free html hit counter Peak Oil Debunked: March 2006

Friday, March 31, 2006


Ice is an often overlooked way to store energy. Here's a neat idea that's been around a while:
The oldest form of energy storage involves harvesting ice from lakes and rivers, which was stored in well insulated warehouses and sold or used throughout the year for almost everything we use mechanical refrigeration for today, including preserving food, cooling drinks, and air conditioning. The Hungarian Parliament Building in Budapest is still air conditioned with ice harvested from Lake Balaton in the winter. Quite an impressive system, which I was able to visit last summer.Source
It makes you wonder about other possibilities. How about saving city ice and snow from the winter, and using it in the summer for air conditioning? Or towing bags of water up to higher latitudes to freeze, and towing them back again?

Of course, that's just brainstorming. In practice, ice energy storage is rapidly growing as a new way for homes, factories and commercial facilities to slash costs by shifting their cooling load to the night-time hours. In Japan, the technique is called "Eco Ice". In America, the "Ice Bear" from Ice Energy is one popular system (click to enlarge):
These systems can also reduce CO2 emissions and fossil fuel dependence in areas where nighttime base load is provided primarily by nuclear and hydroelectric.
-- by JD

Wednesday, March 29, 2006


Much of the original push for peak oil awareness came from environmentalists and people concerned with sustainability -- Richard Heinberg being the classic example. These green activists see peak oil as the long-awaited corrective event which will destroy industrial civilization, and bring humans back into a state of harmony with nature.

To make this argument work, they have tirelessly argued for three key premises:

1) We desperately need oil, and without it we will die.
2) Alternatives can't fill the gap.
3) Immediate government action is necessary because the market is incapable of coping with peak oil.

This was a huge strategic blunder, as we will soon see in Phase II of peak oil. Heinberg and his fellow travelers have inadvertently created a Frankenstein's monster, and now it is going to turn on them. The status quo will now co-opt the three peak oil premises, and use them to destroy everything environmentalists have fought for over the last 35 years.

An early manifestation of this process is the new right wing website Drill or Die. The site has a slick design, but is pretty amateurish as a piece of propaganda. It has lots of flaws: turgid writing, blatant pro-Israel bias, frothing hatred of environmentalists and muslims, and transparent pandering about the "poor". But the approach is clever, and we can expect the right wing and big business to repackage this message in a more palatable form and sell it to the public.

Here's the message in a nutshell: If we're all going to die without oil, then the only rational response is drill or die. We have to immediately drill ANWR and the OCS (Outer Continental Shelf), and gut every environmental regulation standing in the way of Exxon. We must do this because -- as the peak oilers have informed us over and over again -- oil isn't optional, and without it we're going to die. The only other possibility would be to conserve and switch to alternatives, but yet again, the peak oilers have done Exxon's dirty work, and conveniently assembled books full of arguments demonstrating why alternatives can't substitute for oil. In fact, the whole middle section of the Drill or Die Manifesto was cribbed from The Party's Over. Solar? Won't work. Windmills? Snort. Biomass? Ha! Conservation? Pfft. Nope, none of those options will scale, so the only answer is oil and gas. Ergo we must Drill or Die. To top it all off, the Drill or Die reactionaries steal another idea from the peak oiler play book. The market won't be able to respond in time, and we need to do something NOW! So the President must declare a state of emergency, and wage war on the environmentalists who are standing in the way of our access to oil.

What you end up with is a plan like the Hirsch Report on steroids. Here's the summary from the Drill or Die Manifesto:

The President shall declare a state of emergency, and decree by Executive Order the following "mitigation" program:
1. Permit the lease of land and sea areas to U.S. entities, on a bidding basis. Said leases are to be awarded within four months of this declaration to U.S. oil and gas companies for the extraction of oil and/or gas at ANWAR and in other areas under U.S. jurisdiction.

2. Launch a project to bring the oil and gas from the leased areas to U.S. consumers in the shortest time, and build facilities to process and distribute their derivatives to U.S. consumers. It is now too late to keep the cost of oil and gas from causing extra hardships to our people, but we can reverse this trend within 18 months from the date of this declaration.

3. Announce a project to add at least 20 more refineries to those we now posses to produce gasoline, as well as diesel fuel, and fuel and products for other applications. Within 30 days of this declaration, create a committee to select sites where the refineries will be located with the least inconvenience to our citizens. Selection of these sites shall be finished within 3-months of the date of this declaration, and work to start construction of the new refineries shall begin within three weeks thereafter. That work shall be carried out by private companies willing to fund and own these facilities, with a U.S. government guarantee that they will not be closed due to pressure by the greens, and if a later administration cancels this authorization, the U.S. government shall reimburse the private companies for all their costs of these facilities. If no private companies are willing to perform such construction, start construction of the refineries by the U.S. government, for ownership and operation by the U.S. government. Such work shall not be sabotaged by greens, or by any person or entity they may employ to enforce their will. We are now at war and, as in World War II, must not obstruct the construction of vital national facilities.

4. Announce a project to build at least 500 extra nuclear power plants of the newest, safest design, to add to the 103 we already have in operation. Assure the owners of these plants that they will not be shut down due to pressure by the greens, and if a later administration revokes this promise, provide the owners of these plants with a U.S. government guarantee to reimburse them all their costs for these facilities. Under these conditions, induce U.S. companies to start construction of 20 new nuclear power plants within 6 months of this declaration and, at least, 80 additional plants each year thereafter, until all 500 extra nuclear plants are under construction or are already under operation.

5. Announce a project to reopen or construct facilities to recycle residues from nuclear power plants under the same conditions and with the same U.S. government guarantees as provided for nuclear power plants described in paragraph 4 above. Work to start this project is to begin within 6 months of this declaration, and shall be finished within 3 years thereafter.

