Meltdown

[BachQ]

Hi Sean!  How are you?

Dm, do you know of any opinions from experts on the present increases?

Actually, a majority of experts have expressed the belief that the current oil price spike is due to the interaction of several factors.  Specifically, the oil price spike is caused by:

1. Speculators who are wary of the dollar's freefall and investing in safehaven commodities like gold and oil futures.

2. Growing demand (esp. in Asia).

3. Iraq war and concommitant instability (e.g. the recent Basra pipeline sabotage).

4. Higher marginal costs of extracting oil.

5. Cyclical nature of oil prices.

Because a majority of analysts don't think peak oil will happen until 2010-2012, the current price hike is seen as being largely unrelated to the underlying limitations in supply (i.e., peak oil).

IOW, if the current price spike is not related to peak oil, then just imagine how high the prices will escalate once we reach peak oil!  At that point, widespread economic collapse is all but certain.

[BachQ]

Petroleum Man will be virtually extinct soon
by Colin Campbell


"it is now evident that the world faces the dawn of the Second Half of the Age of Oil, when this critical commodity, which plays such a fundamental part in the modern economy, heads into decline due to natural depletion. A debate rages over the precise date of peak, but rather misses the point, when what matters — and matters greatly — is the vision of the long remorseless decline that comes into sight on the other side of it. The transition to decline threatens to be a time of great international tension. Petroleum Man will be virtually extinct this Century, and Homo sapiens faces a major challenge in adapting to his loss. Peak Oil is by all means an important subject."

Colin Campbell is Founder of Association for the Study of Peak Oil & Gas and ASPO Honorary Chairman

[BachQ]

"Minivans, global air travel and the transport of goods by diesel truck soon will become the stuff of yesterday as the world adapts to depleting oil reserves. The planet, posits a new book by two Canadian academics, is on the cusp of a revolution in transportation that will steer people away from petroleum-fuelled vehicles and into ones that are either battery-powered or connected to electrical grids."




"the key to our collective futures is whether or not the decline in the availability of fossil fuels, particularly oil, will come upon us so fast that that the earth will not have the resources -- fuel, minerals, food, organizational coherence – to effect a worldwide change from fossil fuels to renewable energy."


"But the end of the American dream won't come easily. There is simply too much invested in maintaining this way of life. Even as the choices continue to dwindle for average Americans, people will fight to maintain a way of life they feel entitled to have."






Excerpted from the Wall Street Journal

Northwest Airlines Takes Steps To Counter Fuel Costs
By KATHY SHWIFF
April 3, 2008 6:03 p.m.

Struggling to cope with record oil prices and a weakening economy, Northwest Airlines Corp. said Thursday it will raise fares, fuel surcharges and baggage fees and cut its domestic flight schedule by 5%.  The move is the latest by a major carrier to trim back service and pile extra fees on customers as relentless growth in the cost of fuel threatens the industry's attempt to put a half-decade slump and a round of bankruptcies behind it.  Northwest also said it has suspended plans to hire more pilots and flight attendants and will cut capital spending that doesn't involve airlines by about $100 million this year, to $150 million. Employees' pay won't be cut, and any job losses will happen through attrition if possible.

"Over the past several months, the price of oil has risen dramatically to all time highs and there is no reasonable basis to conclude that oil prices will materially decline anytime soon," Chief Executive Doug Steenland said in a release. "These increased costs are significant and call for a strong response from us."  *** Oil prices have surged to record highs this year amid rising demand from India and China, global tensions and a falling U.S. dollar that tends to raise the price of commodities such as oil that are denominated in dollars. Benchmark U.S. crude oil futures settled Thursday at $103.83 a barrel, up 8.2% so far this year.

Those rising prices are sucking cash out of airlines' coffers. Steenland said in March the company expects at least $1.7 billion in higher fuel costs than Northwest expected last May, when it was preparing to exit bankruptcy court. UAL Corp., parent of United Airlines, said at the time it expects $1.5 billion in extra costs.

This week, three airlines have announced they would close: ATA Airlines Inc., Aloha Airgroup Inc. and Champion Air. Among major carriers, Delta Air Lines said in March that it will cut about 2,000 jobs, trim domestic flights by an additional 5%. Northwest and Delta have discussed a merger that many hoped would jumpstart consolidation in the industry and help airlines better compete. But talks have been snarled by the inability of pilots at the two airlines to agree on seniority issues.






Skybus becomes third airline this week to close

(CNN) -- Skybus Airlines announced Friday it is shutting down its passenger flights -- becoming the third airline this week to cease operations.

