnight Ride

Meanwhile, the peaksters aren't about to let up. They'll convene in Boston on Oct. 25-27 to sound their alarm at a conference called ``Time for Action: A Midnight Ride for Peak Oil.'' The title is a reference to the American patriot Paul Revere, whose horse ride in 1775 warned Massachusetts colonists that British soldiers were advancing. The battle that followed, at Lexington and Concord, marked the beginning of the American Revolution.

It was just 84 years after Revere took his ride, on Aug. 27, 1859, that Edwin Drake struck oil in Titusville, ushering in the Oil Age. Exxon Mobil says the era of oil isn't about to end. In one of its ads, the company says, ``Oil is a finite resource, but because it is so incredibly large, a peak will not occur this year, next year or for decades to come.'' The ad depicts a man looking through binoculars at a snowcapped mountain whose summit is hidden by clouds.

Campbell says the illustration actually drives home the point Exxon Mobil is trying to avoid. ``Even though it is obscured by clouds, we know there is a peak,'' Campbell says. His investor followers are betting he's right.

To contact the reporter on this story: Deepak Gopinath in New York at dgopinath@bloomberg.net .

http://www.bloomberg.com/apps/news?pid=20601109&sid=arur.i7moHMs&refer=news

Chicago Tribune Discusses Peak Oil

2006-08-13T01:46:00.000-04:00

The Chicago Tribune talked about Peak Oil and quoted Matthew Simmons in an article that was part of a series in which the reporter tracked the gasoline in a station back to its original source, along the way discussing America's ridiculous dependence on oil. Here is the excerpt:

"I truly think we're at one of those turning points where the future's looking so ugly nobody wants to face it," said Matthew Simmons, an energy investment banker in Houston who has advised the Bush administration on oil policy. "We're not talking some temporary Arab embargo anymore. We're not talking your father's energy crisis."

What Simmons and many other experts are talking about is a bleak new collision between geology and geopolitics.

Below ground, the biggest worry is "peak oil"--the notion that the world's total petroleum endowment is approaching the half-empty mark, a geological tipping point beyond which no amount of extra pumping will revive fading oil fields. Peak oil theory is controversial. Many think it alarmist. Yet even Big Oil is starting to gird itself for possible fuel shortages: Chevron, the nation's second-largest oil company, has bluntly declared that "the era of easy oil is over" and is warning energy-hungry Americans that "the world consumes two barrels of oil for every barrel discovered."

Aboveground, things look little better. Most of the world's petro-states, aware that crude supplies are growing increasingly valuable, have limited drilling rights to their own oil companies.

In the meantime, humanity's thirst for petroleum continues to run wild. Producing nations are pumping at maximum capacity. Yet the competing energy demands of America and rapidly industrializing China and India now threaten to outstrip global oil output. China has displaced Japan as the No. 2 oil importer, after the United States. Chinese oil imports are projected to double to 14 million barrels a day over the next 20 years. Many credible analysts foresee a new "energy cold war" as the U.S. and China square off over the planet's last reserves."

http://www.chicagotribune.com/news/specials/chi-oil-1-story,0,7163057.htmlstory?coll=chi-homepagepromo440-fea

The Peak Oil Crisis: Portland Takes the Lead

2006-08-13T01:38:00.000-04:00

Falls Church News-Press

By Tom Whipple

The Middle East , home to a third of the world's oil production, is coming unglued in so many ways and in so many places that it is nearly impossible to track. One would have to be a complete fool, however, not to recognize one of the manifold costs of all this chaos is going to show up on that big sign over your neighborhood gas station— shortly.

The roots of these conflicts go back two thousand years. They are not going to be settled in our lifetime or many lifetimes. There is very little any of us can do except to prepare for the consequences. As yet, with exception of Sweden , none of the major world governments have officially recognized that a decline in world oil production with potentially devastating consequences is imminent.

In the US , it is politically unthinkable for a government confronted by Iraq , Hezbollah , Iran , global warming, and numerous other woes to openly acknowledge peak oil and all that it implies. From time to time, they have dropped hints — "Energy Independence," "Advanced Energy Initiative," need to drill more, "addicted to oil" — but the administration has yet to openly acknowledge that one of the greatest crises the country has ever known is just over the horizon.

This total abrogation of responsibility by the federal government has led to a handful of local governments to start considering action on their own to prepare for what is sure to come. The furthest along is Portland , Oregon . In May, the City Council passed a resolution establishing a peak oil task force "to assess Portland 's exposure to diminishing supplies of oil and natural gas and make recommendations to address vulnerabilities."

The twelve "WHEREAS's" in Portland 's resolution (#36407 should you want to Google it) are a thing of beauty, for they make the case for an imminent and dangerous peaking of world oil production in a succinct and convincing manner. The City's planners have clearly done their homework well.

The charges to Portland 's peak oil task force are also worth noting:

1. To acquire and study current and credible data and information on the issues of peak oil and natural gas production and the related economic and other societal consequences;

2. To seek community and business input on the impacts and proposed solutions;

3. To develop recommendations to City Council in this calendar year on strategies the City and its bureaus can take to mitigate the impacts of declining energy supplies in areas including, but not limited to: transportation, business and home energy use, water, food security, health care, communications, land use planning, and wastewater treatment; and

4. To propose methods of educating the public about this issue in order to create positive behavior change among businesses and residents that reduce dependence on fossil fuels.

And there, in a nutshell, is a plan. At this stage, the plan may only be to study peak oil and its local consequences, but you have to start somewhere.

At last count, there were 87,576 governments in the United States (one federal, 50 state, 38,976 general-purpose local governments, and the rest special-purpose local governments such as school boards). Thus far, only Portland seems to be planning in public for peak oil.

Last week Portland 's government released a 93-page briefing book prepared by the city to acquaint their new task force with the basis for the City Council's concerns and to amplify on the guidance given in the resolution. The report discusses 14 areas that will be impacted by loss of cheap oil and gas and asks the task force to assess which are most relevant to Portland .

The areas of concern discussed are: Transportation, Land Use, Local Economy, Housing, Food, Public Services, Population shifts, Social Services, Health Services, Education, Electricity, Manufacturing, Retail and Communications.

In preparing this list, the City of Portland have done us all a big favor for they have moved the thinking about how to cope with the post-peak oil world forward another step. The message in the Portland report is that while we are all going to face peak oil, the effects on every one of those 87,576 governments is going to be slightly or a lot different.

Areas with sprawl will face massive commuting problems as gasoline becomes unaffordable, but in New York City , so long as the subway works, most people could care less. While feeding New York City may one day become a giant problem, rural America will continue to grow food way beyond what they consume. We are going to need 87,000 different solutions to mitigating peak oil.

As individuals, there is little most of us can do to keep oil flowing in the face of turmoil in the Middle East and nothing any of us can do in the face of peaking world production — other than to conserve.

There are however, still 87,575 governments in the US that, thus far, are doing absolutely nothing (at least in public) to prepare for peak oil. The chances are excellent that you live in one or more of them. Some day soon, each of these governments is going to have to face the consequences of peak oil. The sooner we can get governments thinking about it, they better off we, our children, and our grandchildren are going to be when that day comes.

http://www.fcnp.com/622/peakoil.htm

Reaction to Peak Oil Starts Close to Home

2006-08-13T01:34:00.000-04:00

Cowichan Valley News Leader (Canada)

By Pete Keber

Last month the Cowichan Valley Regional District overwhelmingly rejected a motion on peak oil.
That is a most disappointing development, since this issue threatens our way of life and our very existence.

The reasons given for turning down the motion are simple. It is a global issue that is not within the purview of the CVRD. The majority at the CVRD feel there is nothing that they can do about it.

This demonstrates a total lack of vision, and a failure to understand the consequences of ignoring this issue.

Other municipalities in North America comprehend the problem and are moving towards finding measures that they can undertake to mitigate the consequences at a local level.
In an e-mail I sent to the board recently, I suggested several steps that they could take to start the ball rolling here in the Cowichan Valley. I also went into more depth on what peak oil actually is.

For the uninitiated, peak oil occurs when approximately half of the world’s conventional oil supplies have been used up. At that point it is close to impossible to increase production any further. This happened to the United States in 1971.

It has never been able to pump as much of the black gold as it did that year, despite increased drilling, significant discoveries in Alaska and the Gulf of Mexico and continual advances in technology. Since then, another 53 to 55 of the major oil-producing nations have experienced peak production.

Is it not then reasonable to infer that this will happen on a global basis as well? Although it is helpful to know when that will happen (many experts believe global peak could occur between now and 2012), it is more important to do whatever we can now to lessen the impact.

There are two big arguments against peak oil advocates. The peak of oil production has been predicted several times in the past and it has not happened. The second counter is that recoverable reserves have continued to grow every year despite declining discoveries.

The first argument is not based on science, merely past failed predictions. A stopped clock…well you know the saying. How can we keep on increasing reserves if we are not discovering more than we are pumping?

In the 80’s the major Opec producers virtually doubled their stated reserves on paper with no major discoveries to back them up. This was to get around the new quota system.

Since then, those reserve numbers have stayed at the same levels despite extracting billions of barrels without replacing those barrels with new discoveries. Additionally, many major oil companies understated their reserves due to SEC requirements, than increased those reserves when they became provable.

Expectations that new technologies will increase the amount of oil being produced from oil fields has also helped to boost reported reserves. There may be phantom barrels in those reserves and there are limits to what technology can produce from finite fields, so all these numbers must be viewed with some suspicion.

We are not addicted to oil. We are addicted to convenience. A steady supply of cheap oil that has provided us with that convenience.

The thing is, we don’t care if it is oil or something else that ensures that convenience. The overarching problem: there is nothing on the horizon that can replace that gooey tar to guarantee a continuation of our gluttonous ride. Maybe nanotechnology can create a clean-burning alternative, but I wouldn’t hold my breath since that would contravene the first law of thermodynamics.

What will happen when peak oil occurs? My guess would be nothing immediately, but as shortages really start to hit escalating prices will impact the poor and developing nations. There will likely be scrambles by nations to secure their oil supplies and regional conflicts over resources. Whoa. That is already happening. Things can only get worse. The conflicts may spread to North America.

So what can we do? We can be a lot more conscientious about our vehicle use to start. North America consumes more than 25 per cent of the world’s oil supply with only five per cent of the population. We could reduce our consumption by 50 per cent if we set our minds to it without seriously limiting our lifestyles. Notice, I said limit and not change.

Either we change our style of living or wait until we are forced to. It is our choice. We can also lobby the CVRD to make peak oil mitigation a policy in the Cowichan Valley.

Pete Keber is a south Cowichan resident.

http://www.cowichannewsleader.com/portals-code/list.cgi?paper=9&cat=48&id=702791&more=

The Peak Oil Crisis: Recognizing the Peak

2006-06-21T22:45:00.000-04:00

Falls Church News-Press

By Tom Whipple
June 15, 2006

It is conventional wisdom among students of peak oil that worldwide peak oil production will not be recognized, and certainly not "officially" certified by some organization or other, until some years after the event has passed. The exception to this, of course, is if some natural or man-made catastrophe shuts down a lot of oil production in a manner not likely to be restored for many years.

Without such a catastrophe, recognition of peak oil will be gradual, with month after month of volatile production statistics trending downward. At some point, even the most optimistic prognosticator will be forced to admit it is unlikely that world production will ever again climb above the highest production record previously achieved.

The world is currently producing somewhere around 84-85 million barrels a day of oil. Pessimists say the current production rate is beginning to look a lot like a peak. Maybe another million or so a day, but that’s it. Moderates on the issue will allow that another five million barrels per day looks possible and see a peak around 90 million barrels a day. Until recently, the optimists were talking 120 million barrels day, 20 or 25 years down the line, but numbers like this are appearing less frequently

Currently, there is a fair sized discrepancy regarding total world oil production between the world's two major production compilers, the International Energy Agency in Paris (IEA) and the Energy Information Administration in Washington (EIA). The IEA says we are currently producing 85 million barrels a day while the EIA says it’s closer to 84 million.

Now, I am not privy to the methodology used by these two agencies to compile their worldwide production statistics each month, but even from the outside, some problems are obvious. There is a distinction between those countries that make every effort to publish accurate and timely production statistics and those who, for a variety of reasons, want to give out a false (usually higher) impression of their actual production.

In the former category are North America , Europe , Russia and China and countries where most production is carried out by the major international oil companies. Here the statistics are, given the complexities of compiling such data, reasonably timely and accurate. Corrections are made promptly when new information is acquired. Production numbers from these countries shows that they jump up and down on a month-to-month basis. Old wells dry up; new ones are drilled; equipment breaks down; storms or extreme temperatures appear. By their very nature, oil production numbers are volatile. It is the trend that counts.

Then there are a group of countries where a state run oil company controls production and the local government feels it is in its interest to keep a tight reign on any official release of production statistics. The most prominent of these are Saudi Arabia , Venezuela and Iran , although a couple of other Middle East producers, such as Qatar and Kuwait , do not appear to be particularly forthcoming.

The non-cooperating countries are easy to spot, for their purported production remains the same month after month in the tables produced by the major compiling agencies. Rock steady production numbers means that even organizations with major resources behind them cannot come up with better numbers (at least that they can publish openly) and are forced to make educated guesses or go with the previous month's production number.

In a number of cases, the IEA and EIA are forced to use the estimates of "tanker trackers." These are private organizations maintaining contacts in the major oil exporting nations who simply note whenever a tanker leaves, where it is supposed to be going, and how heavily loaded it appears. As most of these ships are hard to miss, one can assume that counting departing tankers is about as an effective way as any of tracking country's exports.

In response to many complaints about the production data, a database called the Joint Oil Data Initiative was set up about a year ago. This is a public online database to which all producing countries are supposed to submit their production statistics. A quick perusal of the web site shows that it has many critical gaps and that the concept still has a ways to go.

You may wonder why we should really care if a country's production is going up, going down, or remaining flat. The answer of course is that, until recently, it really didn't make much difference to anyone, but the Saudis, if they produced 8 million, 10 million, or 12 million barrels of oil in a given day. If they didn't fulfill demand for their product, somebody else would. As long as there was sufficient oil to fulfill demand without forcing up prices too much, that was all that mattered.

As the worldwide oil supply and demands tightens however, the need for timely accurate production statistics becomes increasing important— so much so that at some point, timely and detailed knowledge of world energy supplies may become a matter of critical importance.

The reason behind this assertion is simple. As oil depletion nears, we are all —from the highest levels of governments to the individual citizen— going to have to make many, many decisions as we rearrange our lives and our livelihoods in response to cope with life in a world with declining availability of oil and all deriving from it.

To get through this transition, good and timely information as to when and how fast the energy situation is changing is going to change will soon become vital to all of us.

http://www.fcnp.com/615/peakoil.htm

The Peak Oil Crisis: One Year in Review

2006-06-11T11:38:00.000-04:00

Falls Church News-Press

By Tom Whipple
June 8, 2006

As the world oil situation is rather quiet at the minute, it's a good time for a review. The price of oil continues to bounce around $70 a barrel and shows no sign of moving very far in either direction until the next big development occurs. The Iranians are busy trying to decide how much they really want an atomic bomb (or at least the ability to make people think they have one). The wrong decision by either side could impact world oil supplies and prices for years to come. Finally, the Nigerian militants have managed to abduct and probably ransom a group of foreign oil workers from an exploration platform 40 miles offshore.

The most obvious-to-everybody development in the past year is that the average US price for gasoline has managed to climb by 77 cents a gallon. So far the economic damage has been well below what many observers had thought $3 a gallon would do to the economy. However, there are signs of trouble ahead. Sales of large SUVs are on their way down, inflationary numbers are starting to appear, and Wall Street is having bad days. While for many people $3 a gallon is something one gets used to, many others are rapidly on the way to maxing out their credit cards or hocking the family heirlooms to get to work.

The other hard-to-miss events of the past year were the big Gulf of Mexico hurricanes. Whether you believe in global warming or not, the waters in the Gulf and mid-Atlantic have gotten a lot warmer in recent years resulting in two consecutive seasons in which Gulf oil production was badly torn up. Last year's hurricane season resulted in the permanent loss of some 200,000 barrels a day of oil production. While no one knows as yet if this year's hurricanes will do damage comparable to the last two years, all the climatological prerequisites for another bang-up hurricane season are in place. Gulf oil and natural gas production has grown into a mighty big target.

During the past year, a pair of internal company documents were leaked in Mexico and Kuwait . The Mexican document suggests that production from the giant Cantarell oil field from which the US imports 1.6 million barrels a day is about to collapse catastrophically. In the case of Kuwait , the leaked study claims that the country's oil reserves may only be 25 to 50 percent of the official number. In the meantime, Kuwait has announced that production from their giant Burgan oil field has started to decline.

The status of Saudi oil production, which many believe to be the key to any further growth in world oil production, remains a well-guarded state secret. Here too, however, there are tantalizing hints of trouble ahead. Riyadh continues optimistic claims about future production capabilities and has embarked on major new onshore and offshore drilling projects, paying top dollar to lease the required equipment. For most of the last year, Saudi oil production has been steady at 9.5 million barrels a day at a time when world oil prices and presumably demand has increased. Recently a firm of "tanker trackers" announced that it looked to them as if Saudi production had dropped to around 9.1 million barrels a day in April and May. The number for April has been confirmed by the Saudis who claims they simply can't find buyers for their oil.

It may be perfectly true that the Saudis can't find a market for some of their oil. A lot of it is difficult to refine and a growing share of the world's oil consumers simply can't afford the going rate these days, even as the richer countries continue to grow nicely. A number of outside analysts are saying that it is just about time for Saudi production to go into decline, perhaps catastrophically. In a year or so, we should know who is right.

Also, keep in mind that stopping Saudi oil production is still Al Qaida's top objective. They failed in an attempt to blow up a key chokepoint a few months back, but they are still out there and not getting any friendlier.

We all know where the Iraqi situation is going and that it is only a matter of time until oil exports, which are doing nicely at the minute, are drastically reduced or come to a complete stop. The Iranian situation is in limbo at the minute. Decisions in the next few weeks should settle whether exports and further oilfield development continue or the situation deteriorates into any of several possibilities that will increase to price of oil or perhaps markedly reduce the amount of oil coming out of the Middle East .

A major phenomenon of the past 12 months has been the scramble for secure oil supplies that has been taking place around the world. The Chinese have been particularly active in seeking out new deals and signing contracts for oil. Close behind China in the search for bilateral agreements have been the Japanese and the Koreans who are faced with the problem of growing industrialized economies and no indigenous oil. There appears to be a trend getting underway from market-based oil sales, where “he who pays the most gets the oil,” to a situation where exporters are selling to customers under direct bilateral agreements.

Thanks in part to the hurricanes, US oil production thus far in 2006 is down by 400,000 barrels a day (7.3%) as compared to 2005. Our net imports of crude and finished products are up by a comparable amount. This means that roughly two thirds of US oil consumption is now being imported and therein lie the seeds of a problem more serious for the US than the peaking of world oil production: peak US oil imports.

Let's face it, during the last year, the popularity of the US around the world has not been doing too well. Many see a way to do us real harm through cutting or slowing our access to oil. Nationalism is on the march in many places. A few countries led by Venezuela are saying that as soon as they can figure out how to stop exporting oil to the US , they will.

It is gospel that when an exporting country goes into depletion they will keep supplying the domestic market first so that their exports will drop much faster than their total production. Moreover, we are starting to hear talk about cutting back on exports just to save it for another day. The message of rapidly rising prices is that an exporter can earn growing revenues and keep more of his oil safely in the ground too, simply by slowing exports. The only obstacles to deliberately slowing exports are long term contracts, other trade relationships, security guarantees, and the fear that they could end up like Baghdad .

So what does the past year tell us? First of all, world oil production has moved up very little. While new wells and new oil fields continue to be drilled, this increased production has been largely offset by hurricane damage, insurgencies, and general oil depletion. The year of peak oil production will be determined by the balance of how fast the drillers can open increasingly more expensive and difficult to drill wells vs. mother nature, insurgents bent on closing down production, and increasing rates of world oil field depletion.

The US and other industrialized countries, most of which are, or soon will be, major importers, are facing the double whammy of rapidly reducing supplies of oil available for import. In the meantime, and for the moment, the worldwide demand for oil, even in the US , continues to increase.

http://www.fcnp.com/614/peakoil.htm

Invest in Silver, Oil

2006-06-05T16:30:00.000-04:00

Over the last few days, I have been looking into various investments I could make.

Invest in the silver ETF (Exchange Traded Fund), which runs under the symbol SLV, or in the oil ETF which runs under the symbol USO.

The silver ETF works like this:

The investment firm/bank buys a certain amount of silver, and stores it. They then sell "shares," equal to 10 oz bars of silver. Instead of having to physically store it somewhere, you own the silver on paper. The value of one share is the spot value of an ounce of silver x 10.

The oil ETF doesn't work exactly the same, but runs in a somewhat similar manner, based on the price of a barrel of oil.

Or, you could just go to your neighborhood coin dealer or jeweler and buy the physical bullion itself.

With inflation, Iran fears, and a weakened economy, now is the time to invest in the energy sector or in precious metals.

Silver is extremely undervalued, based on what I have read.

"Today, for less than $20, anyone can get into the silver speculation game. On top of that, silver is easy to buy and somewhat liquid. All you have to do is find your neighborhood coin dealer and start trading.

My question is: Do you understand silver? Do you know why silver is a good investment? Do you also know why it's a bad investment? If you don't know the answers to these questions, I would recommend that you stick with what you understand.

Although not a silver expert, I'll share with you the reasons why I'm bullish on the asset:

1) Silver is a consumable precious metal. Unlike gold, which is hoarded, silver is used industrially. For years, before digital photography, it was used in film for cameras and movies. Today, silver is used extensively in electronics.
The reason this is a good fundamental reason to get into the metal today is because silver stockpiles are dwindling, so its price is driven by supply and demand.

2) It's a precious metal. Silver has been used as real money for centuries. We humans have an ancient fascination with this metal, as we do with gold. For years, I have visited gold and silver mining sites all over the world. That's something that has always amazed me, regardless of whether I was in China, South America, Mexico, Africa, or Canada.
I still remember standing on a mountaintop in Peru, doing my due diligence on a gold mine and looking at tiny caves dug into the side of a mountain. The caves were the mines of ancient Incas who were seeking gold, long before the Spaniards came and stole their wealth and country from them. Standing on a 14,000-foot mountain, where I could hardly breathe, I wondered what motivated those ancients to live in such an arid and hostile environment and delve for gold. Then I realized I was there for the same reason, only centuries later.

3) The primary reason I'm in real estate, oil, gold, and silver is because the U.S. dollar has become the peso the world. It's becoming more and more worthless as the U.S. is the world's biggest debtor nation.
Just how badly is the U.S. borrowing money? According to the Treasury Department, America's first 42 Presidents (from George Washington to Bill Clinton) borrowed a combined total of $1.01 trillion from 1789 to 2000, Between 2000 and 2005, President George W. Bush has borrowed $1.05 trillion -- and he's got a few more years left to go.
I'm not confident that our political leaders have the guts to do what's required to put the U.S. back on a sound economic footing. This is not to blame either Republicans or Democrats. I blame Americans for wanting their Social Security cake and Medicare ice cream, too. It's the entitlement mentality that grips the U.S., from the President on down, that needs to be changed. Too many Americans have come to expect the government to solve our personal problems (see "Why Many Aren't Securing Their Financial Future").
So if you think America's politicians and citizens are willing to make the changes necessary to strengthen the U.S. dollar, then don't buy silver. But if you're like me and don't expect us, as a nation, to take our medicine, then short the dollar -- and the way you short the currency is by going long on gold and silver.

4) Equities (stocks) and commodities (gold, copper, oil, and silver) are counter-cyclical. On average, equity prices go up for 20-year periods, and commodities go down. Then they reverse directions. Looking back in time, equities (stocks) began their run-up in 1980 and imploded in 2000. In 2000, commodities began their run-up, and equities headed down. In other words, around 2016 to 2020, start getting back into stocks and out of commodities.

5) A silver exchange traded fund (SLV) was launched on Apr. 28. That means silver, the commodity, can be traded as a paper asset. This makes silver easier for the masses to buy. They don't have to take delivery of the physical metal. Millions of pensions can now hold silver as a paper asset. The ETF will have to actually buy the silver and store it for the investor. This should add to the scarcity of the metal, which should reduce supply and increase prices.
So that's a simple explanation of what I understand about silver -- and why I'm bullish. I'm not buying silver because the price is going up, I'm buying it because I believe I understand why its price is rising.
I could also be wrong -- but at under $20 an ounce, silver is a good buy, in my opinion. I believe it's the last great affordable investment for the masses. And when the masses find out, another bubble will inflate and, of course, at some point burst." (Excerpt from http://finance.yahoo.com/columnist/article/richricher/4027)

More links:
http://www.gbtg.net/mnn/silver-v-gold.htm
http://www.marketwatch.com/News/Story/Story.aspx?guid={9E4F204C-FD45-40D4-B648-AD5953F5264D}&print=1&siteid=mktw
http://en.wikipedia.org/wiki/Silver_as_an_investment

I'm not an expert (obviously), but I have enough common sense to get in the game while I still can.

Good luck.

The Peak Oil Crisis: Dividing a Growing Pie

2006-06-02T23:53:00.000-04:00

Falls Church News-Press

By Tom Whipple
June 1, 2006

In recent weeks, there has been a spate of stories about oil-producing countries either nationalizing their oil industry or unilaterally announcing new contract terms for international oil companies (IOCs) operating in their countries.

As the price of oil increased rapidly in recent years, exporting nations that had foreign oil companies operating within their borders looked at the unprecedented profits being earned by IOCs and began asking, “Why aren’t we making that money; it’s our oil?”

This is not a new issue. Nearly 70 years ago the Mexicans asked the same question as they nationalized their oil production. In the decades after World War II, most Middle Eastern producers took control of their own oil resources, either peacefully as with Saudi Arabia or accompanied by turmoil as in Iran and Iraq .

The current wave of nationalization/renegotiation began in 2004 when the Russian government moved to bring its giant Yukos oil company, that had been in private hands since the collapse of the Soviet Union , back under state control. This of course was an internal matter for the Russians.

This year has seen more pressure on the IOCs as Venezuela, Bolivia, and Ecuador either announced nationalization, in the case of Bolivia’s gas fields, or new contract terms that would bring the government more control and a greater share of the profits.

Last week the spotlight swung back to Russia when Moscow floated the notion that it should have 51 percent ownership in three of the biggest foreign oil projects in Russia — Shell's Sakhalin-2 field, Exxon's Sakhalin-1 and the Kharyaga license held by Total. The Russians claim these projects are all behind schedule, over budget and short on Russian involvement.

Although there has been no movement as yet, there is speculation other oil producers with a significant foreign oil company presence will be either announcing or asking for contract renegotiations.

The reason the foreign companies are present at all is because they alone have had the resources and technical expertise to find, produce, and market the oil. In many cases, the host government’s major function is to collect and spend the revenue check. Now, the tightening world oil supply and spiraling prices have brought a whole new dynamic to the revenue sharing question.

Most of the relationships between producing nations and the IOCs go back many years if not decades. Production and revenue sharing contracts were written back in the days of $10 or $20 a barrel oil. Contracts usually provided for the IOCs to make all the investment in return for some share of the profits. If the deal were for a 50-50 split, and the oil sold for $10 a barrel, then each partner might make a couple of dollars a barrel after a expenses.

The problem came when the value of oil quickly rose to $70 a barrel with little increase in perceived expenses. Then the IOC and the host government could each be making $30+ per barrel. From the host government’s point of view, the question became why should the IOC that was satisfied with a couple of dollars per barrel profit be entitled to a profit of $30 or more.

The question shifts to one of how much leverage the producing government has to demand more of the revenue pie. This, of course, requires a careful analysis and a lot of luck on the part of the government seeking a bigger share of the revenue. Given that most oil companies are making money, in some cases a lot of money, from their foreign operations, it is obvious that they have a lot of give. Naturally, they want to continue profitable production contracts and they already have made multi-billion investments in their projects.

In many cases, there are other factors to consider besides the profitability of the IOC. What other economic or political relations does the host government have with foreign oil importers? Should the government feel that its national security rests on good relations with Washington or some other importer, then it is going to be reluctant incur the problems of breaking existing contracts in hopes of gaining more revenue. The size and potential for a nation’s oil production would enter the equation. If oil production is minimal by world standards, an IOC could easily close up shop and leave the host country on its own.

Another new factor in the equation may be technically competent countries such as China , Japan , and South Korea who are becoming concerned about the future of their energy supply. In many situations, these countries would be more than happy to assist exporting nations with their oil production in return for access to the product.

Yet another complicating factor is that most new oil production is coming from deep-water fields these days. Finding and producing oil from beneath deep waters is a difficult task that requires huge investment, many years of effort, and much technical expertise. Losing access to the money and know-how of the IOCs is something a country that wants to continue in the oil production business should not take lightly.

Much debate is taking place as to whether recent grabs for a bigger piece of the profits will pay off in the longer run. Venezuela , which is currently producing about 2.7 million barrels a day but has large reserves of hard-to-produce heavy oil, is the most interesting. Having unilaterally announced major increases in their share of the revenue and control over heavy oil production, Caracas is awaiting a response as the whether the IOCs will acquiesce in the unilateral breaking of long-term contracts.

If the IOCs pull out or reduce their efforts in Venezuela , at stake are US imports of 1.6 million barrels a day plus long-term access to large quantities of geographically close heavy oil. If there is a break in the oil relationship, both countries are likely to suffer for an indefinite period.

Most observers hold that Bolivia and Ecuador have made mistakes in breaking their contracts with foreign oil companies. Their production is relatively small and they lack the capital and expertise to increase production without outside help.

Are any other nations likely to succumb to the lure of more pie and seek revisions to existing contracts? In reviewing the list of major producers, most such as China, Mexico, Norway, Canada, and Saudi Arabia either do not have production sharing agreements or are unlikely to get into the contract-breaking business.

There are others in the world such as Nigeria and Angola who might be tempted but in these cases other overriding factors could come into play.

