Meltdown

[BachQ]

New York Times

April 29, 2008
Oil Price Rise Fails to Open Tap
By JAD MOUAWAD




As oil prices soared to record levels in recent years, basic economics suggested that consumption would fall and supplies would rise as producers drilled for more oil.
But as prices flirt with $120 a barrel, many energy experts are becoming worried that neither seems to be happening. Higher prices have done little to suppress global demand or attract new production, and the resulting mismatch has sent oil prices ever higher.
That has translated into more pain at the pump, with gasoline setting a fresh record of $3.60 a gallon nationwide on Monday. Experts expect prices above $4 a gallon this summer, and one analyst recently predicted that gasoline could reach $7 in the next four years.
A central reason that oil supplies are not rising much is that major producers outside the OPEC cartel, like Russia, Mexico and Norway, are showing troubling signs of sluggishness. Unlike OPEC, whose explicit goal is to regulate the supply of oil to keep prices up, these countries are the free traders of the oil market, with every incentive to produce flat-out at a time of high prices.
But for a variety of reasons, including sharply higher drilling costs and a rise of nationalistic policies that restrict foreign investment, these countries are failing to increase their output. They seem stuck at about 50 million barrels of oil a day, or 60 percent of the world's oil supplies, with few prospects for growth.
"According to normal economic theory, and the history of oil, rising prices have two major effects," said Fatih Birol, the chief economist at the International Energy Agency in Paris. "They reduce demand and they induce oil supplies. Not this time."
With global supplies tight, geopolitics continue to play a big role in pushing up oil prices. Oil futures closed at $118.75 a barrel, up 23 cents, on the New York Mercantile Exchange, after strikes by oil workers in Scotland and Nigeria that shut down nearly 1.7 percent of the world's daily production.
Countries outside the Organization of the Petroleum Exporting Countries have been the main source of production growth in the past three decades, as new fields were discovered in Alaska, the North Sea and the Caspian region.
But analysts at Barclays Capital said last week that non-OPEC supplies were "seemingly dead in the water." Goldman Sachs raised similar concerns last month, saying that growth in non-OPEC supplies "can no longer be taken for granted."
At the same time, oil consumption keeps expanding. Global consumption is forecast to increase by 1.2 million barrels a day this year, to 87.2 million barrels a day, with much of the growth in demand coming from China, India and the Middle East, according to the International Energy Agency, a group that advises industrialized countries.
In the United States and through much of the developed world, the higher fuel prices have led drivers to reduce their consumption, and gasoline demand is expected to drop this year. But that drop will be more than offset by the rise in energy demand from developing countries. In the next two decades, demand is projected to jump by 35 percent, and developing countries will consume more oil than industrialized countries.
Higher oil prices mean record profits for oil companies that have, to some extent, masked the supply problems. Exxon Mobil and Chevron are both expected to deliver knockout performances when reporting quarterly earnings this week, even as they struggle to increase production.
"What is disturbing here is that things seem to get worse, not better," said David Greely, an analyst at Goldman Sachs. "These high prices are not attracting meaningful new supplies."
The outlook for oil supplies "signals a period of unprecedented scarcity," Jeff Rubin, an analyst at CIBC World Markets, said last week. Oil prices might exceed $200 a barrel by 2012, he said, a level that would very likely mean $7-a-gallon gasoline in the United States.
Some regions are simply running out of reserves. Norway's production has slumped by 25 percent since its peak in 2001, and in Britain, output has dropped 43 percent in eight years. Production from the giant Prudhoe Bay field in Alaska has dropped by 65 percent from its peak two decades ago.
In many other places, the problems are not below ground, as energy executives like to put it, but above ground. Higher petroleum taxes and more costly licensing agreements, a scarcity of workers and swelling costs, as well as political wrangling and violence, are making it harder to raise production.
"It's a crunch," said J. Robinson West, chairman of PFC Energy, an energy consulting firm in Washington. "The world is not running out of oil, but rather it's running out of oil production capacity."
Mexico, the second-biggest exporter to the United States, seems increasingly helpless to find new supplies to offset the collapse of its largest oil field, Cantarell. A combination of falling production and rising domestic consumption could wipe out Mexico's exports within five years.
Foreign investment could help Mexico produce oil from deeper waters, but that is a controversial proposition in a country where oil has long been seen as part of the national patrimony.
Another country, Russia, is also a focus of analysts' worries. Russia is not exactly running out of places to look for oil — a huge chunk of eastern Siberia remains unexplored — and the country has been the biggest contributor to the growth in energy supplies in the last decade.
But Russian energy officials warned recently that the days of stunning growth that followed the collapse of the Soviet Union were over, as the country focuses on stabilizing its output. Russia today produces about 10 million barrels of oil a day, up from a low of 6 million barrels in 1996.
The Russian government has been muscling Western companies to gain more control over its energy resources. That rise in energy nationalism could freeze new investment and slow any meaningful growth in supplies there for years.
As countries like Russia slow output, analysts say OPEC will have to pick up the slack. The oil cartel accounts for 40 percent of the world's oil exports and owns more than 75 percent of global reserves. But there are serious concerns that OPEC will also find it tough to increase production.
Saudi Arabia, the world's top oil exporter, is completing a $50 billion plan to increase capacity to 12.5 million barrels a day, but it signaled recently that it would not go beyond that. That means Saudi Arabia could fall short of the 15 million barrels a day that most experts had expected it to produce in the long run.
OPEC's 13 members plan to spend $150 billion to expand their capacity by five million barrels a day by 2012. But OPEC will need to pump 60 million barrels a day by 2030, up from around 36 million barrels a day today, to meet the projected growth in demand. Analysts say that without Iran and Iraq — where nearly 30 years of wars and sanctions have crippled oil production — reaching that level will be impossible.
Not everyone is pessimistic about energy supplies. A study by the National Petroleum Council, an industry group that provides advice to the secretary of energy, concluded that the world still had plenty of petroleum resources that could be tapped.
In fact, high prices have set off a global dash for oil. Brazil, for example, has struck large offshore fields that could turn the country into one of the world's top 10 producers. But developing new fields can take many years.
To make up the shortfall, the world is also increasingly turning to fuels from unconventional sources, like biofuels or heavy oil. Canadian tar sands, for example, have attracted large investments.
But the International Energy Agency estimates that current investments will be insufficient to replace declining oil production. The energy agency said it would take $5.4 trillion by 2030 to raise global output. Otherwise, it warned that a crisis before 2015 involving "an abrupt run-up in prices" could not be ruled out.

