Moon of Alabama Brecht quote
March 16, 2005

Oil Prices - Who's Worried - or Not.


the world has been consuming oil faster than discovering it since 1986. (IHS Consulting)

[It is] "no longer tenable" to continue placing environmental issues, including climate change, "in a category separate from the economy and from economic policy" (Gordon Brown, UK Chancellor of the Exchequer - i.e. Finance Minister)

"The economy might be too strong in terms of demand growth. The question is whether the market is underestimating how much work the Federal Reserve is going to have to do" M. Mussa, IIE.

World's growing energy thirst adds to problem caused by falling output

The Cantarell oilfield, in the shallow waters of the Campeche Bay, is regarded by Mexicans as their crown jewel. It is the second-largest oil field in the world by production,pumping 2.2m b/d, the same amount as all the Kuwaiti fields together. For that reason, Mexicans were recently dismayed when Petróleos Mexicanos, the state oil company, said that the field's production would decline this year, signalling a trend towards its depletion. Cantarell's difficulties are not unique.

Other mature oil provinces outside the Organisation of the Petroleum Exporting Countries, such as the North Sea or Alaska, are now suffering huge yearly declines, constraining the world's supply of oil and helping to push up the prices.

Last year's surge in oil prices was propelled by the biggest yearly increase in demand since 1976. But analysts say today's high prices are the result of strong demand and a significant slowdown in oil supply growth from non-Opec countries. Barclays Capital estimates that non-Opec supply outside the former Soviet Union rose by 700,000 yearly between 1990 and 2000. But since then the growth had been roughly flat every year. T

his slower increase in non-Opec supply is boosting demand for the cartel's oil, reducing Opec's already low spare capacity. The market takes the reduction of this cushion against unexpected shocks as a bullish signal, sending the prices higher. "We got a lot of new capacity additions, but the problem is when you net those with the declines in mature regions, you got a flat line," said Paul Horsnell, of Barclays Capital. Among the new projects are several deep water platforms in Brazil, the BTC pipeline project in Azerbaijan, the Thunderhorse field in the Gulf of Mexico and the huge Kizomba field in Angola.

The International Energy Agency, the industrial countries energy watchdog, forecast non-Opec supply will growth this year by 900,000 b/d, but Russia and other former Soviet Union countries would account for about 60 per cent of the increase. Production in Europe, Asia and North America will decline, with significant increases only in West Africa, Brazil and Ecuador. Even non-Opec countries in the Middle East, such as Oman, Syria and Yemen, would see production declining by nearly 100,000 b/d.

At the same time, world oil demand would jump by 1.8m b/d, increasing the dependence on Opec oil for the third year in a row.

Analysts said the trend would continue because oil companies were not investing enough and also lacked the opportunity to drill in promising regions such as Mexico whose constitution barred foreign oil companies.

Lehman Brothers and Citigroup, the investment banks, forecast an increase in worldwide exploration budgets of less than 6 per cent for 2005, a significant slowdown from last year's 12 per cent. "With increasingly depleted reserve bases, non-Opec declines are only expected to gather steam in the years to come," Washington-based PFC Energy said in a report.

IHS Energy, a leading consultancy advising oil majors on upstream operations, estimates that the world has been consuming oil faster than discovering it since 1986.

In addition, new discoveries are more expensive than in the early 1990s, as a large proportion of oil fields are found in deep waters, rather than onshore or the shallow continental shelf. In 2003, about 70 per cent of the largest oil discoveries were in deep waters, with a large proportion of that in waters more than 1,000 meters deep. A decade before, only 16 per cent were in deep waters.

With specific reference to non-Opec countries, the IEA has warned that "a rising share of production will have to come from smaller oilfields, where the unit costs are higher". For this reason, the marginal cost of production in mature basins in non-Opec countries is rising. "This may well deter investment and capacity additions in the long term," the IEA warned in its latest outlook for the oil market.


Central bankers are not worried yet:

Why the rise in oil prices does not yet threaten crisis

In contrast to the experience of the 1970s, the impact of $50 a barrel oil on global growth and inflation has been fairly limited. The rise in the oil price last year did damp growth but the expansion remains fairly healthy. While headline inflation rose last year, core inflationary pressures and, crucially, inflation expectations remain contained. Financial markets do not seem concerned that energy prices will spark higher inflation.


According to a draft of the IMF's forthcoming World Economic Outlook, the fund forecasts healthy world growth of about 4.3 per cent in 2005 and 2006. The slowdown from last year's 5.1 per cent rate is explained partly by the impact of the oil price but also reflects a maturing of the global economic expansion. Separately, the IMF has "stress tested" its forecasts by assuming an oil price rise to $80 a barrel this year, falling to $50 in 2006 and then drifting to the $34 range in 2009. The conclusion is that even a rise to $80 would not be disastrous for global growth.


This fairly sanguine IMF view of the impact on the world's biggest economies rests on the assumption that central banks would act to prevent a rise in inflation expectations. Central bankers' credibility was built up by the eventual defeat of the inflation unleashed in the 1970s and by the subsequent maintenance of low inflation.