As oil depletion sets in and the price of oil moves up, pressures on producing nations to get all they can, while they can, will increase. In this situation there is much opportunity for miscalculation. This would probably come in the form of the IOCs either pulling out of a country under pressure or a reluctance to make major new investments while under threat of expropriation. In either case future oil production will suffer and the day of peak oil will move a little closer or worldwide depletion will be a little faster.

http://www.fcnp.com/613/peakoil.htm

The Day After Peak Oil

2006-06-02T23:49:00.000-04:00

atlanta.creativeloafing.com

By John F. Sugg
May 31, 2006

Will we die in our cars or retool our communities?

You know that place alongside I-85? Or was it I-75? Maybe State Road 400? Could have been I-20.

Well, it doesn't really matter what stretch of concrete because the environs are all the same. Mass-produced cul-de-sac subdivisions are surrounded by cookie-cutter malls, all laced together with endless ribbons of car-clogged roadways.

Sprawl. We know that. Been there, got the "sweltering on the expressway" T-shirt. But to understand what sprawl really means -- for your future -- we need to connect a few dots.
We have sprawl because ... well, because of gasoline. The internal combustion engine created in the last century this phenomenon called the suburb. Hundreds of millions of Americans suffer from the mass delusion that they live (sorta) in the "country" because they have a 3,000-square-foot, incredibly-cheap-construction manse and bit of grass, and their subdivision boasts a name like Fox Run or Oak Creek. Those not intoxicated with gasoline fumes have noticed that such names are historical markers recording what once was on the land before it was bulldozed.
As industrial and commercial urban centers became noisome and noxious, the car allowed people to move into the burbs. The commuter was born (and is slowly dying), with the interstate as an umbilical cord.

So, if a gasoline glut giveth sprawl, will paltry petroleum production taketh it away?

You haven't heard a lot in the mainstream press about something called "peak oil." The Atlanta Daily Newspaper of Declining Circulation -- whose marketing and news orthodoxy is that sprawl is splendid -- has mentioned the term only four times. Ever. Those items include one letter and, oh, one column from the pro-sprawl, pro-more-roads Georgia Public Policy Foundation. That column labels peak oil as a "belief" that's foisted on the public by "snake oil" salesmen.

"That's really stupid," says Richard Heinberg, author of two books on peak oil, and a guy who practices what he preaches. He's converted his California suburban home into a mini-farm where he raises food on once-manicured lawns. Through solar panels, he has cut his energy bill by 80 percent.

"The public policies that encourage sprawl are insane," Heinberg says. "Peak oil isn't a hypothesis. It's an observation. We're writing history, not predictions. And policies that don't recognize that are creating a tragedy that our children and grandchildren will pay for."

Sometime in the next 30 years, the world will have exhausted oil supplies to the point where production will rapidly diminish. A 2005 U.S. government study (clearly ignored by Bush & Cheney Inc.) called the Hirsch Report concluded that peaking "without timely mitigation" will result in "unprecedented" social, economic and political chaos.

How do you mitigate the affects of peak oil? As the Hirsch Report underscores, the old blather about "market forces" doesn't apply. True, rising prices will eventually prompt conservation and promote the search for alternative energy. But that won't happen soon enough to skirt disaster. The study found it will take 20 years to recalibrate American society for a future of diminishing oil. If we've already hit peak oil, which might be the case, we're facing two decades of horrendous crisis. Or, if the peak is still 20 years off, we'd better start preparing today.

Many cities -- Portland, Ore., San Francisco, Bloomington, Ind. -- have passed peak oil resolutions that call for sensible public policies.

In Georgia, meanwhile, our Republican leaders are headed in the opposite direction. Last legislative session, they slipped a transit-killing poison pill into the state budget. And rather than vetoing that anti-commuter provision, Gov. Sonny Perdue is backing a new wave of road building funded by "public-private partnerships," which means the public will bleed billions and "private" pals of legislators will cart away the money.

Jim Kuntsler, a peak oil author who lives in New York, says Georgia's policies are creating "a public realm that has been reduced and impoverished into a universal automobile slum."
There are smart people who live here, and they're thinking about the problem. Joe Allen heads a community improvement district at the aging Gwinnett Place Mall. He's picked up on the themes of transforming sprawl into new cities, places where people can work, live and play with minimal reliance on cars.

"We have a great infrastructure here," Allen says. "It needs dusting off and a new direction. In 1984, the mall forever changed the face of the area. New concepts that transform this into an urban center will again change Gwinnett for another 20 or 40 years."

Gwinnett County's planning director, Steve Logan, quips, "I've long seen all of those huge parking lots as a way to land-bank property for future use. We'll see sprawl areas congeal and intensify. Five-dollar-a-gallon gas will make it happen a lot faster."

The idea is to carve out scores of cities in metro areas -- real centers of commerce and housing. Instead of 90 minutes in the car, you spend nine minutes strolling to your office. Or, if you commute, it's a couple of miles on a trolley or train, not 30 miles in the SUV.

What's at stake is the future. Good public policy is the key. Kunstler calls for programs to rebuild America's train system. Others favor jacking up gas taxes and using the money for transit -- a good idea if provisions are made so that the burden won't disproportionately fall on the poor.

In the near term, reconfiguring suburbia into new cities -- like the plans for Gwinnett Place -- could transform sprawl into communities. While we're at it, we should retool the nation's agriculture and retailing -- returning to local farms and neighborhood shopping. It's a better way to live -- and we could escape the worst of the day after peak oil.

JOHN.SUGG@CREATIVELOAFING.COM

Get involved

http://atlanta.creativeloafing.com/gyrobase/Content?oid=oid%3A81309

Pricey Gas? That's Reality

2006-05-30T15:28:00.000-04:00

www.alternet.org

By James Howard Kunstler
May 30, 2006

It's actually kind of funny to hear Americans complain these days about the cost of gasoline and how it is affecting their lives. What did they expect after setting up an easy-motoring utopia of suburban metroplexes that make incessant driving inevitable? And how did they fail to register the basic facts of the world oil situation, which have been available to us for decades? Those facts are as follows: oil fields follow a simple pattern of production and depletion along a bell curve. Universally, when an oil field gets close to half the amount of oil it originally possessed, production peaks and then declines. This is true for all oil fields in the aggregate, for a nation and even the world.

In the United States, oil production peaked in 1970 and has been declining ever since. We extracted about 10 million barrels a day in 1970 and just under five million barrels a day now. Because our consumption has only increased steadily, we've made up for the shortfall by importing oil from other countries.

There is now powerful evidence in the production figures worldwide that we have reached global peak oil production. The collective nations of the earth will not make up for this by importing oil from other planets.

Contrary to a faction of wishful thinkers, the earth does not have a creamy nougat center of oil. Oil fields do not replenish themselves. Also contrary to the prevailing wish, no combination of alternative fuels will allow us to keep running the interstate highway system, Wal-Mart, Walt Disney World and the other furnishings of what Dick Cheney called our "non-negotiable way of life."

People who refuse to negotiate with the circumstances that the world throws at them automatically get assigned a new negotiating partner: reality. Reality then requires you to change your behavior, whether you like it or not. With global oil production peaking, we are now subject to rising oil prices, as markets are forced to contend with allocating a resource heading in the direction of scarcity. Oil prices are only likely to go higher -- though there is apt to be a ratcheting effect as high oil prices depress economic activity and thus dampen demand for oil which will depress prices leading to increased consumption which will then kick prices back up, and so on. The prospects for more geopolitical friction over oil also self-evidently increase, as industrial nations desperately maneuver for supplies.

Mainly though, the danger lies in the resulting instability of the super-sized complex systems that we depend on daily.

Trouble with oil will spell huge problems with how we grow our food, how we conduct trade, how we move around and how we inhabit the terrain of North America. These systems are going to wobble and eventually fail unless some effort is made to reform their scale and their procedures. For example, Wal-Mart's profit margins will disappear as higher diesel fuel prices hit its "warehouse-on-wheels."

Now, in the face of this, you'd think that the national leadership in politics, business and science would prepare the public for substantial necessary changes in the way we do things. What we are seeing across the board, though, is merely a desperate wish to keep the cars running by any conceivable means, at all costs. That is the sole target of our focus. Our leaders don't get it. We citizens have to make other arrangements.

But we must. We have to live differently. We're going to have to re-inhabit and reconstruct our civic places -- especially our small towns -- and we're going to have to use the remaining rural places for growing food locally, wherever possible. Our big cities will probably contract, while they densify at their centers and along their waterfronts. Our suburbs will enter a shocking state of economic and practical failure.

We cannot imagine this scenario because we have invested so much of our collective wealth the past 50 years in the infrastructure for a way of life that simply has no future.

We'd better start paying attention to the signals that reality is sending or we will be living in a very violent, impoverished and demoralized nation. And we have to begin somewhere, which is why I suggest we start by rebuilding the national passenger railroad system. It would have a significant impact on our oil use. It would put a lot of people to work on something meaningful and beneficial to all ranks of American society. The equipment is lying out there rusting in the rain, waiting to be fixed. We don't have to re-invent anything to do it.

The fact that we are not even talking about such solutions shows how unserious we are.

James Howard Kunstler is the author of The Long Emergency, just released in paperback by The Atlantic Monthly Press.

http://www.alternet.org/audits/36746/

Interesting Video Online

2006-05-25T16:19:00.000-04:00

Go watch this video. Made by an artist named James W. Johnson. It is short, free, slightly humorous, and makes a good point.

http://www.jameswjohnson.com/movies/vids/post-oilman.htm

End Times

2006-05-23T17:16:00.000-04:00

Los Angeles Times

By Dan Neil
May 21, 2006

If Al Gore's documentary "An Inconvenient Truth" has a single message, it's that global warming is bad—very, very bad. Floods, droughts, famine, disease . . . a miasma of End Times calamity caused by the burning of fossil fuels.

Even at that, Gore is—at the risk of paraphrasing—a candy-assed optimist, according to James Howard Kunstler, author of "The Long Emergency: Surviving the Converging Catastrophes of the Twenty-First Century."

Whereas Gore and other prophets of climate change believe we still have the time and means to avert the worst consequences of anthropogenic global warming—hybrid cars, solar panels!—Kunstler argues with hellish persuasion that we are basically toast. Why? The entire edifice of American civilization—from our mega-scale methods of food production to our great repositories of national wealth, that is, the equity invested in our sprawling suburbs—is propped up, trembling as if balanced on matchsticks, on cheap oil. And there is no substitute for cheap oil.

But wait, I say, when I get him on the phone at his house in Saratoga Springs, N.Y. What about plug-in electric vehicles and pure electric vehicles, not a few of which are, here in California, being charged by DIYers' solar panels? What about wind power, biomass or wave power? Kunstler emits a well-practiced harrumph.

"When confronted with these ideas, people generally go through . . . what was her name? . . . Kubler-Ross' stages of grief," Kunstler tells me. "You're still in the bargaining phase." Nothing, no deliverance of technology, he says, could possibly replace the cheap energy we get from oil, and even if it could we would have to surmount the "incredible passivity" of the American people narcotized by decades of abundant petroleum. Kunstler derides the belief that alternative energy will save us as Jiminy Cricket-like wishing upon a star.

When I ask him about the TerraPass program at the University of Pennsylvania's Wharton School (drivers pay a fee proportional to the size of their cars to offset their cars' carbon impact), he goes bananas. "What do I think? I think it's [colorful intensifier here] stupid!" he fairly shouts. "There's not going to be a [ditto] Wharton School!"

So, that would be a nay, then?

Kunstler, 57, has emerged as the most dire and articulate proponent of a school of thought known as Peak Oil, the idea that the world has or will soon reach maximum oil production, after which oil becomes scarcer and more expensive to extract. There's nothing theoretical about it. Like global warming, Peak Oil—a bell-curve description of oil reserves first outlined by geophysicist M. King Hubbert—is widely accepted by serious people. Discoveries of new oil topped out in 1964. The world consumes about 27 billion barrels of oil a year. At current pace, the world's estimated 1 trillion barrels of oil reserves will be gone within a few decades, but as a practical matter, extracting every drop from sources like Canadian oil shale would be impossible, since the effort would consume more energy than it produces.

"After peak," writes Kunstler, "all bets are off about civilization's future."

As gas prices in Southern California hover near the $4-per-gallon mark, Kunstler's book—recently released by Grove Press in paperback—seems a lot less fanciful than one would hope. What happens when gasoline reaches $10 or even $20 per gallon, as it almost certainly will, according to Kunstler? The social ecology of suburbia will collapse, and the nation's endless capillary networks of tract homes, with their lawyer foyers, pools and bonus rooms, will become vast ghettos inhabited by gas-less and immobile squatters. The food production system will likewise crumble, resulting in famine and death.

The collapse of industrial agriculture is just one of many ways that "peakniks"—adherents of Peak Oil—contend that these events will precipitate a die-off of humanity (though, in an unusually sanguine moment, Kunstler says he prefers the term "die down" because humanity will live on, despite its reduced circumstances). In the absence of any large-scale organizing feature—federal government itself being a manifestation of cheap oil—America will descend into neo-feudalism, where plowmen will be a lot more useful than IT directors. Put another way: It'll be Amish with guns.

I'm not convinced that the post-oil era will play out quite so apocalyptically. Yes, America wastes a lot of energy, which means it could conserve that energy before having to plow under the suburbs for farmland. Just for an example, the Department of Energy estimates that new full-spectrum LED lighting could reduce electrical consumption by about a third by 2025. With sufficient national will, America could convert to a nearly all-electric automotive fleet in a decade, putting our mobility onto a more sustainable, renewable footing.

But we've got some major infrastructural remodeling to do. Can we do it? Can we negotiate a soft landing? The first step, of course, is getting people to understand that, just like the once-derided case for global warming, Peak Oil is real, to see that train a'coming. Then to act decisively, resisting both a sense of futility and the urge toward anarchy.

It's a matter of hoping Al Gore is more right than Kunstler.

http://www.latimes.com/features/printedition/magazine/la-tm-neil21may21,1,4476344.story?coll=la-headlines-magazine

Raise gas tax $3 a gallon to promote fuel efficiency

2006-05-23T17:11:00.000-04:00

Chicago Sun-Times

By Lester R. Brown
May 20, 2006

Now that the $100 tax rebate proposed by the Senate Republican leadership as a response to rising gasoline prices has been discarded, it is time to get serious. Any effective response to climbing gas prices must recognize a geological reality -- namely, that the earth's oil reserves are shrinking.

The amount of oil pumped has exceeded new discoveries since 1980, and the gap is widening. In 2004, for example, the world pumped nearly 31 billion barrels of oil while discovering fewer than 8 billion barrels of new oil.

Instead of encouraging gasoline use with tax rebates or gas tax holidays, we need a way to reduce gasoline use. We need a higher gas tax, but the only way to get a tax rise large enough to wean us from imported oil is to offset the rise with a reduction in the tax on income.

The gas tax boost should be substantial -- a rise that will send a strong, clear signal to consumers -- and it should be gradually phased in. A gasoline tax hike of 30 cents a gallon per year for the next 10 years would send the right signal. This eventual increase of $3 per gallon would be offset every step of the way with a reduction in income taxes.

A $3 per gallon tax on gasoline in addition to the existing federal tax of 18 cents is a lot, but our economic future is at stake. Such taxes are not unheard of. Motorists in Germany pay a tax of $3.76 per gallon, French drivers pay $3.46, and in the United Kingdom the figure is $4 per gallon. Prices at the pump in these countries typically range between $5 and $6 a gallon.

A number of countries in Europe have been lowering the tax on income and raising those on energy. Sweden, now the leader, is in the middle of a 10-year shift of $1,100 per household from income taxes to energy taxes. Sweden's plan is to be oil-free by 2020.

A planned long-term rise in the price of gasoline would enable automobile owners and manufacturers to plan intelligently for an oil-short future. It would encourage motorists trading in older cars to look for more fuel-efficient vehicles, including the highly efficient gas-electric hybrids. And it sends the right signals to manufacturers, enabling them to shift to more fuel-efficient vehicles over time.

The shift to gas-electric hybrid cars offers another option. If we add a second storage battery and a plug-in capacity to hybrids it will enable us to do our short-distance driving, such as the daily commute or grocery shopping, almost entirely with electricity. Cars could be recharged at night when the demand for electricity is low.

If we build not merely hundreds of wind farms but thousands of them to feed cheap electricity into the grid, then we can do our short-distance driving with wind energy. The wind electricity equivalent of a gallon of gasoline costs roughly 50 cents. Wind energy is inexpensive, inexhaustible, and it is ours.

Rising gas prices also will encourage investment in public transportation, enabling us to reach the levels of convenience and reliability of systems in Western Europe and Japan. They also will facilitate creation of the increasingly popular bicycle- and pedestrian-friendly transport networks. And higher gas prices are already mobilizing billions of dollars of investment in the production of alternative fuels, such as ethanol.

There is also the pressing question of who gets the revenue from oil price increases. It is in the interest of oil-exporting countries to raise the price of oil as high as possible without causing a global economic recession or depression. If we let OPEC keep raising the price, the increases will end up in OPEC treasuries.

If we shift taxes, however, more of the additional money spent on gasoline will end up in our treasury, and individuals will benefit from lower income taxes. Higher U.S. gas taxes will also reduce the global demand for oil, making it more difficult to raise the price.

A world where oil use is climbing is totally unprepared for the peaking and subsequent decline of world oil production. Whether peak oil comes this year, next year, or 10 years from now, we need to be ready for it. The adoption of a 10-year tax shift as outlined above would accelerate the shift to alternative energy sources, and help re-establish U.S. leadership in building a sustainable energy future.

Lester R. Brown is president of the Earth Policy Institute.

http://www.suntimes.com/output/otherviews/cst-edt-ref20a.html

The Peak Oil Crisis: A Frenzy in Washington

2006-05-05T13:57:00.000-04:00

Falls Church News-Press

By Tom Whipple
May 4, 2006

Last week the peak oil phenomenon reached a turning point when official Washington began to realize it has a problem. The problem, however, is currently being framed as high-gas-prices-going-into-the-next-election rather than worldwide oil depletion. Thus the first round of solutions being proposed ranged from the bizarre to unachievable.

The fun started on Sunday of last week, right after oil has reached a new high of $75 a barrel, when Senator Arlen Specter said the US should back a plan to tax away the excess profits of the oil companies. The senator opined that that the US has allowed too many oil companies to merge so that we have reduced competition and higher prices.

On Monday, Presidential spokesman Scott McClellan revealed that the President had directed the Energy and Justice Departments to investigate "illegal manipulation of gasoline markets" and that the President would unveil a set of plans the next day to deal with high oil prices.

On Tuesday morning, the Washington Post weighed in with a story on how the President and congressional Republicans were beginning to feel the heat from high gas prices and were starting to fear what the electorate would do next November. After consulting various energy experts, the Post concluded that anything the President or Congress could do to increase the supply of oil or reduce demand would take years to have an impact.

Later that day, the President appeared before the Renewable Fuels Association to announce his plan for dealing with $3+ gasoline prices. In addition to the previously announced efforts to root out illegal price gougers and oil company collusion, the President said he would temporarily suspend the requirement to replenish the Strategic Petroleum Reserve with oil that had been borrowed after the hurricanes last fall. As this replenishment was occurring at the rate of roughly three-tenths of a percent of daily US oil consumption, few observers thought it would make a noticeable difference. Even the Wall Street Journal had the grace to note that the effects would be "mostly psychological."

The President also directed the EPA to waive clean air rules in areas where the transition to the clean air additive ethanol was causing gasoline shortages. He asked Congress to roll back about $2 billion of the $10 billion worth of tax breaks they had given the oil companies last year and give increased tax breaks for hybrid purchasers.

The commentators immediately noted that these measures would do nothing to bring down gas prices, but they sounded so good the price of oil dropped right after the President's speech. In a burst of candor, and to his credit, the President said, "energy experts predict that gas prices are going to remain high throughout the summer, and it is going to be a continued strain on the American people."

After the President had his say, it was Congress's turn to weigh in. At various times during the week, they proposed a 60-day federal gas tax holiday, a $100 federal tax rebate check, and reworking of the accounting standards pertaining to inventories so that oil companies, and every other kind of company, would have to pay higher taxes. All of this was accompanied by numerous press conferences and photo ops staged at gas stations.

By the end of the week, the demagoguery of all this was apparent to nearly everybody and, one by one, the proposals sunk of their own weight or threat of presidential veto. The $100 rebate came in for the most scorn with liberals and conservatives both seeing it as nothing more than an effort to buy votes. The proposal did, however, have a couple of interesting features. The rebate was tied to oil drilling in the Arctic Wildlife Refuge so that the Democrats would have to vote against it just before the election. It also had a provision that the $100 check would go to families with an income of $218,000 or less -- causing some to wonder if this might just might be a new definition of the poverty level.

There were other proposals including one to raise automobile fuel efficiency standards. The President insisted however that increasing fuel efficiency only be done in the context of a complete overhaul of the standards system so as not to harm the US automobile industry too badly. Nothing is simple anymore.

On Sunday, Energy Secretary Bodman appeared on “Meet the Press” to explain why gasoline prices had increased by 60 cents per gallon in the last month. The secretary sees high gas prices as fallout from President Bush's successful efforts to build a stronger economy and the "inability of suppliers to make the flows equal to demand." The secretary foresees tight oil supplies as continuing for the next two or three years when either supply will catch up with demand or the administration will be out of office and high gas prices will be somebody else's problem.

Absent from the week's torrent of words was any mention of peak oil or even a hint the beginnings of worldwide oil depletion just might be at the root of the gas price problem. Many serious commentators, however, noted a gap was opening between supply and demand due to vigorous world economic growth. Widespread appreciation of this point is, of course, a step in the right direction.

Sadly, one searches in vain for any mention of conservation as a first, inexpensive, step towards mitigating the problem. It is clear that the country, the media, and our leaders in Washington have a ways to go before we are discussing the real issue and real choices. Someday, the historians will note that in late April 2006, a national discussion of oil policy, however surreal, began in earnest.

http://www.fcnp.com/609/peakoil.htm

Peak Oil and the Political Economy of Terrorism

2006-04-26T09:57:00.000-04:00

The Baltimore Chronicle

By Mathew Maavak
April 24, 2006

Wars are dictated by the primacy of economics, while ideologies serve to rouse the masses.

Crude oil has breached the $70 psychological barrier again. This time, however, it will not be a one-day seduction by the stormy Katrina.

The causative culprits are aplenty.

Terrorists have taken out 25 per cent of Nigeria's sweet crude since late February, and the daily joust between Washington and Tehran is providing splendid returns to those who had invested in oil stocks. For these savvy investors, there will be enough gas in the tank during the peak summer driving season.

Then there is that 10.2 per cent growth registered by China, announced very conveniently before President Hu Jintao's scheduled meeting with his US counterpart George W. Bush. China's booming growth can only be greased by a harder-to-pump oil. The alternatives are stark. If the Chinese bubble gets pricked, the global economy suffers, US corporations may need higher tax cuts—or even subsidies—and Americans will finally need to trim their bellies.

That would be Hu's sales pitch but Bush may opt for a more risky oil prospecting venture. This time, the failed former Texan oilman may succeed, and ignite enough fires in an energy-strained world.

It is high noon for those prospecting for maximum oil returns. Even the types not usually associated with Wall Street, rocket science and deficit spending are glued to Bloomberg's running crude oil tickers by the minute.

The objective is the lucky strike. Peak Oil is forming a strategic fit with Peak Terrorism.
For a synoptic glimpse into the future, read this excerpt from New York Times' April 16 article headlined "Blood and Oil":

Just as things seemed to be calming down in the delta region of Nigeria after a spate of kidnappings and insurgent attacks, the militant group calling itself the Movement for the Emancipation of the Niger Delta—MEND—announced last week to all who would listen that it was planning new violence against oil facilities in the region. Apparently unconcerned about tipping its hand to the authorities, MEND even gave a date for the start of its new campaign: April 25.

That date is perfect! These guys are more financially savvy than stuffed suits who have hedged their future in a world where oil never existed. D-Day in the Niger Delta is just 72-odd hours before the UN Security Council meets to unleash a little fission over Iran's nuclear enrichment program.Crude oil at $80 per barrel on April 28? Who knows?

If a rag-tag bunch of militants in Nigeria are accurately reading the tea leaves in an oil-brimmed cup, imagine what Al Qaeda and the pan-global martyrs of terror have in store.

There is a greater lead-filled premium now for oil-related and economic targets. In a business-speak twist, collateral damage can be applied to the unlucky rejects in a fire-sale transaction.
You can bet your every last dime that terrorists are ready to throw their explosive spanners into the machineries of global trade. They know the drill. There is tremendous potential here to cause pandemonium and cross-border tensions. Targeting energy infrastructures will be far more efficacious and less opprobrious than the indiscriminate slaughter of civilians.

Why assassinate politicians or shoot a GI when mobs—deprived of their daily bread—can do more in aggregates and derivatives? In layman's terms, we are talking about riots, sit-downs, union strikes, looted stores and political mayhem. Economic targets offer the best returns with fewer risks. Stock markets will be depressed, inflation will set in, bankruptcies will proliferate, and people will starve.

The concatenation of financially-induced social upheavals has been witnessed before—across continents—during the currency crisis of the late 90s. Unless checked, wars are the inevitable culmination. There are no IMF prescriptions for dwindling oil reserves, busted pipelines and electricity blackouts.

Call this the political economy of terrorism, but apart from Iraq and Palestine, terrorists will increasingly focus on the conveyor belts of finance and trade. There is no shortage of targets for disgruntled elements worldwide. There are Maoist guerillas in Nepal, ethnic insurgents in Burma, Al Qaeda-inspired militants in Islamic nations and assorted purveyors of violence in every nook and corner where there are power plants, ports, retail stores, trading depots, factories, banks and transborder pipelines. Mundane industrial structures—particularly those connected to oil—have attained more value-added targeting than shoppers at a marketplace. A suicide bomber might as well "walk the last walk" into a minor, provincial bank than into a crowded souk. Planting midnight bombs at ATMs in a major city entails little or no bloodshed, though it may douse seasonal fire sales the next morning, not to mention the lack of change for lunch. (Ever noticed the anticipatory or frustrated month-end file of workers at ATM kiosks short on notes?)

A little inconvenience can go a long way in disrupting normal routine, and no nation can provide complete protection for these mundane cogs of human activity.

Terrorists switching to the political economy side of their trade can expect other windfalls. Destroying the perceived icons of (Western) imperialism elicit less disgust—and perhaps sympathy—than the televised butchering of individuals. Suicide bombings that shred innocent limbs at a discotheque and net relayed beheadings of infidels reek of bestiality. Why kill a Daniel Pearl when you can play Che Guevara?

But is this happening?

There were strong hints emerging since February.

The Niger Delta attacks offlined production amounting to 550,000 barrels per day, rendering the affected Royal Dutch Shell installations immobile till today. What was untouched was probably left for April 25. Almost simultaneously, violent protests in the Ecuadorian province of Napo forced state oil firm Petroecuador to halt supplies through its Trans-Ecuadorean pipeline.

Both incidents raised US crude oil futures by $1 overnight. The price has since risen by more than $10 dollars—a safe median figure used by commentators without an MSNBC or Bloomberg ticker on their offline notebooks.

In Iraq, while bombs routinely kill civilians, little has been noted of pipeline sabotages stretching from Kirkuk to Bayji to the Turkish border. Restoring normal output may take up to a year.

And that's a big hypothetical "if" with Iraq in a state of disintegration. Think of the hundreds of thousands of miles of exposed pipelines around the world, and the cumulative number of years needed to repair them. If Iraq's oil and its pipelines can energize the current sectarian war, couldn't that be replicated in places simmering with ethnic and social tensions? Expect authoritarian governments to manufacture terrorism for the perpetuation of power. If you regard the USA PATRIOT Act as draconian, you haven't seen the world yet!

Any bomb anywhere can be pinned on "terrorists" and sifting the real from the manufactured would be next to impossible with censorship laws established to prevent the transmission of coded communications. Sounds familiar?

It would pose no barrier to the Real McCoys, however. Terrorists - separated by ethnic, ideological and religious motivations but united by calculated anarchy - have learnt their economic primers on the go. It is the most potent weapon in this age of Peak Oil.

Neither the brotherhoods of anarchy nor coded messages are needed to set action time. The daily business headlines will do.

In Sync

While oil traders were still risk managing the outage from Ecuador and the Niger Delta, militants in Saudi Arabia attempted to blow up the world's largest oil processing complex in Abqaiq on Feb 24. If they had succeeded, there would have been a double digit increase in the price of crude in 48 hours. It could have also precipitated social anarchy in a land seething with repressed anger against the Al Saud monarchy. Under such a scenario, repair works at Abqaiq would be next to impossible, oil would shoot to above $100 per barrel, and a vortex of violence would spiral to engulf much of the world. Remember, society is only three meals away from anarchy.

As tensions rise by the day over Iran's nuclear enrichment program—and it's not only Iran—pipelines and economic targets are easier pickings vis à vis heavily-guarded political, military and constabulary bastions. Call this risk management on both sides. Governments will prioritize security for the levers of governance and power; terrorists will probe and prioritize valuable, less-guarded targets to trap security apparatuses in a game of musical chairs. This will leave a gap for political targets sooner or later. It's an old trick with new destructive possibilities in a world peaked of oil.

Terrorists can also conflate ideological mileage with financial aggrandizement. This was demonstrated during the days leading up to the Sept 11 attacks. Unusually heavy transactions were noted on airline stocks in the hours and days leading up to the fateful incident. The yet-to-be-proven suspects were Osama bin Laden and Al Qaeda. This gives a new twist to the maligned practice of "insider trading," and it ingeniously raises capital for further terrorist ventures. Non-ideological players like organized criminal gangs and state actors would have taken note. Each day, violent arts permeate our airwaves, are regurgitated on news clips, and are headlined on our dailies. The real dangers of terrorism can be manipulated and faked by the religious devotees of Mammon, and blame can fly in all directions.

Terrorists, after all, are the dernier cri bogeyman of our times. They can—advertently or not—create political and financial capital for powerful entities. The terrorism shill also provides a Trojan Horse for state actors to destabilize a hostile nation. In this high-octane world of dwindling mineral resources, "terrorism" might be the spark—and later a sideshow—for outright inter-state conflict. Wars are dictated by the primacy of economics, while ideologies serve to rouse the masses.