6. Close our borders to persons who try to enter the U.S. by illegal means. Most of them are seeking work in the U.S., but some may well be terrorists who plan to do us grievous harm. Treat all persons who try to enter the U.S. illegally, or who may already be here by illegal means, as law-breakers and, if suspected to be terrorists, prosecute them to the full extent of the law as ununiformed enemy guerillas.

7. Work with states to create democratically elected committees in U.S. cities and counties to expose and counter the abuse of power by sham environmentalists and government officials who help them. Members of these committees are to take legal steps to prevent such abuses, and hold those who inflict them financially and/or criminally responsible to their victims. (Source: Drill or Die Manifesto, P. 68-69)
So, there you go peak oil greenies. You wanted the government to do something, and they're going to do something alright. The status quo is going to hijack all your talking points, and twist them around to justify the biggest corporate pork project in the history of mankind. Exxon and Halliburton will send you a "Thank You" note.
-- by JD

Tuesday, March 28, 2006


The March 28, 2006 New York Times has an article (behind the free registration wall) on the oil situation in Russia, particularly the Timan-Pechora region.

In the USGS World Petroleum Assessment 2000, Timan-Pechora is Province 1008, and this is the map (green dots are oil fields and red dots are gas fields):
WPA 2000 ranks Timan-Pechora as the 26th province in the world in terms of undiscovered oil, with the following stats as of 1995 (MMBO, except for maturity):

Cumulative oil: 3,346
Remaining oil: 9,774
Known oil: 13,120
Mean undiscovered oil: 5,732
Future oil: 15,506
Oil endowment: 18,852
Discovery maturity: 70%

This basin is far from peaking, and produces the sort of light crude which is in high demand. So why isn't production in this province booming?

The answer is one we have previously addressed in 253. MONOPOLISTS SITTING ON OIL. From the NYT article:
Despite its remote location in the far north, Usinsk has some inherent advantages. An export terminal a few hundred miles away on the Arctic Ocean could supply tankers able to reach the United States in nine days. Building a pipeline to Europe would feed the high-quality oil directly to another ravenous market.

But for now, the Russian government controls exports. So instead, oil from here is pumped into a maze of state-run pipelines stretching far to the south, where it is blended with inferior oil and sold at a discount.
Hard to believe, isn't it? Russian bureaucrats are blending caviar with slop, and selling it as dogfood. Which, as a side-effect, just happens to eliminate any incentive to produce the caviar.

Another interesting fact from the article: Siberia is covered with natural gas flares. There aren't enough pipelines and the gas can't be moved, so they just burn it. Rosneft alone flares enough gas in one year to supply an entire city the size of Denver.

So we've got Western Europe struggling due to lack of gas, while the Russians are burning it off like it was garbage in Siberia. This doesn't sound like a problem caused by resource constraints. It sounds like a problem caused by government meddling and mismanagement.
-- by JD


When he's not regaling us with in-depth chronicles of his hip replacement, Jim Kunstler is busy reasoning with curse words and telling us that Phoenix is "fucked". Here's some standard fare:
I have maintained that we will see cities like Phoenix and Las Vegas virtually depopulated in the next fifty years as all their artificial means to support human settlement grow scarce. Imagine Phoenix without cheap air conditioning.Source
He must have said this a hundred times already, but it's still just as retarded as the first time he said it.

Phoenix and Las Vegas are the last places which will have air-conditioning problems. How do I know this? Because the western desert is the U.S.'s Saudi Arabia of solar energy. Conditions are ideal for generating large power flows from solar energy, and it just so happens that those power flows will be available at the same time air conditioning demand is highest. It's a no-brainer, and investors are already breaking ground:
But as oil, natural gas and electricity costs soar, companies are racing to build commercial solar thermal plants that are the size of conventional power plants.


Utah-based International Automated Systems Inc. on Thursday signed an agreement to install a $150 million, 100-megawatt power plant for Solar Renewable Energy in Nevada.

And North Carolina-based Solargenix, in which Spanish building and services company Acciona SA is buying a 55 percent stake, will break ground over the weekend on a 64 MW, $100 million solar thermal plant called Nevada Solar One. The company said it will be the first U.S. commercial solar thermal plant, coming on line in 2007.

Currently, all the types of solar energy provide only about 1 percent of U.S. power. One hurdle is price. Solar thermal at present costs about 12 to 15 cents per kilowatt hour, Westerholt said, compared with natural gas power which costs 10 cents per KWH.

But as production grows, solar companies expect costs to slip to 8 cents per KHW in five years.

SCHOTT will provide components for at least one 50 MW plant per year in the U.S. Southwest deserts every year until 2010, said Westerholt.Source
-- by JD

Monday, March 27, 2006


In 2005, Hurricane Katrina caused $75 billion in damages, and Hurricane Rita $10 billion, for a total of $85 billion in the U.S. alone. These hurricanes also caused extensive damage to the oil production infrastructure in the Gulf of Mexico, much of which was simply written off. Clearly any technology capable of moderating hurricanes, or directing them away from population centers and energy infrastructure, would be extremely valuable.