Public confidence that inflation is not about to take off makes the effects of oil price rises far less painful. While price rises have reduced profits for businesses and squeezed household budgets, there appears to have been little impact on inflation expectations and hence on wage demands. A desire to maintain hard-won credibility means that the Federal Reserve and the European Central Bank will watch closely for any rise in inflation expectations - not so much in the "headline" inflation numbers, which show the direct effect of oil price rises, but in the indirect "second-round" effects on prices and wages.


Michael Mussa, a fellow at the Institute for International Economics in Washington, says it is still surprising that the high oil price had so little impact on growth last year. In the US, he says, the fact that long-term interest rates remained low - even as the Fed tightened monetary policy - continued to stimulate the housing market and consumer spending. "The main concern is not that the US slows down too much in 2005 but that it does not slow down enough, particularly domestic demand growth," Mr Mussa says.


"The economy might be too strong in terms of demand growth. The question is whether the market is underestimating how much work the Federal Reserve is going to have to do," Mr Mussa says.

So expect more pressure on wages and posturing on the international stage to get OPEC to increase production, and then, as this is unsufficient, an abrupt increase in interest rates which will surprise the markets (thus causing them to fall) in addition to making debt a lot more expensive.

Meanwhile, some countries are reacting:

High oil price drives users to other fuels

As the US was putting pressure on Opec ministers to damp oil prices, other leading consumers of energy were yesterday talking about adjusting to a new reality of higher prices.

China, the world's second largest consumer of oil after the US, yesterday said high oil prices and threats to the climate from fossil fuels were forcing it to become the world's biggest producer of nuclear power.

Gordon Brown, UK finance minister, urged his counterparts from 20 developed and developing countries to incorporate environmental concerns into economic policymaking. "Higher energy prices are requiring industry and commerce to examine the cost and efficiency of energy use," Mr Brown told a London conference of finance, environment and energy ministers.

"In terms of policy, these challenges all point now in the same direction towards a reduction in the carbon intensity of energy production and greater efficiency in its use."


Liu Jiang, vice chairman of the national development and reform commission of China, also urged western countries to give Chinese industry access to renewable energy technologies.

He said Beijing, as well as experimenting with advanced pebble-bed technology, hoped to "achieve self-reliance on nuclear power" by introducing advanced 1,000MW press-urised water reactor nuclear technology. "Nuclear power belongs to clean energy and nuclear power construction also serves the purpose of achieving a low-carbon economy," Mr Liu said.

He called on developed countries to manufacture renewable energy equipment - such as solar cells and wind turbines - in China.


Mr Brown said that after "the twin objectives of high and stable levels of growth and employment", there was a "third objective on which our economies must be built, and that is environmental care".

He said it was "no longer tenable" to continue placing environmental issues, including climate change, "in a category separate from the economy and from economic policy".

"Across a range of environmental issues . . . it is clear now not just that economic activity is their cause, but that these problems in themselves threaten future economic activity and growth," he said. Mr Brown said measures to tackle climate change, such as energy efficiency and low-carbon technologies, could stimulate innovation and improve economic productivity, rather than imposing an economic cost.

Posted by Jérôme à Paris on March 16, 2005 at 11:04 UTC | Permalink


U.S. trade deficit hits record $665.9 billion in 2004

WASHINGTON - The United States deficit in the broadest measure of international trade soared to an all-time high of $665.9 billion in 2004, showing in stark terms the speed with which the country is becoming indebted to the rest of the world.

The Commerce Department reported Wednesday that the shortfall in the current account was 25.5 percent higher than the previous record, the $530.7 billion deficit set in 2003. The department also noted that the deficit was worsening as the year ended with the shortfall in the fourth quarter hitting a record $187.9 billion, up 13.3 percent from the third quarter deficit.

Posted by: Harbinger of DOOM | Mar 16 2005 14:18 utc | 1

Kos posted

Are you tired of all these oil threads? Thanks for the feedback.

Posted by: Jérôme | Mar 16 2005 14:34 utc | 2

Strikes me as more whistling past the graveyard than truly being unconcerned. It's hard for me to see why $80/bbl oil could do anything else but start a global recession, especially if it comes in a year time frame.

Posted by: Tim H. | Mar 16 2005 14:55 utc | 3

Rice advises against India, Iran pipeline

Posted by: Nugget | Mar 16 2005 15:27 utc | 4

Jerome- I appreciate these posts and encourage you to continue them. They help me to understand (just a little bit) some of the global tug of war over energy issues, among other things.

...and every war ever fought has been, ultimately, about resources, if you ask me (tho you didn't.) :)

Posted by: fauxreal | Mar 16 2005 15:43 utc | 5

Me chemical engineer. Me like oil posts. Me think Jerome should continue.

Posted by: Tim H. | Mar 16 2005 16:00 utc | 6

from Nugget's link:

"I am quite certain ... any decisions that the Italians make about their forces will be fully coordinated in a way that does not put (U.S.) forces at risk," Rice said.