The most tindery powder keg right now is Iran. It's not just hedge fund managers and investment gurus who are bracing for the worst, or the best, depending on one's philosophy. There is money here for Armani-clad entrepreneurs and coups de grace for ski-masked individuals.

If Iran burns, or if neighboring Iraq descends further into anarchy, expect scattered strikes against oil installations, ports and power plants the world over. There will be more trouble in Nigeria and Ecuador. Hotspots will get hotter with conflicts spreading far and wide. With so much happening, renewed conflict in little-known Chad—among the five poorest nations in the world but one with a billion in crude reserves—may not blip on our media radar.

The Ides of March have passed and it has left us with bad omens for the coming months. The game of energy geopolitics is taking new turns and uncertainties, including the option of a tactical nuke attack on Iran's Natanz, Isfahan, and Bushehr complexes. If Iran gets hit, the anti-American Venezuelan President Hugo Chavez may deliberately divert oil supplies to nations like China, depriving the US of 15 per cent of its oil imports.

There are other, albeit highly unlikely, variants to this game.

Al Qaeda may bomb targets within Iran, and blame it on the United States, or it could sink a few tankers in the Straits of Hormuz and blame it on the Persians. Neither the United States nor Iran need to fight in a best-case scenario—if an extraneous culprit can be identified and a standoff reached in time. A Straits of Hormuz blocked by sunken tankers either way will immediately reduce global oil supplies by 20-25 per cent per day. Perhaps more, depending on which estimates you have been reading.

The United States, after all, has the largest strategic petroleum stockpile in the world, and its powers would be aggrandized through this energy buffer. Is that good news? Well, should US soldiers die in a Middle East artificially contrived and subverted by Britain? Cut a deal with Tehran! After all, Iran might have been a US partner today if not for Winston Churchill. The CIA only stepped in later, in 1953. The tussle started over the Anglo-Persian Oil Company, which no longer exists by that name, but the bone of contention has gone on to include tactical nukes.

Like changed names, the United Kingdom's role in global subversion has been well-masked by Uncle Sam's schoolboy misadventures.

Trust the Brits to ramp up their global terror machine again and expect Uncle Sam to receive the annual rogue superpower award. Expect a scramble for oil worldwide, providing targets of opportunities to militants, criminals, and state-sponsored terrorists. When this happens, the current national and international structures would be blown out of shape.

Within this nightmare world, ordinary folks would gladly welcome some order, or a New World Order. That plan was readied long back—lock, stock and barrel. Long before the United States of America came into being!

Welcome to the year when the artifice of civilization begins its slide into a natural state of barbarity.

http://baltimorechronicle.com/2006/042406Maavak.shtml

Gas Breaks the $3 Barrier

2006-04-22T10:12:00.000-04:00

Sacromento Bee

By Dale Kasler
April 21, 2006

Prices are near September record, with no relief near.

The dreaded $3 gallon of gas became reality across California on Thursday.

The statewide average price jumped 3 cents to $3.02 for a gallon of self-serve regular, the highest it's been since the post-Hurricane Katrina gas crisis, according to AAA. That's within 3 cents of the record set last September.

Sacramentans were paying $2.90 a gallon. Motorists were paying an average of $3.12 for self-serve regular in Santa Barbara, a record for the city and the highest among the 25 metropolitan areas surveyed daily by AAA.

Prices are expected to continue rising, although it's not clear when and where they'll peak. Oil prices have shot up because of violence in Nigeria and the possibility of war in Iran. On Thursday, after briefly hitting a record $72.49 a barrel, prices eased off after Shell announced it will resume oil production in late May at a key facility that was damaged by Katrina.

Oil closed at $71.95, down 22 cents, on the New York Mercantile Exchange.

Even with that lull in crude costs, analysts expect gas prices to keep going up for the foreseeable future. A nationwide shortage of refining capacity will put upward pressure on gas prices even if crude prices fall. Gas prices will likely peak in late spring or early summer.

Rising energy prices are making economists increasingly nervous. Last fall, when prices shot up after Katrina, economic output slowed down across the United States.

The latest spike "is certainly not a recession-making event, but it could have an effect on some industries in California," said Howard Roth, the state's chief economist.

Among them is tourism.

"Absolutely. Everything from airline fuel to Mom and Pop taking the kids on vacation," said Gary Carr of PKF Consulting, a hospitality consulting firm.

But Sean Comey, spokesman for AAA of Northern California, said he thinks tourism will hold up pretty well. While gas price spikes do prompt motorists to conserve somewhat, it's unlikely that Californians will cancel their vacation plans, he said.

"Most people, despite the high gas prices, tend to think a driving vacation is a good value," he said.

Meanwhile, farmers are feeling the effects.

"It's huge, it's absolutely huge," said Joe Martinez, a Yolo County almond farmer whose diesel fuel costs are increasing. Diesel hit $3.05 in Yolo on Thursday.

Martinez, president of the county Farm Bureau, said higher oil prices will also mean costlier fertilizer, plastic piping and other inputs. "Farmers have to eat any increased costs," he said.

http://www.sacbee.com/content/business/story/14246095p-15064038c.html

The Peak Oil Crisis: Politics After the Peak

2006-04-22T10:02:00.000-04:00

Falls Church News-Press

By Tom Whipple
April 20, 2006

There is little doubt the effects of peak oil will someday soon radically change the political landscape in America—and nearly everywhere else for that matter. It is still a little too early to say when oil depletion will start appearing in political equations. If we have a particularly bad summer as some suggest, then "gas prices" could feature prominently in our November 2006 mid-term elections. If predictions of peaking within the next couple of years are correct, then energy policy likely will be a major factor in the 2008 presidential election. If peaking slips a bit then it is almost certain that the 2012 and 2016 elections will be fought over nothing else.

From the vantage of April 2006, it would be folly to speculate on the details of elections taking place months or years from now. A new "Peak Oil Party" could emerge to lead us out of the darkness (literally) or the same old Republicans and Democrats, retooled for the post-oil era, could compete for our votes. America could emerge from a decade or two of converting to new lifestyles as a new and stronger democracy, or the demise of the oil age could be too much of a strain for our current political arrangements. However, there is a lot of recorded history around for insight and human nature being human nature, a few general observations might be in order.

One of the most disturbing things I have read recently pointed out how hard it is for people to radically change a way of life. The writer noted how in 1860 when the South was threatened by abolition, an entire generation picked up arms and marched off to endure terrible sufferings in order to protect a way of life from which few benefited directly.

Equally disturbing is how a significant portion the German middle class embraced the Nazi Party after their economic well-being was wiped out by hyperinflation.

Given the love affair that Americans, and everybody else in the world that can afford one, have with cars, giving them up is going to be the collective trauma of a lifetime. Polls tell us a vast majority of car owners say they will drive to their last dollar or until there simply is no choice.

From a political point of view, such a strong emotional and lifestyle attachment is fertile ground for demagoguery. The Congress already has summoned the oil executives to lecture them before the cameras about high gasoline prices. Various states have passed anti-price gouging bills to make it look as if they are doing something. The administration has declared an "Advanced Energy Initiative" which throws a few million dollars at a problem that will require trillions. The trivial increases in CAFÉ standards for SUVs will someday appear as laughable as battling an ocean with a sword.

We are starting to see scattered instances of peak oil tax demagoguery. At a time when government should be rapidly increasing energy taxes to slow consumption, some politicians are calling for the elimination of gas taxes so their hard-working constituents can afford to drive as they wish. At a time when gasoline prices will soon be thought of in round dollars —$3, $4, $5 gas— rather than cents, eliminating a few pennies of tax will soon be recognized as pointless.

The ultimate absurdity will be the price cap. If anyone wants to bring transportation in a country to a complete halt, simply decree that motor fuel can't be sold for more than "X." Osama Bin Laden couldn't come up with a better idea if he tried.

As some point however, the silly season will end, the body politic will come to recognize that hearings, tax cuts, price caps, and drilling in national parks are not the remedy for peak oil. Whenever that day comes, congressmen, legislators and governments will start look for real solutions: massive conservation and a transition to sustainable fuels and lifestyles. The real question then is whether this will happen soon enough to avoid causing damage that will set the transition back many years and increase the hardships. Will an administration —the current, the next or the one after that— have a change of heart mid-term, or will an election have to be fought over remedies for peak oil first?

Any poll taken today will show Americans are worried about "dependence on foreign oil" but are not yet ready for hardships, such as serious reductions in driving to achieve this goal. For an administration committed to not rocking the boat while tossing in a sea of other troubles, it probably will take a mega-development in the oil production world that quickly spikes gasoline prices into the $6-$7 range to force a change.

The bellwether for change will be the imposition of a strictly enforced nationwide 55 mph speed limit. Until such an inexpensive and effective oil conservation measure is passed, our politicians are still listening to the call of a bygone age rather than preparing us for the next.

Before the oil age comes to a complete close, let's hope someone rehabilitates Jimmy Carter as one of the most prescient Presidents ever to hold the office. Congress might even rename an airport for him— just before it is shut down forever.

http://www.fcnp.com/607/peakoil.htm

The Peak Oil Crisis: It's Time to Start Planning

2006-04-14T00:05:00.000-04:00

Falls Church News-Press

By Tom Whipple
April 13, 2006

Let's start with the completely obvious. We are no longer living in the 19th century. Seventy percent of Americans no longer live on farms as they did when the first oil well was drilled (it now is more like 2-3 percent). Very few have transportation pastured behind the house. Nor do many have a chicken coop, a wood lot, a vegetable garden or a place to hunt for food. Somewhere along the line, the 20th century with its abundance of oil got in the way of self-sufficiency and everything changed.

Very, very, few of us are, or could be, anywhere near self-sufficient in the 21st century. Oil has created a very specialized society in which the essentials of life —food, clothing, shelter— come to us through a complex social and economic chain involving thousands of people each performing specialized tasks.

The whole system sustaining our lives is bound together by oil. It is the cheap freely available oil that has allowed us to move ourselves and our goods around cheaply, quickly, and efficiently. Specialized highly efficient production has of course resulted, for many, in a golden age, a cornucopia. Take away the oil, or simply raise the price high enough, and the social/economic order starts to come apart rapidly. Then what?

The answer is obvious. We in America , and indeed in many other countries, will turn to government to organize a solution. Which government? All of them. Every level from village council to presidents and prime ministers will be overwhelmed by the need to take action. Needs will be enormous, compared to anything we have known in recent years.

If anybody doubts this assertion, just ponder for a minute, one or two of the many changes that took place during the oil age. On the average we got a lot older. There are currently about 40 million of us over 65 years old in the United States and nearly 20 million over 75. If anybody thinks the average octogenarian is going to jump on a bicycle and pedal 20 miles over to the Wal-Mart to pick up supper, they're wrong — it just won't happen. Most of us are going to need help to get through the transition to a post carbon world. Life threatening situations will abound.

In addition to the elderly, there are other problems such as the 2 million people currently locked up in some jail or prison. What's the warden or the state governor going to do when the guards can no longer afford to drive in for their shifts, the electricity goes out as part of a rolling blackout, and kitchen manager reports he can no longer get enough food delivered for three square meals a day? There are endless scenarios, but by now you should be getting the picture. By a wide margin, the peak oil crisis will be one of the biggest problems governments have had to face in the modern era.

As oil depletion sets in, we are going to see dozens, then hundreds, then thousands, and ultimately 300 million (population of the US ) new problems show up which clearly will be beyond the means of our current social/economic system. Just imagine the New Orleans flood engulfing the whole country at once to get some sort of feel for what things might be like.

Where to start? The answer to this one is easy. Governments at all levels must start planning, planning, planning for what clearly is to come — be it in five months or five years. What should they plan for? Here the details are difficult but the general concept is rather straightforward. Let’s look at state and local governments today for the federal response to peak oil is a whole other story.

Before a state or local government can help its citizens, it must first ensure that it can function. Then it must ensure it has sufficient authority and resources to do whatever is necessary in the decades when the effects of peak oil will be the worst. Although there will be endless debates over the government's role during the decades of transition to a post-oil world, I believe protecting life and maintaining civil order come first, followed by helping new economic arrangements emerge.

The number one planning objective for any level of government is to prepare for a sudden and long-lasting reduction in the availability of oil. There are presently numerous situations festering in the world ranging from giant-hurricane spawning temperatures in the Gulf of Mexico to numerous militant or terrorist organizations and governments that are working at shutting down substantial portions of the world's oil supply.

Thus plan #1 should focus on a government's ability to function. Can a government's employees get to where they are needed? Is there sufficient fuel for government vehicles? Is there enough money to pay for the fuel and likely increases in activity? What happens to tax revenue?

Then there is a question of authority. Can a government prioritize the distribution of limited fuel, or even food stocks? Can it institute rationing, conservation measures, impose fuel-saving speed limits, mandate car pools? Clearly a high priority should be given to preparing a package of emergency powers for governors and local councils.

Beyond the initial need to develop the organization to maintain life, civil order, and the distribution of vital goods and services, there will be a need for government in establishing extensive new systems of mass transit. If, as most expect, there will be very serious economic disorders, we start to raise issues of government as the employer or provider of last resort.

An argument can and will be made that the government should stay out of all this. Let prices rise and market forces alone will do the necessary allocations. There is no question that such policies would quickly devolve into widespread and unacceptable life-threatening situations comparable to evacuating yourself from the New Orleans flood without a car.

For now, planning is cheap. One day soon the implementation of these plans will be very costly.

http://www.fcnp.com/606/peakoil.htm

Oil prices likely to surge to new record highs

2006-04-14T00:04:00.000-04:00

Reuters

By Randy Fabi

LONDON - An influx of fresh fund buying and geopolitical worries will most likely push oil prices to new record highs soon, analysts said on Tuesday, while the most bullish predicted prices to eventually climb to $100 a barrel.

Supply concerns in Nigeria, Iran and other key oil-producing countries have ignited U.S. crude prices, up 13 percent this year and within $2 of the all-time record high of $70.85, reached in late August 2005 in the wake of hurricane damage in the United States.

Analysts predicted the market to rally even further as high oil prices have failed to reduce global demand.

"It is pretty clear that we can break $70 without too much problem," said Deborah White, an analyst at SG CIB Commodities in Paris.

"We have been getting a massive injection (of investment fund money) in the commodity markets. It is very clear from the price action that they haven't stopped."

Analysts said prices could peak at around $80 a barrel, a level that matches inflation-adjusted prices set after the 1979 Iranian revolution.

Twenty-seven years later, the market is again focused on the Middle East country as Tehran battles with the West over its nuclear program.

"Even without a possible Iranian oil disruption, we could go to $75 to $80 a barrel," said Olivier Jakob of Swiss-based Petromatrix, an oil analysis group.

To stay at those levels, Iran or some other major oil-producing nation would have to cut oil supplies, analysts said. This would then prompt the International Energy Agency to release emergency government reserves to keep markets from spiking even further.

Ian Henderson, fund manager at JP Morgan Fleming in London, took an even more bullish stance, saying prices would continue to climb as long as demand stayed strong.

"The ultimate deterrent for the market is when the price becomes too expensive for people to fill their tanks," he said.

"I think they will continue to carry out their travel plans even with oil prices as high as $100 a barrel. I personally wouldn't stop driving."

A POWERLESS CARTEL

Analysts agreed that OPEC, the source of more than a third of the world's oil, would be of little help in a crisis.

The cartel, which is already pumping at near-maximum capacity, has repeatedly said it wants oil between the upper $50 to lower $60 range.

"OPEC can make all the statements that they want, but they really can't do anything," Jakob said.

But some analysts warned that the market could just as easily plummet.

"The current rally is crucially linked to whether the intensity of the current news flow can be maintained, particularly given the health of fundamentals in (the second quarter)," said BNP Paribas in a research note.

The IEA has repeatedly said world markets are well-supplied and that other OPEC producers have filled the Nigerian shortfall, now at around 500,000 barrels per day.

In February, prices fell by more than $11 in about two weeks after a huge rise in U.S. fuel stocks and a slight easing of geopolitical tensions.

"The rapid fall in the oil price in the first half of February should remind the market how compelling fundamentals can also prove at times," BNP Paribas said.

http://today.reuters.com/news/articlenews.aspx?type=reutersEdge&storyid=2006-04-14T021501Z_01_SCH408042_RTRUKOC_0_US-ANALYSIS-OIL.xml

Saudi's Can't Sate World

2006-04-04T16:19:00.000-04:00

AP

By Jim Krane
April 4, 2006

The world's only oil superpower boosted output last month, starting a pair of projects that are part of a massive $55 billion endeavor to keep pace with the world's ever-intensifying thirst for oil.

But demand for the world's premiere source of energy is rising so fast, by about 2 million barrels per day each year, that even Saudi Arabia's vast resources will be unable to cope without drastic help, oil executives and analysts say.

Even Saudis, who control about a quarter of the world's known oil, are calling for relief from relentless consumption.

"The current out-of-control demand is not good for us," said Ghazi Al-Rawi, head of private equity at Gulf One Investment Bank, in a recent interview. "When you have this kind of demand, you're forced to supply beyond the optimal rate."

Most urgently needed is energy conservation, especially in the United States, which now burns up a quarter of the oil sold to the world, said Saddad al-Husseini, the former head of production at state-owned Saudi Aramco.

Also critical is the development of fuels from oil-rich sands or natural gas that can serve as substitutes for oil. Other producing countries, especially OPEC's No. 2 and 3 leaders Iran and Iraq, could ease the crunch by increasing exports to handle a greater share of the surging demand in China and India, Saudi experts said.

"We need some help," said Nawaf Obaid, a Saudi petroleum adviser with close ties to the government.

If such help doesn't materialize and Saudi Arabia maxes its output -- cranking out perhaps 35 percent more oil than it does today -- the kingdom's proven reserves might only sustain those gushing flows for a couple of decades before starting to dwindle, al-Husseini said.

Can global consumers "afford to keep increasing demand by almost 2 million barrels a day each year? Is it Saudi Arabia's role to meet that demand?" asked al-Husseini, who retired in 2004 after working 32 years in the kingdom's oil sector. "You're leading yourself to having to find an alternative source of energy very quickly."

Few analysts think oil is about to run out. But experts differ on whether the current soaring oil demand will outstrip current supplies, and how quickly.

Many blame today's tight market on 20 years of low oil prices that stifled investment in new wells, refining and exports.

Keeping prices high is the best way to meet demand in the next decade or two, said Leonardo Maugeri, an executive with the Italian energy company Eni. High prices give investors incentive to spend the billions needed to increase oil production and develop other fuels, Maugeri wrote in the current issue of Foreign Affairs.

But Maugeri also wrote that it takes six to eight years for oil from a new well to reach consumers. Developing oil sands or natural gas-based diesel fuel is even slower and more expensive.

Saudis worry that consumer demand could overwhelm the slow progress in bringing new energies to market. "If this continues, you'll have demand outstripping supply over the next five years by a wide margin," said Obaid.

Others, such as Sharif Ghalib of Energy Intelligence Research in New York, say the world's cushion of excess oil production capacity -- a safety margin that keeps a lid on prices -- is so low that demand could outstrip supplies now. All it would take is a single oil producer going off-line for any reason.

"The crunch is already here. It's not five years down the road," Ghalib said. "There is no thought being given in the U.S. to raising gasoline taxes or increasing mileage on U.S. cars. In China, automobile use is skyrocketing."

For now, Saudi Arabia is bent on meeting this demand by drilling wells and laying pipe.
In March, state-owned Saudi Aramco and Japan's Sumitomo Chemical broke ground on a $10 billion oil refinery and petrochemical plant that will be one of the world's largest when finished in 2008.

The refinery, one of two planned in the kingdom, is aimed at opening bottlenecks on delivery of refined products such as gasoline and diesel. The plant will increase Saudi Arabia's output because it can refine heavy sulfurous crude that the kingdom can't sell now.

Saudi Arabia and its partners plan to invest a further $28 billion in three more huge refineries, in China, India and Texas, Obaid said.

Also last month, Saudi Arabia began opening valves on a 300,000 barrel-per-day expansion in output from the world's largest oilfield. By summer, the full flow of the oil is planned to be under way.

These are just the latest installments of what experts describe as the world's largest oil expansion effort, which will increase Saudi Arabia's output capacity by 2009 by almost 14 percent -- from 11 million to 12.5 million barrels per day.

If demand warrants, the Petroleum Ministry could decide to invest an additional $8.5 billion in a further increase of 800,000 barrels a day by 2013, bringing sustainable capacity to 13.05 million barrels a day, Obaid said.

Ali al-Naimi, the Saudi oil minister, has said the kingdom could reach and sustain 15 million barrels per day in output if needed.

But even leaping to those frantic levels won't satisfy rising world demand for long, analysts say.
"The Saudis can't do it alone," said Ehsan Ul-Haq, chief analyst of Vienna-based energy broker PVM Oil Associates.

And pumping at 15 million barrels a day, the lifespan of Saudi's 260 billion barrels of proven oil reserves would be shortened by 30 percent, with output dwindling about two decades from now.

The kingdom has already used up 100 billion barrels. Production typically declines when a country has produced half of its reserves. That's 180 billion barrels in Saudi Arabia's case, al-Husseini said.

"If instead of reliable oil production lasting 20 years, it were to last for 40 years, then we would all be ahead," he said. "That's why there is a need to supplement conventional oil with other sources of energy."

http://www.newsobserver.com/104/story/425050.html

Key oil supply for U.S. declines

2006-03-19T23:21:00.000-05:00

Philadelphia Inquirer

By Kevin G. Hall
Inquirer Washington Bureau

MEXICO CITY - Mexico's giant Cantarell oil field, which has financed government spending here and held down U.S. gasoline prices for 20 years, is facing a production decline - a prospect that could heighten U.S. dependence on Middle East oil.

An internal report from Mexico's state-owned oil company, leaked last month, said water and natural gas were seeping into the massive offshore oil field in the southern Gulf of Mexico. That would reduce Mexican oil output and be bad news for U.S. consumers. Mexico is the second-largest supplier of oil to the United States.

The timing is especially bad because global oil supplies are tight and there's growing concern about several other important suppliers of oil to the United States. Unrest grows in Nigeria, conventional oil production is dropping in Canada, and Venezuela is taking an increasingly belligerent anti-American tone.

In his State of the Union address on Jan. 31, President Bush vowed to wean Americans from Middle East oil. But the threat of accelerated decline in Mexican oil output means other suppliers will have to pick up the slack, and the world's largest oil reserves remain in the Middle East.

Cantarell is one of the world's great oil fields; only Saudi Arabia's Ghawar field is larger. Cantarell was discovered in 1976 and has been a workhorse ever since.

"It's a super-giant field, so when you have a super giant-field declining, it's very difficult to compensate for that," said Adrian Lajous, a veteran oilman who was the director of Petroleos Mexicanos (Pemex), the state-owned oil company that operates Cantarell, from 1995 to 1999.

Cantarell's output of 2.0 million barrels per day last year accounted for about 60 percent of Mexico's output of 3.3 million barrels daily. It's been pushed hard in recent years to take advantage of high global oil prices - with production rising from 1.0 million barrels per day in 1994 to a peak of 2.1 million in 2004.

Until this year, 70.8 percent of Pemex's earnings went to Mexico's federal government.

Pemex management downplays the report about Cantarell, saying it was a low-level document whose worst-case scenarios reflected a "do-nothing curve," scenarios in which Pemex didn't respond to changing conditions.

Those worst-case outlooks suggested that by 2008, Cantarell's output could fall to barely more than 500,000 barrels per day, more than halving Mexican crude exports.

Rolando Galindo, a top Pemex financial adviser, told Knight Ridder News Service this week that Pemex won't let that happen. "We are not sitting on our hands," he said during an interview in Pemex's huge glass building, which towers over the hemisphere's largest metropolis.

In a conference call for investors Thursday, Pemex's production manager, Carlos Morales, lowered Cantarell's production outlook to 1.9 million barrels per day this year, a 6 percent decline, and said production would be 1.4 million barrels per day by 2008. That's a return to 2000 production levels.

Mexican President Vicente Fox announced on Wednesday that Pemex would spend $37.5 billion over the next two decades to develop the Chicontepec oil field in southern Veracruz and Puebla states. The field, estimated to contain 18 billion barrels of crude, produces 26,000 barrels per day but could produce as many as 1 million a day within eight years, Fox said.

The saving grace for Mexican oil output, and the U.S. consumers who depend on it, is that much may still be undiscovered.

"In Mexico, just 13 percent of explorable territory has been explored," said Sergio Rosado, the associate director in Mexico City for Cambridge Energy Research Associates, a global oil consultancy. "There are many areas to develop."

But Pemex's Galindo, like many outside experts, thinks the era of easy, cheaply produced oil in Mexico appears to be over.

"With the decline of Cantarell, Pemex will no longer be Cantarell. For many years, we depended almost 100 percent, or in great measure, on Cantarell," Galindo said. "Now Pemex will have to work fields, not super-giant fields like Cantarell, but... more complex fields. Our operations will have to become more efficient because these are fields that cannot absorb inefficiencies like Cantarell at one time could."

Pemex: At a Glance
Petroleos Mexicanos is the state-owned oil company that operates the Cantarell field.
Nationalized:March 18, 1938.
Business:Oil and natural gas exploration, refining and marketing.
Employees: 138,000.*
Reserves:16 billion barrels of oil, 14.8 trillion cubic feet of natural gas.
Competitors: Exxon Mobil, Petroleos de Venezuela, Royal Dutch Shell.
Net Losses:
2002: $2.9 billion.
2003: $3.6 billion.
2004: $2.3 billion.
2005: $3.8 billion.
*As of December 2004

http://www.philly.com/mld/inquirer/business/14127352.htm

CNN Airs Peak Oil Special

2006-03-19T23:17:00.000-05:00

Here is a synopsis of what aired on CNN on 3/19.

http://www.cnn.com/2006/EDUCATION/
03/14/cnnpce.we.were.warned/

Oil shortage threatens military

2006-03-19T23:12:00.000-05:00

U.S. News & World Report

By Marianne Lavelle
Posted 3/15/06

A grim view of the nation's energy future, and its implications for the military, emerges in a just released report by the U.S. Army Corps of Engineers.

"The days of inexpensive, convenient, abundant energy sources are quickly drawing to a close," says the report, titled "Energy Trends and Their Implications for U.S. Army Installations." It concludes that at the current rate of consumption and production decline, the lifetime of proven domestic oil reserves is only 3.4 years. It projects the lifetime of proven worldwide oil reserves at 41 years, but with declining availability, noting that Saudi Arabia – home to the bulk of those reserves – has not increased production in three years.

The report was completed in September but was not released publicly until a request was made earlier this week by Rep. Roscoe Bartlett, a Maryland Republican who has made several speeches in recent months warning that the world is in the grip of "peak oil" – a time of declining production and rapidly escalating prices. The theory is highly controversial, and the oil industry maintains that there are abundant untapped resources, although admittedly more expensive to develop than has historically been the case. In a speech on the House floor Tuesday night, Bartlett quoted extensively from the report.

"The Army operates in a domestic and world energy situation that is highly uncertain," the report says. Even its outlook on nuclear energy, a key component of Bush administration policy, is not positive. "Our current throwaway nuclear cycle will consume the world reserve of low-cost uranium in about 20 years," the report says.

The researchers conclude that the military needs to take major steps to increase energy efficiency, make a "massive expansion" in renewable energy purchases, and move toward a vast increase in renewable distributed generation, including photovoltaic, solar thermal, microturbines, and biomass energy sources.

http://www.usnews.com/usnews/news/articles/060315/15natsec.htm

The Peak Oil Crisi: Rationing by Price

2006-03-11T09:24:00.000-05:00

Falls Church News-Press

By Tom Whipple
March 9, 2006

http://www.fcnp.com/601/peakoil.htm

'Peak Oil" Perplexities Test the Nerves of Major Oil Companies

2006-02-28T22:38:00.000-05:00

Resource Investor

By Adam Porter
February 28, 2006

http://www.resourceinvestor.com/pebble.asp?relid=17479

The Power of Community: How Cuba Survived Peak Oil

2006-02-26T17:36:00.000-05:00

February 24, 2006

http://www.globalpublicmedia.com/articles/657

The Peak Oil Crisis: State of the Union

2006-02-14T13:48:00.000-05:00

Falls Church News-Press

February 9, 2006

The "addicted to oil" section of President Bush's State of the Union address was surely added as an afterthought. As the draft was being staffed around the White House, a senior reviewer must have noted it still needed some more drama or a new initiative that would be universally popular. Another staffer, who must have been aware that rapidly rising gasoline prices were not good for the President's next popularity poll, suggested energy. So back to the speechwriters for a little more work.

First a headline-grabbing lead-in was necessary, so " America is addicted to oil" was born or perhaps borrowed. It already has become an instant classic right, up there with "War on Terror" as a slogan with staying power.

Then a new program was needed. After a couple of false starts, all must have agreed that "Advanced Energy Initiative" had a nice ring to it. Finally there was the problem of what to put in an "Advanced Energy Initiative." For an administration whose energy policy has consisted mostly of tax cuts and trying to convince the Congress to allow drilling in places where drilling wasn't allowed, this was somewhat of a problem.

Calls were made and energy specialists were surely summoned to the offices of the speechwriters. After some discussion it was determined that renewable, alternative forms of energy is what should go into the "Advanced Energy Initiative." First, however, the speechwriters needed to establish the President's bona fides as an alternative fuel kind of guy. This was done by having the President point out that since coming into office, his administration has spent $10 billion on developing alternative forms of energy. Thanks to the President's foresight, we are now on the threshold of "incredible advances." True or not, $10 billion resulting in incredible advances has a nice ring.

Then came the time to describe the actual initiative which consists of a 22 percent increase in funding for clean energy research; zero emission coal fired plants, solar, wind and nuclear energy for our homes, and biomass based ethanol for our motors, and better batteries for our electric cars.

The most attention-grabbing proposal was for the commercial production of cellulose-derived ethanol within six years. This came as such a surprise, that after the speech numerous pundits were forced to ask each other "just what is switchgrass?"