The ground work for achieving this has been done by Ross N. Hoffman, Chief Scientist at Atmospheric & Environmental Research Inc. (AER), a weather consulting firm headquartered in Lexington, Mass. In the October 2004 issue of Scientific American he described one approach:
Our team plans to conduct experiments in which we will calculate the precise pattern and strength of atmospheric heating needed to moderate hurricane intensity or alter its track. Undoubtedly, the energy required to do so would be huge, but an array of earth-orbiting solar power stations could eventually be used to supply sufficient energy. These power-generating satellites might use giant mirrors to focus sunlight on solar cells and then beam the collected energy down to microwave receivers on the ground. Current designs for space solar power stations would radiate microwaves at frequencies that pass through the atmosphere without heating it, so as to not waste energy. For weather control, however, tuning the microwave downlink to frequencies better absorbed by water vapor could heat different levels in the atmosphere as desired.
In a presentation on this topic, he also mentions the idea of using space mirrors:
Solar reflectors: In low earth orbit, these would produced bright spots on the night side and shadows on the day side of the earth
Now, it remains to be seen whether 2005 was an anomaly, or the start of a new pattern. But if we do enter a period where hurricanes like Katrina become a chronic pattern, there is really no excuse for not building microwave satellites or space mirrors to deal with them. A working system would pay for itself in a few years, even if it cost $100 billion. It could also generate electrical power as a side benefit.

It makes a lot of economic sense, and a company called Space Island Group (SIG) has a detailed plan for doing it. You can read about the company and their plan here.
-- by JD

Saturday, March 25, 2006


I like the idea of looking at energy conservation as an extreme sport. In fact, it would be really cool if they had an energy conservation olympics as a way to promote fun new ways of living well on miniscule amounts of energy. I've previously talked about a couple of low-tech techniques: the space heater and the bicycle. Today let's look at another miracle machine: the pressure cooker.

The energy stats on pressure cookers are amazing. These stats are from Kuhn Rikon, a Swiss manufacturer (click to enlarge):

As you can see, the savings are phenomenal. Depending on how you cook, you can shave your energy needs for cooking by as much as 95%.

Wider adoption of these techniques could have a big impact. According to this report, 17% of U.S. energy consumption is attributable to the food system, and the following chart shows that about 32% of that is consumed by food storage and preparation in the home.

It's interesting to consider methods like this as an alternative to investing in LNG facilities or nuclear plants. If you're going to spend a few billion dollars anyway, why not loan the money to ordinary people to buy gas space heaters and pressure cookers, and promote the idea on TV? It's a simpler way to "produce" the same amount of energy.
-- by JD

Friday, March 24, 2006


I'll be getting back to the usual POD analysis in the next post, but today I want to get a little philosophical and address an interesting side issue. It takes a bit of a tangent to fully explain, so please bear with me for a moment.

Lou Grinzo was the one who got me thinking, when he wrote this:
I am sick to death of the people like Kunstler and the other Apocalypticons telling us how humanity has never faced anything this serious, and then predicting in minute detail how freakin' awful things will be. How do they know? Why are they so intent on making these moralistic arguments about the downfall of modern civilization, etc.?
My friend Bart from was wondering about the same thing:
Where do fatalistic and Doomer ideas come from?
Now, let me take that tangent.

I grew up in the U.S., but have lived much of my adult life in an extremely non-Christian society (Japan). This makes the deep, ingrained Christianity of the U.S. stand out in high relief to me. It is one of the most prominent features of the reverse culture shock I experience when I return to the U.S.

Note that by "deep Christianity" I don't mean Pat Robertson, or people going to mega-churches, or the Bible Belt; that's "surface Christianity". Deep Christianity is the Christianity which is embedded into the very fabric of secular America. Generally, Americans never notice this because it's like the air they breath; I never did when I grew up there. But if you live for a while in a culture which doesn't have that Christian substrate, it's very obvious when you go back home.

Here's an example, to help you see vividly what I mean. This is a photo from the world famous penis festival at Tagata Jinja in Aichi, Japan:

This is not a joke. It is a solemn and ancient fertility rite of a pagan religion.

Due to their resourcefulness, the Japanese were one of the few peoples on the earth to resist the onslaught of Christian missionaries, and preserve these old rites. But in ancient times, they were practiced by all peoples. Herodotus speaks of a rite he witnessed in Egypt where a woman publicly copulated with a goat -- the goat being ritually regarded as the incarnation of a god. Public buildings and shrines in Rome were adorned with massive phallic sculptures and motifs. People wore phalluses around their neck, much like people wear crosses today.

Now, the U.S. is ostensibly a country of religious freedom, but what would happen if (say) some neo-paganists marched a giant pink penis down the streets of Chicago as part of their religious observations?

Well...the American public can't even handle 0.5 seconds of Janet Jackson's nipple in the form of a TV microdot, so it's clear that the "perps" would be arrested and, in all likelihood, convicted as sex offenders. But what would be the reason? It couldn't be Christianity because that would be tantamount to enforcing a state religion. So America invents secular euphemisms to cover this Christianity. They say the penis is "inappropriate" or "indecent" or "obscene".

This is what I mean by "deep Christianity" -- blatantly Christian behavior, morals and thought processes by people who claim to be uninfluenced by, or even antagonistic toward, Christianity.

There are lots of other examples of this phenomenon, but let's return to the topic of peak oil.

My claim is that peak oil doomers are subconsciously influenced by the apocalyptic doctrines of Christianity. It's part of their "deep Christianity". Of course, they will vehemently deny this -- just like all the American atheists and agnostics who would frantically dial the police to report an "obscene" penis parade their child saw out the window in Chicago. Deep, subconscious Christianity is passed off as "common sense", or even as normality itself.

But the connections are there if you have the eye for them. Consider this:
I don't know if this is a boost for PO but last night I heard Pat Robertson of all people, telling his TV audience that he recently read the book "Twilight in the Desert" by Matthew Simmons. He went on to tell about the how the Saudi's are doing everything to keep their production numbers up but once the oil fields peak, we are all in trouble. Source
What an amazing coincidence! We're on the same wavelength about the "End Times", Brother Simmons! To the untrained eye, this appears to be some roundabout, accidental connection between geology and theology, but in fact the connection is very short and direct. Simmons and Robertson are simply preaching different versions of the "Apocalypse" -- a meme which has been burned indelibly into their subconscious minds by the ambient culture of America.