The low-cost carrier couldn't overcome "the combination of rising jet fuel costs and a slowing economic environment," the company said Friday. "These two issues proved to be insurmountable for a new carrier."

Skybus, an Ohio-based airline founded in 2004, will cease operations effective Saturday.

Earlier in the week, ATA Airlines and Aloha Airlines announced they would shut down flights as both companies work through bankruptcy filings.

ATA, an Indiana-based low-cost charter airline, filed for Chapter 11 status Wednesday as a result of financial problems "following the loss of a key contract for our military charter business," the company said. The company started operation in 1973.

Hawaii-based Aloha Airlines announced Sunday it would shut down its passenger operations this week after filing for bankruptcy protections last month, concluding 61 years of service.

In its bankruptcy filing, Aloha said it was unable to generate enough revenue from its inter-island passenger flights because of below-cost fares by competitors Mesa Air Group's go! airline. The company said it was forced to match the competitor's fares during an unprecedented increase in the cost of jet fuel.

Skybus said all flights Friday would be completed; passengers with reservations for Saturday and beyond were told to seek refunds from their credit card companies.

[orbital]

Dm, do you know of any opinions from experts on the present increases? The whole thing is really alarming, and you know it's bad when most people just don't want to know: a pig headed refusal to face the facts is the best they can do.

Sean, doomsday scenario authorship does nothing to subtract from the problem at hand either. If this looks like a two-way communication between you and Dm that does not mean that you are more aware of it than anybody else. The fact is there is not much any of us here can do about peak-oil, except try to adopt a less petrolium dependent life style for ourselves, and get ready to embrace the hard times -if they indeed come.
Anyone who wants to be active about this subject should pursue a path where they can actually achieve some results. And that involves pressuring those in charge of your government's energy policies. Because just talking about how people do not talk about it will not get you to anywhere positive.

[BachQ]

"Dear Reader,   

"Civilization as we know it is coming to an end soon. This is not the wacky proclamation of a doomsday cult, apocalypse bible prophecy sect, or conspiracy theory society. Rather, it is the scientific conclusion of the best paid, most widely-respected geologists, physicists, bankers, and investors in the world. These are rational, professional, conservative individuals who are absolutely terrified by a phenomenon known as global Peak Oil."

[BachQ]

Dm, do you know of any opinions from experts on the present increases? The whole thing is really alarming, and you know it's bad when most people just don't want to know: a pig headed refusal to face the facts is the best they can do.

Sean, responding further on the point of the role of speculation / speculators:



Congress told speculators not driving up oil price
Thu Apr 3, 2008 6:44pm BST
By Tom Doggett

WASHINGTON (Reuters) - The U.S. futures market regulator on Thursday told skeptical members of Congress that speculators were not responsible for pushing crude oil prices to record highs, but one lawmaker warned that commodity markets had become casinos.

Market fundamentals such as strong oil demand in China and India, a weak U.S. dollar and geopolitical tensions in big oil producing countries "provide the best explanation for crude oil price increases," Commodity Futures Trading Commission (CFTC) Chief Economist Jeffrey Harris told a Senate panel's hearing.

Harris said his agency, which regulates futures markets, has seen "little evidence that changes in speculative positions are systematically driving up crude oil prices."

Many senators on the Energy and Natural Resources Committee disagreed, saying hedge funds and other speculators had pushed up oil prices.

"There is an orgy of speculation in the futures markets," said Democrat Byron Dorgan. "This is a 24-hour casino with unbelievable speculation."

At the hearing on what's behind skyrocketing crude costs, Dorgan said about 20 times more oil is sold daily in the futures markets than actually exists.

As crude has surged above $100 a barrel, the number of outstanding oil futures contracts at the New York Mercantile Exchange has soared from about 1 million contracts in 2004 to over 2.8 million in the most recent week, Harris said.

But the economist said the share of outstanding NYMEX oil contracts held by speculators has increased only marginally -- from 31 percent to about 37 percent over the last three years.

He said the NYMEX oil futures market has had a steady ratio over the last 22 months between about 310 noncommercial, or speculative, traders and about 120 commercial traders such as oil companies or airlines that need to hedge fuel costs.

Despite the CFTC's reassurances, lawmakers from both parties expressed concern about rollicking futures trading.

"I'm not sure things are hunky-dory," Pete Domenici, the top Republican on the Senate energy panel, told Harris.

Sean Cota, who heads a heating fuel dealers trade group, told lawmakers the amount of money speculators are required to put up to trade oil futures should be increased.