The energy section ended with a pair of applause lines. "This initiative will enable the US to reduce its oil imports from the Middle East by 75 percent in 20 years," .. "and make our dependence on Middle Eastern oil a thing of the past."

That this part of the address was not adequately staffed around the government became obvious the next morning when the President's Energy Secretary and Economic advisor placed a conference call to reporters to tell them that the President had not really meant what he said. The US will indeed be dependent on Middle Eastern oil for a long time to come.

What does it all mean?

At the top of the importance list comes the admission that we have a problem. Granted, the President did not come out and say we are getting close to the end of cheap oil, but by using the word "addiction," he dropped a big hint we may just have a big problem. This is indeed good news, for admitting the existence of a problem is the first step to solving it.

After having made the key point, however, the logic of the presentation went down hill. There was no notion that our oil addiction is an urgent problem requiring a crash mobilization of resources. The only date mentioned was 2025 as a year in which we won't be using so much Middle Eastern oil.

Anybody who has been following the peak oil discussion knows that by 2025 there is unlikely to be much affordable oil available from the Middle East or anywhere else for that matter. Considering the present course of US-Middle East relations, it is an open question of whether they will still be willing or able to sell oil to us in 2025 even if they are still exporting.

The second glaring absence in the speech was any discussion of energy conservation. The President said flat out "the best way to break this addiction is through technology." Now anyone following this knows that technology is not going to substitute for America 's 21 million barrels a day addiction anytime soon. Only massive conservation of every form of energy can get the US , and the rest of the industrialized world, through the next 50 years

There is nothing intrinsically wrong with the “Advanced Energy Initiative” itself. Wind, wave, solar, better batteries, and biomass-derived ethanol are all good ideas whose day will come— the quicker, the better. To imply, however, that by spending a couple hundred million dollars more to develop some promising technologies will solve the addiction problem is simply understating the problem by a whole lot.

The President and his administration are simply off the mark by several orders of magnitude as to the amount of money, time, and collective effort it will take to get us through the transition from the oil age to whatever follows intact.

http://www.fcnp.com/549/peakoil.htm

Peak Oil and the Sorry State of the Union

2006-02-14T13:41:00.000-05:00

Men's News Daily (CA)

By Byron King
February 11, 2006

In his State of the Union speech, President Bush said, "America is addicted to oil," and set a goal of replacing 75 percent of the nation's Mideast oil imports by 2025 with ethanol and other energy sources.

Who is he kidding?

Saudi's Ghawar field is close to being in irreversible decline. The Saudis are only managing to maintain current oil production volumes by virtue of a massive seawater injection program that pumps more than seven million barrels of salt water per day into its oil fields. This pumping helps to maintain production pressures in the oil reservoirs, but is also the source of formation damage due to the presence of oxygen and bacteria in the seawater. By 2025, Saudi will still export oil, but far less oil than now and each tanker will be of such value as to require its own armed escort.

United States Peak Oil: Iran and Iraq

Iran is not quite at its production peak, but within 20 years, even the most optimistic estimates forecast that Iran will cease to be a net oil exporter. (This may also have something to do with Iran's desire to develop a nuclear program.)

And Iraq? By 2025, Iraq may be an oil exporter, not to mention an eastern province of Iran. But considering the looming and inevitable decline in daily world oil production, who will be able to afford whatever gets exported? (Hint, do you speak Chinese?)

The point is, on the other side of Peak Oil, the United States will be fortunate to receive any oil at all from the Mideast, let alone the Bush goal of only 25% of current (or forecasted) imports. The planners, who are connecting the dots of the past, and mechanistically extrapolating out into the future with no allowance for Peak Oil, are living in a fantasyland. They are planning, if anything, for the failure of the American economy and the attendant decline of American civilization.

Still, our Mr. President raised the subject. To recall an old phrase: "What does the President know, and when did he know it?" If G.W. Bush is onboard with Peak Oil, he failed to bring up the subject with specificity in his State of the Union speech and give the concept the publicity and credibility that such a speech would merit. Then again, maybe the president saw the movie A Few Good Men. Maybe he is imitating Jack Nicholson's character, a colonel in the Marines, who said, "You want the truth? You can't handle the truth." Maybe, to Mr. Bush's way of thinking, he is just doing the best that he can.

There are people who plan for the long term. There are Japanese companies with 100-year business plans. Can anyone predict what the world will be like in 100 years? No. But these companies, reputedly, intend to be around when the next century rolls over. One way or the other. It might be the founder's great grandchildren, but they will be around. As the saying goes, "It's not the plan, it is the planning." (This is a famous quote from General Eisenhower that is painted on the wall of every staff college of the U.S. military.)

United States Peak Oil: Strategy

Strategic planning, operational planning, tactical planning...they all have their place in this world. It is not that things will follow exactly the plan. It is that you have at least planned something and thought things through. You have identified your challenge. You have considered your "desired end state," and determined which pathways might get you there. There are many roads from which to choose, so ya gotta choose. What are you going to do? You need to marry-up your resources to your action plan. What do you need in order to accomplish your mission? You need to identify what you need, and how you are going to get it. And you have to consider the alternatives along the way.

You need to think in terms of "what if this?" and "what if that?" And then you act, starting tomorrow morning, knowing full well that the next day, some freaking damn thing will occur to screw you all up. But at least you have a plan for this as well. And whoever has the better plan, the United States, China, Russia, the European Union, or the Bolivians...they are going to be left standing at the end of the day.

Few things in this world are more scripted than a U.S. President’s State of the Union address. By comparison, the Oscars are a little-old-lady Bingo game down at the fire hall. The entire resources of the U.S. federal government are at the disposal of Herr POTUS. If el Presidente says "X," then the next day there are small armies of federal employees power-pointing "X." If el Pres. says "Y" in the SOTU address, then...you get the picture.

The U.S. Navy, for example, has a 50-year plan. Why? It is because we are building ships with a useful life of 50 years. What will the world look like in 50 years? Beats me; beats anybody. But I bet that you will see U.S. Navy nuclear-powered aircraft carriers floating on the waters of the world. The Navy is inventing its own future, Congress permitting and appropriating. They are designing berthing compartments and kitchen sinks, not to mention nuclear reactors and gear reduction systems and catapult systems, for sailors who will not be born for another 25 years. And when the time comes, these young lads & lassies will be sleeping and washing up, and sailing and shooting airplanes, off of something that some guy designed at a drafting table in Newport News, like, maybe, yesterday.

United States Peak Oil: Reduction of Dependence

Yes, we have been hearing this "We will have to reduce our dependence on foreign oil" B.S. for 30 years. And for 30 years, it was easier to let the daily oil markets dictate that the nation did not have to get serious. What were we going to do, put a $4.00-per-gallon tax on gasoline and kill the driving-based economy? Sorry, guys. Democracy gave you Hamas in Palestine, and Ahmadinejad in Iran, right? Well it also has given cheap gas in the United States for the past century. It was fun while it lasted. Now, Mother Nature is at the door, telling you that it's payback time. Uh-oh.

So, we had our $8.00-per-barrel oil in the 1980s, and our $10.00-per-barrel oil as recently as 1999. We sprawled all over the land, from sea to shining sea, paving over the amber waves of grain, running condos up the sides of purple mountains, and laying out housing tracts where the deer and the antelope used to play. We choke the land with Interstates from the Redwood Forests to the Gulf Stream Waters. This land was made for you and me, huh?

And we plugged a hell of a lot of stripper wells along the way, too. So long to those marginal barrels, at three or five units per day, times 100,000 wells.

Now we see and hear G.W. Bush, who is pals with Matt Simmons and Richard Rainwater (ahem...), saying we are going to reduce out oil imports from the Mideast by 75% in the next 20 years. We never heard Herr Clinton say that...did you? Or if he did, he was just trying to pick up some cute girl, sitting in the front row wearing a wet T-shirt that said "No Blood For Oil" (Whatever works, right Slick?). Considering the reality of Peak Oil, G.W. Bush's statement is a freaking no-brainer. Finally ("Hallelujah!!"), the Bush Administration gets it right, even if it may well be for all of the wrong reasons.

Wisdom may come late, but it seldom never arrives.

Then again, maybe Bush is talking alternative energy for the right reasons, but sometimes a president just can't tell people what is going on. Why did the United States decide, almost overnight, to implement the Safeguard Antiballistic Missile System in late 1968 and early 1969? Did it have anything to do with Soviet submarine K-129, and its abortive nuclear strike at Pearl Harbor? Do you think that President Johnson or President Nixon could have come out and said, "Hey, we almost got nuked on March 8, 1968, by some Red Star Rogue (hey, catchy title...), so we need an ABM system.” Sorry, there are some factual secrets that you just have to keep.

This applies to motive as well. Why alternative energy? Why now? Hmmm. The gears are turning, slowly maybe. But they are turning. I can hear the medulla oblongata, grinding away in the Oval Office. "I cannot really say 'Peak Oil.' The only people who know what it is are a bunch of too-smart people at the margins. Besides, whatever I say, it won't be enough for them. And I have to talk to the center. And we all know how stupid they are out there in the center.

“The lumpenproles in Florida cannot even push a stick through a piece of paper on election day. Do I want to lay the Peak Oil gig on them? It will be panic-city. What will happen to the stock markets if the masses wake up and realize that their 401(k) funds are invested in utter trash, in an economy whose long-term business model is just plain busted.

“Besides, we have 60 Minutes peddling all that crap about how the Alberta tar sands are our salvation. People are confused, and I cannot hold school for the entire freaking country during a one-hour SOTU speech. So, I will say as much as I can get away with, and not get myself assassinated by the...well, I'm not supposed to even think about those people."

Something is going on. Something big.

Byron King
The Daily Reckoning

P.S. Not all nations suffer equally in the event of a crude crisis. Since the United States accounts for roughly 25% of the oil being consumed, even a minor shortfall in the production and distribution of oil around the globe portends disproportionate economic downsides here in America... For all but a few knowledgeable investors, that is. Discover how you can stay informed and ahead of the upcoming "Petrocalypse."Oil ApocalypseByron King currently serves as an attorney in Pittsburgh, Pennsylvania. He received his Juris Doctor from the University of Pittsburgh School of Law in 1981 and is a cum laude graduate of Harvard University. He is a regular contributor to the free e-letter, Whiskey and Gunpowder, which covers resources, oil, geopolitics, military history, geology and personal freedom. To get your free subscription, visit Whiskey and Gunpowder.

http://mensnewsdaily.com/blog/money/2006/02/peak-oil-and-sorry-state-of-union.html

What Peak Oil Means to Every American

2006-02-06T06:54:00.000-05:00

http://www.tidepool.org/original_content.cfm?articleid=184962

By Tom Udall
February 2, 2006

The Peak Oil Crisis: Iran

2006-01-29T19:11:00.000-05:00

Falls Church-News Press

By Tom Whipple
January 26, 2006

The world moves quickly these days. Since the New Year, oil has risen by more than $7 per barrel and currently is in sight of the all-time high of $70 a barrel. Cold weather in Eastern Europe and threats of supply disruptions from Nigeria and Iran are raising the possibility of an economy-threatening spike in oil prices later this year.

How high would oil prices have to go to before serious economic consequences begin? From our experience in 2005, we know $3 a gallon gasoline won't do it. Gasoline consumption in the US actually increased a bit during the past year despite much higher prices and numerous lengthy supply interruptions caused by the various hurricanes.

Each of us has a personal gas price at which we start to curtail our non-essential driving and a higher price at which our non-emergency driving comes to close to stopping. Most of us have no idea just where these prices might be for we have never had to think about the issue before. Gasoline has always been so cheap, few have had to worry.

There are, of course, numerous variables that would go into a drive/no drive decision: the fuel efficiency of your vehicle, the length and frequency of your trips, the importance to you of your trips, how much disposable income or credit you have, and can you pass some or all of the fuel cost on to somebody else.

After adjusting the previous high of $1.80 a gallon for inflation, several observers have come up with the estimate that it will take somewhere around $6-7 per gallon to force major reductions gasoline consumption in the US and thereby cut into the economic activity that goes with discretionary driving.

At the minute, the most serious of the several threats facing the world's oil supply is clearly the Iranian situation. Iran 's leadership is determined to start a uranium enrichment program. Tehran claims it is for electric power, but the US and Europe say "nuclear weapons." To make matters worse, nearly every major world power (and numerous minor ones) has a finger in the Iran pie either as an actual or potential customer for Iranian oil, or as a friend or foe of Tehran . As with so many previous mid-east confrontations, this situation is rife with possibilities for miscalculation.

The important new factor in this crisis, however, is the lack of much spare oil production capacity anywhere in the world. There certainly is not enough to offset the 2.4 million barrels a day Iran is currently exporting. Thus, for the first time we are seeing the threat of a completely new kind of economic embargo called "who gets hurt the worst"— the world economy, or the one embargoed.

Both sides are aware of this situation with Tehran threatening to send world oil prices to over $100 per barrel if anyone interferes with their enrichment program. The US spokesmen seem to be saying that we must pay any economic price to keep the Iranians from nuclear weapons. At this point it is impossible to say how this multi-facetted situation will play out. Both sides seem determined.

From a peak oil point of view, however, stoppage of Iranian exports either by formal UN embargo (unlikely) or by Tehran 's retaliatory or preemptive cutting of exports (more likely) would be a seminal event.

Oil prices obviously would be driven higher. Whether they get to the "serious damage" level is hard to say because so many factors go into shaping the price of oil. A complete stoppage of the 2.4 million barrels a day would of course be a real problem, while a token stoppage would only provoke a short-lived spike.

The length of the stoppage would be important. A token stoppage would mean little, while a complete 2.4 million barrels a day stoppage lasting for years would trigger much unpleasantness.

Given that we are very close to peak oil, it is quite possible a major stoppage of Iranian exports could play a significant part in the actual event. Several years from now, when studying the history of world oil production, it just might be possible to point to the day when Iranian oil exports ceased to flow and say "Yes, that was the exact day of peak oil."

http://www.fcnp.com/547/peakoil.htm

Osama's Secret Weapon

2006-01-29T19:03:00.000-05:00

www.energybulletin.net

By Neal Brandvik
January 26, 2006

Several times a year Osama Bin Laden emerges from seclusion to taunt America. There is always a quiet confidence about him as he proclaims that victory for Islam and God over America is inevitable. In addition to promising more attacks on us, Osama says he is patient and willing to wait for our demise as long as it takes. Is he crazy? Where does he get the idea that a group of rag tag thugs who live in caves is going to defeat the greatest superpower nation in history? After all, as horrendous as the 9-11attacks were, our economy rebounded quickly.

To find out where Osama gets his mojo, go to your computer and Google “Peak Oil.” One of the websites that will come up is www.lifeaftertheoilcrash.net . This meticulously documented site is authored by Matt Savinar, a recent law school graduate. It begins with the statement: “Dear Reader, civilization as we know it is about to come to an end.” Mr. Savinar is not referring to Osama’s vision of civilization but our modern, petroleum based civilization that Dick Cheney refers to as “The American Way of Life” that is not negotiable according to Mr. Cheney.

I’m betting Osama has visited this site and read it thoroughly. He’s smug and confident about the demise of America because he knows you will dismiss Mr. Savinar as a “chicken little” or “environmentalist wacko.” If you decide to defy Osama and read Mr. Savinar’s website carefully, you’ll find out many of the folks warning us about Peak Oil are very rational and conservative. One is Republican Congressman Roscoe Bartlett who has quoted the ominous warnings from www.lifeaftertheoilcrash.net and read them into the congressional record during several Peak Oil speeches in Congress. Another is Mathew Simmons, an energy investment banker and member of Dick Cheney’s Energy Task Force. Need more reason to take Peak Oil seriously? How about the CEO of Chevron Texaco who started a marketing campaign to address the challenges of Peak Oil with their website www.willyoujoinus.com .

Bin Laden’s strategy is clear. He learned from another Muslim – Muhammed Ali – in his fight with George Foreman. Remember the rope-a-dope? While we exhaust our resources “taking the fight to the terrorists” instead of massively investing in alternative energy, Osama’s army will grow because Arabs know our military presence in the Middle East is all about the oil. The world knows this except for Americans, especially Iraqis who chased the British out of Iraq during the 1920s for doing the same thing. As global oil depletion squeezes the American economy, Osama’s troops will continue to assault our “Way of Life” by bombing pipelines and killing oil workers. Unfortunately, in the long run there aren’t enough tax dollars and willing young Americans to protect the Middle East’s vast oil infrastructure. Since 60% of the oil remaining on the planet is in Muslim countries, Osama’s minions never have to go far to make increasingly scarce, expensive oil more scarce and more expensive.

Geography, geology and time are on Osama’s side not ours. The Peak Oil wolf is at our door and he knows it. Osama also knows we won’t confront our petroleum demon any time soon. No politician who is interested in keeping his or her job will stop the continual building, maintaining and accessorizing of suburban sprawl that makes us utterly dependent on cheap oil. The Bush Administration can’t talk about Peak Oil because acknowledging it makes America’s oil grab in Iraq look obvious to all. They know killing for a resource that will run out some day is not palatable to a Christian nation. So Bush and Bin Laden have one thing in common. They don’t want you to know about Osama’s secret weapon -- Peak Oil.

How can you wipe the smirk off Osama’s face? Send this link to every politician and community leader you can think of: www.projectcensored.org/newsflash/the_hirsch_report.pdf . The Hirsch Report was commissioned by the U.S. Department of Energy. Its conclusion challenges the notion that the free market will solve Peak Oil.

“The world has never faced a problem like Peak Oil. Without massive mitigation more than a decade before the fact, the problem will be pervasive and will not be temporary. Previous energy transitions (wood to coal and coal to oil) were gradual and evolutionary; oil peaking will be abrupt and revolutionary”

Make sure you DEMAND action other than continual war in the Middle East!

http://www.energybulletin.net/12328.html

World about to hit down-side of peak oil curve

2006-01-29T18:58:00.000-05:00

Sarasota Herald-Tribune

Letter to the editor
January 29, 2006

Regarding drilling for oil in the Gulf:

Petroleum geologists tell us that 95 percent of the world's oil has been discovered. U.S. production peaked in 1970; world oil production will peak this year or maybe in five years, depending on one's source. With demand continuing to rise, we are well on our way to global inflation, which would be followed by a depression.

Drilling for the last dregs of a dwindling resource is not a solution.

We have access to an incredible energy supply that will never stop: wind power. This environmentally friendly source is in sufficient supply to provide electrical needs for the entire country. Surplus power can manufacture hydrogen for portable usage. Ethanol from corn, cane and other grains, along with soy biodiesel, can fuel autos. The biofuels all burn clean and do not make hydrocarbons like petroleum does.

Tax incentives and other governmental programs should be focused on weaning ourselves from the petroleum addiction. This would improve the air and water and stop greenhouse gas emissions. This would also lesson the need to meddle in the affairs of Mideastern countries. We should save the few untapped oil reserves for future generations.

David Emmerling

Sarasota

http://www.heraldtribune.com/apps/pbcs.dll/article?AID=/20060129/OPINION/601290816/1029

Bracing the world for the day when the oil runs out

2006-01-18T10:43:00.000-05:00

The Independent (UK)

By Michael Harrison
January 18, 2006

As the oil price nudged above $64 a barrel yesterday on heightened concerns about disruption to supplies from Iran and Nigeria, a small group of geologists, economists and commodity traders was meeting in London to consider a more fundamental question: when will the world begin to run out of oil?

That moment is known as "peak oil" - the point at which production stops increasing and goes into inexorable decline. Some commentators believe that moment may be as little as two years away, some reckon we do not need to worry for another 20 years and some think the peak of production is so far in the distance that it is pointless to even try to put a timescale on it.

But one thing that all shades of opinion are agreed on is that when peak oil does happen, its impact on the world economy - and the consumer lifestyles so many of us take for granted - will be profound. Chris Skrebowski, the editor of the Energy Institute's Petroleum Review, believes peak oil will occur in 2008, at which point the world will move into "a land without maps where we are all likely to be poorer".

For oil is essential to almost everything we do - 90 per cent of world transport is oil-dependent; all petrochemicals are produced from oil; 99 per cent of our food relies on oil in some way, either to grow it or get the produce to market; and 95 per cent of lubricants are oil-based. And, in many cases, oil is not easily replaceable. There are no realistic alternatives to oil for fuelling aircraft and ships, producing petrochemicals or powering cars, without massive investments in technology such as hydrogen.

Given that world oil consumption has doubled since 1970 from 42 million barrels a day to 84 million, that poses a stark challenge. At present rates of depletion, 5 million barrels a day of new production will need to be brought on stream for the next 10 years just to keep world output rising.

The peak oil debate tends to divide into two camps. On the one hand there are geologists who argue it is almost upon us or shortly will be, based on analysing past production and discovery rates and field exhaustion and extrapolating into the future. On the other there are economists, political scientists and the oil majors who believe that oil producers - be they governments or companies - will always find a way to meet demand, whether through cleverer ways of finding and extracting oil or greater fiscal incentives to discover and produce more.

Yesterday's conference in London, organised by the Dutch investment bank Insinger de Beaufort, represented both strands of opinion. Mr Skrebowski says that the world's big five oil majors all produced less in 2005 than they did in 2004, while North Sea oil production is declining so rapidly that it will halve in the next seven years.

According to the University of Reading's Dr Roger Bentley, the secretary of the Association for the Study of Peak Oil & Gas, the evidence is irrefutable. He points out that 64 of the world's 100 or so oil-producing countries are already past the point of peak production and on the downward slope. Although there may be a "mini-glut" as output is stepped up from Russia, the Caspian and Iraq and new sources come on stream such as deepwater oil and oilsands, the trend, he says is unmistakable. Dr Bentley believes that non-Opec production will reach a peak within the next 30 months while global output will start to decline between 2010 and 2015 or 2020 at the latest depending on the contribution from non-conventional sources such as oilsands. "Alongside global warming, this is one of the two extraordinary challenges facing mankind," he says. "The numbers may slip a little but the fundamental underlying direction does not change."

Dr Jeremy Leggett, an oil industry geologist turned environmental campaigner turned chief executive of a solar energy company, paints an even more apocalyptic scene. He believes that peak oil will occur some time this decade. That will not only produce "horrible economic pain" as oil prices rise to choke off demand but it will also precipitate environmental disaster as oil-consuming countries switch to coal and hasten global warming. "The shortfall between current expectations of oil supply and actual availability will be such that neither gas, nor renewables, nor liquids from gas and coal, nor nuclear, nor any combination thereof will be able to plug the gap in time to head off economic trauma," he warns.

What is his evidence? Dr Leggett points to the lessons of history. In 1956, a world-renowned geologist, M K Hubbert, predicted that US oil production would peak in 1971, much to the disbelief of almost everyone, including his employer Shell. He turned out to be wrong - peak production occurred a year earlier in 1970. Using the same methodology, the "Hubbert curve" falls smoothly to this day, pointing to a peak sometime between 2005 and 2010. Despite the ingenuity of the oil industry in extracting oil from ever more hostile environments, it is, adds Dr Leggett, a quarter of a century since the world discovered more oil in one year than it produced. In 2000 there were 16 discoveries of giant fields containing 500 million barrels or more - in 2003 there were none.

Not all those attending yesterday's conference are sold on the idea of peak oil. Mike Lynch, an adviser to the US government who runs his own energy and economic research consultancy, is one of the biggest sceptics. He says that the study of peak oil is not a science and that those who advocate it are guilty of naiveté, ignorance and plain manipulation of the data. "There are a lot of zealots out there and a lot of claims are made which are not tested," he says. "It is true that oil is finite but since 1989 people have repeatedly predicted the peak too soon and have had to keep on increasing their estimate of reserves. Just because a country's output has peaked and gone into decline, it doesn't mean that production can't rise again." He cites the example of the fall in North Sea production in the 1980s which supporters of peak oil attributed to geological factors but which was, in fact, due to more stringent safety measures after the Piper Alpha fire.

Mr Lynch is one of the few pundits who forecasts that oil prices will begin to ease, but as even he jokes: "I have predicted nine of the last two price decreases."

http://news.independent.co.uk/business/
analysis_and_features/article339347.ece

Will We Have Enough Oil and Natural Gas?

2006-01-10T19:09:00.000-05:00

Energy Pulse (CO)

By Ronald R. Cooke
January 10, 2005

http://www.energypulse.net/centers/article/article_display.cfm?a_id=1179

The Peak Oil Crisis: New Years 2006

2006-01-07T00:15:00.000-05:00

Falls Church News-Press

January 5, 2006

It's a good time to review -- looking backwards at what we learned in 2005 and forward at what might be in store for 2006.

During the past year, the average price of oil increased 33 percent almost matching the 34 percent increase of 2004. If one wants to think of peak oil just as steadily increasing prices, then we are clearly on our way. Since 2001, oil prices have nearly tripled.

The most memorable feature of 2005 from the peak oil perspective was the pair of powerful hurricanes that smashed into the Gulf oil facilities, momentarily sending oil to over $70 per barrel, and causing extensive damage to Gulf oil production and refining facilities that has still not been fully repaired

Among the noteworthy features of the storms however was how little they seemed to have harmed the US economy. Obviously a lot of people were directly affected by the destruction of one major and numerous smaller cities and towns. However, by moving quickly, the government was able to import, and withdraw from the national reserves, enough crude and refined products to forestall shortages. For now, the US economy gives every appearance of continuing to grow and most observers are forecasting further growth in 2006. From the peak oil perspective, however, this "good news" means more demand for oil in the year ahead and still higher prices coming sooner rather than later.

America , however, is slowly coming to the realization that high energy prices are here to stay. In their annual end-of-year-review, the general consensus among Wall Street analysts was the energy situation has indeed tightened and $30-40 oil is unlikely to be seen again. Even governments are starting to perceive a problem is ahead. A peak oil caucus has been formed in the US House of Representatives and the administration has asked the National Petroleum Council to look into the future availability of "affordable" oil. In December, the Swedish government, in a bold step, publicly acknowledged that peak oil is indeed imminent and formed a commission to study how the country can eliminate the use of fossil fuels by 2020.

In retrospect, those following the peak oil situation are coming to appreciate that 2004 was the watershed year in the history of petroleum production. That was the year worldwide demand grew by 2.8 million barrels a day (3.5%), nearly double the usual annual growth of 1.8 percent. This unprecedented surge, largely occasioned by increased demand from China , nearly eliminated any spare capacity in worldwide oil production. From then on, supply and demand has been precariously balanced so that sudden increases in demand or supply interruptions are likely to result in significantly higher prices.

Understanding of the peak oil phenomenon and the forces governing what is about to about to happen also improved during the past year. The idea that "proven reserves," shale oil, tar sands, or arctic oil, has much, if anything, to do with the peaking of world oil production is now rejected by objective analysts.

The reason is simple. World oil production is now so massive —84 million barrels a day (30 billion barrels a year)— that new sources of oil simply are not being discovered and brought into production fast and cheaply enough to make any difference. The ability to maintain the size of the current flow, and the availability of the resources to do so, is all that counts.

The concept of "accessible" oil reserves is coming into the literature. Accessible reserves are those that can be brought into production soon enough so they can increase or help stem declines in current production, and cheap enough so users can afford them. Discussions about significantly increasing world production by spending trillions of dollars on new exploration and production efforts are sounding less and less realistic in a situation in which we may be only months away from peak production.

What, then, is likely to happen in 2006?

It is clear that if we have not already arrived at peak oil, then we have at least entered the run-up to the final peak. This year is certain to start with increasing demand for oil. Current world daily consumption of circa 84 million barrels a day (the exact number is always murky) is forecast to increase by about 1.7 million barrels during 2006. Nearly every detached analyst who has looked at the balance between production from new projects and the likely rate that production from existing fields will decline has concluded, at best, the worldwide oil production can grow for another four or five years.

When you throw in the idea that we live in a turbulent world —hurricanes, wars, political instability, etc.— the odds of worldwide oil production being able to meet any annual increase in worldwide demand of 1.8 percent much beyond the next 2-3 years are not very good.

As demand must drop to meet available supply, we will have rationing by price, unless government steps in to ration or cap prices— then we will have shortages. There is little doubt oil prices in coming years will be marked by unprecedented volatility. In the last six months we have seen the price of gasoline in the US spike to over $3 per gallon, retreat to around $2, and then start climbing again. It seems likely that swings of this magnitude and frequency will become the norm as the world undergoes the most important paradigm shift in the last 500 years.

Because of the many uncertainties involved, forecasts as to the future price of oil and gas are all over the map. Eternally optimistic Wall Street and government analysts see prices pretty much the same for the next year or so. Other serious observers are talking of oil being over $200 per barrel within a few years, either because Saudi Arabia has gone into depletion or serious disruptions to our supplies have occurred.

One thing we have leaned in the last year is that $60-65 per barrel oil is still deemed affordable by most American consumers. In retrospect, the September spike to $65-70 didn't really curb demand for gasoline and diesel fuel in America although, as Detroit has learned, it didn't do much for sales of large gas-guzzling cars. Many observers believe the demand for gasoline will hold firm until we hit $6-7 per gallon and then we might see a significant modification in driving habits. Beyond that, traffic jams and the economic activity that goes with them will be reduced dramatically.

When will we see $6-7 dollar gasoline? In the unlikely situation nothing untoward happens, than it could be around the end of the decade. However, given the likelihood something really bad will happen —an assassination, coup, a civil war, hurricane, major cold snap— then the real troubles could start at any time.

http://www.fcnp.com/544/peakoil.htm

Peak Oil and the End of Empire

2006-01-04T16:00:00.000-05:00

www.opednews.com

By Charles Sullivan
January 3, 2006

Peak oil is most likely a term most readers have not heard before. That is about to change. The concept is slowly making its way onto the mainstream stage. It is intruding into the fringes of the public conscience and soon it may occupy the greater part. When that time comes, as it inevitably will, and probably sooner than you think, the world as we know it will end.

Oil is the lifeblood not only of the U.S. economy—especially its terrible military capability—it is in a very literal sense what drives the global economy. Even small declines in oil extraction (oil is not produced—it is extracted), have created major ripples in the global economy. Remember the gas shortages and rationing that occurred during the Carter Administration during the late 1970s?