[BachQ]

What's the price of oil today? Is it over $120 yet? Is peak oil happening now? I hope not.

Sean, according to Richard Heinberg, "it's happening" ........






It's Happening

There is a surreal quality to the experience of seeing the unfolding of unpleasant events that one has predicted. Plenty of times over the past few years I've said, "I want to be proven wrong!" Who in their right mind would wish to see economic collapse and famine? But it was obvious that, given the direction our society is headed, these must be the consequences. Now, with oil at $117 a barrel, the US economy teetering, and food riots erupting in Haiti, Egypt, and Asia, one could perhaps gain some satisfaction in saying "I told you so." But what faint compensation that would be. We are all going to have to share the bitter fruits of our society's century-long growth binge, whether we have criticized it or participated wholeheartedly. The only silver lining is the possibility that now, at last, as the trends (Peak Oil, the failure of growth-based economics, the failure of industrial agriculture, climate chaos, and so on) are becoming so starkly clear, policy makers will begin seriously to contemplate a Plan B (or C, as Pat Murphy insists). For those of us who have been lobbying in that latter direction for some while, this is no time to let up, but rather the ideal moment to redouble our efforts.

[BachQ]

The Clock is Ticking for A US Attack on Iran

Now it looks like the attack is coming soon.

The Washington Post's Ann Scott Tyson is today reporting in an article headlined, Joint Chiefs Chairman Says US Preparing Military Options Against Iran, that Admiral Michael Mullen, the nation's top military officer, thinks the US military is not stretched too thin to take on Iran, and that Iran is becoming an "increasingly lethal and malign influence" in Iraq.  This article comes only a day after a US civilian ship under contract to the US military to deliver supplies to Iraq fired on Iranian boats in the Persian Gulf--just the kind of aggressive action that could lead to an Iranian reaction and trigger a full-blown US response. The Persian Gulf is now crammed full of US attack ships, ranging from a missile-armed nuclear sub to aircraft carriers packed with tomahawk cruise missiles and fleets of attack aircraft larger than most nation's entire air forces (and also with nuclear weapons).

Other things also point to an attack, most significantly the pushing out of Adm. William Fallon as Central Command chief, and now his replacement by Gen. David Petraeus, who is widely seen as a "political" general who is essentially a yes-man for Bush and Cheney. I would say the die is cast, and that it awaits only the pretext. There would be no melodramatic Congressional debate over the reasons for going to war against yet a third nation this time around. Thanks to the 2001 Authorization for Use of Military Force (AUMF) passed by Congress in October 2001 (and never subsequently rescinded) to authorize the attack on the Taliban and Al Qaeda in Iraq, which Bush and Cheney have illegally and outrageously interpreted as a declaration of a global and unending "War on Terror," the administration is claiming it has the right to attack any nation it defines as "terrorist" at any time, without authorization. Presidential candidate Hillary Clinton helped promote war against Iran a few months ago by backing a Senate resolution authored by Sens. Joe Lieberman and Jon Kyle that defined the Iranian Revolutionary Guard as a "global terrorist" organization. That was all Bush and Cheney needed, as Clinton, Lieberman and Kyle clearly knew.

In what has to be one of the understatements of the century, Adm. Mullen said he knew that conflict would be "extremely stressing" and "disastrous on a number of levels."

Indeed it would. Troops in Iraq are already on their fourth and even fifth rotation, and the "surge" troops in Iraq for the past year are being sent home, not because their job of "stabilizing" Baghdad is done (hardly! violence is increasing!), but because there's nobody left to replace them, and they've been there for 15 brutal months.

Worse yet, oil prices have hit a record $122/barrel and are causing a US and even a global recession--but that figure will be doubled the minute any US attack on Iran begins. This is because war with Iran would immediately bring all oil shipments through the Persian Gulf, which supplies 20-25 percent of the world's oil, to a halt. Even if not one tanker were sunk, no insurer would cover a tanker in that region. Moreover, Iranian sappers, and their allies in Iran, Turkey and Saudi Arabia, could be expected to take out vulnerable pipelines, refineries and even well-heads in retaliation to any attack.

So an attack on Iran would mean global economic collapse.

Hold on to your hats. I hope I'm proved wrong yet again, but I'm afraid we're in for a bumpy ride. Even if there is no attack, the level of threats against Iran now emanating from the White House and the Pentagon are sufficient to keep driving oil prices skyward.

Americans should look at those pump prices and see Bush's and Cheney's faces in the digital display.
They should also think of the gas they pump as blood, because it is going to be spilled in prodigious quantities if the US goes through with an attack. Not only would countless innocent Iranians be killed by US bombs and rockets and by any radiation released by attacks on Iran's nuclear facilities (the more so if the US or its Israeli ally use nuclear bombs in that attack), but the toll of US military casualties could be expected to soar, as Iran's Shia allies in Iraq predictably turn on American forces in support of Iran.