"It has become apparent that excessive speculation on energy trading facilities is the fuel that is driving this runaway train in crude oil prices," Cota said.

"Hedge funds and investment banks are not driven to provide U.S. citizens the most affordable energy supplies; they are driven to profit from volatility," Cota said.

Stock market investors generally are required to keep more cash in margin accounts than futures investors are.

Several committee members supported higher margin requirements for futures trading. But the head of the committee, Democrat Jeff Bingaman, said he did not know if Congress would pass a bill to do so.

Cota urged lawmakers to support a bill that would require traders in oil futures to take actual delivery of the crude, which would effectively chase speculators from the market.

Chances of passing that bill, sponsored by Rep. John Larson of Connecticut, during this election year were unclear.

[Sean]

Sure thing orbital, and I guess you're right that I have a cynical streak. However the mess we're in comes directly from the character of the society and the decisions, or rather blind greed, that have propelled it up to now... I feel I want to wash my hands of it, not form some misguided lobby group that has the weight of a billion idiots against it in democratic control and with no moral sense of the future.

[head-case]

I feel I want to wash my hands of it, not form some misguided lobby group that has the weight of a billion idiots against it in democratic control and with no moral sense of the future.

Why don't you "wash your hands" of western society, for real.  Live in the undeveloped world that you claim to admire so much.  Then you could die of amoebic dysentery or dengue fever, like a real third worlder, rather than snapping picturesque photos of their miserable condition.

[BachQ]

End of the world as we know it
You might feel fine, but high oil cost, scarcity mean American Empire is about to come crashing down
Guy R. McPherson
University of Arizona professor
Apr. 6, 2008 12:00 AM

Peak oil spells the end of civilization. And, if it's not already too late, perhaps it will prevent the extinction of our species.

M. King Hubbert, a petroleum geologist employed by Shell Oil Co., described peak oil in 1956. Production of crude oil, like the production of many non-renewable resources, follows a bell-shaped curve. The top of the curve is termed "peak oil," or "Hubbert's peak," and it represents the halfway point for production.

The bell-shaped curve applies at all levels, from field to country to planet. After discovery, production ramps up relatively quickly. But when the light, sweet crude on top of the field runs out, increased energy and expense are required to extract the underlying heavy, sour crude. At some point, the energy required to extract a barrel of oil exceeds the energy contained in barrel of oil, so the pumps shut down.

Most of the world's oil pumps are about to shut down.

We have sufficient supply to keep the world running for 30 years or so, at the current level of demand. But that's irrelevant because the days of inexpensive oil are behind us. And the American Empire absolutely demands cheap oil. Never mind the 3,000-mile Caesar salad to which we've become accustomed. Cheap oil forms the basis for the 12,000-mile supply chain underlying the "just-in-time" delivery of plastic toys from China.

There goes next year's iPod.

In 1956, Hubbert predicted the continental United States would peak in 1970. He was correct, and the 1970s gave us a small, temporary taste of the sociopolitical and economic consequences of expensive oil.

We passed the world oil peak in 2005, and we've been easing down the other side by acquiring oil at the point of a gun - actually, guns are the smallest of the many weapons we're using - paying more for oil and destroying one culture after another as the high price of crude oil forces supply disruptions and power outages in Third World countries.

The world peaked at 74.3 million barrels per day in May 2005. The two-year decline to 73.2 million barrels per day produced a doubling of the price of crude. Later this year, we fall off the oil-supply cliff, with global supply plummeting below 70 million barrels/day. Oil at merely $100 per barrel will seem like the good old days.

Within a decade, we'll be staring down the barrel of a crisis: Oil at $400 per barrel brings down the American Empire, the project of globalization and water coming through the taps. Never mind happy motoring through the never-ending suburbs in the Valley of the Sun. In a decade, unemployment will be approaching 100 percent, inflation will be running at 1,000 percent and central heating will be a pipe dream.

In short, this country will be well on its way to the post-industrial Stone Age.

After all, no alternative energy sources scale up to the level of a few million people, much less the 6.5 billion who currently occupy Earth. Oil is necessary to extract and deliver coal and natural gas. Oil is needed to produce solar panels and wind turbines, and to maintain the electrical grid.

Ninety percent of the oil consumed in this country is burned by airplanes, ships, trains and automobiles. You can kiss goodbye groceries at the local big-box grocery store: Our entire system of food production and delivery depends on cheap oil.

If you're alive in a decade, it will be because you've figured out how to forage locally.