Similarly, consider Professor Deffeyes' comments in a recent interview:
Q: Where is the economic impact of peak oil going to be felt acutely and when?

Geologists like to look back in time, and I'm not that good at futurology. I borrow the analogy of the Four Horsemen of the Apocalypse: war, famine, pestilence and death.Source
Where did he get that analogy come from? Yup, you guessed it: THE BIBLE (Revelation 6:1-8).

Contrast this with the thinking of the Japanese. They don't even have the concept of the "End Times" or the "Apocalypse" (a biblically derived term) or "Armageddon" (another biblically derived term), except as an exotic foreign import. They're not coming to the playing field with the psychological baggage -- inculcated into them from birth by the ambient religious culture -- that the wicked will be punished for their sins when the world comes to an end on Judgment Day.

In the West, the collapse of Rome casts a very long shadow. Westerners look back on the Roman ruins, and worry "That could be us. It happened once before, and it could happen again. We're decadent like they were." This too harks back to the Bible. America is the new Rome, the decadent harlot of revelation:
18:2 And he cried mightily with a strong voice, saying, Babylon the great is fallen, is fallen, and is become the habitation of devils, and the hold of every foul spirit, and a cage of every unclean and hateful bird.

18:3 For all nations have drunk of the wine of the wrath of her fornication, and the kings of the earth have committed fornication with her, and the merchants of the earth are waxed rich through the abundance of her delicacies.

18:4 And I heard another voice from heaven, saying, Come out of her, my people, that ye be not partakers of her sins, and that ye receive not of her plagues.

18:5 For her sins have reached unto heaven, and God hath remembered her iniquities.

18:6 Reward her even as she rewarded you, and double unto her double according to her works: in the cup which she hath filled fill to her double.

18:7 How much she hath glorified herself, and lived deliciously, so much torment and sorrow give her: for she saith in her heart, I sit a queen, and am no widow, and shall see no sorrow.

18:8 Therefore shall her plagues come in one day, death, and mourning, and famine; and she shall be utterly burned with fire: for strong is the Lord God who judgeth her.

18:9 And the kings of the earth, who have committed fornication and lived deliciously with her, shall bewail her, and lament for her, when they shall see the smoke of her burning,

18:10 Standing afar off for the fear of her torment, saying, Alas, alas that great city Babylon, that mighty city! for in one hour is thy judgment come.

18:11 And the merchants of the earth shall weep and mourn over her; for no man buyeth their merchandise any more:

18:12 The merchandise of gold, and silver, and precious stones, and of pearls, and fine linen, and purple, and silk, and scarlet, and all thyine wood, and all manner vessels of ivory, and all manner vessels of most precious wood, and of brass, and iron, and marble,

18:13 And cinnamon, and odours, and ointments, and frankincense, and wine, and oil, and fine flour, and wheat, and beasts, and sheep, and horses, and chariots, and slaves, and souls of men.

18:14 And the fruits that thy soul lusted after are departed from thee, and all things which were dainty and goodly are departed from thee, and thou shalt find them no more at all.

18:15 The merchants of these things, which were made rich by her, shall stand afar off for the fear of her torment, weeping and wailing,

18:16 And saying, Alas, alas that great city, that was clothed in fine linen, and purple, and scarlet, and decked with gold, and precious stones, and pearls!

18:17 For in one hour so great riches is come to nought. And every shipmaster, and all the company in ships, and sailors, and as many as trade by sea, stood afar off,

18:18 And cried when they saw the smoke of her burning, saying, What city is like unto this great city!(Rev. 18:2-18)
Tell me that isn't Kunstler in a nutshell, right there.

In the East, there was no Rome, and nobody pays attention to the Bible, so this whole strain of thought doesn't have any impact. It sounds weird and foreign. Japan never collapsed (and neither did China). The Japanese don't look back on their history and see ominous ruins, from which they are supposed to draw moral lessons about the wages of sin and excess. Instead, they look back and see Horyuji, the oldest wooden structure in the world:
When you've got a wooden building which has been standing continuously for 1300 years, the idea that "everything must eventually collapse" doesn't seem so convincing.
-- by JD

Thursday, March 23, 2006


As expected, the myth that "higher oil prices will drive food prices through the roof " dies hard. The peak oilers simply can't handle the inconvenient truth that oil prices have very little impact on food prices.

Nevertheless, I'm a cheerful vampire slayer, so let's take another crack at it, and see if we can't drive a few more stakes into the heart of this myth.

A critic in the comments to the previous article (#265) writes:
Rising oil prices have not been reflected in a correspondent rise in corn prices (to use one of JD's examples) due largely to US government farm subsidies, of which corn growers are amongst the highest recipients (1). These subsides help keep the "farm value" (i.e. price of corn at the farm gate) artificially low.
Proceeding to the critic's source, however, we find this incongruous information:
What drives the expenditures today is the same basic policy framework that has driven farm subsidy spending since the "world food crisis" of the early 1970s. When global grain and oilseed prices spiked dramatically, then-Secretary of Agriculture Earl Butz unleashed farmers from decades of production controls and exhorted them to plant "fence row to fence row" to meet the global demand for their crops—to feed the world. After forty years of "agricultural adjustment" programs, Butz foresaw that the government, at long last, was getting out of agriculture. Within a few years farmers were literally plowing up the Mall in Washington in protest of prices and incomes driven ruinously low by the pressure of massive crop surpluses.Source
It appears our critic is a little confused about what agricultural subsidies actually do. If subsidies are provided to keep prices low, shouldn't prices rise -- not drop like a rock -- when they are eliminated?