[BachQ]

New York Times

April 29, 2008
With Demand Slipping for Its Pickups and S.U.V.'s, G.M. Will Lay Off 3,550
By NICK BUNKLEY

DETROIT — General Motors said Monday that it would slash production of big trucks and sport utility vehicles by nearly 140,000 units this year, a move that would eliminate assembly shifts at four plants and cause about 3,550 workers to be laid off.
G.M., the world's largest automaker, has gradually slowed production of many vehicles because of declining demand, but this is the largest one-time cut in recent years.
G.M.'s need to make such a large cut, even after many of its truck and S.U.V. plants have been shut down for much of March and April because of a strike at a parts supplier, indicates how sharply sales of these vehicles have fallen.
Sales of G.M.'s full-size pickups, the Chevrolet Silverado and GMC Sierra, which were redesigned for the 2007 model year, fell 16 percent in the first quarter of this year, according to Autodata, which tracks industry statistics. Sales of G.M.'s large S.U.V.'s were down 28 percent in the same period.
The declines mirror overall decreases in those segments for the industry, but G.M., the top player in both segments, has been hurt the most by the rapid shift in consumers' preferences.
The announcement came on a day when the national average price of regular gasoline hit a high of $3.603 a gallon and a slumping housing market continued to cause a decline in demand for trucks.
"With rising fuel prices, a softening economy and a downward trend on current and future market demand for full-size trucks, a significant adjustment was needed to align our production with market realities," the president of G.M.'s North American operations, Troy Clarke, said in a statement.
"This is a difficult move," he said, "but we remain committed to retaining and growing our leadership position in the full-size truck market."
One of two shifts will be eliminated on July 14 at a plant in Janesville, Wis., that builds the Chevrolet Tahoe and Suburban and GMC Yukon S.U.V.'s and at a full-size pickup truck plant in the Detroit suburb of Pontiac, G.M. said. Also on July 14, one of three shifts will be cut at a plant in Flint, Mich., that builds heavy-duty pickup trucks, and a pickup plant in Oshawa, Ontario, will go to one shift from two on Sept. 8.
G.M. said the cuts would reduce truck production by 88,000 units, about 11 percent of its total full-size truck sales in 2007. The planned 50,000 cut in S.U.V. production represents about 15 percent of its sales last year in that segment.
Affected workers who do not leave the company voluntarily through an ongoing buyout program that offers them as much as $140,000 will continue receiving benefits and most of their pay under the automaker's "jobs bank" program, as part of the contract with the United Automobile Workers.
G.M.'s 74,000 hourly workers have about three more weeks to decide whether to take a buyout.

[BachQ]

Global Food Crisis Investing Special

Food riots across the world illustrate the degree to which the world is seeing a shift from cheap food to the early stages of a mega trend in the agricultural sectors that is set to continue for many years. This impact is not just limited to the developing world but people in the developed world have seen their food costs soar by as much as 50% over the last 12 months.

The primary driving forces for the agricultural commodities boom are -

* Bio-Fuels - As crude oil hits another all time high of $119, the world is seeing a dash towards bio-fuels such as ethanol, this shift in allocation of food production towards fuel is one of the primary forces for the surge in food prices and given that the trend in crude oil is unlikely to revert in the face of Peak Oil, the shift in production towards bio-fuels is expected to continue for many years if not decades.

* China and Indian Demand - The economic boom in China and India is resulting in increase in food consumption as the 2 billion plus consumers demand a more varied diet more in line with the developed world.

* Return of the Food Mountains - The 1980's were renowned for huge food mountains across Europe, as the European Community bought up excess supply so as to stop food prices from collapsing in the face of over production by the heavily over subsidised food industry. Now in the wake of food riots and shortages, many countries, including the key exporting countries are seeking to build up their own food mountains so as to counter the likelihood of short-term shortages. This has the effect of driving prices higher as supply is being taken out of the market which makes less available on the world market.

* Disruption of food production due to global warming - Global wheat stocks have fallen to 20 year lows as the trend towards global warming continues, so will the trend towards more expensive food production costs as the weather patterns change across the world resulting in the increase in poor harvests. Global warming means most countries will be losers such as the US, and Asian countries, but Russia and Canada are expected to reap a bumper harvest as more land is made feasible for agriculture use.

* Rising Inflation - The US subprime sparked credit crisis has resulted in the US Fed's abandonment of the Dollar towards attempts at averting a deep recession. The strategies deployed of cutting interest rates and increasing the money supply are highly inflationary. Other central banks across the world are following the US Fed's example by adopting similar inflationary policies.

* Investment & Speculation - Increasingly investment funds are being re-allocated towards the Foods sector in recognition of the expected out performance against weak sectors such as the Financials.

The easiest way for investors to gain a long-term exposure to the agricultural commodities boom is through the wide range of available Agri-Foods ETF's. For the rest of this report please subscribe to our FREE Weekly Newsletter

By Nadeem Walayat

[BachQ]

Media asleep regarding Energy and the Presidential Election
by Stan Moore
(Monday, April 28, 2008)

"An honest media and an informed public are the basic foundations of a real democracy. They are missing in action and the public is deceived, manipulated and will eventually be hung to dry because critical knowledge is withheld regarding the energy fate of the U.S. and of mankind."