All of the oil that exists is the product of complex ecological processes: the decomposition of prehistoric plants and animals over eons of time. There will never be any more oil than there is now. There will only be less; and eventually there will be none. Peak oil refers to the time when the rate of extraction from a specific location (or the whole world) is at a maximum. Beyond the peak of extraction follows a steady and continuous decline. In the U.S. peak oil was reached in the early seventies of the last century. Since that time extraction of all U.S. oil reserves has been steadily declining, while demand has gradually increased. As more of the world becomes industrialized and taps into the world’s oil pipeline, the more rapidly it is depleted. Once it’s gone, it’s gone. There will never be any more.

The world’s largest known oil reserves are in the Middle East--specifically, beneath the desert sands of Saudi Arabia. Other significant reserves exist in Africa, Venezuela, Asia, and Siberia and in lesser amounts scattered across the planet. According to the world’s most highly regarded geologists, physicists and investment bankers, those reserves are much smaller than originally thought. Much of what remains is of poor quality, difficult to extract and very expensive to refine. Globally, world peak oil may have occurred as early as the year 2000. By the year 2020 global population will have nearly doubled; and ever more underdeveloped countries will come online. It should be obvious to any sane person that worldwide demand for oil is severely outpacing supply. For every ten barrels of oil used, only four barrels are being extracted and refined to replace them.

Peak oil is a concept that is well understood by most governments. The end of cheap oil means the collapse not only of the U.S. economy but also the global economy. Alarm over peak oil is almost certainly the hidden reason that the U.S. invaded Iraq. It is the reason we are building fourteen permanent military bases in that country. The U.S. has no intentions of ever leaving Iraq as long as one drop of our precious oil lies beneath their sand. How our oil got beneath their sand must have some cryptogamous connection to the ideology of manifest destiny that has driven this nation to unthinkable crimes against nature and humanity. It is the basis for World War Three, which we may already have initiated with the U.S. occupation of Iraq. Widespread resource wars will be the very predictable result of the rush to extract the world’s last remaining and dwindling oil reserves.

Peak oil is almost certainly the underlying cause for the events of 9/11. The American people are not being told the truth. There is a high probability that Oil men in high places of the U.S. government orchestrated those events in order to get the American People behind the invasion of first Afghanistan, then Iraq; and probably Iran, Syria or North Korea will be next. Dick Cheney appears to be a likely suspect, perhaps with the aid of Poppy Bush and his CIA connections. They intend to get average American’s used to the idea of war that will not end in our lifetimes. The age of cheap oil is nearing an end and the financiers of war and empire are scared stiff. They will do anything to have access to the last dregs of oil that can be sucked out of the earth, no matter which nations sit atop them. The second largest reserves of oil happen to lie beneath Iraq. The U.S. connections to the House of Saud are too well documented to warrant discussion here.

Those who run America’s shadow government, a coalition of the world’s wealthiest and most powerful people; including the Carlyle Group and the Bilderbergers, know that we are addicted to oil, especially cheap oil. The entire financial infrastructure of the U.S. Empire and its global holdings, including its satellite terrorist state, Israel, is on the verge of collapse. Those in power are secretly panic stricken. America’s unequalled military firepower is utterly dependent on the life blood of cheap oil to keep the machinery of run amok capitalism running. Given the atrocities that the U.S. is inflicting with impunity around the world, there will be hell to pay when that advantage is lost. Like an addict hooked on Cocaine, those in power will do anything to get one more fix, cost what it will. We are in for a rude awakening.

We must wake up to what kind of people we are dealing with. This government is not only more criminal and corrupt than we imagine—it is more criminal and illicit than we can imagine. Bush and company make the mafia look like boy scouts. Let me try to convey some idea of what I mean. The collection of thugs and criminals now running the country are the greatest and most dangerous organized crime syndicate in the world. And they possess the greatest arsenal of weapons, many of them nuclear, that the world has ever seen. They have an unparalleled propensity for violence. They are not who you think they are; and they are not doing what you think they are doing.

As world citizens we must come to our senses and cast off the intoxicating lies we have been told about America’s domestic and foreign policies. We have built a self delusional culture of mindless consumption of goods and services based upon the exploitation of working class people and raw materials by the ruling elite. It is in their interest, not ours’, that the myths of America as a democracy, as world emancipator of the oppressed were created. They are mere folklore and powerful delusions that are based upon lies and deceit in order to serve the purposes of empire; to keep the poor in servitude to the rich and powerful. They were created so that we can bear to live with ourselves. We are the slaves of modern capitalism in all its horrible incarnations. Like Frankenstein, we helped to create this monster and unleashed it upon the world. We therefore bear the responsibility for bringing it under control and making it accountable to the world.

It has been said that the truth will set us free. If so, and I believe it will, it would behoove us to come to an honest reckoning with the history we have chosen as a nation to create. Any truth is better than make believe.

Charles Sullivan is a furniture maker, photographer, and free lance writer residing in the eastern panhandle of West Virgina. He welcomes your comments at earthdog@highstream.net

http://www.opednews.com/articles/
opedne_charles__060103_peak_oil_and_the_end.htm

Udall, Congressmen call for energy transition

2006-01-03T22:23:00.000-05:00

Los Alamos Monitor

By Roger Snodgrass
January 3, 2006

Eight congressmen, including Rep. Tom Udall, D-NM, formed a bi-partisan caucus in the House of Representatives to call attention to what they and many others believe is a looming global problem, known as Peak Oil. Udall said the group grew out of talks he was having with a colleague, Rep. Roscoe Bartlett, R-Md, when they decided to team up and see what they could accomplish.

Udall spoke by phone from a cloakroom in the House, between roll call votes at the end of the first session of congress. "Los Alamos and Sandia and the other national laboratories have a key role and are playing it now," he said. "If we made the decision to really galvanize and commit resources, there would be a much larger role."In testimony before the House Energy and Air Quality Subcommittee on Dec. 7, Udall participated in a panel organized by the caucus. In his prepared statement he emphasized the importance of taking "a bold new approach to our energy supplies," inspired by major feats of the past.

"In response to great challenges and inevitable threats, we pooled our resources and ingenuity to build an atomic bomb in just a few years and put a man on the moon in a decade," he said. "We must do this again."Last spring, in one of those speeches on the House floor that is carried live on late-night C-SPAN, Bartlett laid out the elements of the Peak Oil scenario and planted the seed for the new caucus.

The term Peak Oil, he recalled, was coined by M. King Hubbert, a scientist who worked for Shell Oil, and who had studied trends in oil field supplies during the 1940s and 50s. Hubbert noticed that oil field supplies followed a reliable curve. When they reached their maximum volume, about half the oil had been extracted from a given field.Applying this formula, Hubbert accurately predicted in 1956 that the U.S. would reach its Peak Oil point in 1970, according to his proponents.With many books and articles now published on the subject, Peak Oil has become a catchphrase that encompasses a host of oil-related issues, including tight energy supplies, rising gas prices, fuel efficiency strategies, foreign oil dependency and alternative energy sources.

Energy efficiencies are making their way into the national agenda and Udall said he found pluses and minuses in the national energy policy act that was finally signed into law in early August 2005, after repeated failures."You could make an argument that there are a few things in there that would help us move toward a cleaner energy economy," he said.

"But the largesse was about $80 billion, that went mostly to the established energy conglomerates that run our energy show now."In a recent report on long-term energy outlook, "A View to 2030," the oil giant ExxonMobile acknowledged that North America has exceeded the half-way point of its oil supply. But the company estimates total discovered and undiscovered, conventional and unconventional oil resources at 4 trillion barrels, and contended that nearly every other region in the world retains more oil in the ground than it has produced.The Energy Information Agency in the Department of Energy, like ExxonMobile, expressed confidence in December that the oil supplies would be adequate.In an energy outlook projection for 2006 that looks forward to 2030, the EIA reported that it has revised last year's estimates upward by 37 percent. World prices, they said, have risen because of strong growth in developing countries and China and then, later in the year, because of "disruptions and inadequate investment to meet demand growth.

"After reviewing the new landscape, EIA increased its estimate by $21 a barrel for 2030 to an average cost per barrel of $56.97.Current oil costs are hovering around $60 per barrel, slightly above that on Thursday and slightly below on Friday for a barrel of benchmark crude for February delivery. That's about $3 more than the government's estimated price for 25 years from now.Another expert witness at the Peak Oil hearing was Robert Esser, director of Global Oil and Gas Resources, a private research and consulting firm that provides continuing assessment of future oil supplies.In a text of his remarks, he warned that the planet is consuming 30 billion barrels of oil a year of its finite resources."It is true that total annual global production has not been replaced by exploration success in recent years," he testified, but noted that exploration together with production upgrades more than compensated for oil produced during the eight years from 1995-2003.

"We still do not have an exact estimate of total reserves," he said, which makes it hard to accurately time Peak Oil. "Rather than an imminent peak, we see an undulating plateau, two to four decades away.""A global problem has to be dealt with by a global approach, whether it's 5, 10, 15 years in the future, or already upon us," said Udall. "I see the issue as being one of political will. I don't know that we have the will today to tackle this."

http://www.lamonitor.com/articles
/2006/01/01/headline_news/news05.txt

The Peak Oil Crisis: Growing Our Fuels

2005-12-30T22:49:00.000-05:00

Falls Church News-Press

December 29, 2005

It is time to revisit the question of using biomass as the feedstock for our liquid fuels, as it is looking more and more like we will have few other choices.

While converting coal to liquid fuels is possible and obviously popular in coal producing states, there are limits on how far coal can go to replace oil as a source for liquid fuels. If coal consumption increases rapidly to meet the need for liquid fuels, then our estimated 250-year supply would quickly turn into a 50-year supply and we would be back where we started. Converting one fossil fuel into another may be a reasonable short-term transition strategy, but it is not going help our grandchildren.

Before going further, it needs to be pointed out that, at present, there seems to be no way growing fuel can make up for the 325 billion gallons of petroleum products the US uses each year.

Even if we take the most optimistic projections, that the US can produce 1.5 billion tons of biomass (plant and other organic material that can be converted into ethanol) per year, and assume we can process 100 gallons of ethanol out of each ton, we only come up with 150 billon gallons of liquid fuel per year.

Even if we take the most optimistic projections, that the US can produce 1.5 billion tons of biomass (plant and other organic material that can be converted into ethanol) per year, and assume we can process 100 gallons of ethanol out of each ton, we only come up with 150 billon gallons of liquid fuel per year.

Therefore, there is simply no alternative to massive conservation efforts both in the short and long run. The US can no longer be a consumer of 21+ million barrels of oil per day— especially with our natural gas supplies showing signs of running low.

Many are skeptical we can ever grow a significant portion of our fuel needs, as biomass currently is contributing only about three percent of US energy consumption. However, recent studies and research breakthroughs offer hope.

Last spring, a joint study prepared by the US Departments of Energy and Agriculture concluded the country could remove some 370 million dry tons of biomass from our forests each year and could grow an additional billion tons of biomass on agricultural land on a sustainable basis. If this proves to be the case, it appears the raw biomass would not be a problem.

How might a large scale biomass-to-fuels industry work? First, growing and processing biomass is going to be a local industry compared to the way our oil companies currently work. Hauling millions of tons of grass or tree branches across the country to large centralized processing plants will not work because you would use a large portion of the fuel you are trying to make hauling the raw material to a distant processing plant. Thus, growing and processing biomass into fuel is going to be a cottage industry with hundreds or thousands of small to medium sized processing plants scattered all over our rural areas.

Perceptive readers will start to see why the big oil companies, who are used to oil fields yielding millions or even billions of barrels, can't get too excited about building thousands of mini-refineries in rural counties and arranging for the biomass feedstock to be grown by thousands of farmers.

The product from processing biomass into fuel would be either biodiesel or ethanol. Neither of these products is new. They currently are widely sold in Midwestern states as a way of using up the oversupply of corn and soybeans the US has been producing in recent decades. Urban readers might not be aware that average corn yields in the US have gone up from 20 bushels per acre in the 1930s to over 160 bushels per acre today and are projected to increase to over 200— if our fertilizer production holds out in the face of natural gas shortages.

During the current era of cheap oil, converting surplus grains to fuel is primarily a way to help US agriculture by increasing the demand for its products even if it takes a government subsidy. The fact corn based ethanol is taking nearly as much energy to produce as it is yielding is not particularly relevant.

All that is about to change. As the price of conventional liquid fuels increases above the cost of producing biomass into fuel, the demand for ethanol made from crops quickly will surge to undreamed of proportions. The issue of "we have to eat too," of course, will put a limit on the portion of our food crops that can be turned into motor fuel

Without going too deeply into the chemistry of converting plants to fuel, biomass has edible components (starch, food oils, and protein) and non-edible components (lignin, hemicellulose, and cellulose). While there still appears to be some room for growth in converting edible biomass (soybeans, corn, rapeseed) to fuel, the real jackpot will come from the non-edible components, called lignocellulosic biomass.

There currently are four ways of converting lignocellulosic biomass into the ethanol that can be used in an internal combustion engine. They all work at laboratory scale and, as yet, it is too early to tell which technology will be the most cost effective when scaled to industrial quantities. The various conversion techniques are said to yield from 60 to 130 gallons of ethanol per ton of biomass feedstock. There is currently a pilot conversion plant working up in Canada .

One of the more promising sources of grown-for-fuel biomass is a native American plant called switchgrass. This grass, which can grow up to nine feet tall, is a perennial requiring low inputs of fertilizer, yet yields 5-8 tons per acre. At 65 gallons of ethanol per ton, each acre could produce about 425 gallons per year. Right now, the cost of growing and converting switchgrass to ethanol can't quite compete with gasoline even at $2.25 per gallon, but when the price of oil moves higher than locally produced ethanol, it will become very attractive.

For those concerned with global warming, it should be noted that biomass based fuels are "carbon neutral." That means the carbon released when ethanol or biodiesel are burned was recently absorbed from the air as the plant was growing. Thus, there is no net addition of carbon to the atmosphere as there is from burning fossil fuels whose carbon was absorbed from the atmosphere eons ago.

The last point to consider is how we can start producing and consuming biomass for fuel prior to the advent of very expensive gasoline. The trouble is it will take many years or decades to get a nationwide biomass-based ethanol industry going. Establishing a good stand of switchgrass can take three growing seasons and a lot of work.

One early step might be to require a small percentage of switchgrass be added to the fuel in coal-fired power plants. This would not only reduce emissions from the power plant but would establish a market for switchgrass prior to the construction of lignocellulosic processing plants.

The bright spot in all this is that American agriculture, which has been suffering from low agricultural prices wrought by 60 years of heavy fertilization and pesticides application, now has much better prospects. The arrival of peak oil, coupled with the developing shortages of natural gas and the consequent demand for coal, will leave biomass as the least costly source for transportation fuels. Farmers as well as the environment will certainly do better.

The sooner we can get started on this new paradigm, the better for us all.

http://www.fcnp.com/543/peakoil.htm

Oil Market Analysts Issue Dire Warnings

2005-12-29T17:35:00.000-05:00

IPS

By Humberto Marquez
December 29, 2005

CARACAS, Dec 29 (IPS) - While this year's record high oil prices are unlikely to come down in the near future, analysts are warning the world's traditional and emerging economic powers to curb consumption, saying that at the current rate, proven reserves will only meet demand up to 2030

"The current model (of consumption) is suicidal," Venezuelan Energy Minister Rafael Ramírez recently told journalists. "The United States, for example, will use up its oil reserves in 10 years, and after that it will go after its rivers, lakes and forests."

This month, Democratic Party lawmakers in the U.S. Senate narrowly blocked a Republican-led bill that would have allowed drilling for oil in Alaska's Arctic National Wildlife Refuge, which has an estimated 10 billion barrels in reserves.

The United States devours one out of four of the 84 million barrels of oil consumed daily around the world, and one out of two litres of gasoline.

But the emerging powers are steadily closing the consumption gap. In India, less than 200,000 new cars were sold annually two decades ago, compared to 802,000 in 2004.

"Since oil began to be drilled in 1859, the world has consumed 900 billion barrels - nearly half of the planet's reserves (according to an oil industry expert quoted by the Wall Street Journal), which means we'll have oil for another 50 years at the most," said Francisco Mieres, a professor of postgraduate studies on the oil economy at Venezuela's Central University.

But because consumption is increasing every year, driven by economic growth rates like those of China - which have ranged between seven and 11 percent a year - "oil will perhaps only last until 2030, even including reserves like Alaska's and the Athabasca tar sands" in Alberta, Canada, Mieres told IPS.

That long-term outlook will also be affected by more immediate political factors, "like the difficulties faced by the United States in the Middle East, rebellious governments like those of Venezuela and (the future administration of leftist president-elect Evo Morales in) Bolivia, or the radicalisation of Iran's leadership," he added.

On the economic front, Mieres said these developments would discourage investment by large corporations.

He also mentioned the competition between China, India and other emerging powers to get their hands on the available oil resources, and the real or expected decline in deposits in the North Sea, the Caspian Sea, Mexico or Siberia in Russia.

"The era of cheap oil is over," is a phrase repeated over and over by experts like Ramírez, Mieres or Colin Campbell, the founder of the Association for the Study of Peak Oil & Gas (ASPO).

U.S. benchmark West Texas Intermediate (WTI) soared to 70.85 dollars per barrel on Aug. 30, when Hurricane Katrina devastated New Orleans and much of the U.S. Gulf Coast oil-producing region.

The Organisation of Petroleum Exporting Countries (OPEC) basket of crudes averaged 50 dollars a barrel this year, bringing the members of the oil cartel more than 500 billion dollars in revenues. By comparison, the average price stood at 36 dollars a barrel in 2004, and 28 dollars in 2003.

And the year is coming to an end with international oil prices ranging between 50 and 60 dollars a barrel.

Nevertheless, the late January OPEC ministerial meeting "should decide to reduce output to keep prices from dropping," said Ramírez.

The members of OPEC - Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela - pump a combined total of 30 million barrels a day.

And OPEC president Sheikh Ahmad al-Fahd al-Sabah visited Moscow this week to persuade Russia, the world's second biggest oil producer after Saudi Arabia - it produces nine million barrels a day - to cooperate with the cartel, in order to avoid flooding the market.

OPEC, according to al-Sabah, would be willing to withdraw up to two million barrels a day from the market if springtime is warm as forecast, which would lead to a drop in demand in the second quarter of 2006.

But Ramírez asserted that "the responsibility for supplies and prices cannot only fall on the shoulders of producers."

"Importer countries, whether industrialised or emerging economies, should rationalise consumption," he argued.

In addition, "the burden of internal taxes is overwhelming," he said. "In Europe, for example, taxes account for 70 percent of the final price for energy paid by consumers."

Venezuelan Foreign Minister Alí Rodríguez, a former OPEC secretary-general, said that "in this respect, France is more of an 'oil country' than those of the Persian Gulf, because the French state obtains more revenues from oil than the countries in that region."

And in small countries like those of Central America, whose oil bill has doubled over the past three years to nearly five billion dollars a year, one out of every three dollars paid by consumers in gas stations goes to taxes.

Ramírez also stated that "the markets cannot be stabilised if political instability is provoked in producer countries, because that gives rise to high costs and uncertainty." He pointed to the U.S. invasion of Iraq, and the George W. Bush administration's pressure on Iran and open hostility towards the Venezuelan government of Hugo Chávez.

This year, international oil relations shifted after the Chávez administration reached cooperation agreements based on oil supplies. Mexico also took steps in that direction.

Chávez launched Petrocaribe, an alliance under which Venezuela will provide 198,000 barrels a day of oil to 13 Caribbean nations, with financing for up to 40 percent of the bill. In addition, Caracas will accept payment in the form of products or services.

Mexico, meanwhile, reached an agreement with its Central American neighbours to build a new refinery and gas pipeline in that region.

Since 1980, Venezuela and Mexico, Latin America's biggest oil producers, have sold 160,000 barrels a day, divided in equal parts, to nations in Central America and the Caribbean on preferential terms, with financing for up to 20 percent of the total cost, under the San José Pact.

But the Pact has sometimes faced difficulties in implementation because the beneficiaries must in exchange purchase products from Mexico and Venezuela.

Caracas also promoted the creation of Petrosur, based on alliances among South American nations that began with supplies of heating oil and fuel oil to Argentina, to be paid for with agricultural and manufactured goods, as well as a contract with shipyards in Argentina to manufacture and repair vessels for Venezuela's oil fleet.

Paraguay and Uruguay will also receive Venezuelan oil shipments under terms similar to those offered through Petrocaribe. In addition, the state-owned oil companies Petróleos de Venezuela (PDVSA) and Brazil's Petrobras signed agreements and will begin construction of a refinery in northeastern Brazil.

Furthermore, Venezuela set aside deposits in the southestern Faja del Orinoco - considered the world's biggest reserve of extra heavy crude oil, with 230 billion barrels - for joint ventures with state-owned firms from Argentina, Brazil and Uruguay.

South American countries also foresee the construction of a gas pipeline running from Venezuela's Caribbean coast to the Río de la Plata (River Plate, located between Argentina and Uruguay). The project will involve Bolivia, whose president-elect, Morales, is a political ally of Chávez and other left-leaning leaders in the region.

Even Colombia, which is governed by right-wing President Alvaro Uribe, has entered into an association with Venezuela to build a binational oil pipeline connecting Venezuela's oilfields with the Pacific coast.

Oil producers Ecuador and Peru, and Chile, an oil importer, have also expressed interest in taking part in the new energy integration schemes, which differ from the traditional commercial relations of the past.

The need to ensure supplies of energy, which will soon become scarce, in a context of sustained high prices, has fuelled the new forms of cooperation that have been emerging in the developing South.

China, which will purchase 5.4 million barrels of Venezuelan oil this month, hopes to receive a total of 300,000 barrels a day from this country starting in 2006, and has explored with OPEC the possibility of long-term cooperation mechanisms. (END/2005)

http://www.ipsnews.net/news.asp?idnews=31610

Syriana: Hollywood's Oil Flick

2005-12-27T10:47:00.000-05:00

Toward Freedom (VT)

By Rob Williams
December 27, 2005

Director Stephen Gaghan’s gripping new film "Syriana" explores the roots of 21st century civilization’s biggest dilemma: Peak Oil. Inexpensive fossil fuels – oil and natural gas – have floated both the corporate-controlled global economy and U.S. imperial planetary hegemony for the past several decades. Now, the party is over, as "elephant" fields like Kuwait’s Burgan are peaking, oil companies are maintaining sagging portfolios by buying up other companies’ reserves (real and fictitious). The world is beginning to grasp the significance of living without immediate and inexpensive access to one of the 20th century’s most vital resources.

Perhaps "Syriana’s" biggest weakness (if one can call it that) is that Gaghan doesn’t pander to his audience. Instead, he seamlessly stitches together a complex and fast-moving narrative that tracks more than a dozen characters on four continents, assuming we know more about the way the world really works than we might.

To fully appreciate "Syriana’s" storyline, it’s important to understand that the world currently consumes 80 million barrels of oil a day, with the globe’s richest and most powerful empire (that’s the U.S.) burning up 20 million of those barrels. Understand, further, that the United States reached "peak oil" (maximum domestic production capacity) in 1970, when it produced 10 million barrels of oil a day. Now, as U.S. supply dwindles, the country currently produce only 5 million domestic barrels a day (while consuming 20 million, remember), for a yearly consumption total of 7 billion barrels, while possessing only 28 billion barrels in strategic reserves. That leaves fifteen million barrels of oil the U.S. needs each day that we can’t produce ourselves. If oil-producing nations (say Iran or Venezuela) cut the U.S. off tomorrow, we’d have only four years of oil and natural gas left.

Rather than give the oil-producing nations of the world that kind of power, U.S. based energy corporations (the fictional Connex and Killan corporations, who merge in "Syriana) and the U.S. government (now essentially the same entity, with Team Bush/Cheney/Condi/ Wolfy/Rummy running DC) have worked tirelessly during the past few decades to secure control over the world’s remaining fossil fuel reserves.

Make no mistake – under cover of a post-911 "war on terror," the U.S. government is waging a sequential struggle to control the planet’s known remaining oil and natural gas reserves - Afghanistan and Iraq are but stepping stones to increased U.S. geo-strategic control over the greater Middle East.

The C.I.A., represented in "Syriana" by George Clooney’s Bob Barnes, an agent who moves from true believer to angry skeptic, exists primarily to do the unpleasant but necessary work of funding Wall Street bankers and fueling U.S. imperial expansion by employing a wide variety of tools to ensure that the right deals are made by the right governments: drug smuggling, money laundering, weapons smuggling, election skullduggery, and assassination. Access and control of oil reserves is integral to their mission, as "Syriana" suggests.

And, as "Syriana" makes plain throughout the story, energy corporations and the U.S. government are doing this, not just to make huge profits, but to perpetuate the current oil-lubricated American way of life for as long as possible. Many of us may pay lip service to opposing Team Bush/Exxon/ Cheney/ Halliburton’s plans, but as long as we refuse to make a radical energy shift, we are complicit in this whole exercise. Without being heavy-handed or preachy, Gaghan reminds us of this in subtle ways throughout the film.

And, lest we get too cranky with ourselves, other powerful nations (China, with an economy exploding at an annual 10% rate, takes center stage in "Syriana") are desperately looking for fuel, and the often-corrupt patriarchal emirs of Middle Eastern oil-producing nations are happy to sell, especially if it means enriching their own pockets and building their own palaces as part of the bargain. And what if a more enlightened desert despot (Iran’s Prince Nasir in "Syriana) wishes to sell his country’s black gold to the highest bidder (say, China) to make possible a more democratic, tolerant and prosperous society for his own people? Declare him a terrorist ("communist" or "socialist" are so retro) and eliminate him.

"Everything is connected," reads "Syrian’s" tag line. Indeed it is. We also meet energy trader Bryan Woodman (Matt Damon), who ends up backing Nasir’s efforts to nationalize his country’s energy fields; Iranian and displaced oil worker-turned fundamentalist/terrorist Wasim Khan; investigative lawyer Bennett Holiday (Jeffrey Wright) and a host of other characters whose lives converge in one of the most provocative and true-to-life stories of our time.

"Syriana" is probably the closest Hollywood will ever come to presenting on honest picture of our Peak Oil dilemma. Don’t miss it.

http://towardfreedom.com/home/content/view/712/

Oil Majors Pumping Cash into Reinvention of Image

2005-12-25T10:34:00.000-05:00

Times Online, UK

By Carl Mortished
December 24, 2005

IT’S energy without carbon emissions — almost — and BP is spending a mint telling us all about it.

BP is advertising its proposal to build a novel power plant in Scotland that will extract hydrogen from natural gas and use it to make electricity while it stuffs the residual carbon dioxide down an old North Sea oil well.

Carbon sequestration could cut 90 per cent of carbon dioxide emissions, BP claims, a figure that adorns a multimillion-dollar advertising campaign with the catch-line: “This time what we don’t produce is more important.”

What BP does not produce, it does not yet produce because Peterhead is still on the drawing board. There is an added cost in separating hydrogen from natural gas, so the project needs a subsidy and talks with the Government continue. Vivienne Cox, BP’s head of gas and renewables, says: “The project needs support.”

Could that explain why Peterhead features prominently in British ads? Might it encourage Gordon Brown, the Chancellor, to give such clever schemes a bit of a boost?

The BP image campaign kicked off at the end of November with the launch of BP Alternative Energy, a unit that will eventually house Peterhead as well as BP’s solar cell and nascent wind power businesses. However, a commitment to spend $8 billion (£4.6 billion) on renewables over the next decade was not enough to sway the Chancellor who a week later raised the tax on North Sea oil profits.

If not aimed at hard-nosed finance ministers, at whom are the ads addressed and what are they really saying?

One purpose is to stand out from the herd. In 2000 BP rebranded itself with the sunburst logo and tag-line “Beyond Petroleum”, aligning itself with consumer concern about green issues. BP was then ridiculed. Evironmentalists derided its “greenwash” and even Fortune magazine jeered: “Here’s a novel advertising strategy. Pitch your least important products and ignore your most important one.”

Five years later BP is having another go and investors are probably not the audience. Jon Rigby, an oil analyst at UBS, the investment bank, admits to being puzzled. “I am not sure how the campaign will help win over global investment institutions. I can’t work out why they are highlighting a relatively small part of their business,” he says.

BP is not alone in addressing issues that challenge its core activity. Chevron’s “Will you join us?” campaign broaches the sensitive subject of dwindling oil reserves in ads featuring letters signed by David O’Reilly, Chevron’s chairman. “It took us 125 years to use the first trillion barrels of oil. We’ll use the next trillion in 30,” he writes.

Matt Simmons, founder of Simmons & Co, the energy investment bank, is an internal critic of the oil industry, questioning the assumption that oil and gas output will carry on rising to meet demand. He doubts, however, that Chevron is a convert to the “peak oil” school of analysis, suggesting, instead, that the energy majors have been rattled by hurricanes, the apparent weakness of some oil infrastructure and a gathering political storm over oil profits. The massive flow of cash into dividends and share buybacks has become politically embarrassing, Simmons reckons.

“David O’Reilly is probably one of the most politically astute men in the oil industry. Chevron has joined a committee to decide what peak oil is about and he has got a lot of praise over it.”
Shell’s first wave of ads, after protests over the Brent Spar and troubles in Nigeria, highlighted environmental issues but recent imagery appears less overtly political. Employees — geologists, scientists and the captain of a liquefied natural gas vessel — talk about their job, what it means to them and what they feel about energy issues. It is an attempt to make human and approachable what to many appears big and frightening.

BP insists that its new campaign is brand building, not a tactical manoeuvre. David Welch, BP’s head of marketing, says: “It is a long-term effort to make people understand the full breadth of what we do.”

It might sound disingenuous but it is probably true. Simmons, a lifetime supporter of the oil industry, despairs of oil’s image problem. “One reason it is so disliked is it has never been able to project a human face,” he says, criticising the industry’s weak public relations response to the hurricane disasters.

Rigby wishes big oil was less apologetic. “They are central to the well-being of the global economy. They should be proud of that.”