The death and suffering will be unimaginable. We have come to depend on cheap oil for the delivery of food, water, shelter and medicine. Most of us are incapable of supplying these four key elements of personal survival, so trouble lies ahead when we are forced to develop means of acquiring them that don't involve a quick trip to Wal-Mart.

On the other hand, the forthcoming cessation of economic growth is truly good news for the world's species and cultures. In addition, the abrupt halt of fossil-fuel consumption may slow the warming of our planetary home, thereby preventing our extinction at our own hand.

Our individual survival, and our common future, depends on our ability to quickly make other arrangements. We can view this as a personal challenge, or we can take the Hemingway out. The choice is ours.

For individuals interested in making other arrangements, it's time to start acquiring myriad requisite skills. It is far too late to save civilization for 300 million Americans, much less the rest of the planet's citizens, but we can take joy in a purpose-filled, intimate life.

It's time to push away from the shore, to let the winds of change catch the sails of our leaky boat.

It's time to trust in ourselves, our neighbors and the Earth that sustains us all.

Painful though it might be, it's time to abandon the cruise ship of empire in exchange for a lifeboat.



Guy R. McPherson is a professor of conservation biology at the University of Arizona.

[BachQ]

Peak Oil Review -- April 7th, 2008
By Tom Whipple
Posted 07 April 2008 @ 05:20 pm EST

1. Prices, Production and Exports

It was another week of volatility for oil prices as a potpourri of fundamentals, financial crisis, hearings, unemployment and a looming recession drove oil prices one way and then another. After losing $4 a barrel on Monday as speculators closed positions, prices recovered on Wednesday after the EIA reported that US gasoline stockpiles had fallen by 4.5 million barrels the previous week, twice what analysts had expected. On Friday, prices rose again to close out the week at $106 a barrel after the report that US jobs had declined for the third straight month, confirming fears that the US was headed for a recession. This time oil prices rose on bad economic news in expectation that there will be more interest rate cuts, a weaker dollar, and a flight to safe assets such as oil.

2. Electricity Shortages and Diesel

Stories of current and imminent shortages of electric power are becoming more frequent each day. A combination of inadequate rain for hydro power, unaffordable oil and coal for thermal power, and rapidly increasing demand is leaving country after country with inadequate power for national grids.

It is becoming apparent that one of the unforeseen consequences of globalization is that there is simply not enough power being produced in the world to run the flood of inexpensive electric consumer goods – TVs, kitchen appliances, air conditioners -- that are pouring from the factories of Asia onto the world.

The increasingly frequent "rolling blackouts" that are appearing around the world unfortunately are killing "essential" systems – water pumps, hospitals, banking computers, factories, TV stations, and telephone exchanges – as well as the less-essential consumer devices.

While electric companies may eventually be able to make special arrangements to exempt organizations that are vital to the economy from blackouts, there are massive numbers of organizations around the world that are completely dependent on electricity to keep functioning. For these, the choice is generate their own electricity with their own generators or shut down.

What is developing is a new and potentially very large demand for gasoline and particularly diesel fuel as the national power grids fall further and further behind in their ability to keep up with demand for electricity. Higher prices and shortages are clearly in store as more and more Chinese-made small and medium sized electric generators come into service around the world.

3. Rice, Inflation and Oil

Rice prices increased by 50 percent in the last two weeks to an all-time high as importing countries scrambled to hold off social unrest by securing supplies from the few exporters still willing to sell. As the staple food for 3 billion people, 33 countries are facing unrest as the price of food and energy becomes unaffordable.

[BachQ]

Oil peak theorist warns of chaos, war
SHAWN MCCARTHY

From Tuesday's Globe and Mail

April 7, 2008 at 9:09 PM EDT

WASHINGTON — Matt Simmons sounds the alarm like the Cassandra of the oil industry, warning that crude production has peaked and that looming energy shortages could derail global growth and even spark armed conflict.

As a prominent "peak oil" theorist, the veteran oil industry financier paints a grim picture of a world facing resource scarcity. Still, it doesn't take a "peak-ist" to conclude that the global oil producers will find it increasingly difficult to keep up with growing demand.

He squared off yesterday against other experts who argue that the world has yet to reach the physical limits of oil production. But while they disagreed on the extent of the problem, the panelists at a U.S. Department of Energy conference in Washington concurred that future crude production will be constrained by physical, economic and political factors that add up to tight markets and higher oil prices.