Translation: gee, yes, that is a vise attached to your gonads. hate to see anything happen to them if you pulled away suddenly. yes, let's talk.

Posted by: Citizen | Mar 16 2005 16:04 utc | 7


I am with fauxreal, please continue with the oil posts.

However, there is another topic were I would like to read your point of view. What about Wolfowitz, how much power would he have at the World Bank? Can his nomination be blocked by other nations? Working in a Bank I assume you might have deeper insights then us regular mortals.

Posted by: Fran | Mar 16 2005 16:16 utc | 8

Oil price dips as OPEC agrees to raise output

Posted by: Nugget | Mar 16 2005 16:26 utc | 9

Jerome- I appreciate these posts and encourage you to continue them. They help me to understand (just a little bit) some of the global tug of war over energy issues, among other things.

...and every war ever fought has been, ultimately, about resources, if you ask me (tho you didn't.) :)

Posted by: fauxreal | Mar 16 2005 16:32 utc | 10

Crude futures for April delivery are above $56 today. Meanwhile, General Motors is expecting a loss for the first quarter, and the Dow is down 109 points. I get bored reading about oil because it's so frustrating, which is precisely why we need you to keep posting on it, Jerome. I think the "experts" are indeed whistling past the graveyard. Inflation is almost certainly, for various technical reasons, somewhat higher than reported. More importantly, the twin US budget and trade deficits may severely restrict the Federal Reserve's ability to use monetary policy to rein in inflation. I hate to sound apocalyptic, but there could be a storm brewing here.

Posted by: Aigin | Mar 16 2005 16:35 utc | 11

I like the energy posts, but perhaps a few more positive developments could be worked in amongst the harbingers of doom. For my part, I will post links to some "good news" sites that I like when I get home this evening.

PS: Wasn't someone who posts here planning an energy blog? What happenned to that effort?

Posted by: Tom DC/VA | Mar 16 2005 16:36 utc | 12

“Geological” peak oil will happen sometime, but before that “political” peak oil will arrive first. I think that this “political” peak oil is what we experiencing right now. Probably there are many oilfields in the world unexploited, but, for political-geopolitical reasons, this is not feasible. Spare capacity is gone and only a huge recession will create it again (I think the last Asian crisis took 6M b/day out of the market).

Jérôme, the price of oil in dollars is irrelevant for the eurozone and it will become irrelevant for the rest of the world, if they stop the official or unofficial pegging of their currencies to the dollar.

I am not sure, but I have the impression that oil was more expensive in Europe in 2000 than today.

Posted by: Greco | Mar 16 2005 16:40 utc | 13

Lukoil workers killed in 'plane crash

Posted by: Nugget | Mar 16 2005 16:49 utc | 14

Greco - I agree. In 2000, oil was at 35$, which meant close to 45 euros. Today, it is 55$, close to 42 euros.

Posted by: Jérôme | Mar 16 2005 17:44 utc | 15

Oh, has the Rapture begun already? Am I late?


These 'sweet crude' posts are important.

Political peak oil arrived long ago..(Well, there are definition difficulties..)

Anyway, for ex.:

Gasoline Cost Externalities: Security and Protection Services

An update to CTA's Real Price of Gasoline report, this paper analyzes the external costs Americans pay for gasoline taking into account recent military expenditures and the cost of the war in Iraq.>Intl Center for Technology Assessment - publications, list of PDF papers, this is second down.

Posted by: Blackie | Mar 16 2005 17:48 utc | 16

Oil surges to new high, $56.10 a barrel

Posted by: Nugget | Mar 16 2005 18:09 utc | 17

In Isaac Asimov's FOUNDATION, psychohistorian Hari Seldon observes that it is too late to prevent the collapse of the Empire, but sets up the Founfation(s) to plan for the post-collaspse transition and minimize the ensuing hardship.

This, really, ought to be the primary focus of all intelligent people. I think the Collapse will happen, not if, but when is the question. Myself, I picture a Brezhnev-to-Andropov-to Gorbachev slow meltdown of the US economy and power with the concomitant social unrest, but I don't rule out a more sudden crash.

In any event, my own preparation involved getting rid of all personal debt, move 75%v of our assets outside the US and personally relocate to the beautiful countryside of Southern France (a regime friendly to economically-challenged middle-aged folks) while keeping the business in the more "friendly" US environment.

Politics-wise, I will support forward-thinking politicians who think about/plan for the future, not DINOs who try to appeal (in vain) to doomed (IMHO) mid-center Republicans -- the other, the fascists, cannot be compromised with.

Posted by: Lupin | Mar 16 2005 18:31 utc | 18

@TomDCVA there was a proposed energy blog that was my idea, which may be what you are remembering. it does exist, but has never really been populated. Mea culpa.

Problem was/is (a) I don't have the time/energy (of the biological kind) to do it by myself and (b) I have not been proactive enough about recruiting co-editors and writers, partly because of (a). I had hoped to drag Jerome into the project but as he was a busy fellow to start with and is now co-barkeeping here, I failed in my nefarious plan :-) I still have good intentions of republishing a number of his essays at the energy blog.