It seems like the whole world knows about Peak Oil; except for the U.S. Presidential Candidates, that is. (And the American public). To hear Hillary Clinton and Barack Obama and John McCain speak, the high prices of oil are reversible with better U.S. policy. Food prices are not connected to petroleum prices. The whole situation is temporary and will be reversed by electing the new guy.
Alas, geology and history tell us otherwise. Oil is becoming more and more scarce while demand is rising around the world. The U.S., once the world's largest exporter of oil, is now the most dependant nation in the world on imports from other nations, but China is fast on our heels in demanding foreign sources of oil for their own rapidly expanding economy. India is introducing a very inexpensive automobile designed to introduce automotive ownership to millions and millions of Indians who have never owned an automobile before. Farmers need petroleum-based fertilizers, pesticides and fuels just to grow their crops and more fuel is required to process the crops into foods and get the food to market.
The world situation related to energy is unlike anything mankind has experienced before and we are entering the beginning of the end of the entire Petroleum Age for all of mankind.
And did you hear about this from the candidates? Did the media bring it up so that the candidates could address the public on these historic issues of vital interest to all the citizenry?
Did the media connect the dots between Peak Oil and the invasion of Iraq, the likely invasion of Iran? After all, there should be no secret that the Project for the New American Century laid all this out in detail even before George W. Bush and the neo-cons entered the White House. It should be old news but the public is still thinking that Iraq/Iran are threats due to weapons of mass destruction or other deceptions by the Prevaricator in Chief and his minions.
Perhaps the media wants to avoid panic. That is until good solutions are completely unavailable. When the panic comes, the media will surely report it, but fail to explain their own complicit role in the failure to problem-solve before the fact or to allow democracy to shape the American future according to the informed desires of the American people.
An honest media and an informed public are the basic foundations of a real democracy. They are missing in action and the public is deceived, manipulated and will eventually be hung to dry because critical knowledge is withheld regarding the energy fate of the U.S. and of mankind.

[BachQ]

Natural gas likely to follow oil in price hikes
By Leah Bower, Special to Gulf NewsPublished: April 29, 2008,

As if it wasn't bad enough that oil prices are staying high, natural gas prices are now going up.It probably should be little surprise, since all commodity prices are through the roof, but natural gas is beginning to ride on oil's coattails to ever higher prices.Unlike oil, however, the market fundamentals seem to be somewhat solid for natural gas.Analysts are predicting that gas is going to stay in the $11 to $12 per British thermal unit (BTU) range, as demand grows and reserves, especially in the United States, decline.The US's Energy Department said that natural gas inventories have only risen 24 billion cubic feet, to just over 1.2 trillion cubic feet, as of April 18, which Dow Jones called a much smaller increase than expected.Meanwhile, prices for natural gas have risen to their highest level in more than two years.

[BachQ]

Something amazing happened recently: there was actually a politician who had a fucking clue about energy policy:

Congressman Roscoe Bartlett on Peak Oil

http://www.youtube.com/watch?v=7lwkyqFB-34&feature=related

[BachQ]

Supply side to blame for high oil prices
Mikkal Herberg
Monday, April 28, 2008

Oil prices careened toward $117 this week, providing further, painful evidence of the virtual "perfect storm" of things gone wrong in global oil markets. Unfortunately, the long list of problems driving high oil prices shows few signs of letting up anytime soon.

A number of factors are at work in this latest run-up in prices, including increased demand, geopolitical problems in the key producing countries, speculative activity in futures markets, and investors' frantic efforts to hedge against dollar-based assets like oil.

These are important elements in today's painful price equation. But the real epicenter of this crisis is a slow-motion global oil supply shock that is now gathering pace.

Despite what many pundits say, oil demand is not really the central problem. True, there has been a huge shift in the sources of demand, away from the rich industrial countries and toward China, India, the Middle East and Russia. But the pace of aggregate demand growth in recent years has not changed significantly and, in fact, has slowed. In short, there has been no demand shock.
Rather, the real culprit is on the supply side. Unlike the sudden supply shocks of the 1970s, this crisis is the culmination of the gradual erosion in global capacity growth, which leaves oil demand chronically bumping up against stagnating production capacity.

The cause, however, is not insufficient reserves or any "peak oil" prophecy. Over the past decade, the world's proven conventional reserves have risen by 140 billion barrels, to 1.2 trillion barrels. If Canadian oil sands are included, the increase was 300 billion barrels. During that same period, the rise in world demand consumed only an incremental 45 billion barrels.

The core problems are underinvestment and political constraints. OPEC production capacity of roughly 32 million barrels per day has essentially stagnated over the past decade due to underinvestment. Non-OPEC production growth, which accounts for 60 percent of global oil output, and which has been the prime source of recent capacity increases, has slowed to a trickle.
Not only is new capacity not being developed fast enough, but at least 2 million to 3 million barrels per day of existing production capacity has recently been shut-in or lost permanently due to ethnic strife, war, or investment failures in Nigeria, Iraq, Venezuela, and Iran.

The net result has been that spare capacity to meet minor supply disruptions has collapsed. In 2000, the world consumed 77 million barrels per day and had an added spare cushion of 6 million. Daily demand today is 86 million barrels with a spare cushion of just 1 million to 2 million.


Essentially, the world's oil system is running flat out every day with new global capacity arriving just in time, which in turn aggravates fears of scarcity and shortages and drives the current frenzy of hedging and price speculation. As a result, prices jump sharply at every wild pronouncement by Venezuela's Hugo Chavez, every time the United States ratchets up the rhetoric toward Iran, and every time ethnic rebels in Nigeria force a shut-in of one of the country's oil fields.

Unfortunately, the prospects for increasing capacity over the next several years are bleak. Russian oil production, which accounted for the entire net increase in non-OPEC capacity since 2004, now appears to have leveled off and may actually decline due to old fields, combined with the crushing weight of Vladimir Putin's taxation and re-nationalization policies.

Saudi Arabia has just reduced its plans to expand long-term production capacity by 50 percent. Production is declining relentlessly in Mexico, Iran, Venezuela, Indonesia, and Nigeria due to years of investment restrictions, under-investment, and mismanagement. Cost increases are also sharply slowing Canada's future oil sands production growth.

Consequently, any chance for near-term price relief will depend on a substantial slowing in demand growth. But the odds on this are long. It's true that demand is now declining slightly in the rich industrial countries, and even the United States is likely to experience a small demand decline this year for the first time in 25 years in the face of unprecedented gasoline prices. The growing global economic slowdown will also reduce world oil demand growth.