Next, our critic notes that beef prices have risen somewhat with oil prices, and gives us the peak oiler rationale for this trend:
Getting the corn from the farm to the cow (or can) and ultimately into our mouths costs far more than just growing it. This farm-to-mouth process is the marketing cost and entails processing, packaging, transporting, and selling the corn (or corn-based product) at the supermarket. It is this cost that impacts price the most.
So it would seem that all of this oil-fueled processing, packaging, transporting and selling is what has caused the price of beef to moderately rise. To verify this hypothesis, lets look at another type of meat: chicken. The following is a time series of prices for fresh whole chickens, per lb., from the Bureau of Labor Statistics (click to enlarge):

Now, from the EIA, we can obtain spot prices for Brent crude to give us a good solid run-up in oil prices:

Price of Brent in Dec. 1998: $10
Price of Brent in Feb. 2006: $60

That's an oil price increase of 6x, or 500%. So what did that do the price of chicken? Absolutely nothing, as you can see in the Table. In 12/98 chicken sold for $1.060/lb., and in 2/06 chicken sold for $1.045/lb. A 500% increase in oil prices led to a drop in chicken prices. So what happened with all the processing and transport etc.? Didn't they have to get the corn to the chickens' mouths, and get the chickens to the processing plant, and pluck the chickens, and wash the chickens, and package the chickens, and transport them to the supermarket etc. etc.? Looks like we have a serious glitch in the peak oil theory here.

The critic had yet another lame argument:
But this is not the point. Most of us don't drag our gunny sacks to the farm gate and fill them with corn. We purchase and consume corn in other ways, either fresh, frozen, or canned, or most often in the form of beef.
Yes that may be true, but (as a few people noted) when you start talking about beef and frozen entrees etc., you're basically unmasking peak oil as a trivial lifestyle issue, not a life-threatening crisis.

Furthermore, aren't the peak oilers trying to get off the food grid because food prices are going to be astronomical after peak oil? To do that, I'm assuming they'll grow gardens. Hence they'll have to grow some staple grain if they really want to be self-sufficient. I haven't seen many peak oiler sites talking about how to do your own rice paddy, or wheat field, so probably the most straightforward "local" grain is corn. You know, plant a big plot Indian-style with corn hills, beans growing up the stalks, and intercropped pumpkins to keep the weeds down. Dry it all on the stalk, and harvest the kernels into paper bags by rubbing the cobs together. Mill with a hand mill and cook into corn bread or porridge etc. etc. It's a lot of fun, but what's the point of going to all that trouble to replace a food source (corn) whose price is demonstrably not affected by oil prices? It doesn't make sense, unless you're gardening just for relaxation, or as a hobby.

The peak oilers are also deeply concerned (elated?) about the impending death of the 3,000 mile salad. The theory is that high oil prices are going to drive the price of long-distance imports like bananas and coffee to astronomical levels, and they'll quickly disappear from store shelves. Lets do a reality check on that one with some more stats from the BLS (click to enlarge):

Isn't that wild? Oil prices rise 500% from $10 (12/98) to $60 (2/06), and banana prices drop from .510/lb. to .508/lb.

Here's the stats for coffee:

Just like bananas, a 500% rise in the price of oil results in an 8% drop in coffee prices.

Clearly the relationship of oil vs. food prices is way more complicated than the kindergartner economics of the peak oilers would suggest.
-- by JD

Wednesday, March 22, 2006


Some of these peak oil myths are like Dracula. You can shoot them dead, but they just keep getting up out of the coffin. Believers continue to insist the groupthink is true, even in the face of unequivocal quantitative evidence to contrary.

Here's one from today's doomer puff piece in Salon:

"As energy gets more expensive, food will get more expensive."

This is totally superficial and misleading. The important question is: HOW MUCH more expensive will food get as energy gets more expensive? Actual data and analysis shows that rising oil prices have almost no effect at all on food prices. From an in-depth study by the USDA:
The empirical results presented above suggest energy prices will have a relatively small but positive impact on the average price that consumers pay for food. The simulations suggest that a doubling of crude oil prices would raise average food prices in competitive food markets by as much as 1.82 percent in the short run, and by 0.27 percent in the long run.Source
More data demonstrating the same point:
Average corn and petroleum product prices moved in parallel until about 1974. However, petroleum prices jumped dramatically thereafter, while corn prices did not. The real price of corn has trended downwards since 1974. This is not true for petroleum prices. The results of statistical analyses show that the average corn price has declined at an average annual rate of about 11 cents/bu, since 1956, in 1994 currency. The average petroleum price index (adjusted to 1994 values of the consumer price index) has increased at an average annual rate of 1.45.Source
Isn't that data above amazing? From 1956 to 1994, real oil prices went up while real corn prices went down. Hmm... Seems common sense isn't all its cracked up to be.

In the period from late 1998 to April 2004, the price of crude oil increased from about $10 to $55. That's an increase of 5.5x.

So did food prices go up by 5.5x?
Let's take a look:

Wheat prices... Steady

Soybean prices... Steady

Sugar prices... Steady

-- by JD

Sunday, March 19, 2006


The latest sensation in the peak oil community is yesterday's CNN program We Were Warned -- a one hour program about oil issues which you may have seen. On the whole, the peak oilers weren't too impressed by the program. They felt it was pablum and didn't really address the dire, depressing crisis that they see "almost just verging around the corner".

One exception, however, was the interview with Matt Simmons. True to form, Matt Simmons ran off at the mouth, and gave the doomers one of those S-C-A-R-Y doggy bones they so desperately crave:
In his book, "Twilight in the Desert," Oil Analyst Matthew Simmons argues we're nearing the point when the world will use more oil than it can produce.

(on camera): Do you hear a ticking clock? MATTHEW SIMMONS, AUTHOR OF "TWILIGHT IN THE DESERT": I hear a gong. I heard a ticking clock during the '90s.