The blog title is "Hubbert's Toboggan" and it has had several subtitles but the one I am now considering is "Show Me The Numbers".

The intent was to take a hard-nosed quantitative/analytical approach to basic energy questions and promote energy literacy, as well provide a broader brush coverage of energy politics, skewed energy economy, etc. I'd like to downplay the oil wars, US foreign policy etc as there are plenty of other places to discuss these things -- like here for example -- and stick mostly to big-picture stuff, like review/discuss Diamond's and related books.

Also want a place to discuss seriously and realistically options for a soft landing. (I do not quite share Clueless Joe's raging despair -- the despair perhaps but not the magnificently misanthropic rage -- and would prefer not to see a big die-off in my lifetime).

Anyway, the project kind of went into stasis while I complete a couple of dead-tree publishing projects, deal with a project ramping up at the office, and so on and so forth. Too many irons in the fire. If any energy-geeks would like to step up to the plate, I would like to revive the blog but I do need some help. It seems more and more urgent, as I hear more and more of what seems to me utter nonsense being spouted both in the media and by individuals. If I hear "hydrogen economy" one more time I swear I am going to puke :-)

I thought of it as primarily a resource centre -- an archive of reference and op/ed material plus practical how-to and a feast of links for lower-energy living -- with some discussion, rather than as primarily a chat bar with some really good bar snacks. If that makes sense.

Gotta run. All potential content-volunteers are earnestly enjoined to drop me a line -- de at daclarke dot org --

the beta test version of the blog is>here -- I have not bothered registering another domain name for it since it is not yet active.

Posted by: DeAnander | Mar 16 2005 18:33 utc | 19

Speaking of>skewed accounting: "Shipping was Extra"

Posted by: DeAnander | Mar 16 2005 18:36 utc | 20

If the global economy doesn't slow down, it is not inconceivable that there will be physical shortages of oil during the next winter, especially of sweet crude. Then we will see how high the prices can go.

Mobjectivist had an interesting post on what happens when there is a shortage of a commodity with inelastic demand.

Posted by: Greco | Mar 16 2005 18:51 utc | 21

The Collapse of the Empire

Lupin states:

In Isaac Asimov's FOUNDATION, psychohistorian Hari Seldon observes that it is too late to prevent the collapse of the Empire, but sets up the Founfation(s) to plan for the post-collaspse transition and minimize the ensuing hardship.

This, really, ought to be the primary focus of all intelligent people. I think the Collapse will happen, not if, but when is the question. Myself, I picture a Brezhnev-to-Andropov-to Gorbachev slow meltdown of the US economy and power with the concomitant social unrest, but I don't rule out a more sudden crash.

In any event, my own preparation involved getting rid of all personal debt, move 75% of our assets outside the US and personally relocate to the beautiful countryside of Southern France (a regime friendly to economically-challenged middle-aged folks) while keeping the business in the more "friendly" US environment....

DeAnander remarks:

...Also want a place to discuss seriously and realistically options for a soft landing. (I do not quite share Clueless Joe's raging despair -- the despair perhaps but not the magnificently misanthropic rage -- and would prefer not to see a big die-off in my lifetime)....

I hope, Lupin, that your precautions are sufficient and even more than sufficient to hold you harmless from the Fall of the Empire. I fear there is at least some chance that the reverberations will go beyond massive unemployment and financial catastrophe for many, to large scale destruction of property and/or loss of life here in the Fatherland - one reaps what one sows, it has been said. At the blog Just a Bump on the Beltway [which makes Billmon's blogroll, and got a mention in Juan Cole's Informed Comment today as a progressive blog run by a woman] Melanie is concerned about a bird flu pandemic within a year or two with MASSIVE impact, worldwide - and there is some reason to suppose that it might happen. If the supply systems for food, water and energy are disrupted enough, this leads to secondary consequences that make things worse, maybe much worse.

As for me, whatever happens stateside in the next couple of years, I guess I'll just have to roll with it. I'm in a gloomy mood, I admit. May the Creative Forces of the Universe have mercy on our souls, if any.

Posted by: mistah charley | Mar 16 2005 19:17 utc | 22

Well its happened in the senate. The Arctic national Wildlife Refuge vote went 51-49 in favor.

The speculators are controling the oil market right now. There is absolutely no reason for this jump in prices. Granted some of it is dollar devaluation. But much of it is speculators.

I was looking at electric car and electric pedal bike equipment the other day. I think I will start this summer.

Posted by: jdp | Mar 16 2005 19:34 utc | 23

Play something tragic, Ton Ton.

Posted by: Aunty Entity | Mar 16 2005 19:44 utc | 24

@jdp -- Jared Diamond vindicated. elites remain irrational, the cultural values must be preserved even when they become maladaptive or lethal. and the whole world must become an "economic sacrifice zone" so that my neighbours can continue to drive their shiny SUVs for a few more years.

OK, dammit, tilting towards CJ's feelings since I read yr news.