Perhaps it is because the old certainties are gone and big oil is puzzled about its future that the story is garbled. Perhaps the strange advertising is an early warning, beamed this time from Houston: “World, we have a problem.”

http://business.timesonline.co.uk/article/0,,9072-1958220,00.html

The Peak Oil Crisis: Sliding Down the Flagpole

2005-12-23T10:28:00.000-05:00

Fallls Church News-Press

December 22, 2005

Last week the US Department of Energy released the preliminary version of its Annual Energy Outlook 2006. This document, which projects supply, consumption, and prices for all forms of energy; is the official US government position on what energy resources will be available and at what cost, five, 10, 20, and even 25 years in the future.

For many years, making these annual projections was a rather straightforward exercise. There was plenty of coal, oil, and gas available, so all the forecasters had to do was project a sensible rate for GDP growth, mix in some energy efficiency gains, add a bit of inflation and out came a reasonable set of projections of what the future US energy consumption and prices might look like.

In recent years however, the traditional approach has started to come apart. Can anybody who follows the issue really imagine a product as valuable and as much in demand as oil dropping from its current $60 per barrel to $33 per barrel 20 years from now? Can anyone remotely familiar with the current oil situation really expect world production to increase smoothly from the current 84 million barrels a day (b/d) to 121 million b/d in 2025?

A few seconds with a calculator shows that, until last week, the US government was projecting world oil production will rise from the current 31 billion barrels per year to 44 billion barrels per year in 2025. This says the world would consume some 760 billion barrels during the next 20 years. This is not a serious projection. It will never happen. Most believe there are only about a trillion barrels of conventional oil left and know it is becoming increasingly difficult and expensive to produce.

In the new report, however, the first glimmerings of a change of position regarding the future of oil are starting to appear. The Energy Information Administration (EIA) projections are nowhere near reality as yet, but then these things take time.

Oil is now projected to cost an inflation adjusted $54.08 per barrel in 2025 vs. last year’s estimate of $32.95. This projected increase is to come amidst continued prosperity in the United State and Europe and continued rapid growth of the Chinese and Indian economies. Considering the price of oil is currently bouncing around $60 per barrel, has recently been up to $70, and many are talking of spikes beyond $100, $54.08 twenty years from now sounds rather conservative, if not quaint.

The EIA has reduced its estimate of world oil production in 2025 to some 111 million b/d vs. 121 million in last year’s projection. OPEC is now supposed to reach 44 million barrels per day in 2025 vs. the 55 million projected for 2025 last year. Non-OPEC production is now supposed to increase from the 52 million b/d to 67 million in 2025.

To be fair to the EIA, the estimates cited above are from the “reference case” assuming there are no policy changes and that nothing really bad (or good) happens to change the “normal” growth in oil production.

The interesting part of this story, however, is not that the EIA has started to back off from the very high production projections (and therefore low prices) they have been making. It is the rationale for doing so that is of note.

First we can dismiss the idea that peak oil will have anything to do with the major reduction in the projected world production 20-25 years from now. The Associated Press quotes the EIA Administrator as saying “the oil is there” when asked about suggestions that perhaps world oil production was peaking. To drive home the point, one of the Administrator’s press conference PowerPoints boldly asserts that the reassessment of long-term prices is “Not due to ‘Peak Oil’ considerations”. So there!

It seems the EIA reassessment, however, is based on the realization that the OPEC nations simply are not going to make the massive investments necessary to increase oil production by the amount the EIA had been projecting. There is also the notion the major oil producers are making so much money from increasing prices they don’t really need to increase production to keep making more and more.

Then there are “impediments” to investment -- unfriendly governments, insurgencies, environmental concerns -- and the incredibly high cost of producing oil from remote places such as the arctic or thousands of feet under the sea. All this adds up to the bottom line judgment that the world probably won’t be producing quite as much oil as previously estimated.

Is this reduction in estimated world production going to cause much pain? It seems not, for the EIA is projecting per capita energy use in the US will stay about the same and energy use per dollar of real GDP will drop to about half the current rate. Thus while US oil consumption will continue to grow to 27.6 million b/d by 2030, vs. 21.6 million today, there is no crisis in the foreseeable future. Domestic oil production will remain about the same so imports will continue to grow modestly

All in all the EIA projects a rosy future for energy supplies. Natural gas will come from greatly increased imports of LNG and prices will drop to a reasonable $4-5 per thousand cubic feet, and peak usage won’t occur until 2025.

It sounds great unless of course, it is a house of cards. The same PowerPoint bullet that asserts that the EIA’s reassessment is “not due to ‘Peak Oil’ considerations” goes on to say, “we are following this issue closely.”

So there you have it, the US Government officially is not yet ready to say that “Peak Oil” will have an impact in the next 25-30 years, but they now willing to admit in public that they are watching it closely. A new threshold has been crossed on the way to reality.

http://www.fcnp.com/542/peakoil.htm

Viewpoint: We are facing a severe survival test

2005-12-21T16:39:00.000-05:00

Rock River Times

By Joe Baker
December 21, 2005

This is the winter of our discontent and also of our discomfort. Our wake up call has arrived. U.S. News, in a recent article analyzing the energy outlook, predicts the next several months will test our survival skills to the maximum.

Peak Oil and Gas are beginning to weigh upon us. Experts in the energy field have been saying for months that natural gas will be our biggest problem this winter, and we are seeing its cost heading for the moon as supplies tighten up.

Some look at the prices at the gasoline pump and believe it all is a matter of big oil companies gouging the consumer, but that analysis is misleading.

Mike Ruppert, publisher of From the Wilderness publications, says it this way: “Peak Oil cannot be a conspiracy of big business to get rich when big businesses are about to be shut down, either because of a lack of energy or a frozen work force. It cannot be a conspiracy of big business when GM and Ford teeter on the edge of bankruptcy; when 800,000 jobs are slated for the ax this winter; when Delta and Northwest are in bankruptcy; when the Federal Reserve has blithely announced it is going to conceal how much money it is printing into the M3 money supply.

“It cannot be a conspiracy to impose a one-world order when the international scene is starting to look like a saloon fight in a ‘B’ Western. It cannot be anything other than what it is: the beginning of the collapse of modern industrialized civilization.”

As the first snowfall of the season smacked the Northeast last week, it became even more apparent that hurricanes Katrina and Rita did a lot more to our energy supply and distribution system than most had thought; the ripples are still spreading through our economy.

Natural gas costs 38 percent more than last year’s record prices, and oil is up 21 percent from that benchmark. So what? So many factories and businesses are going to be closed, and very many people will be out of work, putting additional stress and pressure on poor and low-income families. Few federal dollars will be available to help them.

If this winter brings bitter cold, as it is indicating it might—there will be especially difficult times, particularly in the Northeast, where natural gas shortages will affect electricity supplies, and oil supplies also will suffer. U.S. News quotes Diane Munns, a utility regulator in Iowa who heads the National Association of Regulatory Utility Commissioners. “We pray for warm weather,” Munns said. “We have a prayer chain going. People are talking not just about high prices but actual shortages.”

That sentiment was seconded by Matthew Simmons, a prominent energy investment banker in Houston. “We’re headed into a winter,” said Simmons, “that could be a real winter of discontent.”

Most of the country is still in denial about peak oil and gas, but more are beginning to be aware as the national media finally take note of the problem and start to report on it.

Last summer’s hurricanes hit our oil infrastructure in the Gulf of Mexico harder than anyone had anticipated. The oil industry is reporting 23 percent of the Gulf’s natural gas production—2.3 billion cubic feet per day—will be shut down through March. That is very serious business when you consider 52 percent of U.S. homes heat with gas.

According to U.S. News, the U.S. already was using more natural gas than it produced even before the hurricanes and prices were hitting record levels then. Between 1990 and 2004, demand leaped 16 percent, mostly driven by power plant operators. Natural gas is used to generate electricity.

The country is relying on natural gas from Canada and is turning more and more to liquid natural gas (LNG) shipped from Africa, but the imports aren’t enough to satisfy demand. Roger Cooper, executive vice president of the American Gas Association, told U.S. News: “We’re vulnerable. If we were hit in the 1990s, we would not have been in this situation. But when you are consuming 100 percent of your supply, there’s not much room to maneuver.”

The law of supply and demand is operating, big time. Last week, the market price of natural gas hit $15 per million btu [British nethermal units], more than double the price last year. The normal methods of storing gas in underground caverns, such as NICOR does, are not adequate. The result is higher heat bills for homeowners and tougher choices for businesses.

The National Association of Manufacturers says hundreds of factories will be forced to lay off workers and freeze or cut wages because of the high heating costs. Some of the larger manufacturers have shifted operations overseas, closer to cheaper fuel supplies. Smaller companies don’t have that option. Paul Ciccio, executive director of the Industrial Energy Consumers of America, said: “In manufacturing, there’s just one way to use less energy, and that’s to make less widgets.”

For consumers, the higher costs already are taking their toll. Mervalene Eastman lives on the Crow Indian Reservation in Montana. She is unable to work because of health reasons and also is caring for a 7-year-old nephew. Her situation is desperate.

She was behind on her payments last winter when a $380 bill in December to heat her four-bedroom home climbed by $100 in January and again in February. Now she owes not only back payments but a reconnection fee and a security deposit. All that comes to more than $850, an impossibility for Eastman.

She uses a couple of space heaters and sometimes fires up the oven of her electric range to try to keep warm in Montana’s winters when temperatures can hit 50 below zero Fahrenheit.
“My electric bill is so high,” she told U.S. News, “what I’ve been saving to pay MDU [Montana-Dakota Utilities] I’ve been tapping into to pay electric. Once January comes, I don’t know how I’m going to keep everybody warm.”

It’s a familiar story to Jerry McKim, chief of Iowa’s Bureau of Energy Assistance. “These households are carrying significant debt from last winter into this winter,” he said. “That’s something people aren’t catching.”

The two biggest threats facing the Northeast are: a heating oil shortage, aggravated by the export of distillate fuel oil, which includes both diesel and heating oil, up nearly 50 percent this year; and secondly, a severe shortage of electricity with possible brownouts or blackouts. Many of the power generators are gas-fired and also deregulated and so are under no obligation to continue supplying power; they can simply shut down and sell their fuel at terrific profit.
In New Orleans, already devastated from Hurricane Katrina, a winter failure of the heating system would be catastrophic. Any lengthy heat loss could cause water pipes in commercial and residential buildings to burst, and “traps” where steam escapes could freeze and fail, causing steam pipes to split and lose pressure.

Jim Woolsey, former head of the Central Intelligence Agency, who is dealing with energy issues in the Crescent City, said parts of New Orleans could look like “a frozen New Orleans.”
And the threats don’t stop with the coming of spring. Around the world, agriculture is in trouble. According to the International Society for Ecology and Culture, farmers are going bankrupt in record numbers.

At the same time, global trade in food is booming. Each year, the distance between producers and consumers grows. Today, the average meal in America has traveled more than 1,500 miles to reach your table.

These two trends are linked. Global food economy is harming the majority while enriching the few. Big agriculture is a major contributor to rising carbon dioxide emissions and, as a result, climate change.

We need to be heading in the opposite direction, closing the gap between farmers and consumers. Not only would such a change rejuvenate the land, but it would furnish jobs at the local level, rebuild community and allow farmers to earn a decent living while providing urbanites with healthy, fresh food at affordable prices—without the added transportation costs and fuel consumption.

It may take some time in the dark and cold and some hunger pangs in the belly to wake Americans to that reality. “I hate to sound like the voice of doom,” said McKim, “but somebody has to say this stuff. It’s just like Hurricane Katrina. They knew it was coming, but little was done to prepare an effective response. And the same thing is happening here.”
How are your survival skills?

http://www.rockrivertimes.com/index.pl?cmd=viewstory&cat=4&id=11948

Analyst sticks to his forecast of oil at $105 a barrel

2005-12-19T22:43:00.000-05:00

Bloomberg News

By Alejandro Barbajosa
December 19, 2005

LONDON Arjun Murti, the Goldman Sachs Group analyst who roiled oil markets in March by saying crude could reach $105 a barrel, now says that forecast might be conservative if the "peak oil" theory is right and world supplies are running out.

The theory, which postulates that the world's oil supply is close to an irreversible drop, is no longer "on the fringes" of the market, according to a research report by the New York-based Murti, who forecasts oil prices of between $50 and $105 a barrel until 2009.

The UBS analyst James Hubbard, a former oil engineer at Schlumberger, has said an inevitable decline in supply will start sooner and be worse than expected unless investment is increased for many years.

A jump above $105 a barrel "is possible if we don't invest the right amount of money," Hubbard said in an interview in London.

"There will be a peak in production earlier than expected, and that post-peak decline will be more dramatic than currently assumed unless there is a sustained increase in investment in oil and gas production, greater consumer efficiency and alternative energy sources."

The Saudi Arabian oil minister, Ali al-Naimi, and the president of Exxon Mobil, Rex Tillerson, have both said oil supplies will last for decades. But energy traders are increasingly debating the amount of available crude after rising demand from China surprised suppliers, who had failed to spend on new pipelines, rigs and refineries.

Tillerson in September told the World Petroleum Congress in Johannesburg that a U.S. Geological Survey estimate of two trillion barrels of conventional oil reserves still to be recovered is conservative, with the range of possibility as high as seven trillion barrels. Less than a trillion barrels has been pumped in the world so far.

Investors who back the peak oil theory, like Boone Pickens, a Dallas-based hedge fund manager and former oil executive, have fueled the price rally of the past two years, when oil almost doubled in price to reach a record $70.85 in August. Prices ended last week at $58.06 a barrel in New York.

http://www.iht.com/articles/2005/12/18/news/bxcom.php

One is by rail; two is by sea

2005-12-18T10:49:00.000-05:00

The Roanoke Times

Editorial
December 18, 2005

The United States must prepare for the inevitable day when fuel oil supplies run short. If the White House won't lead, the states should.

Gov.-elect Tim Kaine's transportation listening tour has brought out the rail enthusiasts along the congested Interstate 81 corridor.

The need for massive improvements, including dedicated truck lanes and expensive tolls, could be avoided if only truck traffic were diverted off the highways and onto the railroads, chants the rising chorus of rail enthusiasts.

They have a point. But making the case on congestion alone won't sway the argument.

Running short on fuel oil should. The world, according to energy experts, has either reached or is nearing peak oil supply. That isn't to say that we've pumped oil reserves dry, but that much of it will remain inaccessible to today's technology that would consume as much energy extracting the oil as it would produce.

"Oil peaking represents a liquid fuels problem, not an 'energy crisis' in the sense that term has often been used," said Dr. Robert L. Hirsch, energy consultant and former chairman of the Board on Energy and Environmental Systems at the National Academies, while testifying Dec. 7 before the House Subcommittee on Energy and Air Quality. "Motor vehicles, aircraft, trains and ships simply have no ready alternative to liquid fuels."

Matthew Simmons, investment banker and author of "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy" warns, "The idea that this (energy crunch ) is just another spike is the greatest myth of all time."

One of Simmons' suggestions to keep the economy from collapsing once fuel oil becomes scarce is to move freight off the highways and ship goods by the more energy-efficient means of rails and barges.

But it is difficult to entice industry and the government to begin thinking that way when fuel remains relatively inexpensive, the state of "our railroads would make Bulgaria embarrassed" and the time to move goods is extended.

Simmons said that shipping freight from San Diego to Portland, Maine, takes 4.5 days by truck, 12.5 days by barge and 25 days by train. With abundant, cheap fuel, the incentive to move off road is nonexistent.

The challenge for leaders is to project the future, energy-efficient modes of transportation and to persuade the public and industry of the need and means to arrive there. That type of leadership is absent from the White House. The Bush administration's Energy Policy Act ignores the impending liquid fuels crunch, and continues pushing Alaska's limited oil reserves as the saving fuel.

The United States cannot afford to wait three more years to get started, which leaves the initiative to the states.

But Virginia, even with Kaine's favorable view of rail improvements, can't rebuild transcontinental lines. The new governor can spur his counterparts in the I-81 corridor to make ready the way for when fuel oil runs short.
Precedents already exist for such alliances, as when states joined together to address greenhouse gas emissions while the administration foolishly pretended global warming was a myth.

Impending fuel shortages are just as real.

http://www.roanoke.com/editorials/wb/wb/xp-44948

The Peak Oil Crisis: The Congress Meets Peak Oil

2005-12-15T18:39:00.000-05:00

Falls Church News-Press

By Tom Whipple
December 15, 2005

Last week the House of Representatives Committee on Energy and Commerce held its first hearing on peak oil. Appropriately, or perhaps ironically, it took place on December 7, Pearl Harbor Day. The hearing was held at the instigation of Maryland Congressman Roscoe Bartlett, who recently introduced a resolution calling on the government to immediately embark on an international crash program to mitigate the effects of declining world oil production.

However, given the issues currently confronting Congress —Iraq, poll numbers, congressional elections, record budget and trade deficits, global warming, and a pandemic— hearing the world is about to run out of cheap oil is close to the last thing any member of Congress wants to hear. Who on earth would want to go into the next congressional election with their voters thinking gasoline was about to become unaffordable? Just to get a hearing on peak oil is a testimony to the legislative skill of Congressman Bartlett and his standing in the Republican caucus.

When confronted with holding a hearing they really didn’t want, the Committee leadership and staff used the time-tested technique of turning something completely obvious into an academic debate with different points of view.

In effect, the title of the hearing said it all— “Understanding the ‘Peak Oil’ Theory.”

The speakers for both sides were excellent. Bartlett and Congressman Udall of New Mexico led off with a clear case as to why world oil production would be peaking soon with very serious consequences. They were followed by star witnesses Kjell Aleklett, from the Association for the Study of Peak Oil, and Robert Hirsch, from the consulting firm SAIC. The four speakers could not have made the case for peak oil more clearly or succinctly.

The peak-oil-is-imminent speakers were followed by Robert Esser, a senior consultant for Cambridge Energy Research Associates, who told the committee the world “is not running out of oil imminently or in the medium term.” “Rather than an isolated ‘peak’ we should expect an ‘undulating plateau,’ perhaps three or four decades from now,” he said. “The major risks to this outlook however are not below-ground geological factors but above-ground geopolitical factors.”

And that was the hearing. Take your pick: either the world is faced with an imminent catastrophe or an “undulating plateau” decades from now. In the midst of a dozen pressing crises, a theoretical peaking of world oil production certainly will look to most in Congress like something that can be put off until the evidence becomes clearer.

Thus far, the press coverage of the event has been sparse despite the presence of at least a dozen journalists at the hearing. The Oil and Gas Journal, whose readers are obviously concerned, ran an extensive piece on the hearing and the arguments for peak oil. At the other end of the scale, the Wall Street Journal ran a story from Market Watch reporting only the Cambridge Research contention that there will be plenty of oil for decades.

If one were expecting that Congress would have a “ Eureka ” moment because they were given a forceful case that peak oil is imminent, then you should know that Congress does not work that way. A threat thought to be five years away is meaningless.

Thus, this hearing is unlikely to result in the Peak Oil Resolution being reported out to the House floor where the whole House would have to vote on whether peak oil is imminent. The hearings and the resolution however, did result in the formation of a bi-partisan Peak Oil Caucus, which thus far, only has a handful of members.

Someday however, the Energy and Commerce Committee will be holding hearings on “Why is Gasoline $5 a gallon?” Hopefully Congressman Bartlett will still be around to testify about peak oil and his caucus will have grown into the hundreds.

http://www.fcnp.com/541/peakoil.htm

Exxon: Oil demand to rise 50%

2005-12-14T16:45:00.000-05:00

Dallas Morning News (www.wfaa.com)

By Elizabeth Souder
December 14, 2005

Energy industry can supply what's needed, company says

Exxon Mobil Corp. forecasts global energy demand will rise 50 percent by 2030 and oil will remain the dominant fuel source.

The Irving-based oil company said Tuesday that economic growth in developing countries will drive much of the demand, along with population growth.

The forecast comes one day after the Energy Department predicted oil prices will remain north of $50 a barrel for years.

Exxon declined to forecast energy prices, saying only that its expectations of supply and demand don't support current high prices.

And Exxon said it's confident the energy industry can meet demand, a sentiment some industry experts don't share.

Most experts blame rising demand for the run-up in prices in the past couple of years.
Exxon disagrees with skeptics who warn that oil production will soon peak because humans have used nearly half the oil in the world.

"What we've seen, through doing this for decades, is that repeated predictions of peak oil have proved wrong time after time," Jaime Spellings, Exxon's general manager of corporate planning, said in a conference call.

"We're very comfortable with the resource size to support the production outlook," he said, adding that new technology plays an important role in meeting demand.

Electricity generation is the fastest-growing energy need, boosting demand for coal and natural gas as well, Exxon said.

Dominant fuel

Oil use will grow more slowly, but oil will remain the dominant fuel, Exxon predicts, driven by transportation needs.

The company expects the global fleet of cars and light trucks to rise by 1 percent a year until 2030, with the fleet in Asia Pacific quadrupling in that time.

Demand for hybrid cars in North America and Europe should eventually begin pushing demand for gasoline and diesel vehicles down, the company said.

Exxon expects gasoline demand in North America to remain constant for the next 30 years as cars become more efficient, and more people buy diesel and hybrid cars. But demand for gasoline in Asia Pacific will probably triple.

The world's largest company by revenue predicted the energy industry will keep up with that demand, though North America will come to rely more heavily on oil from members of the Organization of Petroleum Exporting Countries.

Exxon estimates global conventional oil reserves, or the amount of oil that can be produced through conventional methods, at 3.2 trillion barrels.

Nonconventional resources boosts the amount to 4 trillion, accounting for new discoveries and improved technology.

Through 2004, the energy industry has produced about 1 trillion barrels, leaving more than 2 trillion barrels of conventional resources still to be produced, Exxon said.

Peak oil

Only the U.S. has passed its peak oil production.

That's a point of contention among some energy experts.

In a hearing last week before the U.S. House Subcommittee on Energy and Air Quality, several experts and representatives testified that global oil reserves will peak in the next few decades, causing prices to rise dramatically and shifting more political power to oil producing countries.

So far, few decision-makers are paying much attention to peak oil theorists.

Rep. Tom Udall, D-N.M., and a member of the Congressional Peak Oil Caucus, called on Congress to develop a plan to cut oil use and move to a different fuel.

"The sooner we start, the smaller those sacrifices will be," Mr. Udall said, testifying that little is being done.

Exxon doesn't seem to expect such efforts to derail oil's dominance anytime soon.

The company predicted oil will retain the largest market share of the energy industry.

Oil and natural gas will still have 60 percent of the market by 2030, the company said.

The company stressed that technology to explore and produce oil is critical to meeting demand challenges.

The company also expects demand for natural gas and coal to rise, as demand for all kinds of fuel increases.

Wind and solar demand should rise by 11 percent a year during the next 25 years, but those fuels will serve only 1 percent of the market, Exxon predicts.

The company expects sentiment in the U.S. on nuclear energy to turn in the next two decades, boosting demand for nuclear fuel.

E-mail esouder@dallasnews.com

http://www.wfaa.com/sharedcontent/_
dws/bus/stories /DN-exxon_14bus.ART.State.
Edition2.1348d4f2.html

Planning for a future not dependent on oil

2005-12-12T14:52:00.000-05:00

Seattle Times

By Kate Riley
December 12, 2005

Last week, I filled my trusty Honda's gas tank and happily noted the fall in gas prices eclipsed the 9.5-cent state gas tax I voted to keep.

But after a couple of days listening to energy experts, economists and investors talk about something called "peak oil," I fear a $2.16-a-gallon price is only a temporary respite.
Once the domain of wonky economists and think tanks, concern that world oil production is at or approaching its peak is gaining traction among America's policymakers. On the ascending side of the production bell curve, prices tend to be relatively low. But at the peak and on the downslope, they would rise precipitously.

Wednesday, the U.S. House Energy and Air Quality Subcommittee held the first congressional hearing on the idea of peak oil and what should be done about it. Last month, U.S. Energy Secretary Samuel Bodman asked a government advisory panel to study whether the world's oil and natural-gas production can continue to meet U.S. demand — and for how long.
It's an important question. The United States accounts for 8 percent of the world's oil production but consumes 25 percent. Sixty percent of U.S. consumption comes from foreign sources.

Competition for what is available is heating up — China recently surpassed Japan and is now the second-largest oil importer. It doesn't help that the majority of the world's proven oil reserves are in the volatile Mideast. Plus, it's difficult to know how much oil is available because some foreign producers aren't talking.

"We are sitting on the world's most incredible illusion — that the Mideast has an unlimited supply of oil," says Matthew Simmons, a Houston-based energy industry investment banker and one of President Bush's energy advisers.

Simmons points to the market response to the Gulf Coast's hurricanes as an indicator the industry's spare capacity is getting thin.

Gas prices near $3 a gallon, however briefly, have gotten people's attention. While federal energy legislation passed pre-Katrina offered little to reduce U.S. consumption, a bipartisan group of eight senators three weeks ago proposed legislation to do so.

Citing the need for energy independence and national security, the group led by Sen. Joe Lieberman, D-Conn., would require U.S. consumption to be cut by 10 million barrels a day within 25 years. The bill would provide incentives for alternative vehicles and fuels.

Congressman Jay Inslee, D-Wash., has proposed legislation with a more holistic view. His New Apollo Energy Project would establish energy performance standards, provide tax incentives and market-based assistance to create clean energy jobs while reducing greenhouse gas emissions and dependence on foreign oil.

Last week, at its annual meeting in Spokane, the Washington Public Utility District Association highlighted plug-in hybrid vehicles and alternative energy generation, such as wind, landfill gas, solar and tidal/ocean energy.

In January, the Snohomish County Public Utility District and the Cascadia Center hope to launch a regional discussion about the role of plug-in hybrid technology in solving some Puget Sound problems. The PUD's Steve Marshall suggests an expanded hybrid-vehicle technology could solve some of Puget Sound's transportation problems. Hybrid cars with extra batteries could be topped off by recharging on home electrical systems, further increasing mileage. Technology could limit recharging overnight when loads are low. Or free charging could be offered at park-and-ride lots to encourage more people to take the bus.

I don't know if world oil production is peaking, but I'm glad policymakers from the Bush administration to local utilities are fretting about it. Congress erred when it passed legislation that turned a blind eye to reducing oil consumption. America must plan for a future with less dependence on oil.

Kate Riley's column appears regularly on editorial pages of The Times. Her e-mail address is kriley@seattletimes.com

http://seattletimes.nwsource.com/html/opinion/
2002678362_riley12.html

The Peak Oil Crisis: The Gulf Stream

2005-12-10T12:03:00.000-05:00

Falls Church News-Press

By Tom Whipple
December 8, 2005

A couple of months back I discussed the North Atlantic Oscillation and how the British Meteorological Office was very concerned a flattening of the Atlantic's high and low pressure areas was going to make for an exceptionally cold winter in Northern Europe. This phenomenon also allows frigid Canadian air to make its way into the northeastern US resulting in higher prices for heating oil, diesel, gasoline, natural gas and nearly everything else. Winter is now two weeks away, and the British Meteorologists are still holding to their forecast of an unusually cold winter.

Last week, however, a new and more disturbing report was published by the Southampton Oceanography Centre in the UK concerning the stability of the Gulf Stream — a major heat source keeping Northern Europe from becoming Northern Siberia . It seems that since the last time they took measurements 12 years ago, the flow of fresh water from the melting of the north polar ice cap has interfered significantly with the Gulf Stream . Some 30 percent of the Stream’s warm water is no longer making it to the vicinity of Northern Europe , but is being diverted back towards the equator.

A drop of 30 percent in the flow should have been enough to cause an as-yet-to-happen drop in the average North European temperature. Some suggest the increasing world wide average temperature— global warming— is enough to offset the loss of heat from the Gulf Stream as far as Europe is concerned.

All this may only be an interesting (or perhaps not) academic debate, as not much seems to have happened to Northern Europe , as yet. However, what happens to the 30 percent of the warm water no longer making it to the North Atlantic ? I would like to thank Stuart Staniford of the web site The Oil Drum (theoildrum.blogspot.com) for explaining in detail that vast quantities of warm water are now flowing southward towards those regions of the Atlantic, the Caribbean, and the Gulf of Mexico where the hurricanes spawn.

Last week, the National Oceanic & Atmospheric Administration (NOAA) held a press conference on the 2005 Hurricane season. As we all suspected, the season shattered nearly every record ever kept about hurricanes. In short, it was two hurricane seasons rolled into one.

Moreover, NOAA says there is no relief in sight. The forecasters believe we are at the beginning of a 20-30 year era of increased hurricane activity. Now, if we learned anything from listening to those meteorologists describe the approach of all those hurricanes this year, it’s that warm water makes hurricanes and that very warm water makes very strong hurricanes.

In the last 15 months, three major hurricanes have slammed into our oil production facilities in the Gulf causing extensive damage. Six weeks after the last hurricane, about one third of Gulf oil production is still out of service. This new report that massive amounts of warm water are now flowing into the southward not only suggests, but screams, there are major troubles ahead. In the worst case, one or more hurricanes a year could slam into Gulf Oil production and refining facilities causing major production slow downs, very expensive and time-consuming rebuilding of facilities.

Work is already underway to strengthen our drilling rigs and production platforms to withstand the more powerful storms developing from the warmer water. But this is a slow process and hurricane seasons do not wait.

Looking beyond the oil industry, it’s obvious that year after year of numerous major hurricanes coming ashore along our southern coasts will quickly do serious damage to the US economy. At some point insurance (and therefore mortgages) for structures near hurricane prone shores simply will not be available.

The results of the recent survey were deemed so serious, oceanographers have moored a series of buoys across the Atlantic to continuously monitor the return flow of the Gulf Stream . In time, this continuous monitoring should answer the question of whether this shift in the Gulf Stream 's return flow is a short-term phenomenon or a long-term trend.

In the meantime, none of this bodes well for the price of oil and gas. A colder Europe will require more and more oil and gas to keep functioning, and frequent Gulf hurricanes will lead to a marked slowdown in oil production.