However, continued strong economic conditions are likely to keep oil demand growing fast enough in China, India, the Middle East and Russia to maintain pressure on tight and uncertain supplies. So high oil prices are here to stay for at least the next few years.

Mikkal Herberg, formerly director of global energy and economics at ARCO, is an adjunct fellow at the Pacific Council on International Policy.

[BachQ]

Scotsman

Insight: What happens when we've used the last drop?

Published Date: 27 April 2008
By Christopher Harvie

SIXTY years ago the Orkney poet Edwin Muir wrote some lines which, in the panic surrounding the Grangemouth strike, feel like a premonition. They point to a world not too far in the future where our reliance on oil has become all too clear, and the way we live our lives all too fragile.
And then the thought confounds us with its strangeness.

The tractors lie about our fields; at evening

They look like dank sea-monsters crouched and waiting.

We leave them where they are and let them rust:

They'll molder away and be like other loam.

Something of his prediction seems to be forming itself. The petrol age, scarcely making much of an impact when he wrote, now seems hastening towards its end.

Around the year 2000, the Californian Delphi research institute was predicting the $15 oil barrel for about 2010. We are now over $100 and there's talk of a 'stabilisation price' as high as $300. This doesn't just reflect the problems of forecasting; once a commodity like oil is in crisis, any notion of expectations goes out of the window.

Every aspect of the use of oil is about to get argued or fought over. From the philosophical issue of whether the 'good' of individual mobility can be respected if it brings hellish climate change in its wake, to the sheer social disorientation of motorists – as at the moment – scrambling for dwindling supplies.

On the positive side there's just a chance that the Grangemouth strike is a timely warning, and that mounting scarcity and instability, along with opaque systems of control (what is Ineos, the Grangemouth firm, and who runs it?) make us ask whether we can plan a way out. An unlikely figure appears. In 1988 Margaret Thatcher seemed to sense that her 'great car economy' – with its unplanned exurbia, out-of-town shopping centres, retail parks, airports and Center Parcs, and their climatic consequences – was a potential menace.

She nailed global warming 18 years before Al Gore did. Her ministers Chris Patten and John Gummer took against sprawl and supermarkets, and so too, in his book Where There's Greed, did Gordon Brown. Let's call it unfinished business.

As we ponder our use of the car we have an unlikely role model. London boasts a sophisticated public transport catering for support workers, and only 31 cars per 100 people, compared with over 140 per 100 in the Scottish countryside.

But elsewhere the car exerts a powerful hold. 'Fordism', the joy of the open road, was the little guy's ideology as well as the name of his car. The question of how we survive past Peak Oil can be translated as: how do we survive as a society? We first of all sit on our own resources and watch their value grow. This means a deal with Norway on oil extraction from the North Sea, a commitment to low depletion and low consumption at home, and careful transport and social planning.

The car as a prime mover, dominating to-work journeys throughout the country, has major problems. Forget hybrids and forget widgetry; these are for expensive new cars and not our standard belching bangers. We have better things to spend our money on, such as carbon-free individual transport – bikes and walking – and public transport which is qualitatively superior and succeeds through speed, co-ordination and low cost. This involves distinguishing between the necessarily mobile 'useful drivers' – engineers, carers, traders, doctors, deliverers, etc – who have to get to a variety of destinations, and the commuting journeys better handled by collective transport.

There are problems with congestion charges since they are regressive; but into this Government can introduce local measures which separate the car as utility from the car as congestant. Rural areas could buy subsidised motoring by selling renewable energy, something that ought to win the approval of those motorists legitimately dependent on the car, and hit by roads clogged by inessential traffic. Systems of differential access rates, the socially equitable rationing of mobility, have a greater likelihood of public support than an unsubtle tax.

Big tranches of the population will tend anyway to give up private transport, and in the future they could steer policy. The under-26s and post-60s for a start, even now perhaps a majority of the population, could get statutory rights to cheap or free tickets and to adequate services, using German precedents which gave students and apprentices open access to town buses and trains for fifty quid a year.

The long decline of the buses – passengers are still down by over a third on 1985, and three-quarters on 1960 – can be reversed. Though when the flow back to public transport strengthens, their problems will show.

Engines and tyres depreciate completely every five years, accentuating the attraction of rail in general and electric light rail – the supertram – in particular. Timetabled, fast, predictable: the town of Karlsruhe, whose system has become the prototype for Europe, found that 40% of motorists would switch to it, compared with only 3% to a bus.

A bus may last five to 10 years before complete rebuilding. Vienna's trams and underground cars are over 40 years old. The current designs are now interchangeable with low-floor suburban trains. Lines must be laid out to facilitate this, and integrated with buses and suburban railways. If the law doesn't facilitate this, it must be changed, and fast. In this way, Princes Street could become Edinburgh's second train station.

Freight must be taken off the roads. With Deutsche Bahn taking over EWS railways and most UK rail freight, we can expect it to grow rapidly. But any real advance must come through a renaissance of sea transport. Water is still the most efficient means of bulk freight transport, though in comparison with Norway our coastal shipping is minimal, as is the use of sophisticated passenger craft such as hydrofoils, hovercraft and catamarans.

Bureaucracy and the business world must stop competing with one another in incompetence, and a new combination of enabling state and market-driven technology has to replace the extremes of Caledonian MacBrayne and Forth Ports, statist bureaucracy on one hand and a property company which regards docks as brownfield sites for speculative residential development on the other. The multiplication of uncoordinated maritime agencies: nearly 20 at the last count – must be curbed and rationalised.

This vision may be condemned as utopian or bureaucratic. But it works increasingly for Germany, Scandinavia and Switzerland. Given that the market alternatives are costly and inegalitarian, what is required is a big new European idea. There must be a Europe-wide transport executive, with coordinated control of arterial routes, with common powers and standards. The UK Ministry of Transport ought to be taken out of Whitehall control and its powers vested in a strategic planning body representing the regions and nations.