Posted by: DeAnander | Mar 16 2005 19:48 utc | 25

Well as Greco and Jérôme point out, oil prices have dropped if you think in euros. Maybe if you think of it as the dollar becoming less valuable relative to oil. Isn't that cheering?

Posted by: Colman | Mar 16 2005 20:03 utc | 26

Senate Votes to Open Artic Refuge to Drilling. Read Dick Cheney Cleans Up. Oil Cos. never cared that much as there's not that much there; it's oil services cos., read Halliburton, that wants it. 51-49.

Posted by: jj | Mar 16 2005 21:15 utc | 27

@jj yes, of course that is the real point. Mr Eastman I think it was who said that the business to be in was not selling cameras but selling the film. and at the current cusp of the oil industry the biz to be in is selling the support and drilling services... which have to be paid for even if the wells don't produce as anticipated/ballyhooed.

Posted by: DeAnander | Mar 16 2005 21:30 utc | 28

DeA - feel free to poach all my contributions here - and all the even more valuable comments - for the site. It would actually be useful to have it all in one place dedicated to the topic, as this would help us to organise out thoughts on the various aspects of the subjects.

I am still willing to participate/contribute. Maybe it's just easier to write off the cuff and not try to actually construct a well thought ou, polished, piece... (of course, being French and therefore rational, my thoughts are naturally orderly and organised...;-))

Posted by: Jérôme | Mar 16 2005 22:32 utc | 29

Brecht, from "Von Armen BB":

We have installed ourselves, a lightweight race / In houses thought to be indestructible / (That's how we built the tall boxes of Manhattan Island / And the thin antennae that entertain the Atlantic Ocean).
Of these cities, what will remain is that which passed through them: the wind! / The house makes glad the eater: he empties it. / We know that we're only stopgaps / And after us will come nothing worth mentioning.
In the earthquakes that will come, I hope / I won't let my cigar go out from bitterness / I, Bertolt Brecht, cast up in the asphalt cities / From the black forests in my mother long ago.

I, Bertolt Brecht, come from the black forests. / My mother carried me into the cities / As I lay in her body. And the cold of the woods / Will be in me until my extinction.]

Posted by: slothrop | Mar 16 2005 22:41 utc | 30

Greco - thanks for the Mobjectivist link

Posted by: Jérôme | Mar 16 2005 22:53 utc | 31

(of course, being French and therefore rational, my thoughts are naturally orderly and organised...;-))

Yes, the French rationalism. Derida, Foulcau, Delez-Guattari, Brodriyar etc, hahaha. Descartes's childred!

Posted by: Greco | Mar 16 2005 23:11 utc | 32

@Mistah Charley:

The problem with bird flu, as far as planning is concerned, is that when it becomes a “big” problem it will be significantly different from what it is now. Right now, bird flu does not (as far as we know for sure, anyway) jump from person to person. The worry is that bird flu will infect someone with human flu, the two will comingle, and a new flu sharing traits of both types (most specifically human flu’s ability to move from human to human) will emerge.

And, of course, if the disease is significantly different, then any pre-prepared vaccines are likely to be completely useless.

The good news, though, is that there is no rule saying that the hybrid, if or when it appears (I, and most other people who are taking this seriously, are saying “when”) will be as deadly as the current bird flu. In the process of picking up the ability to transmit between humans, it might become a milder disease. And, of course, there is always the chance—however infinitesimally slim—that some researcher will make a miraculous discovery that will solve the problem in some way before the hybrid appears. (Then again, there is also the possibility that bird flu will become a super-disease that will wipe humanity out completely. Life is distracting and uncertain.)

If you, like me, are stuck in an urban environment and want to improve your chances, I would suggest preparing for the flu the same way you would prepare for some natural disaster that knocks out services for two weeks. By the time two weeks are up, the first people to get the disease who recover, if any, will probably start picking up again. Keep a stock of food (and vitamin capsules, too!), a big jug of water refreshed each week, at least one extra set of warm blankets, extra warm clothing, and a stock of aspirin (or some equivalent). It wouldn’t hurt to get some of those filter facemasks, as well. (They probably won’t protect you, because the flu virus is quite definitely small enough to get through the filter, but they will catch viruses that are in droplets of outgoing saliva or mucus when you cough or sneeze, which will make you less infectious to other people.)

Depending on how rapidly the bird flu spreads and how severe it really is, different things may fail. Someone has to watch power plants, water pumps, sewage plants, gas plants, and so on, so if the flu causes a truly significant portion of the population to be out of commission at a time (either by killing them or just incapacitating them), even the best-planned systems will shut down. So be ready to do without running water, electricity, gas, or whatever, along with being sick, if things are bad. Oh, and don’t count on a hospital to be able to do anything for you if the flu is really bad. If the flu is as deadly as the 1918 epidemic was, hospitals will be overwhelmed almost immediately, and won’t be able to keep you alive anyway. (An estimate I read was that even with current technology, a fully-equipped hospital which was not overwhelmed would only have been able to save about half the people who died in the 1918 epidemic. That number would fall dramatically if the hospital were not fully equipped, or if the hospital were filled with a sudden rush of very sick people—as they would be in an epidemic—so your chances would not be good. Might as well stay at home and be sick in familiar surroundings.