Despite oil prices that have topped $100 (U.S.) a barrel, there was little sense at yesterday's conference, put on by the Department of Energy's Energy Information Administration, that high prices would spark either a boost in oil output or a sharp fall in global demand.

Record pump prices – and a sharply slowing economy – have cut into U.S. demand, which represents 25 per cent of the world's total. But analysts who follow the emerging economies said there is no sign yet that triple-digit crude prices have seriously dented demand in China or India.

Global demand for oil will continue to grow, analysts forecast, even as the developed world reduces consumption in the face of high prices and environmental concerns. Economic growth and rising living standards in developing countries like China, India and the Middle East will more than offset reduced energy consumption in the mature economies of North America and Europe.

The views of Mr. Simmons, who runs Houston-based Simmons & Assoc. investment bank, bordered on apocalyptic.

Oil shortages "could lead to social chaos and war," he warned. "The issue is the most serious risk to sustaining the 21st century. Peak oil is real, and we have to take it seriously." He argued that production of conventional crude peaked in May, 2005, at 74 million barrels a day.

Since then, the world has met rising consumption – now at about 88-million barrels a day – by cutting inventories, tapping natural gas liquids that typically are included in crude production figures and using better refinery efficiencies.
Peter Jackson, a director at the Cambridge Energy Research Assoc., said Mr. Simmons was overstating decline rates of existing fields, was not taking into account the prospect for new discoveries, and played down the importance of unconventional resources such as Canada's oil sands.

Still, he said the industry faced "above ground" problems that would make it difficult to keep production growing fast enough to meet rising demand. About 90 per cent of existing conventional reserves are controlled by state-owned oil companies, many of which are not investing enough in capacity expansion, he said.

At the same time, the industry worldwide has seen construction costs explode, even as oil companies are forced to exploit smaller, more remote and more geologically complex reserves. The average cost of producing a barrel of oil has more than doubled in the past eight years, with most of that increase occurring in the past four, he said.

James Schlesinger, who was the United States' first energy secretary 30 years ago during the oil shock of the late 1970s, warned of a new crisis looming.

That 1970s shock was the result of supply disruptions caused by the 1973 Arab embargo and then the Iranian revolution. The current runup in prices reflects a more fundamental disconnect between constrained supplies and rising demand in the developing world, he said.

"At some point during the decade immediately ahead, we will hit a plateau, and this will have a tremendous shock both economically and politically," Mr. Schlesinger said.

[head-case]

I see the chicken little thread never dies.

[Sean]

Hard reality, rapidly catching up with our house of cards-

http://www.energybulletin.net/

For instance, http://www.energybulletin.net/42498.html

[BachQ]

I see the chicken little thread never dies.

How about this: over the next four years, I'll invest heavily in solar energy stocks, and you invest heavily in airlines and automobile manufacturing stocks ........ and we'll compare results in four years!

[BachQ]

Hard reality, rapidly catching up with our house of cards-

http://www.energybulletin.net/

For instance, http://www.energybulletin.net/42498.html

Excellent.  Thanks Sean! 

[head-case]

How about this: over the next four years, I'll invest heavily in solar energy stocks, and you invest heavily in airlines and automobile manufacturing stocks ........ and we'll compare results in four years!

Exactly my point, the economy will adapt, other sources of energy will be developed, and all of the "chaos and war" and "end of civilization as we know it" people will be revealed as lunatics.

[BachQ]

"as early as 2013, there will be substantial shortages of uranium worldwide."

[BachQ]

"our oil reserves are nearly depleted or are at least on the downward curve of production. For the last quarter century, we have used more oil each year than we have found. New finds will likely be hard-to-extract sources that will be costly to produce.  The $3-plus gas price is just the first sign of a very changed future staring us down. The curve of oil supplies shows that the downward slope will be much steeper than the gradual climb as more and more oil reserves were discovered in the middle of the 20th century."

[BachQ]

The Age of Scarcity

[BachQ]

Final Conclusions of Peak Oil Series

The peaking of all fossil fuels this century will result in dramatic changes in how people in today's industrialized societies conduct their lives. First, a near-term decline in world oil production will force us to re-think our entire economic and physical infrastructure. Natural gas will peak shortly after that and will cause even more dislocation. Using coal as an oil/gas substitute would only worsen our global warming
situation, and in any case coal may also peak within two to three decades.  No combination of lternatives appears to be able to replace more than about 10 percent of our present transport energy in a sustainable manner. The only potentially workable adaptation appears to be re-localization of everything we do ? including massive reduction in energy use, local energy generation, local food production, local building materials and local fabrication of all essential commodities.