Changes are never absolute but fought over and negotiated. They also depend on icons and symbols. Three decades ago the Government was about to demolish London's St Pancras Station – now it stands for a rail renaissance. There is no reason why this crisis can't become a moment of hope, and spawn the will to produce a new and more advanced society in these islands.

• Professor Christopher Harvie is the author of Fool's Gold, a history of the North Sea oil industry. He is an SNP regional MSP for Mid Scotland and Fife

[BachQ]

The major resource war currently underway involves the United States and its acolytes forcibly invading and taking control of those countries in the Mid-East that are not already client states, which the aim of completely controlling the Mid-Eastern oilfields. The invasion of Afghanistan, which does not have much oil, was a strategic geopolitical move. The invasion of Iraq was designed to secure a major prize, as Iraq is sat on the world's second largest oil reserves. That only leaves Iran, which will prove to be a tougher nut to crack, more about which later, and Syria, which will be a cakewalk, and doesn't have much oil and so is of limited interest anyway. A by-product of these military adventures is the elimination or at least neutering of Israel's enemies.

*** The War on Terror is a crude deception, a fig leaf, designed to provide a façade behind which to conduct a good old-fashioned war of colonial conquest. The only reason it is not questioned more in the mainstream media is that the government controls the mainstream media and they do as they are told. You had to have a reason for the War on Terror, something to lend it some credibility, and that reason was provided by the catastrophic events of September 11th 2001.
Turning now to Iran, this is the only remaining significant country in the Mid-East that is not already either a client state of the United States or big western oil multinationals, like Saudi Arabia or the Gulf states, or already subject to military occupation. It is not in compliance, and can therefore expect to be forcibly dealt with at some point in the future. If it had no oil, and was not perceived to be a potential threat to Israel, it would perhaps be left alone, but it does have oil and Israel, at least, perceives it to be a threat.

[BachQ]

1. The resource wars of the 21st century are now well underway, with the US and Britain leading the charge in the Mid-East, behind the façade of the War on Terror. The goal is complete control of the Mid-East oilfields, which will be achieved by a combination of the already existing client states such as Saudi Arabia and the Gulf states, and the forcible acquisition of remaining oil rich countries. Logic dictates that the next country to be appropriated will be Iran, and although they would like to take in addition the oil rich countries around the Caspian Sea, an attempt to do so would result in a direct confrontation with Russia, so instead they will bide their time and likely attempt to subvert these countries politically.

2. Peak Oil is upon us, or very close at hand. The combination of rising population and strong increase in demand for oil from developing countries such as China and India, coupled with inelasticity in demand for oil, at least on the downside, is likely to force a continuing uptrend in the price of oil, although this may be mitigated once Iraq is brought on stream in a big way.

3. As the oil price is an underlying component of the price of food, the price of food is likely to continue to rise, a situation that will be exacerbated by the recently fashionable and rather bizarre practice of turning food into fuel. This can be expected to lead to widespread unrest and possible anarchy in many poorer countries.

4. The seizure of Iraq is widely perceived to be have been a blunder. From the strategic standpoint of the US elites it was no such thing. The oil reserves contained within Iraq are gigantic, and thus its acquisition was a major economic and security leap forward for the United States. In addition its central position within the region and the earlier acquisition of Afghanistan make the eventual appropriation of oil-rich Iran an almost foregone conclusion. In comparison with the US strategic planners, those in the European Union are hopelessly naïve and ineffectual - they can't even organize the trash collection in Naples .

5. The United States is desperately sick economically, with an economy lamed by gargantuan debt, outsourcing and rampant speculation, and yet somehow it manages to spend more on its military machine than every other country in the world combined. This is only possible because the dollar has been, up until now, the world currency, and because the US is living on the rest of the world's savings. The supreme irony is that the rest of the world is financing the US takeover of the Mid-East, and in a few years countries which have had, and have right now, the power to stop the US in its tracks by dumping dollars and Treasuries, but can't face the dire consequences of doing so, will have to kow-tow to the US for oil. Once that time arrives they won't dare dump US paper and face the retribution of having their oil supply cut off and their economies shut down.
At present the US is only militarily the greatest power on earth, but in a few years it looks set to assume comprehensive hegemony of the planet, as the massive oil revenues from the spoils of the Mid-East campaigns flow in and correct the careening deficits. China will then comply with US demands or the oil tap will be swiveled in the off direction. Russia, currently blessed by an abundant supply of oil and other natural resources, should do well, but will be surrounded and eventually forced into compliance as its resources dwindle and it becomes increasingly isolated. Britain, as the 1st officer of the US in its wars of acquisition, will enjoy a privileged place at the table in an increasingly resource starved world. Israel will look on with quiet satisfaction at all of this.

6. Now we crystallize the most important point of this article, which is what the whole thing has been leading up to. As we have already noted, the United States is widely perceived as an economic basket case on account of its astronomic debts and weakened domestic economy, but it is in the process of seizing control of the world's most important remaining oil reserves and bringing them on line. Once it has achieved this it will not just be the greatest military power on earth but will assume center stage as the greatest economic power on earth as well and be completely unassailable. By that time no other country will dare to, or perhaps even want to, dump dollars or US Treasuries. As we have observed on www.clivemaund.com in the recent past, the US stockmarket has refused to make new lows (apart from a fleeting intraday new low) for a couple of months now, despite all the doom and gloom flying around, and the volume internals of the market are bullish.
So it would appear that Smart Money is beginning to get a handle on what's cooking as set out here. If our evaluation of the situation is correct, and China continues to play ball by not dumping US dollars or Treasuries, despite the Tibet provocation in the western media, then the US stockmarket is poised for a powerful bull market advance, as the injection of massive amounts of newly created liquidity works its magic and eases the global financial crisis. This advance would initially take the market back to its highs, but should later continue on to new highs. The huge global increases in money supply are of course highly inflationary and should continue to fuel a robust bull market in commodities, including gold and silver, even if they get put on the back burner and continue to correct for a while as the focus shifts to the broad stockmarket. Right now the US stock markets are poised to break out above the crucial 1400 resistance level on the S&P500 index, an event that could easily trigger a 400 - 500 point up day on the Dow Jones Industrials.