Posted by: Blind Misery | Mar 16 2005 23:35 utc | 33


between you & deanander & a number of others i have acquired an education on issues that are of the gravest importance

that you share them is of paramount importance

it is surely more healthy & helpfull than my suicdal songs

so you should have no doubt, you must continue

Posted by: remembereringgiap | Mar 17 2005 0:03 utc | 34

Peak Oil via xymphora

Posted by: friendly fire | Mar 17 2005 0:20 utc | 35

funny how the quotes above forecast the price of oil to be between $80 and later $34 by 2009 (sounds strange to me if peakoil is true). i read today in the newspaper that OMV, the austrian national petroleum company, is forecasting $30 as the price per barrel for next year and they are also planning their business on that price. why ? because that price seems "reasonable" according to mr. ruttensdorfer, the general manager. very weird, must be a "political" thing.

a weird thing is that while my gas/electricity bill has increased as compared to last year, cheap airplane tickets to almost everywhere are still available. am asking myself if anyone has noticed.

Posted by: name | Mar 17 2005 1:13 utc | 36

Jerome and all posters and lurkers, I hope you will continue the oil and energy posts (and comments). I find them really interesting and educational.

DeA: I love your posts, and hope your site gets off the ground. I don't have the expertise to help, but I always appreciate your comments.

I have the impression that the habitue's of MoA will generally be more capable of dealing with sudden economic shifts or other crises, because we are already at least thinking about these things and each makes his or her own little adjustments to daily living needs and choices as circumstances allow. But "the masses" will really be screwed in any sudden economic shock, whether precipitated by energy shocks, biological threats, or some other factor.

Posted by: Maxcrat | Mar 17 2005 1:24 utc | 37

Jerome, do keep it up - this is vital. And De, I hope life soon allows you time for your energy blog, especially the survival tips! :)

Jerome, if I understand correctly, your sources talk about OPEC picking up the slack. Doesn't seem likely per this MSM account:

OPEC says it has lost control of oil prices - Cartel producers say they can't keep up with strong global demand

Your thoughts?

Posted by: liz | Mar 17 2005 1:27 utc | 38

I have been surfing around a bit and my conclusion is that there are quite a number of sites discussing Peak Oil both in newsy terms and with a view to individual "survival planning" --

here is a typical>Peak Oil News Clipping page.

here is>the main page of the same site which imho is poorly laid out (doesn't paint properly with my firefox) but contains much quantitative info.

here is>a public forum with a truly impressive list of moderators/experts (JHK among others).

and I have just been told about another yahoo list,>Running On Empty, where these issues are discussed. I am sure there are tons more.

I think if there is any future for my Hubbert's Toboggan site, it needs to be a niche dweller with a tight focus. I am not sure a big enough niche is left to make it worth the effort of maintaining the content, but am open to further discussion... it may be that those of us obsessed with the topic should go join the crowd over at

the level of discussion on the newbie threads is pretty low (people calling other people's relations ugly names for "not having a clue" and similar instances of what Stan Goff once called "food-fight rhetoric"). i have not checked out the more expert threads yet but will report back later.

Posted by: DeAnander | Mar 17 2005 2:35 utc | 39

DeAn..., For what it is worth, I am not in favor of you taking on the job of running an energy blog. (I dare say this because I percieve that you are not all that gung-ho on the idea now after some consideration)

We love your multiple frequent and long posts right here, with all your insight and intelligence. You are exactly right that the energy-comment field is full to overflowing, albeit ever-changing and dynamic - that naturally is exciting, but restrict yourself to inserting pithy comments as appropriate rather than taking on the task of administrator.

- my $.02

Posted by: rapt | Mar 17 2005 2:54 utc | 40

De, thanks for the tips.

Posted by: liz | Mar 17 2005 3:56 utc | 41

Please, continue the economic and energy posts. It was worth reading tonight to learn that the price of gasoline for Europeans hasn’t increased over the last 5 years.

Only Americans are paying more and those countries that tie their currency rate to the US dollar. There must be intense pressure for the China & Japan to dump their dollar reserves.

Japan’s money managers could decide that they can weather a recession in the USA by selling internally and exporting to Europe.

Chinese Communists could determine that a collapse of the dollar would mean no more money for the USA to spend on the 7th Fleet patrolling the Taiwan Strait. Japan has to back down to China’s Nuclear threats. Taipei, properly, is once more a Chinese provincial capital.

All Hell Breaks Lose. Rapture written in Chinese Hanzi Characters.

Posted by: Jim S | Mar 17 2005 4:27 utc | 42

My take on the Peak Oil crowd is that they are in the thrall of a sort of secular millenialism. While I think the end of cheap oil is a non-trivial challenge, I'm confident that humans are capable of finding the technological solutions needed. It is whether humans will be able to overcome cultural inertia that worries me, especially here in the USA. But the Peak Oil crowd has completely lost sight of the fact that humans have been able to do amazing things over the past 200 years, and that throwing our collective intelligence into the problem is a better approach than trading tips on canning string beans.