For now, there seems little we can do except to remember that the 2006 hurricane season is less than six months away.

http://www.fcnp.com/540/peakoil.htm

Lawmakers: US should prepare for global oil flow peak

2005-12-08T13:20:00.000-05:00

Oil & Gas Journal

By Nick Snow
December 7, 2005

WASHINGTON, DC, Dec. 7 -- While there is disagreement about when world crude oil production will hit its peak, the US should begin preparing for it now, two US House members told an Energy and Commerce subcommittee hearing on Dec. 7.

Reps. Roscoe G. Bartlett (R-Md.) and Tom Udall (D-NM) led off the hearing before the Energy and Air Quality Subcommittee because they lead the House Peak Oil Caucus, which has six other members.

"We started it to bring immediate and serious attention to this issue. The continued prosperity of the United States depends on its ability to act on this," Udall explained.

Bartlett, who has given 14 special-order speeches before the House on the subject since March, cited Shell Oil Co. geologist M. King Hubbert's 1956 prediction that US oil production would peak around 1970.

"If he was right about our country, there's no reason to believe that he wasn't right about the world. He predicted that its oil production would peak about now," Bartlett said.

Domestic oil production has declined every year since 1970 despite higher prices and improved technology, he told the subcommittee.

"To provide a smooth transition to a more secure and sustainable energy future, we need to invest the effort and the money to use energy more efficiently while developing alternative and renewable sources, especially in transportation," Bartlett said.

Udall called for a government initiative comparable to developing the atomic bomb at the end of World War II and putting a man on the moon in the 1960s.

"Over the past 100 years, fueled by cheap oil, the United States has led the revolution in the way the world operates. Replacing this resource is imperative in continuing our way of life," he said.

Varying outlooksBut three witnesses on a second panel varied in their recommendations and assessments of the situation. So did several members of the subcommittee.

"The United States, with 5% of the world's population, should not continue to consume 25% of the world's oil production if other countries are to have their fair share," said Kjell Aleklett, a radiation sciences professor at Uppsala University in Sweden.

He added that a global effort will be necessary to address the peak-oil problem, and technologically advanced countries such as the US will have to take the lead.

Robert L. Hirsch, senior energy program advisor at Science Applications International Corp., Alexandria, Va., said SAIC recently concluded, in an analysis commissioned by the US Department of Energy, that a maximum effort will be needed to mitigate problems resulting from the world's hitting an oil production peak.

"The timing was left open because we don't know when it would occur," Hirsch said. "But if we wait until it does, the world will have a problem with adequate liquid fuels for more than two decades. If we initiate a program more than 20 years before it occurs, we have a possibility of avoiding the problem."

But a Cambridge Energy Research Associates official said a field-by-field analysis of worldwide production and development finds "no evidence to suggest a peak before 2020, nor do we see a transparent and technically sound analysis from another source that justifies belief in an imminent peak."

Robert Esser, CERA's global oil and gas resources program director, said many predictions of an imminent worldwide oil production peak do not include potential contributions from natural gas.

They also rely heavily on exploration and production data companies file with the Securities and Exchange Commission that are overly conservative because they don't consider the contribution of improved technology, he said.
The fourth scheduled witness in the second group, Murray Smith, minister-counselor for Alberta at the Canadian Embassy in Washington, DC, submitted written testimony but was called away before he could speak.

Impact of technologyThe potential contribution of improving technology was a major area of disagreement, in terms of both increasing oil recovery and developing alternatives.

Hirsch said hydrogen looks technically but not economically feasible because breakthroughs still are needed in fuel cells and onboard storage. "We took an optimistic view, but don't bet on it. The things that are essential don't exist now," he said.

He sees more potential in coal-to-liquids conversion because it can be done with commercial technology. "In addition, the carbon dioxide that's produced can be used for enhanced oil recovery," he said.

Aleklett conceded that ultradeepwater oil production is making an increasing contribution to supply. But he added that Brazil, which many consider the world's leader in that effort, has found about 12 billion bbl of oil in deep water, which is not much in comparison to the world's annual total consumption of 30 billion bbl.

"Right now, there is no more intense exploration play in the world than Canadian oil sands," Esser said.

"Companies are struggling to get into the play, buying interests from others who are running short financially. The ones that are there are expanding their projects to bring production on sooner. We see oil sands out to 2020 up to about 4 million b/d, up from the current 1 million b/d. By 2030, we see production reaching 6 million b/d."
But Bartlett said the Canadians are using more energy from gas to retrieve oil from tar sands than they are producing in btu terms, which is economically inefficient unless it involves gas that would be stranded otherwise.

Aleklett said the Canadians are exploring nuclear power as a possible alternative.

Esser pointed out that technology already has reshaped US gas production. "Ninety percent of the natural gas drilling in this country now is toward unconventional sources such as coalbed methane and tight sands gas. Gas-related drilling has never been higher, but we don't see any way to turn around declining US production. We'll have to import liquefied natural gas," he said.

"But we could do more by improving access," the CERA official continued. "There are several instances where companies were awarded offshore leases and not allowed to develop them, such as [Gulf of Mexico Lease] Sale 181 and the Destin Dome. Access to promising lands in the Rocky Mountains also can be impeded at every step. Nobody seems interested in doing anything about this."

Contact Nick Snow at nsnow@cox.net.

http://ogj.pennnet.com/articles/article_display.cfm?Section=ONART&C=
GenIn&ARTICLE_ID=243263&p=7

Article Excerpt

2005-12-06T20:36:00.000-05:00

Wall Street Journal

Corporate Social Concerns:Are They Good Citizenship,Or a Rip-Off for Investors?

December 6, 2005

MS. HOGUE writes: The world will have to grapple with energy efficiency and energy consumption in a real way if we are to achieve goals of poverty alleviation and ecologically sound energy sources. We appreciate the bank policies that create incentives for energy efficient mortgages allowing customers to take advantage of the cost savings associated with efficiency. Yet we have to be honest that the U.S. consuming 25% of the world's energy while housing only 5% of the world's population is not valid model for replication. These resources are finite.

Even Exxon Mobil recognizes that peak oil is a reality; oil will run out. It is not "if," but "how" we will transition to a renewable energy economy. This economy will necessarily embrace efficiency models as well as a level playing field that enables real competition for all energy sources, rather than favoring the fossil fuel industry to the tune of billions a year.

What is exciting are the opportunities offered by this transition. Leading thinkers, like writer Ross Gelbspan and economist Eban Goodstein, have identified that with anticipation and planning; the coming energy transition will create new jobs and stimulate the economy. Perhaps more importantly, renewable energy sources can put control of energy sources back in the hands of national and local populations.

It is time to smash the myth that fossil-fuel extraction benefits local populations. MNCs, like Shell, Chevron, Exxon have been operating in resource rich (oil, timber, minerals) countries for decades, yet large scale extraction projects are strongly linked to higher poverty rates and increasing national debt that robs key resources better used for education, health care, and building local economies. Even the World Bank's Extractive Industry Review recommended no more funding for fossil-fuel projects because it runs directly counter to the goals of poverty alleviation. Look at Ecuador, look at Nigeria, look at the Congo.

MR. SMITH writes: As always in these discussions, the issue of transition is important but whether we should rely on politicians to make these u-turns or consumers and suppliers is the better issue. Government has already wasted vast sums in seeking energy alternatives, in seeking "energy independence." I was at EPA when the Synfuels programs began to absorb its billions of taxpayer dollars -- years later it produced a few barrels of oil.

GE and Exxon Mobil, for that matter, invest large sums to ensure that they'll be prepared regardless of which outcome emerges. That is intelligent but they need not disparage the existing technologies that are producing great good for mankind now.

I once joked that the thoughtful "responsible citizens" of California had elected to cease their reliance on the horrible energy sources of hydropower, fossil fuel and nuclear -- all of which were terribly environmentally destructive. California, they decided, would rely on electricity instead. If American firms are forced into economic production and distribution and marketing programs that will please RAN, NOW, the AFL-CIO or Amnesty International, there won't be much economy left.

http://online.wsj.com/public/article/SB113355105439712626.html?mod=todays_free_feature

Area teachers form outpost to examine peak oil

2005-12-05T17:58:00.002-05:00

Peoria Journal-Star

By Jessica L. Aberle
December 4, 2005

Group to host documentary, 'The End of Suburbia,' at Downtown Peoria library

PEORIA - Doug Day wonders, even worries, about what life will be like without fossil fuels. He believes other people need to start thinking about it too.

Day, a theater instructor at Illinois Central College, along with his partner and fellow history professor at the school, Dave Thompson, have formed the Peoria-area Post Carbon Outpost for the discussion of issues related to the concept of peak oil and life after fossil fuels.

"I heard an author interviewed on the radio last June, and I went out and bought his book and have been kind of thinking about it ever since," Day said of peak oil, the idea that at some point the rate of oil production will no longer be able to increase and therefore be unable to satisfy demand. "When I heard this author interviewed what he was saying was fitting in with my view of things, so I reacted positively. Some other people might react skeptically."

Day and Thompson want to take their new found passion to the local masses and educate people on what can be done now to lessen the effects of post-carbon life later. The local outpost will host a free screening of the movie "The End of Suburbia," a documentary on peak oil, at 7 p.m. Dec. 13 at the Downtown Peoria library auditorium.

"We're just trying to get the word out on peak oil and we think this documentary is a good way of doing that."

The movie is distributed through the Post Carbon Institute, an initiative and operating unit of MetaFoundation, a not-for-profit organization chartered in Portland, Ore. The Institute is an educational institution and think tank that explores in theory and practice what cultures, civilization, governance and economies might look like without the use of (non-renewable) hydrocarbons as energy and chemical feedstocks.

Day said recent Journal Star articles on the Illinois coal industry raise questions about the United States' ability to institute poly-product coal gasification plants soon enough to lessen the economic and cultural affects of peak oil and offer a transition period to better develop forms of renewable energy.

Some subscribers to the concept of peak oil believe the world is in the midst of peaking, others believe it will happen in the next decade, while most experts agree it will definitely happen within the next 30 to 40 years. Regardless, there is no argument that oil and all fossil fuels - including natural gas where shortages are becoming evident, and coal which remains plentiful and America's largest resource - are all finite resources, Day says.

The auditorium will seat up to 200 people and Day and Thompson will be available for discussion following the viewing. Depending on interest, the pair are considering offering additional showings.

Day hopes the movie starts people thinking.

"The question would be this, how quick can we bring coal on as a replacement?" he asked. "If we're going to be entering this peak within the next 10 years how are we going to replace cheap gasoline and oil. We don't have a plan B."

Day contends there is no way, currently, to replace America's dependence on oil in the time available. "We're going to feel it, and we're feeling it right now with our heating bills. I mean it's started," he said, adding currently the United States is importing 15 percent of its national usage from Canada. And that 15 percent represents 50 percent of Canada's national output.

Peak oil will happen worldwide within the next 15 years, Day says. "Some people say we've already hit it.

"I don't know," Day said. "Forty some countries have hit oil peak. The United States hit in the early '70s and that's a well-known fact. ... There has been no other major discovery of oil for years and years and years. Britain, I think this year, will become a net oil importer rather than an exporter.

"The geologists are basically saying that this idea of peak (oil) is going to happen. And these are oil geologists."

For more information on the Peoria-area Post Carbon Outpost or the showing of "The End of Suburbia" contact Day at 694-5149.

http://www.pjstar.com/stories/120405/REG_B8A17C0G.030.shtml

Congressman backs post-oil planning: Thompson says Willits can set national example

2005-12-03T22:09:00.000-05:00

The Willits News

By Claudia Reed
December 2, 2005

WILLITS "We can't keep going the way we've been going," said Congressman Mike Thompson. "That's a no-brainer."

Speaking during Monday's meeting with local officials and members of the Willits Economic LocaLization (WELL) group, Thompson was referring to an economy based on insatiable consumption of fossil fuels. The United States, he said, comprises about 6 percent of the world's population, but consumes at least 25 percent of its oil, most of which is imported.

"Congress has a responsibility to take the U.S. away from foreign (fuel) dependency," Thompson said.

The U.S. Department of Energy currently predicts the condition of peak oil (the time when demand outstrips supply) will begin in 2036. Thompson joined WELL's Phil Jergensen in calling the timeline overly optimistic.

Thompson charged the date was set in order to allow time to win the current U.S./China competition over a dwindling oil supply, rather than to prepare for a post-oil economy. President George W. Bush's energy policy, he noted, calls for heavy subsidization of the oil industry and relatively little incentive for development of sustainable energy sources.

Keith Rutledge, who has acted as consultant to such clients as the City of Sacramento in the transition to renewable energy, compared federal energy policy with burning the wood on the Titanic for heat, rather than using it to build life boats. He called for using existing oil resources to build the infrastucture needed for a post-oil economy.

Mendocino County Supervisor Hal Wagenet suggested calling the DOE's bluff by asking for funding and incentives to begin the full-scale development of alternate energy systems that must be operational in another 31 years.

In the meantime, Thompson strongly supports renovation and use of California's North Coast Railroad Authority lines in order to reduce the number of gas and oil guzzlers on the road. He said he's taken flack for his position from those who call the project, pegged at between $60 million and $200 million, too expensive.

The question remains: too expensive compared to what?

"Abandoning the lines," Thompson said, "a job that includes disposing of the creosote-soaked rail ties, could cost as much as $2 billion."

Repair and expansion of roadways impacted by heavy truck traffic, he added, also runs into the millions of dollars. Thompson recommended reducing truck traffic by promoting an active connection between smaller ports and rail lines. Larger ports, he said, are already at capacity.
WELL co-founder Dr. Jason Bradford pointed out the cost of the future Willits bypass is currently estimated to be at least $150 million.

Several of those taking part in the discussion noted a historic preference for roadways over rail lines on the part of both federal and local agencies. Thompson said longstanding connections with road builders may be influencing the viewpoint.

Turning from transportation fuels to energy sources for homes, local governments and businesses, Thompson noted the administration's energy plan, which authorizes an additional oil industry subsidy of $1.5 billion, also authorizes expenditure of about $800 million for development of alternate energy. He promised to look into ways to send some of that money this direction.

"We could use it here," said City Councilman Ron Orenstein, who chairs an ad hoc committee on development of sustainable energy systems for city buildings and operations.

Thinking aloud, Thompson suggested federal incentives aimed directly at establishing renewable energy cities.

Meeting participants discussed ways to expand city-owned renewable energy systems to the private sector. Possibilities include city ownership and maintenance of solar panels and other generating equipment that could be rented or leased by homeowners.

Madelyn Holtcamp of the Economic Development and Financing Corporation said city-owned utilities can make different decisions on serving the public because they don't have to provide profits for stockholders.

With or without a city-owned utility, Kevin Erich, president of Frank R. Howard Memorial Hospital, said his facility's new building complex would comprise the first rural green hospital in the country.

"I really believe renewable energy (use and production) can create jobs," said Janet Orth of Willits Renewable Energy Development Institute.

Thompson agreed. He offered to help develop something that can work for this area in making the transition to a post-oil reality.

"If we do," he said, "we can get something that will work for the rest of the country."

http://www.ukiahdailyjournal.com/Stories/0,1413,91~3089~
3152140,00.html

Governor Pataki Increases Use Of Biodiesel For New York; Peak Oil Reality Picks Up Momentum By Federal Government

2005-12-03T22:04:00.000-05:00

Business Wire

December 2, 2005

BAKERSFIELD, Calif.--(BUSINESS WIRE)--Dec. 2, 2005--E-Wire--Green Star Products, Inc. (OTC:GSPI) today announced that last week November 20, 2005, Governor George E. Pataki announced a major initiative to increase the production of biofuels in New York State as part of a comprehensive plan to develop and expand markets for ethanol and other biofuels, and help reduce our dependence on foreign energy sources. The Executive Order includes mandates that by 2007, at least 2 percent of fuels used in the State fleet must be biodiesel, with this percentage rising to 10 percent in 2012.

This is another great step in bringing biodiesel into the mainstream fuel distribution system. This announcement follows two other recent important Legislation Bills signed by Gov. Schwarzenegger of California to further the use of biodiesel. See press releases dated Jul 20th and October 4th 2005 by GSPI.

Joseph P. LaStella, P.E., President of GSPI stated, "Biodiesel is becoming a household word very quickly and production of biodiesel is expanding by margins not predicted by anyone even as recently as one year ago. US production of biodiesel in 2005 will be 200% higher than 2004. Biodiesel is gaining prestige as a domestic renewable fuel while the phenomenon called 'Peak Oil' is becoming a national controversy."

'Peak Oil' is a point in time where crude oil production reaches its maximum output and begins to decrease while demand continues to increasingly exceed production.

Mr. LaStella stated, "The need to increase US production of biofuels is directly related to the 'Peak Oil' problem."

On November 25, 2005, USA Today published an article titled, "Can Oil Production Satisfy Rising Demand?"

The USA Today article quotes a Chevron Ad: "The world consumes two barrels of oil for every barrel discovered. So is this something you should be worried about?"

The USA Today article also states, "Energy Secretary Samuel Bodman has asked a high-level advisory board to answer one of the toughest questions dogging the U.S. economy: Can world oil production meet steadily rising demand?" The article further states, "Avoiding economic turmoil will require more than a decade of 'intense, expensive effort,' according to a February study by Science Applications International for the Energy Department. The U.S. would need to build alternative fuel plants and greatly increase vehicle fuel efficiency."

Mr. LaStella also states, "Peak Oil is not a case of 'if' it is going to happen, only 'when' it will happen."

The concept of when it is going to happen is at the center of the controversy. A review of the data from respected industry sources reveals some startling factors. For example: the US consumes more crude oil than the next five top industrial nations combined. However, further illustrating the problem the US is not listed among the top ten nations with proven oil reserves.
In fact, Saudi Arabia has twice the oil reserves as any other nation. Additionally, almost 50% of the world's proven oil reserves reside in Saudi Arabia, Iran and Iraq. This is not a good position for the US to be in.

Another impending question is: How much oil do the Saudi's actually have left to support world demand?

Mathew Simmons is author of a recent book that questions the extent of Saudi Arabia's oil reserves. What Simmons discovered tells a different story than conventional wisdom.

"Simmons analyzed 200 technical papers on Saudi reserves by the Society of Petroleum Engineers."

"Saudi Arabia has over 300 recognized reservoirs but 90% of its oil comes from the five super giant fields discovered between 1940 and 1965. Since the 1970s there haven't been new discoveries of giant fields. The most significant of the oil fields is Ghawar. Found in 1948, the 300-mile-long sliver near the Persian Gulf is the world's largest oil field and accounts for 55%-60% of all Saudi oil produced. Ghawar's current proven reserves are 12% of the world's total. The field produces 5 mbd, which is 6.25% of the world's oil production. According to Simmons, Ghawar's northern regions are almost depleted. Two other giant fields, Abqaiq and Berri, also seem to have peaked in the 1970s."

"To meet global demand for oil, Saudi Arabia will need to produce 13.6 million barrels a day (mbd) by 2010 and 19.5 mbd by 2020."

The report further states:

"Saudi Arabia's oil fields now are in decline, that the country will not be able to satisfy the world's thirst for oil in coming years and that its capacity will not climb much higher than its current capacity of 10mbd. Considering the growth in demand, this could easily spark a global energy crisis."

While the Simmons Report paints a dismal view of the ability to meet increasing demand for oil, another report by Senator Roscoe Bartlett, R-Md, even goes a step further and scientifically reviews the possible alternative energy sources that may supply the world's energy needs.
Senator Bartlett earlier this year presented his in-depth study concerning Peak Oil on the floor of the Senate (see website www.bartlett.house.gov) and met President Bush this summer to urge government action.

Many people scoff at the Peak Oil Theory. However, the Bartlett Report addressed all of the issues and confronts them with scientific data, not with wishful dreams. Consider just a few factors that Peak Oil Theory opponents often cite as possible cures, which are essentially flawed, for our energy problems:

1) The US has coal reserves for 250 years. This is not correct. Cars and trucks do not run on coal. Coal would have to be turned into liquid or gas to be a viable solution. This conversion requires a huge amount of energy for conversion and will require hundreds of billions of dollars to build energy conversion plants to make a difference, not to mention the time for construction and environmental hurdles it would encounter. Additionally, when considering the input energy requirement and calculating only a 2% growth rate for energy consumption the coal reserves would be exhausted in only 50 years. In conclusion, coal reserves will not be able to bridge the energy gap but they will help.

2) Raising prices of oil will stimulate oil exploration and this argument is used to open up wildlife-protected areas to new exploration. This is not a solution at all. Lets consider the existing Alaska pipeline, which was suppose to be an answer to US future energy needs. The Alaska pipeline only produces 5% of the present US requirements of oil. Further, the public does not know that part of the Alaska oil is shipped to Asia not the US because the US does not have the refinery capacity on the west coast to accept Alaska's production.

It is important to note that the Bartlett Report cites the fact the US production of crude oil hit its Peak Oil production in 1970 and has heavily relied on imported crude since. The world is now facing the same Peak Oil crisis with no safety net.

3) Canadian oil sands have been cited as a possible solution because of its oil reserves, that is the good news. The bad news is tar like sands require enormous amounts of natural gas and water to extract its oil in a hostile environment requiring huge capital investment.

Kenneth Deffeyes, a Princeton University Professor Emeritus of Geosciences, calls the talk of substantial tar sands production a "fantasy of economists," adding "they believe if you show up at the cashier's window with enough money, God will put more oil in the ground." (See USA Today October 17, 2005).

A 96-page study prepared in February 2005 from the Department of Energy (DOE) concluded: "The world is fast approaching the inevitable peaking of conventional world oil production (a problem) unlike any yet faced by modern industrial society."

4) The Bartlett Report states that none of the alternative fuels by themselves can affect the coming Peak Oil crisis. However, we desperately need all of them to ease the transition period. Solar, wind, geothermal, biomass, oil shale, tar sands, ethanol and biodiesel, and of course, the most important: conservation.

Some people think hydrogen is the answer. Hydrogen is not an energy source it is only an energy transmitter. It takes a real source of energy to make hydrogen. Any of the previous mentioned energy sources can make hydrogen. Hydrogen is not a solution to the world energy problem.

In summary, it is note worthy to group the energy sources in certain categories to identify other important factors at work.

Solar, wind and geothermal energy plants are capital intensive and will require huge investments and considerable time to make a significant impact. All of the other energy sources, except biodiesel, have a negative energy output, which it means it takes more energy to produce them than is contained in the final product. For example, it takes more energy to produce a gallon of ethanol than it contains in the final gallon of ethanol.

Only biodiesel has a positive energy flow. For every unit of energy it takes to make a gallon of biodiesel it produces 3.5 units of energy in the biodiesel (see reference NBB web site www.biodiesel.org). Furthermore, biodiesel plants require much less capital investment to construct and can be built in a shorter time frame than other plants with minimal environmental impact.

Mr. LaStella stated, "biodiesel is not the only solution except it is one of the most viable."
This is why American Biofuels has now teamed up with Energy Merchant Marketing Co. Energy Merchant Corp. (http://www.energy-merchant.com/) is managed by Industry Experts who have been among the largest independent marketers of petroleum products since 1978. See GSPI press release dated December 1, 2005, "Energy Merchant Marketing Company Enters into a Multi Year Agreement with American Biofuels."

Green Star Products, Inc. is an environmentally friendly company dedicated to creating innovative cost-effective products to improve the quality of life and clean up the environment. GSPI is involved in the production of renewable clean-burning biodiesel and other products including lubricants, additives and devices that reduce emissions and improve fuel economy in vehicles, machinery and power plants. For more information, see GSPI'S Web site at http://www.GreenStarUSA.com or call Investor Relations at 619-864-4010, or fax 619-789-4743, or email info@GreenStarUSA.com. Information about trading prices and volume can be obtained at several Internet sites including http://www.bloomberg.com and http://www.bigcharts.com under the ticker symbol "GSPI."

Forward-looking statements in the release are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including without limitation, continued acceptance of the company's products, increased levels of competition for the company, new products and technological changes, the company's dependence on third-party suppliers, and other risks detailed from time to time in the company's periodic filings with the Securities and Exchange Commission.

http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20051202005553&newsLang=en

Couple take reins in world oil crisis

2005-12-01T15:47:00.000-05:00

The Grand Rapids Press

By Julie Makarewicz
December 1, 2005

WAYLAND -- One couple is taking it upon themselves to find out more about the world oil situation and what can be done about it.

Aaron Wissner, a Wayland Middle School teacher, and his wife, Kimberly Sager, are worried about world oil production and the impact it is having here.

So, the Barry County couple decided to get involved.

For starters, they attended the World Oil Conference, sponsored by the Association for the Study of Peak Oil and Gas, in Denver.

At their home, Wissner and his wife have installed new window treatments and new lights and are planning to add solar panels.

"My feeling coming away from this is one of urgency," Wissner said.

"This is a very real situation and real issue that will affect everyone. We all need to realize there are going to be changes."

Wissner is sharing his sense of urgency in a discussion at 7 p.m. today at the Wayland Union High School auditorium and at noon Friday to the West Michigan Environmental Action Council.
While experts differ on many issues, they all seemed to agree at the conference that world oil production will peak within two to 10 years.

"Mainly, we need to start reducing per capita energy use," said. "That means making changes.
"And we need to start looking at finding ways to use renewable resources for our needs."

As oil production peaks, if demand doesn't decrease, prices will increase. That eventually will lead to price increases for all goods transported throughout the nation, Wissner said.

Individuals can do their part by reducing oil consumption.

That means sharing rides, combining trips and considering working closer to home. It also means energy reduction at home, including installing energy-saving curtains or blinds, turning down the thermostat, turning off lights and appliances when not using and switching to higher-efficiency lighting and items.

Wissner is certain the oil situation is going to cause changes in the world.

"It's real. It's going to happen, and it's going to affect the way we all live and work," he said.
"People need to start looking at this seriously and doing what they can now. There's no way around it. ... We are all going to be in this together, and we are going to have to find ways to deal with it."

http://www.mlive.com/news/grpress/index.ssf?/base/news-1/1133459272211550.xml&coll=6

The Peak Oil Crisis: Washington Stirs

2005-12-01T15:40:00.000-05:00

Falls Church News-Press

By Tom Whipple
December 1, 2005

Until recently, the phrase “peak oil” was among the last elected and appointed official in Washington wanted to hear or see in print. Should there be any doubt as to the correctness of their position, one only has to look at what happened when President Carter donned a cardigan sweater and told us how one day we were going to run short on oil and how we should start sacrificing now to prepare for it.

Relevant administration officials are well aware world oil production will peak someday, but for obvious reasons, they don’t want to acknowledge this until they absolutely have to. They hope beyond hope peaking won’t happen until after they retire so somebody else can deal with the unpleasant consequences.

We know President Bush understands peak oil, for we have the word of Congressman Bartlett, who last summer went down to the White House using his access as a staunch conservative Republican congressman to tell the President all about it.

Later, when asked of the President’s reaction, the congressman reported that it is a matter of the important and the urgent. We can interpret this to mean that yes, the President understands the serious consequences of peak oil, but, no, the evidence of imminent peaking is not yet persuasive enough that he should unleash unknown forces by an official acknowledgement that peak oil may be imminent.

In the meantime, the administration will stick with a policy of encouraging more production through legislation and paying lip service to conservation through public service announcements.

Last week this pattern was broken, or at least shaken a bit, by two stories appearing in select newspapers. The first was published by USA Today and has all the earmarks of an administration leak to a friendly journalist.

The story, which appeared on November 24, reported that on October 5, the Secretary of Energy wrote to the National Petroleum Council (NPC) asking “for a study of the industry’s ability to produce enough oil and natural gas at prices that won't cripple the economy.” Craig Stevens, an Energy Department spokesman, amplified the letter by saying “He’s asked them to take a big-picture look out several years… He wants to get some definitive information."

Of even more interest is that the letter is reported to contain a reference to the “peak oil debate.” After telling us of the administration request, the USA Today story discusses the peak oil debate in much detail giving the arguments for “imminent” and “decades away”.

A day after the USA Today story, a second story appeared in the administration-friendly Washington Times, on, of all things, peak oil. The story, which was keyed to a talk the Chief Economist for the International Energy Agency gave to the Council on Foreign Relations the previous week, was supposed to express optimism – there is plenty of oil in the ground so that the “market” with the help of “technology” will sort things out without any serious dislocations. Between the lines however, a careful reader could detect a warning all may not be well.

What is going on here? Is there some major policy shift in the offing or is the Administration just asking for another group to justify the current policy of unhindered drilling?

The National Petroleum Council, which consists of some 175 CEOs of the biggest oil and energy companies in the US (the current Chairman is the CEO of ExxonMobil) was founded by President Truman in 1946 to give the government advice on petroleum matters. During the last 60 years, the organization has completed some 200 studies on various aspects of oil production in the US , but most of these have dealt with technical issues or contain policy wishes of the oil industry. None have ever grappled with an issue approaching the importance of peak oil.

The first thing to remember about studies like this is that an administration never asks for them unless it knows in advance what the study is going to conclude— less its release do more harm than good. The notion expressed by the DOE press spokesman that the Secretary is seeking “definitive information” about the future availability of cheap oil is absurd. What the Secretary is seeking is definitive backing for either the current policy or a rationale for a change.

The Secretary of Energy is clearly asking the leaders of the oil industry the key question: Is imminent peak oil for real? Can you oilmen continue to provide the American people all the cheap oil they need and want for many years or not?

The underlying issue is whether this request signals that the administration might be considering policy change in the not too distant future.

If the report comes back saying that “yes, oil supplies are getting a bit tight, but if the Congress will let us drill and build what we want where we want then all will be fine for awhile,” then this request is nothing more than the administration seeking more allies in the fight over drilling in Alaska.

If, on the other hand, the report honestly admits the era of cheap oil is nearly over, then we have a new ball game and a new national debate. The mere mention of the words “peak oil” in the request for a report is a tantalizing hint that change may be in offing.

http://www.fcnp.com/539/peakoil.htm

Researchers Convert Chicken Fat to Fuel

2005-11-30T15:46:00.000-05:00

AP

November 29, 2005

FAYETTEVILLE, Ark. - Fuel is the thing with feathers. Hoping to find an efficient way to help power automobiles and trucks, researchers at the University of Arkansas say they have developed a way to convert chicken fat to a biodiesel fuel.