SESNO: And if we don't act? Something doesn't change?

SIMMONS: Well, our life could get a lot darker fast.

SESNO: What is your worse case scenario?

SIMMONS: My worst case scenario is so bad that you don't want to go there.

SESNO: Tell me.

SIMMONS: We basically end up having a series of energy wars over who gets oil. And they're wars between you and your neighbor. And the war is between one town and another, and ultimately one country and another.

SESNO: Chaos.

SIMMONS: It's just total chaos.Source
Yup, you read that right... "chaos". That's the American code word for having to car pool or ride the bus. The horror! The horror!

I don't think Simmons has thought this through, however. I mean, if it's going to be all-out war between municipalities, have they considered parking? I don't think we can really expect morbidly obese American oompah-loompahs to waddle all the way to these bloody conflicts. In fact, we'll probably see some of the fiercest fighting over the handicapped slots closest to the battlefield.

Anyway... Since Mr. Simmons' has become the latest font of doomer hype, it behooves us to take a look at some of his previous predictions. More specifically, today is the first day of spring, so let's take a little trip down memory lane and see how Simmons' predictions for the winter of 2005-2006 fared.

On July 4, Simmons warned of $100 oil:
Warning of $100-a-barrel oil

The Scotsman, July 4 2005

ROCKETING oil prices might hit $100 (£57) this year, controversial
Texan oil analyst Matt Simmons has warned.

Crude surged past $60 a barrel last week and investors are pinning
their hopes on a build-up in US oil-stocks to bring the price down
again in the coming months. However, Simmons said surging demand will
keep prices well above $50.

"We could be at $100 by this winter," he said. "We have the biggest
risk we have ever had of demand exceeding supply. We are about to face
up to the biggest crisis we have ever had."Source
Apparently, this wasn't spooky enough, so in October Simmons ratcheted up the hype to $190 crude:
Oil guru says crude could hit $190 this winter
'Prices are really cheap today and they need to go a lot higher,'
analyst says

Reuters 0ct. 19, 2005

OTTAWA - Consumers should brace for crude oil and natural gas prices
possibly doubling or tripling this winter, Matthew Simmons, a
best-selling author and oil-supply bear, said on Wednesday.

"Prices are really cheap today and they need to go a lot higher, and
they probably will go a lot higher," Simmons said in Ottawa.

"I am very concerned, given the destructive damage done by (Hurricanes)
Katrina and Rita, that the United States must be closer to starting to
see significant product shortages than we've seen since 1979."

Too much got destroyed and too little has been brought back on stream,
the Houston-based analyst said.

He also said that cold weather this winter could bring a very high risk
of natural gas curtailment in the United States.

"Either one of those events (oil product shortage or natural gas
shortage) could send prices two to three times higher than they are
today," he said after a speech in Ottawa.

That could translate into natural gas prices of $40 per million British
thermal units from more than $13 now, he said. Doubling or tripling
crude would put it in the range of $125 to $190 per barrel. Source
Hate to be blunt, but it's almost like Simmons has become a media whore. Here's Simmons in September predicting $10 gasoline for the winter:
Matt Simmons Issues a Wake Up Call Energy THE Of Future

By Jeanne Klobnak-Ball


Like the terrorist attacks of 9/11, Hurricane Katrina stands to become
a defining moment in our nation's history. While the precise meaning of
such moments remains to be interpreted, Matt Simmons believes the
natural disaster may well be remembered as the start of "our great
energy war." "We're almost at the verge of having real energy
shortages," Simmons said last Friday, when he issued a wake-up call to
a standing-room only audience at the Center for the Arts. "We could be
looking at $10-a-gallon gas this winter."

Author of "Twilight in the Desert: The Coming Saudi Oil Shock and the
World Economy" and founder of Simmons and Company International, a
Houston-based energy investment banking firm managing over $60 billion
in assets...Source
And then there was the cherry on top of this whole fudge sunday of escalating bullshit -- Simmons' prediction of $330-$650 crude, and $12.50-$25.00 gasoline, kindly calculated by peak oil know-it-all Matt Savinar over at LATOC(click to enlarge, Source):

Had to archive the screenshot of that one. Wouldn't want Matt&Matt pulling any funny stuff, and trying to squirrel their ridiculous rhetoric down the memory hole when they think nobody's lookin'. Anybody wanna wager on how long it's going to take Savinar to revise that page, now that we're all laughing at his silly red ass, like a monkey in the zoo?

Well then, since we've reviewed what the nutters and hysterics predicted for this winter, let's take a brief look at what actually happened in the real world. These are the actual stats from the EIA:

Gasoline never topped $2.50:

Crude barely topped $65.00:

Massive shortages predicted by Simmons never materialized. Inventories are at a 7-year high:

Enjoy that spring weather everybody! I know I will. ;-)
-- by JD

Wednesday, March 15, 2006


A key assumption of the argument for imminent peak oil is the idea that "the largest fields are discovered first". If you quiz the peak oilers about it, they generally don't produce any supporting data. They simply appeal to "common sense".

Granted, the idea does seem reasonable on the face of it, but I distrust common sense. I prefer data, and the data shows that reality is more complicated.