I recommend the books The Story of Stupidity and Understanding Stupidity as well as the slightly more mainstream title The March of Folly for some good insight into groupthink and cultural inertia.

Here are some semi-positive sites about energy and whatnot:

Peak Oil Optimist
Clean Edge - The Clean-Tech Market Authority
Green Car Congress
The Ergosphere

Posted by: Tom DC/VA | Mar 17 2005 5:01 utc | 43

nothing wrong with knowing how to can string beans in any case :-) Heinlein's famous list of the "things every adult human being should be able to do" is a pretty good starting point imho.

I don't think there is such a thing as a green car, personally... an oxymoron imho.

anyway I have been wandering down another thought-railroad lately... I think we can suggest convincingly that corruption/criminality are only affordable in a world of perceived-infinite resources. i.e., we can only tolerate thieving and vandalism if we have a "frontier" to absorb the damage, if we have perceived-infinite "extra" resources. if we live on a space station -- a frail and highly constrained environment in a harsh and hostile surrounding wasteland -- then we cannot tolerate vandalism of the station's essential life support systems, nor can we tolerate theft or waste of the resources needed to maintain those systems. penalties for stealing food or water on the old time square-riggers (which might spend as long as a year en route, under adverse conditions) were draconian only partly because of the brutal authoritarianism of the time. they were also draconian because it was a survival issue. theft or waste of food or water endangered the entire ship.

at this point "planet Earth" is becoming more like a space station or a ship (in proportion to the mass and appetite of its human inhabitants) than like the "infinite sphere" that it has seemed to us all these millennia. I think we are going to have to criminalise liquidator behaviour, and fast. we need a Reformation as much as a Renaissance -- because no matter what technologies we invent, it will always be cheaper for the various Mafiosi (respectable and not) to lie, cheat, steal, falsify results, bribe officials, etc. than to clean up their act.

imho there are two great stumbling blocks on our way to a sustainable life: one is our profoundly false consciousness about the real nature of "wealth" and "poverty" (so that people drinking contaminated water and eating malnutritious food imagine themselves "rich" because they have shiny cars). our cultural attachment to obsolete notions of prestige, wealth, status and so forth is a millstone about our necks. cultural inertia as Tom said.

the other stumbling block I think is perhaps tougher, and that is the nadir of corruption and criminality into which many major governments seem to be sinking. to maintain the viability of our space station or ship, we need effective enforcement, appropriate penalties, and expeditious remedy to counter the thieves and vandals who threaten our collective survival. we are not going to have those things as long as government is in the hands of commerce. there is no check or balance on the profiteering/liquidating urge.

corruption, bribery, nepotism, totalitarian leader-cultism, religious obscurantism, boughten elections, mercantilist media hegemony, and all the rest, all militate against openness of information and due process of law. this ties our hands -- we are like passengers on a ship whose crew is in open mutiny, feasting for a few days on rations meant to last the whole voyage, stripping the inner skins of the hull to fuel the barbecue. how we rein in this atmosphere of mafia-rule, bully-boyism, reckless privateering and contempt for law and posterity, is imho a key issue in the continuity of what we flatter ourselves by calling "civilisation."

(hmmm) I think I am making the case for a world court. also for the "corporate death penalty". [no this does not mean shooting every employee of the corporation.]

on some other, saner planet there would be a WSO (World Sustainability Organisation) that would slap punitive trade sanctions on any country/corporation that violated basic sustainability and stability principles. uh huh... OK, I'm dreaming with my eyes open. time to go close them for a while.

Posted by: DeAnander | Mar 17 2005 5:46 utc | 44

A useful book is Cass Igram D.O., How to Survive Disasters with Natural Medicines, 1995. ISBN 0911119620

Posted by: emereton | Mar 17 2005 6:04 utc | 45

There are literally hundreds of sites treating peak oil, either as straight info, or as discussion boards, or collections of activists having the aim to actually do something - mainly propaganda to wake people up, in any form. Many books have been published, many meetings have been organised, many people have managed to present superb expositions to Gvmt. bodies, in many countries. Associations like ASPO (google) have seen the day.

All organised (in large part) thru the internet. Endlessly discussed.

Thousands of ordinary people have contributed. Top scientists were movers.

Scientists: physicist, geologist, biologists, economist; and educators, mathematicians...the list is endless... have contributed. People have worked unstintingly, giving time, and money, and most pointedly, giving up copyright, claims to fame, saying, go for it! We are with you. I (we) will do what we can. Take the numbers, run with them.

Yahoo groups (Energy Resources Group, Running on empty, Alas Babylon, and many others - google or go to Yahoo - Yahoo was the first to offer free and palatable boards type communication and people have stuck with them for that reason) are infuential.

I have no mega links to offer right now.