"We're trying to expand the petroleum base," said Brian Mattingly, a graduate student in chemical engineering. "Five to 20 percent blending of biodiesel into petroleum-based diesel significantly reduces our dependence on foreign oil."

Mattingly's research allows biodiesel producers to assess different materials to see what works best. Producers will be able to choose the best way to convert different grades of chicken fat into fuels.

R.E. Babcock, a professor of chemical engineering, said chicken-fat fuels are better for the environment and the machines.

"They burn better, create less particulate matter and actually lubricate and clean things like cylinders, pistons and fuel lines," Babcock said.

Traditionally, biodiesel producers have used refined products like soybean oil because they are easier to convert to fuels. However, the refining process makes soybean oil more expensive — and fuel producers must compete with grocers for the oil supply.

Chicken fat can be a less-expensive substitute because it is available at a low cost. However, fatty acids in raw chicken fat can lead to the creation of soap during the various chemical processes.

In his studies, Mattingly used high-quality fat (less than 2 percent fatty acid content) and low-quality, feed-grade fat (6 percent fatty acid content) obtained from Tyson Foods Inc. plants in Clarksville and Scranton. The high-quality fat is more expensive than the feed-grade fat, but both are less expensive than soybean oil.

It took different steps to refine the different fats, but it could be done, Mattingly said.
"The project demonstrated that there is a very fine line between facilitating an adequate reaction and generating so much soap that the biodiesel yield is diminished," Mattingly said. "Basically, deciding which method to use comes down to economics."

Michael Popp, an associate professor of agricultural economics, said it is too early to tell if making biodiesel fuel from chicken fat is economically feasible.

http://news.yahoo.com/s/ap/20051130/ap_on_sc/chicken_fat_
fuel;_ylt= AqvGJiuJa 8QNh0.eemSTeLqs0NUE;_ylu=X3oDMTA3
ODdxdHBhBHNlYwM5NjQ-

Energy crunch and opportunity

2005-11-29T17:29:00.000-05:00

Blue Ridge Business Journal

By Diane Price
November 28, 2005

Frequently, energy awareness starts in our wallets. The impact of rising costs of oil and natural gas consumption is endemic. Even at local laundromats newly posted signs read: "Due to the increase in energy costs we are forced to raise our dryer prices."

As oil and natural gas costs escalate, Virginians are seeking information on alternative energy resources to save money, especially during the winter heating months.

"There is no need for a huge increase in prices in oil," says John H. Saunders, financial advisor and wealth advisory specialist at Legg Mason Wood Walker Inc. in Roanoke. "If you look at the raw data, there is adequate financial stats and heating oil in the system. The other types of energy, before they can have a major impact on the economy, there will have to be usage going up. There is unlikely to be a short-term blip in those alternative energy sources.

"Clearly, the energy firms are profiting handsomely, as are intermediaries. They are all profiting handsomely in light of the higher energy prices. If you look at the demand and supply of refined petroleum products, we have enough in inventory." Today, about 90 percent of vehicular fuel needs are met by oil. To cut costs by getting more miles per gallon consumers are buying hybrids; still others are waiting for the hybrids to improve.

"There is really no difference in the hybrids and our other cars, except the hybrids are practically zero emissions," says Chuck Baker, general manager, Hayley Toyota in Roanoke. "People often buy them because they are great cars for the environment. They are considered green cars." Popular hybrids for 2006 are the Ford Escape, the Honda Civic and the growing Toyota cadre of hybrids: the Highlander Hybrid and Lexus RX 400h hybrid SUVs, and the Prius hybrid sedan.

More hybrids

"The wait is a little bit longer now for the Prius," says Baker. "It has been in high demand, and low supply since it came out in 2001." Toyota will introduce a hybrid version of its top-selling Camry sedan next year, as well as a hybrid version of the Lexus GS luxury sedan.

Helping to drive up the hybrid market are incentives: If you buy a hybrid new, you may be eligible for a one-time federal income tax deduction of up to $2,000. According to the Association of Peak Oil & Gas, of the 235 million vehicles licensed today, only 275,000 are hybrid electrics.

As the hybrid market matures, so will bio-diesel fuels, a 20 percent soybean-based bio-diesel, with a federal "blender tax credit" of up to 99 cents a gallon for fuel containing bio-diesel. The bio-diesel fuels are now competitive, if not cheaper. "In the states there is also a micro economic factor with investment in soybean-related stock," says Saunders. "There is growth and demand for vegetarian foods. There are other factors at work driving interest in investing in soybean related companies."

Some analysts are saying for now, buy bio-diesel. Much of the commercially sold bio-diesel is domestically made from soybeans. Bio-fuels are energy-containing fuels derived from biomass "biomass" refers to organic materials derived from plants or animals]. Manufactured from vegetable oil, bio-diesel can be used in pure form or blended with diesel to make a cleaner-burning fuel that reduces vehicle emissions. Locally, Public Policy Virginia (www.ppvir.org) is planning an educational forum in Danville on December 10th that will focus on bio-fuels that can be grown economically in Southside Virginia as a viable source of biomass for ethanol, as well as a potential economic boon to the region's farmers and local economy, moving our nation away from dependence on foreign oil, and keeping millions of additional dollars in the local economy.

Renewable

Generally, renewable energy alternatives are on the rise. Findings indicate we may soon rely on fuel cells (which convert a fuel, such as hydrogen, into electricity, with no pollution), or hydrogen power (a clean fuel with great potential), or solar and wind power. And, there's coal.

"People are investing in options. It is not necessarily related to the price of oil. For example, in coal, it is that the old coal companies-with their high-cost structures and their unattractive benefit burden, and labor agreements with unionized work forces- have gone out of business," says Saunders. "Newly formed companies that don't have to carry the burden of those past agreements have acquired their assets. There is a micro-economic factor at work supporting coal in particular."

Coal creates more than half of all the electricity made in the U.S., and we seem to have an inexhaustible reservoir of coal. Coal prices from central Appalachia have doubled-from $30 per ton to $60 per ton-over the past year. With U.S. coal production at record highs, coal companies are hiring again. Good news for Virginia, as the ninth-largest coal producing state in America, and particularly good news in the coal area of Southwest Virginia, where the industry employs 5,000 people (down from 10,000 in 1987).

From digging coal under the ground to up in the sky, solar companies are growing in Virginia. Out of 30 solar businesses scattered throughout the Commonwealth, three solar businesses found homes in Broadway, Christiansburg and Vesuvius.

Solar energy bodes well for future energy use. Unlike fossil fuels, the sun's radiant energy does not have to be burned to be useful, and it does not produce air pollutants. Although the equipment for collecting solar energy can be costly, the sun's energy has no cost.

Solar studies

Colleges in the region are pushing the envelop and research on solar energy possibilities, like in the 2005 Solar Decathlon, where Virginia Tech won the two top categories, architecture and livability (dwelling) awards, and placed fourth in the overall competition.

"There were 18 schools involved as far away as Madrid, Spain included in the Solar Decathlon competition this past October in Washington, D.C. One of the categories dealt with the manufacture and distribution of the solar houses," says Ben Johnson, professor of landscape architecture at Virginia Tech. "Our notion was not simply research, it was the application to society, and the business application to manufacture. Ours is a very buildable house."

Energy-saving products abound in Virginia Tech's solar house. A key part of solar collection is solar insulation panels that prevent the heat inside a solar collector from moving to the outside where the temperature is lower.

Talk has it that people are looking at 50 percent higher costs to heat their homes. Part of the cost from rising oil prices has impacted the price of insulation material. "It went up 9 percent, across the board November 14. All the insulation manufacturers went up 9 percent," says Wayne Toler, president of Toler Insulation in Lynchburg. "That happened, then my products went up 9 percent."

Regular insulation is in peak demand this winter. "In the residential marketplace we have seen an instant impact of people saying, 'I need to do something before winter' to try to cut the problems," says Toler. "My expenses on fuel for running 20 vehicles this year cost more. By August of this year, I paid out in fuel what it cost for all of 2004." Both the insulation and window replacement businesses at Toler Insulation doubled this year.

"The smart investors are selling oil and buying other energy producers. The other group of stocks that have benefited greatly from the hurricane season have been natural resources companies," says Saunders. "All of those stocks are trading at high multiples" Wind energy has media attention, along with solar power and biomass. In Virginia, favorable wind locations are located in the western mountains, and along the Atlantic coast. No commercial wind-energy generators operate within the state.

Then, there is hydropower (the energy exerted by water, as it moves in response to the force of gravity), perhaps one of the oldest sources of energy. In Virginia, more than 16 percent of the state's combined utility and non-utility generating capacity is hydroelectric.

Geothermal energy is yet another renewable resource that taps into the earth's internal heat to create electricity and to heat and cool buildings. There are numerous determinations of temperature and geothermal gradient in Blacksburg and Bridgewater.

It all takes energy

Encouragement of nuclear plants in Virginia runs high. They are relatively inexpensive to run, and they emit virtually no air pollutants. The only significant environmental concern is for nearby waterways used to cool the reactors (that and, of course, the potential of a meltdown). Nuclear plants generate about 20 percent of the nation's electricity and 34 percent of Dominion Virginia Power's consumer load.

All this begs but one question: With increased demand and adoption of alternative energy products and solutions, is it possible to offset the rising costs of petroleum?

"Most people lose sight of, whether it is wind-generation system, solar power or solar-thermal, that all these materials are rooted in petroleum. It takes energy to make the metal for the wind-generator housing; it takes energy to make the aluminum on the panels; and, all of these things are rooted in petroleum," answers Bob Schubert, associate dean for research and outreach at the college of architecture and urban studies at Virginia Tech. "With the increased demand of solar panels, or petroleum, the costs should come down."

That's hard to envision, as reports this year find that Royal Dutch Shell reported a 68 percent jump in profits in October, to $9.03 billion; Chevron posted a profit of more than $4 billion; and Exxon chalked up record earnings as its third-quarter net income jumped 75 percent, to $9.92 billion. This year's sales, which topped $100 billion in the last quarter, are expected to exceed those of Wal-Mart.

Then, there is Wal-Mart. Over the next three years, Wal-Mart expects to get 100 percent of its energy from renewable sources, cut energy use in stores by 30 percent and cut fuel consumption in its truck fleet by 25 percent, according to the Christian Science Monitor. Energy efficiency and renewable energy, including numerous solar PV arrays, small wind turbines, a bio-fuel boiler to recycle and burn recovered oil from store operations, and a nearly endless list of energy-saving and sustainable design principles, are part of its corporate goals for its U.S. stores.

"If we are going to change society, those cultural patterns that we live by, then we have to find ways of doing it so that it is acceptable for society to change," says Johnson. "We have to lead that change opposed to whatever goes to hell in a handbasket that we do."

While skeptics among us may suspect Wal-Mart of promoting social-good efforts to escape the label of a sweatshop, Wal-Mart is now the undisputed champion for cultural change in adopting renewable energy resources.

(Diane Price is the CEO of ASAVI, a creative ideas and solutions corporation with an office in Lynchburg. www.asavi.com)

http://www.bizjournal.com/content/article.php?id=150

Crude Oil Price Portal Turns Peak Oil Price Into Investment Opportunity

2005-11-29T17:20:00.000-05:00

EWorldwire

November 28, 2005

Rising oil prices have many investors concerned, but www.oil-price.net predicts investment opportunity.

For Immediate Release

PORTLAND, Ore./EWORLDWIRE/Nov. 28, 2005 --- Oil-price.net today announced the release of its new and improved crude oil price portal which offers free live oil quotes, price forecasts and advice to investors on how to benefit from high oil prices.

The free portal gives constant live market quotes and charts for crude oil and predicts future prices based on historical activity and current trends.

By also providing guidance and investment advice, the portal allows investors to benefit from high oil prices and "peak oil."

Peak oil is an influential theory concerning the long-term rate of conventional oil (and other fossil fuel) extraction and depletion. Based on current information about known oil reserves, this theory predicts that world oil production will peak around the year 2007.

Meanwhile, demand for crude oil is increasing, leading to a peak in crude oil price. Crude oil price has a direct impact on gasoline prices and all sectors of the economy.

By visiting the http://www.oil-price.net/ portal daily, investors can accurately track the progress of crude oil, today's most important factor in making wise investment decisions.

Visitors to http://www.oil-price.net/ benefit from timely critical information regarding the oil market, both on weekdays and weekends when crude oil is traded.

This wealth of information gives visitors of http://www.oil-price.net/ a definite edge over regular investors in today's energy-conscious economy.

http://newsroom.eworldwire.com/view_release.php?id=13207

Scientist urges world to get serious about oil crisis

2005-11-29T17:16:00.000-05:00

http://www.stuff.co.nz/

November 30, 2005

The world's politicians should act decisively to help reduce the wasteful use of oil, as a growing gap looms between demand and supply, Swedish physicist Kjell Aleklett says.

Speaking yesterday at the trans-Tasman Solar 2005 energy conference hosted by the University of Otago, Professor Aleklett of Upssala University, Sweden, who is president of the Association for the Study of Peak Oil and Gas, warned that big problems would result from the peaking of world oil production .

A combination of declining supply from existing oil fields, and rising global demand for oil meant there was already a potential shortfall of about five billion barrels of oil a year.

Beyond 2008, a growing gap between supply and demand was likely to be felt, he said.

Many nations faced a "democratic dilemma" over dwindling oil supplies.

What was now needed was for politicians to warn about potential problems, and to advise that things might be even worse unless necessary changes were made.

Improved telecommunications meant people could now communicate electronically rather than always travelling to distant locations for face-to-face meetings, he said.

Working more collaboratively with other nations would also be important in future, given that most of the remaining large oil and gas resources were in Islamic countries.

Prof Aleklett will address a commission considering peak oil matters at the US House of Representatives in Washington DC on December 7.

About 120 people - including Green Party co-leader Jeanette Fitzsimons - are attending the three-day solar energy conference, which ends today.

http://www.stuff.co.nz/stuff/0,2106,3495789a11,00.html

Syriana and Iraq

2005-11-28T13:02:00.000-05:00

History News Network

By Mark A. LeVine
November 27, 2005

Critics have been hailing "Syriana," George Clooney's latest film to take on the policies of the Bush Administration, as a cinematic tour de force that has "compelling real-world relevance" and is "unsettlingly close to the truth." But what is the truth "Syriana" supposedly approaches? Put briefly, the plot describes the ramification of a bungled CIA-authorized assassination of a Middle Eastern leader who decided to sign a major oil deal with China instead of an American oil company with close ties to the US Government.

Given the increasing numbers of Americans who believe that the Bush administration deliberately misled the country to justify the Iraqi invasion, many film-goers will no doubt walk accept the film's argument that Big Oil shapes American policies to its interests, even when they violate our core ideals. But is the movie really a case of art imitating life, or does "Syriana" veer towards the kind of hyperbole and exaggeration that marred Oliver Stone's "JFK?"

The evidence would seem to speak for itself. It includes:

- Newly discovered documents, reported in the Washington Post, that reveal that as early as February 2001 senior executives of at least four of the country's biggest oil companies, ExxonMobil, Conoco, Shell and BP America, met with Vice President Cheney's Energy Task Force.

- Documents from these meetings obtained by the conservative watchdog Judicial Watch--including a map of Iraq and an accompanying list of "Iraq oil foreign suitors"--reveal Iraq, with perhaps the world's second largest oil deposits, to have been a major topic of discussion. Indeed, the map erased all features of the country save the location of its main oil deposits. The list of suitors revealed that dozens of foreign companies were either in discussions over or in direct negotiations for rights to some of the best remaining oilfields on earth.

- The meetings occurred at a moment when scientists and industry leaders began worrying that the "age of peak oil production" is approaching faster than previously assumed. Once it arrives, it will no longer be possible to extract enough oil from the earth to replace what we consume, thereby setting off a potentially explosive competition for the world's remaining supplies.

- In such a scenario, insuring American access to, and where possible leverage or even control over, the world's major oil deposits would be a natural concern for an Administration umbilically tied to Big Oil, particularly in the context of escalating competition with an aggressive, energy-hungry China.

- A 2002 report by Deutsche Bank explained the major US companies would lose if Saddam made a deal with the UN, whereas the Europeans, Russians and Chinese would come out ahead. But in a post-Saddam Iraq, the report argued, the US oil majors--specifically, according to the report, ExxonMobil and ChevronTexaco--could manage the country's resources. No wonder the executives of those companies denied meeting with Cheney's staff only weeks after George W. Bush's inauguration.

- At the very moment the first Energy Task Force meetings with industry officials were held, in February 2001, the National Security Council issued a directive for staff to cooperate with the Energy Task Force in the "melding" of new "operational policies towards rogue states" with "actions regarding the capture of new and existing oil and gas fields." No place on earth was more amenable to such melding than Iraq.

- Two and a half yeas after the US-led invasion of Iraq, the Bush Administration continues to resist calls for a major troop withdrawal, despite the fact that most intelligence reports, and Iraq politicians, confirm our presence to be the main motivation for the insurgency.

With American losses and expenditures mounting daily, the threat of WMD disproved, the promise of peace and democracy seeming increasingly pollyanish, the Bush Administration is running out of good reasons for the US to maintain a long-term presence in Iraq. Two that come to mind, however, are oil and military bases--subjects, needless to say, that remain largely unbroachable in polite discourse in Washington or Baghdad.

But it's hard to think of anything else that would constitute the "core interests" both the Bush Administration and leading democrats (most recently Senator Joseph Biden) argue will be threatened by an American withdrawal from Iraq any time soon.

It took roughly fifty years for the CIA to admit that it organized the overthrow of Iranian President Mossadeqh when he dared to nationalize his country's oil industry. Our government also helped organize coups that put the Baath Party in power in Iraq twice, in 1963 and 1968. There's no doubt who was behind the toppling of Saddam. The question that remains, however, is: What was the real reason we invaded Iraq? On that score, "Syriana" hits closer to home than most politicians on either side of the aisle would care to admit.

http://hnn.us/blogs/entries/18700.html

Can oil production satisfy rising demand?

2005-11-26T23:46:00.000-05:00

USA Today

By David J. Lynch
November 24, 2005

WASHINGTON — Energy Secretary Samuel Bodman has asked a high-level advisory board to answer one of the toughest questions dogging the U.S. economy: Can world oil production meet steadily rising demand?

In a previously unreleased Oct. 5 letter to ExxonMobil CEO Lee Raymond, chairman of the National Petroleum Council, Bodman asked for a study of the industry's ability to produce enough oil and natural gas at prices that won't cripple the economy.

"He's asked them to take a big-picture look out several years. ... He wants to get some definitive information," says Craig Stevens, an Energy Department spokesman.

The most noteworthy aspect of Bodman's request is a reference to the "peak oil" debate. At issue: the claim by a vocal minority of energy experts that the world is at, or near, maximum oil production.

That doesn't mean the world is running out of oil. But as booming economies in China and India boost demand, and production levels off, prices will rise. "Oil isn't a concept. It needs to be discovered and produced," says Matthew Simmons, author of a recent book questioning the extent of Saudi Arabia's oil reserves.

Avoiding economic turmoil will require more than a decade of "intense, expensive effort," according to a February study by Science Applications International for the Energy Department. The U.S. would need to build alternative fuel plants and greatly increase vehicle fuel efficiency.

"If peaking is imminent, failure to initiate timely mitigation could be extremely damaging," the report warned.

Many oil industry figures scoff at the peak oil theory, saying rising prices will spur exploration. The International Energy Agency last month agreed, saying oil reserves in the Middle East are "relatively underexploited and are sufficient to meet rising global demand for the next quarter-century and beyond."

Some also doubt that consumption will rise in line with current forecasts of 2% annual growth. China's economy could stumble and American consumers could ditch their gas-guzzlers for more-efficient vehicles. "People will react. They're not going to keep doing what they're doing," says Jim Parkman, an investment banker at Petrie Parkman in Houston.

But the debate is affecting oil company marketing. A Chevron ad asks: "The world consumes two barrels of oil for every barrel discovered. So is this something you should be worried about?"

The NPC study is intended to answer that question. The roster of the 175-member body, created in 1947 by President Truman, reads like a "who's who" of the petroleum industry. The council is chaired by Raymond, CEO of the nation's largest oil company.

That causes Simmons to doubt whether the NPC will endorse the peak oil camp. But Rep. Roscoe Bartlett, R-Md., who met with President Bush this summer to urge government action, says: "Any thinking person has to recognize at some point the world is going to face a crisis."

http://www.usatoday.com/money/industries/energy/2005-11-24-peak-oil-usat_x.htm

Move past era of oil, experts say

2005-11-25T05:41:00.000-05:00

The News & Observer

By Greg Gordon
Washington Bureau

November 25, 2005

Former CIA Director James Woolsey paints a dire scenario: A terrorist attack causes a months-long, 6 million-barrel reduction in Saudi Arabia's daily petroleum output, sending the price of oil skyrocketing past $100 a barrel.

Industry banker and author Matthew Simmons says the kingdom's oil fields are deteriorating anyway. And a recent New York Times story cited an intelligence report suggesting the Saudis lack the capacity to pump as much oil as they boast they can.

Even if nothing disrupts the projected flow of Middle East petroleum, Energy Department consultants warned earlier this year that "the world is fast approaching the inevitable peaking" of global oil production -- a problem "unlike any faced by modern industrial society."

They wrote that the United States and other nations are in a race with the clock to find alternative sources for oil, "the lifeblood of modern civilization," and avoid potential economic disaster.

Congress Notices

After years -- or even decades -- of sitting on the fringe of the world oil debate, Congress is starting to pay attention to the issue of what to do when production dwindles.

This month, a bipartisan group of eight U.S. senators proposed legislation to accelerate the nation's shift to new energy sources in the transportation sector, which accounts for two-thirds of America's oil consumption, guzzling 14 million barrels of oil each day.

Warning of a potential crisis, they proposed billions of dollars in tax incentives to spur development of vehicles powered by electric batteries, diesel, ethanol and exhaust-free hydrogen fuel cells. In the House, 16 co-sponsors want all U.S. gasoline to contain a 10 percent blend of renewable fuel, as only Minnesota requires now.

If peaking production or rising demand lead to shortfalls of oil before a shift to alternative sources occurs, the global effect could be huge, the Energy Department consultants wrote. They said U.S. costs from a prolonged oil shortage could reach $4 trillion.

Developed countries would face inflation, rising unemployment and recession, they wrote, while Third World nations "will likely be even worse off."

Hurdles seen

U.S. companies and government agencies already are exploring the energy alternatives proposed by the senators, but progress has come at less-than- breakneck speed.

Experts say that high startup costs, technological hurdles, tepid consumer demand for pricier, fuel-efficient vehicles and other obstacles likely will prevent such products from significantly reducing U.S. oil imports for a decade or more without government intervention.

Critics say the energy bill that President Bush signed into law last summer will only modestly reduce U.S. dependence on foreign oil. It offers tax credits ranging up to $3,000, beginning Jan. 1, for early buyers of hybrids or diesel-powered vehicles, but it does not toughen 25-year-old fuel efficiency standards for cars and trucks.

Woolsey said in an interview that the administration is no longer "just asleep on these issues" but that the government still isn't moving swiftly enough to bring new technologies to full-scale production.

Reserves are up

Not everyone agrees that oil production is nearing a peak. "I don't think the evidence is there," said Daniel Yergin, founder of Massachusetts-based Cambridge Energy Research Associates.

His team of geologists and petroleum engineers has done an oil field-by-oil field analysis and concluded that world oil production capacity will increase by nearly 20 percent between 2004 and 2010, and that since the 1990s discoveries of new oil reserves have exceeded production.

Yergin, who won a Pulitzer Prize for his 1991 book chronicling the history of the oil industry, said he supports the search for more fuel-efficient technologies. But since the 1990s, he argued, the world has "added more oil [reserves] than has been produced."

In addition, some of the fuel squeeze could be eased by oil and mining companies' breakthroughs in finding new techniques for extracting oil from Canadian tar sands and even ways to convert some of the nation's vast coal resources to petroleum.

Keeping pace

The energy consultants' report said new oil discoveries are distantly trailing new demand, and no "super giant" oil field has been found in more than 35 years. The Arctic National Wildlife Refuge, which the Senate recently voted to open for oil drilling, might qualify. It would produce no petroleum for a decade, then would pump 1 million barrels a day -- still less than 5 percent of current U.S. consumption.

Others say global demand is rising so quickly that new oil discoveries alone cannot keep pace. Sen. Mark Dayton, D-Minn., said that on a recent visit to Beijing, Chinese officials told him the number of cars and trucks there will surge from 24 million to 140 million by 2020.

The U.S. Energy Information Administration has projected the year 2037 as the most likely date for a global oil production peak, but the Energy Department consulting team led by Robert Hirsch said it found another EIA scenario for a peak in 2016 to be "much more credible."

Woolsey is among a group of neoconservatives who have voiced national security concerns over the United States' importation of 62 percent of its oil, given the instability in the oil-rich Middle East and other Third World, oil-producing nations.

"Whatever you think about peak oil," Woolsey said, "you need to be concerned about the possibility that in the very near term at any point, ... regime change, government policy change or terrorist attacks could put a major, and perhaps even a long-duration spike on oil prices. ... We need to move away from oil in either case."

http://www.newsobserver.com/110/story/371106.html

The Peak Oil Crisis: Solutions a First Cut

2005-11-24T14:26:00.000-05:00

Falls Church News-Press

By Tom Whipple
November 24, 2005

After a thorough airing of "whether" and "when", the Denver peak oil conference moved to the murkier issue of "So, what do we do about it?"

The current answer, of course, is to keep drilling. Do whatever it takes — cut taxes, forget air quality, drill in the parks, drill on the seacoasts, drill in the arctic, drill everywhere there is a hint of more oil. As the "more drilling" policy has limited prospects, the Denver conference explored the four major alternatives that could produce large quantities of liquid fuel— shale, tar sands, coal to liquid, and biomass.

Shale can be dismissed quickly as being impractical for the foreseeable future on a large scale because it requires too much energy and entails too much of a threat to the environment.

Meanwhile, billions continue to be spent to increase oil production from the Alberta tar sands. Current plans call for 2 million barrels a day by 2010 and perhaps 5 million by 2030. For a world which currently consumes 84 million b/d, the tar sands, which have all sorts of environmental issues connected with extracting the oil, will never replace conventional oil on the scale it is currently being consumed.

Large-scale conversion of coal to liquid fuel is the first alternative source showing promise to produce liquid fuels on the scale of millions of barrels per day in the next decade or two. The technology has been around for 60 years and was used extensively by Germany during World War II and more recently by South Africa . Although the process relies on non-renewable fossil coal as a feedstock, the world still has large coal reserves. Moreover, modern conversion methods can do much to remove air-polluting impurities during the processing into liquid fuels. A number of organizations are beginning to plan for large-scale coal conversion facilities, and this will only be accelerated as the price of conventional oil climbs higher and higher.

One of the highlights of the oil conference was a report from the National Renewable Energy Laboratory (NREL) about the progress being made on producing liquid fuels from renewable biomass. For those not familiar with the concept, fuels and chemicals can be made from trees, grasses, agricultural crops, animal and human wastes, and algae.

Recently, research has focused on using enzymes to convert non-edible plants such as trees and grasses into ethanol. Studies have shown that some 1 billion tons of lignocellulosic biomass (trees, grasses, etc.) could be grown in the US each year. The NREL believes the conversion of this amount of renewable grass and trees to liquid fuels could supply 50-70 percent of the US 's requirements.

New sources of biomass, along with increased use of conventional biodiesel and ethanol produced from soybean and corns as gasoline substitutes, suggests the future for the farmer and the agriculture industry in general looks brighter than it has for decades. Indeed, if a significant part of liquid fuel production becomes the responsibility of farmers, we could see a conflict between food and biomass-for-fuel production that would drive food prices significantly higher.

However, the major problem with large-scale production of liquid fuels from coal and biomass is the massive amounts of capital and the years required to build the plants to do the conversion. If worldwide oil depletion sets in within the next five years, there is likely to be a period of many years during which there will be major shortages of liquid fuels in the quantities we have been consuming.

During the coming decades, we are going to have to make decisions about how to allocate decreased amounts of liquid fuels among many competing uses. One of the guidelines will be to reduce the use of high-energy liquid fuels wherever there is an acceptable substitute.

For example, electric or even coal-powered trains could replace a large portion of long-haul truck traffic. The advent of lightweight electric or ultra-high mileage hybrid cars could eliminate a significant portion of the gasoline consumption. On the other hand, it is difficult to imagine the technology that would allow a large airplane to fly on coal or electricity. There will clearly be a need for some liquid fuels many years into the future.

One thing becoming clearer all the time is that better electric storage batteries are going to make a big difference. Should a reliable battery with much denser energy storage and much faster recharge times become available (at affordable prices), it would go a long ways to smoothing the transition from petroleum based liquid fuels to renewables. Lithium-ion batteries are already demonstrating that currently available cars can achieve more than 100 miles per gallon for large portions of their daily use. Cars optimized for these batteries could presumably do much better.

One of the more interesting presentations at the conference was the role electric vehicles with big rechargeable batteries could play when paired to interact with a residence. A large car battery could help store excess solar and wind electricity, coming only intermittently, for use around a home at night. The same batteries could be recharged off the grid during the night when the power company has excess capacity.

At the moment, our future transportation is starting to look like biomass and big batteries.

http://www.fcnp.com/538/peakoil.htm

Recent Appearances of the Virgin Mary

2005-11-23T23:33:00.000-05:00

Yes, I know, not really Peak Oil related... but these are just too weird.

Apparently, right now, a statue of the Virgin Mary is crying blood in Sacramento, CA. Here are links to news stories, including photos of the statue:

http://cbs13.com/topstories/local_story_325160721.html

http://www.foxreno.com/slideshow/5373288/detail.html?qs=;s=1;w=430

Apparently after Hurricane Wilma struck Mexico an image of the Virgin Mary appeared:

http://in.today.reuters.com/news/newsArticle.aspx?type=worldNews&storyID=2005-11-21T042626Z_01_NOOTR_RTRJONC_0_India-224366-1.xml&archived=False

I debated posting these on a Peak Oil blog so feel free to send comments to peakoil20@yahoo - dot -com.