For example, if the largest fields are discovered first, why did it take roughly 90 years after oil drilling began to find Ghawar (the world's largest field)? Similarly, Iran recently discovered 2 super-giant oil fields: Azadegan (2001) and Ferdows/Mound/Zagheh (2003). Azadegan was the largest field discovered in Iran in 30 years, and Ferdows is even larger. Oil exploration in Iran began in 1901. So why did it take 100 years to find these large fields if large fields are discovered first? Similarly, Kazakhstan discovered the gigantic Kashagan field (the country's largest field) in 2000, even though oil exploration in the area began prior to WWII. Prudhoe Bay, the largest field in the U.S., was discovered in 1968, even though Colonel Drake drilled the first U.S. well in 1859. Why did it take the U.S. 109 years to find its largest field? Norway recently discovered gargantuan coal deposits in the North Sea holding 3 times more coal than all the previously known coal resources in the rest of the earth's crust. It was the biggest coal discovery ever, and it happened more than 500 years after people began mining coal. That would seem to be a case of the largest deposit being found LAST.

Ronald R. Charpentier of the USGS has data making the same point in his presentation The Future of Petroleum: Optimism, Pessimism or Something Else(pdf) (click image to enlarge):
The disadvantages of trendology are easily demonstrated, however. Consider the discovery history of part of the Trias-Ghadames basin of Algeria. If trendology had been used for an assessment in 1980, the assessment would have given little chance for undiscovered fields larger than 10 million barrels and the resulting estimate would have been low. The largest field in the assessment unit would have been missed. (Slide #6)
As you can see in the chart, the largest field in this basin of Algeria was not discovered first. If the peak oilers had been in Algeria in 1980, they would have pointed to the declining trend and said the basin was all played out. They would have missed the largest field.

The same trend is continuing today. Just yesterday, Mexico announced the discovery of a new deepwater field potentially larger than Cantarell, their largest currently operating field*:
MAR. 13 5:52 P.M. ET Mexico has made a deep-water oil discovery in the Gulf of Mexico that could be larger than the country's giant Cantarell offshore field, President Vicente Fox said on Monday.Source
In short, the evidence shows that large fields are frequently discovered late in the game. It also shows that there are some serious problems with Matt Simmons' superficial fairy tales about kings, queens and lords:
The French Petroleum Institute did a major study a couple of decades ago about the distribution of oil fields by basin. And what they found was that what seems to happen with phenomenal regularity is that within about 5-7 years of moving into a new area of prospective hydrocarbon, you tend to find the queen first, which is the second largest field you're going to find. You then calibrate in on the knowledge of how you found that and within a handful of years you find the king. And then over the next decade, you find there too, the next 8-10 lords. And once you've found the royal family, the rest of everything you'll ever find are basically peons in size.Source
*) Chicontepec, an undeveloped heavy oil field north east of Mexico City, is actually larger than Cantarell. Its original oil in place (OOIP) is greater than 139Gb, of which 7% to 10% (10-13Gb) are currently technically recoverable. (Source: World Oil, Nov. 2001)
-- by JD

Tuesday, March 14, 2006


Human beings have previously switched energy sources without any special difficulty. For example, we smoothly switched from wood to coal without any societal collapse. So why can't we do the same thing this time?

As usual, the peak oilers have a reason why we can't. Here's Aaron from
Every prior energy transition has been from a lower EROEI source to a higher one. From wood to coal | From coal to whale oil | from whale oil to petroleum, each change was a step up the EROEI ladder. This represents our first attempt to go the other way ala Heinbergs Power Down idea.
I've previously shown the flaws with this view in 136. WILL DECLINING EROEI CAUSE COLLAPSE. When humans made the step from hunting/gathering to agriculture, they stepped down the EROEI ladder. Farmers have to work a lot harder than hunters to harvest a unit of energy. But this step did not lead to contraction and the collapse of civilization. Ironically, it lead to a massive explosion of growth and the formation of civilization.

Recently, I've been reading the doomer favorite The Collapse of Complex Societies by Joseph A. Tainter, and it has an interesting section with a bearing on this issue. Tainter writes:
The fuel resources used first by a rationally-acting human population, and the mineral deposits mined first, are typically those that are most economically exploited, that is, the most abundant, most accessible, and most easily converted to the needs at hand (Rifkin and Howard: 73). When it subsequently becomes necessary to use less economical resources marginal returns automatically decline.

The development of the coal-based economy in England is a case in point. Wilkinson (1973) has shown that major jumps in population, at around A.D. 1300, 1600, and in the late eighteenth century, each led to intensification in agriculture and industry (see also North and Thomas [1973]). As the land in the late Middle Ages was increasingly deforested to provide fuel and agricultural space for a growing population, basic heating, cooking, and manufacturing needs could no longer be met by burning wood. A shift to reliance on coal began, gradually and with apparent reluctance. Coal was definitely a fuel of secondary desirability, being more costly to obtain and distribute than wood, as well as being dirty and polluting. Coal was more restricted in its spatial distribution than wood, so that a whole new, costly distribution system had to be developed. Mining of coal from the ground was more costly than obtaining a quantity of wood equivalent in heating value, and became even more costly as the most accessible reserves of this fuel were depleted. Mines had to be sunk ever deeper, until groundwater flooding became a serious problem.(P. 98-99)
Isn't that remarkable? It turns out that the step from wood to coal (like the step from hunting/gathering to agriculture) was actually a step down, not a step up. You can practically hear the snorts of the "peak wooders" in Tainter's text.

Peak wooder: We are so f*cked. Where are we going to get enough wood to meet demand? Everything we do -- our entire society is based on wood. We'll collapse without it.

Cornucopio: We'll switch to coal.