Just one example, to show the kind of thing: Maciel in Brazil part 8 on sugar cane (digging out the previous parts on this board will take some work..)

He anticipates:

In post #10 well discuss how much oil we can expect to substitute with the use of ethanol as fuel for cars and as part of biofuels (transesterification reaction) to be used as fuel for vehicles now running on diesel oil (buses, trucks, tractors). And how much investment, how much land and how much TIME (here is the trouble!) we need for that. Shocking times, shocking numbers!...>YahooGpsMessage


Posted by: Blackie | Mar 17 2005 18:09 utc | 46>just one example of how fuzzy the line is between "business" and "organised crime"... note the number of spills per annum and the failure to clean up, also the (imho deliberate) destruction of subsistence farming which forces people off their land. this is imho no different from the bulldozing of Palestinian orchards, or the diversion of streams by which haole farmers destroyed entire native Hawai'ian villages. starving and sickening people to death is slower and quieter than lining them up, shooting them, and dumping the bodies in quicklime pits -- but it achieves the same result in the end. the "pesky natives" go away and the thugs can loot and [metaphorically or literally] sh*t and p*ss all over everything without witnesses or restraint.

ya know, spilling a pool of crude on viable farmland should be as shocking and repulsive and disgusting to us all as it would be if someone dropped his pants at a formal reception and took a dump on the Aubusson carpet. it speaks to the insanity of our current value system that the latter incident -- far less harmful, with far less lasting impact -- seems more outrageous.

it has been possible to extract oil without such vandalism and open thuggery. but it costs more to do it honestly. challenge before us: to make it cost a hella lot more to do it dishonestly. and to make it clear that defecating, urinating, and vomiting all over someone else's living space is not acceptable.

Posted by: DeAnander | Mar 17 2005 20:43 utc | 47

BBC: Secret US plans for Iraq's oil

In fact there were two conflicting plans, setting off a hidden policy war between neo-conservatives at the Pentagon, on one side, versus a combination of "Big Oil" executives and US State Department "pragmatists".

"Big Oil" appears to have won. The latest plan, obtained by Newsnight from the US State Department was, we learned, drafted with the help of American oil industry consultants.

Insiders told Newsnight that planning began "within weeks" of Bush's first taking office in 2001, long before the September 11th attack on the US.

Ms Jaffe says US oil companies are not warm to any plan that would undermine Opec and the current high oil price: "I'm not sure that if I'm the chair of an American company, and you put me on a lie detector test, I would say high oil prices are bad for me or my company."

The former Shell oil boss agrees. In Houston, he told Newsnight: "Many neo conservatives are people who have certain ideological beliefs about markets, about democracy, about this, that and the other. International oil companies, without exception, are very pragmatic commercial organizations. They don't have a theology."

Posted by: Fran | Mar 17 2005 22:10 utc | 48

@fran sorry, you beat me to the beeb story and I didn't notice in time. how about this one though -- "who's worried about rising oil prices?"

WASHINGTON - With truckers are feeling the pinch of higher fuel prices, you might start noticing store shelves aren't getting stocked as quickly as in the past.

Truckers know where the better diesel prices are around the country. And, it's getting to the point where some try to avoid areas with more expensive fuel.

"You may not see shortages, per se," says Mike Russell with the American Trucking Associations. "But because there aren't as many trucks going there, things may take longer to get delivered."

The price of diesel fuel is up 57 cents from a year ago.

Diesel prices are around $2.25 nationally with some places with diesel at $2.75, says Tom Kloza with the Oil Price Information Service.

"It's a little scary because the actual wholesale prices are five times where they were in 1998," Kloza says.

Every 1-cent increase per gallon of diesel fuel costs the nation's trucking industry roughly $340 million a year, according to the American Trucking Associations.

Kloza says projections show the higher fuel prices will be around at least until 2007, which could have a big impact on the nation's 525,000 trucking companies. About 80 percent of them have 20 or fewer trucks.

"It's going to put a big crunch in an owner-operator. When we fill up a tank, we're looking at a $500 bill," Russell says.

"You're basically paying to drive a truck, rather than being paid to drive a truck. Some people can absorb it for a little while. Some people can't," Russell says.

Trucking companies are trying to offset costs by more efficiently planning routes and keeping trucks well serviced.

Additionally, truckers are charging shippers surcharges.

"It's a tremendous, tremendous strain on the trucking industry. You can pass it through through automatic surcharges but that gets passed on to the goods and service," Kloza says.

But Russell says there's no way of measuring whether the direct impact of the higher fuel costs on consumers because it's not known how many businesses shipping and receiving goods are passing on the additional costs to consumers.>Radio WTOP website

Posted by: DeAnander | Mar 19 2005 1:16 utc | 49

DeA: How on earth did you find wtop? My first thought - be nice to those truckers, road rage from an 18 wheeler ain't purty. ;-)

Posted by: beq | Mar 19 2005 2:04 utc | 50

@beq I think it was at sam's site. prorev is a real grab bag.

Posted by: DeAnander | Mar 19 2005 5:05 utc | 51

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