[BachQ]

Bubble or fact of life: Where's the price of oil headed?

The Associated Press
Saturday, April 26, 2008

HOUSTON: Oil's meteoric rise to near $120 a barrel looks like more than just another economic bubble — growing demand and tighter supplies are likely to keep prices high. Some analysts say even $200 a barrel would not be out of the question.

The latest price surge — pushing crude to record heights in recent weeks, and to nearly double its level a year ago — has some key components of a classic bubble, when market prices climb far above their intrinsic value. The burst comes when investors realize the assets are overvalued.
But growing worldwide thirst for crude, in large part from the rapidly developing economies of China and India, means frustrated consumers probably won't get any relief.

"We can do our homework, but prices are going to go where they want to go at this point," said Jeff Spittel, an analyst at investment bank Natixis Bleichroeder Inc.

Americans who hoped to ride out temporarily high prices by carpooling or driving less may have to make those habits permanent. And because of the premium prices, oil companies may be willing to search out more oil in places they previously couldn't afford to explore.

Oil came close to $120 a barrel Friday on news that a ship under contract to the U.S. Defense Department fired warning shots at two boats in the Persian Gulf that may have been Iranian. The markets were also weighing the effects of a pipeline attack in Nigeria and a looming refinery strike in Scotland.

Retail gas prices, which at times rise in tandem with crude oil, moved further into record territory near $3.60 a gallon.

The Organization of Petroleum Exporting Countries — which supplies about 40 percent of the world's crude — insists it's supplying more than enough oil.

Instead, many observers blame speculative traders for bidding up the price as a hedge against inflation and as protection from the sinking U.S. dollar. Some see that as evidence of a bubble.
It's also becoming harder and more expensive for oil companies to find and tap new petroleum reserves — a troublesome scenario given forecasts that the world's energy needs will escalate by more than 50 percent in the next two decades.

Toss in the weak dollar and political instability in some oil-producing countries, and it seems unlikely that oil will fall below $100 a barrel anytime soon, if ever.

Widely watched oil price prognosticator Goldman Sachs has said oil could average $110 a barrel by 2010, up from a previous forecast of $80, and that a spike as high as $200 a barrel is possible in case of a major supply disruption.

Supply is at the heart of soaring prices, said John Moroney, a Texas A&M economics professor who just finished a book on energy production and consumption. He cites production declines in Mexico, an unstable oil industry in Venezuela and possible shrinking production capacity in the Middle East.
"I don't buy the bubble theory," he said.

Many analysts believe the weakness of the dollar is a bigger factor than supply and demand because the soft dollar draws investors worried about inflation into commodities such as oil and gold.
It also makes commodities less expensive for buyers operating in other currencies. Many investors see the dollar only heading lower if the Federal Reserve keeps cutting interest rates, which most analyst still expect it to do next week.

Some market-watchers say oil will probably keep rising until demand falls off, which they describe as the market's way of finding fair value for the commodity. For oil, some estimate that price as low as $60 or $70 a barrel.

"The fundamentals don't justify anywhere near these prices, even when you factor in geopolitical problems," said Michael Lynch, president of Strategic Energy & Economic Research Inc. in Cambridge, Mass.

He expects prices to fall as low as $80 this year and perhaps as low as $50 in the next three or four years as more global supply comes on line.

Demand already has begun to wane in the U.S., where fuel prices are causing turmoil in an economy already saddled with recession fears, a housing and credit crisis, and dismal retail sales.
Drivers have begun to cut back on gasoline consumption. Some people have taken to riding bikes to work or organizing car pools. The sale of gas-electric hybrid vehicles is up. Larger trucks and sport utility vehicles are selling slowly.

It's unclear how much a drop in oil prices could reduce gasoline prices. The prices do not always move together because they are subject to separate supply and demand forces. While oil prices have risen 80 percent in a year, gas prices climbed only 24 percent.

Trying to predict where prices are headed has devolved into a guessing game, some analysts said.
Two weeks ago, the Energy Department acknowledged "significant uncertainty" in its oil price projections, noting the threat of supply disruptions in oil-producing nations, unusual weather or refinery outages.

The major oil companies began reporting earnings for the first three months of the year this week, with ConocoPhillips saying it earned more than $4 billion, up 17 percent from a year ago. Exxon Mobil Corp. and Chevron Corp. are scheduled to report earnings Thursday and Friday.

The higher prices have allowed companies to extract oil from sources too expensive to tap only a few years ago, like the Canadian oil sands and deepwater sites in the Gulf of Mexico, said Gary Adams, who heads the U.S. oil and gas practice for Deloitte & Touche USA LLP. He expects the price of oil to settle at around $90 to $100 a barrel in the coming months.

Even if oil prices fall back to $60 or $70 a barrel, "the capacity of those businesses to do well and fund major projects will continue," said analyst Bernard Picchi of securities firm Wall Street Access. "These are great storehouses of value, and I don't think anyone can take that from them right now."

[drogulus]

    You don't use the last drop. Long before that it becomes so expensive that replacements become feasible. That's happening now, but too slowly. Everything always happens too slowly when it involves a major reconfiguration of the entire world economy. And the old interests tend to frustrate the new ones until they can get a piece of the action for thenselves to cushion the blow.

     Finally, I don't see how panicking about all this helps. The rich countries will come out all right in the end because they are...rich. Some poor countries will ride out the change pretty well, too. The biggest change that's going on now is that a substantial portion of the poor people on the planet are getting close to not being poor any more. This is happening at the same time as the food and energy prices are rising. So what is the net effect of the trends? I don't know, but it's far from clear that everything will just collapse. The world has huge untapped energy resources and high energy prices. It sounds like a good opportunity to me.

[Sean]

The problem is that there has never been 'another round of innovations' to wait for as the Herald Tribune put it this week. The fundamental point is that the economic base is the same as it was in the Iron age, or Stone age: we just dig this nasty sticky black sludge stuff, or other God-given fossile fuel, out of the ground and find that it burns very nicely.

Digging out of the ground is a profoundly simple and unsophisticated thing to do, and we've been seduced by the vast pyramid of development resting above this process.

Western modernity looks strong but isn't: the major energy problems have never been solved, and the opportunity to really address them with the availability of oil has been wasted. There's plenty of energy in the universe but accessing the fusion of the sun or the diffuse power of the tides is still on the same level as medieval alchemy.

There are no alternatives to oil that anybody knows of. This is what scares me- because I know how people ignore problems they don't know what to do about.

[drogulus]

     

Digging out of the ground is a profoundly simple and unsophisticated thing to do, and we've been seduced by the vast pyramid of development resting above this process.

    The vast pyramid of development seems like a good reason to dig it out of the ground, though it must have been somewhat sophisticated since we didn't start doing it until the 19th century.

     

There are no alternatives to oil that anybody knows of.

     Everyone knows the alternatives. Just pick up a magazine with the "End of Oil" cover on it.

    The oil economy was not a permanent solution to the energy dilemma because there are no permanent solutions, just a succession of improvisations. That's not cheating, that's how it's done.

     I don't think the world wants to live in a nice little Hobbit village just to assuage the guilty conscience of a tiny band of romantics. Besides, worldwide Hobbitization would support maybe 1/5th the present population, and it wouldn't be as clean and comfy as the movies.

[BachQ]

    You don't use the last drop. Long before that it becomes so expensive that replacements become feasible. That's happening now, but too slowly. Everything always happens too slowly when it involves a major reconfiguration of the entire world economy. And the old interests tend to frustrate the new ones until they can get a piece of the action for thenselves to cushion the blow.

    finally, I don't see how panicking about all this helps. The rich countries will come out all right in the end because they are...rich. Some poor countries will ride out the change pretty well, too. The biggest change that's going on now is that a substantial portion of the poor people on the planet are getting close to not being poor any more. This is happening at the same time as the food and energy prices are rising. So what is the net effect of the trends? I don't know, but it's far from clear that everything will just collapse. The world has huge untapped energy resources and high energy prices. It sounds like a good opportunity to me.

Drogulus,

The reason for "panic" is because the "peak oil" problem is utterly unprecedented in recorded history:

(1) Oil is completely unlike any other alternate energy source, whether in terms of its ease of extraction, abundance, efficacy, or efficiency.  Oil is like a "magic bullet" of energy, for which there is no readily-available substitute.

(2) Because oil is exponentially superior to other alternate energy forms, the globe has increasingly dedicated its infrastructure to its exploitation.  Indeed, man's reliance on oil has progressively intensified in recent times, to the point that man will wage war over its control.  Without cheap oil, there would be no skyscrapers, apartment complexes, or large-scale highways/roadways.  Without cheap oil, there would be no sprawling suburbs and McMansions.

(3) "Cheap oil" has allowed the planet to overpopulate by a factor of roughly seven (i.e., oil has allowed the planet's population to exceed its maximum carrying capacity by a factor of seven).  It is only because of cheap oil that enough crops to feed seven billion people have been possible. 

(4) Once the era of "cheap oil" ends, the era of "cheap food" ends.  Once the era of "cheap food" ends, the realities of the planet's extreme overpopulation will have catastrophic consequences, and there will be massive famines.  Add to this the droughts caused by climate change, you have the ingredients for virtual collapse of global society.

(5) Petroleum also permeates many fundamental aspects of our well-being (which I won't get into here), including medicine, fertilizer (agriculture), clothing, heating, yada yada .......

I wouldn't be concerned if the main problems were merely costly fuel for my Hummer, and high heating costs for my lake cabin. Rather, the oil crisis undermines the very foundational fabric of ALL of society.  According to the Hirsch Report (funded by the US government), we needed to plan ahead by 10-20 years prior to peak oil in order to avoid total and utter chaos.  Instead, our leaders opted to further entrench our focused reliance on oil by invading Iraq and pushing Congress to open up oil fields in Alaska.

We blew it.

[BachQ]

 Everyone knows the alternatives. Just pick up a magazine with the "End of Oil" cover on it.

Highly paid scientists have been desperately trying to find substitutes for oil since the 1970's, and, apart from limited-use solar, wind, and tide energies, the best they've come up with is switchgrass, and some other lame biofuels.

Because uranium will be rendered scarce by around 2020, nuclear power has a limited lifespan.

So what are these alternate forms of energy? 

[BachQ]

There are no alternatives to oil that anybody knows of. This is what scares me- because I know how people ignore problems they don't know what to do about.

I agree.

[Sean]

No, all the talk about alternative energy sources is fantasy- they do not exist on the large scale. 99% of all transport in the world for instance is driven by oil, the truly amazing stuff that turns the wheels of a 50 tonne truck against the gradient of a hill. But this is an energy source we hardly earnt for ourselves- there's no real brain power gone into it, we just used what providence gave us.

The 9/11 and war on terror garbage (who still believes this stuff?) was just an excuse to invade the last of the world's oil rich regions: it's very obvious. And eveyone will know it soon as peak oil really starts to bite and those Iraq and Afghanistan pipelines are keeping Westerners from starvation.