Peak wooder: Oh, yeah right. And monkeys are gonna fly out of my butt. You f*cking idiot. Our whole economy is based on cheap wood. Wagons, housing, tools, transport, shipping, cooking, packaging, heating, blacksmithing, furniture. We're doomed without it. Do you have any idea how foul coal is? And how far you have to go to get it? Where are you going to get the wood to move all that coal? For God sakes, wood just grows out of the ground, and you're proposing that we dig into solid rock for that filthy substandard junk? You need to up your medication. Do you have any idea how many people its going to take to dig those holes? And how are you going to make their houses, and keep them warm, and get them to the job without wood? What are you going to make their shovels and wagons out of? The only reason those people can dig coal now is because they're subsidized with cheap wood!!! And even supposing that you could marshall all those people you need to do the digging, you'll just hit water, and then it's game over. You can't bail out the water because YOU NEED WOOD TO MAKE THE F*CKING BUCKETS. Sorry man, but coal is nothing but a bunch of wishful thinking. You're pinning all your hopes on it because you're afraid to face the fact that our wood-based society is doomed. The stupid, myopic wood party is over and the hangover is going to be killer. There is simply nothing which can replace the convenience, versatility and cheapness of wood.
-- by JD

Sunday, March 12, 2006


The peak oilers make a big deal out of the Hirsch report. In particular, they like to quote this sentence from the executive summary (p. 4):
The peaking of world oil production presents the U.S. and the world with an unprecedented risk management problem. As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and, without timely mitigation, the economic, social, and political costs will be unprecedented. Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking.
This is their justification for believing that it's too late to avoid disaster. Here's a classic statement from Monte Myers, Den Mother of the doom troop over at
One of the things that has continuously puzzled me is that amongst the optimistic solutions posited to solve hydrocarbon depletion, I see an assumption that we have, or will have, the time to mitigate the consequences of peak oil. Mitigation, of any sort, will take time and a lot of money. And it will have to be applied world-wide, not just in the first world.

The Hirsch Report details that we need a 10-20 year crash mitigation plan in place before the peak.
This is a load of baloney, and it all hinges on the word "mitigation". You see, what the Hirsch report means by "mitigation", is an all-out crash program for producing more liquid fuels, as you can see from the following diagram (p. 57):

This program is a pro-Exxon, pro-GM, pro-pollution, anti-conservation, Dick Cheney inspired load of crap, and the authors of the report frankly admit it (p. 50):
B. Mitigation Options
Our focus is on large-scale, physical mitigation, as opposed to policy actions, e.g. tax credits, rationing, automobile speed restrictions, etc. We define physical mitigation as 1) implementation of technologies that can substantially reduce the consumption of liquid fuels (improved fuel efficiency) while still delivering comparable service and 2) the construction and operation of facilities that yield large quantities of liquid fuels.
If you read the report, you'll quickly see that option 1) (lame as it is) is still just lip service. The crash plan is all about pork for oil/coal/refining companies, so they can quickly ramp up liquids production from coal, gas, oil sands, heavy oil and EOR, which are projected to provide 95% of the mitigation. There isn't a word in the entire report about conservation.

The raw stupidity of this plan is evident in the fact that 30% of the mitigation wedge shown in the above diagram is projected to come from heavy oil in Venezuela, as we've seen earlier. The authors do not explain how the United States is going to operate on Venezuelan soil in implementing its crash program to save braindead American motoring.

Still, these facts do not pose a serious problem, even if peak oil is imminent.

This is because it doesn't take decades to mitigate. It takes about 5 minutes -- time enough for the President to sign off on a big fat gas tax. Bing. You kill 4 birds with one stone:

1) Reduce demand for oil
2) Drive demand for alternatives
3) Generate massive revenues for building rail etc.
4) Kick Iran, Venezuela and the rest of OPEC in the nuts, and watch them squirm as oil prices and their government revenues drop like a rock.

Now, of course the doomers are in bed with Dick Cheney, and think that the American way of life is non-negotiable. There is no way in hell that the U.S. will ever pass a gas tax. It turns out this is wrong too. A majority of Americans actually favor a gas tax, provided you spin and package in the right way:
If you ask people straight out, "do you favor a gas tax," the answers is overwhelmingly (85%) No. Even if you promise to reduce other taxes --payroll and income -- by the same amount, the answer is still (63%) No.

But if the question is, "would you support a gas tax if it reduced U.S. dependence on foreign oil" or "would you support a gas tax if it cut down on energy consumption and reduced global warming," the results reverse pretty dramatically. The "foreign oil" question gets 55% in favor and the "energy consumption and global warming" question gets 59% in favorSource
It is imperative to not let status quo mouthpieces like Hirsch et al., abuse the word "mitigation". Peak oil is -- by definition -- not a problem which can be solved on the supply side.
-- by JD

Thursday, March 09, 2006


In #249, I linked to a detailed study showing that Jared Diamond's theory of the eco-collapse of Easter Island is a fairy tale.

This morning, popmonkey discovered more new research debunking Diamond's theory. Excerpts from the report:
View of Easter Island Disaster All Wrong, Researchers Say
Ker Than
LiveScience Staff Writer Thu Mar 9, 3:00 PM ET

The first settlers on Easter Island didn't arrive until 1200 AD, up to 800 years later than previously thought, a new study suggests.

The revised estimate is based on new radiocarbon dating of soil samples collected from one of oldest known sites on the island, which is in the South Pacific west of Chile.

The finding challenges the widely held notion that Easter Island's civilization experienced a sudden collapse after centuries of slow growth. If correct, the finding would mean that the island's irreversible deforestation and construction of its famous Moai statues began almost immediately after Polynesian settlers first set foot on the island.
Apparently, there wasn't time for the population to grow enough to collapse:
Also, the few thousand people Europeans encountered when they first arrived on Easter Island might not have been the remnants of a once great and populous civilization as widely believed. The researchers think a few thousand people might have been all the island was ever able to support.

"There may not have actually been any collapse," Lipo told LiveScience. "With only 500 years, there's no reason to believe there had to have been a huge [population] growth."
So what caused the collapse of Easter Island? Europeans. Lipo concludes:
"The collapse was really a function of European disease being introduced," Lipo said. "The story that's been told about these populations going crazy and creating their own demise may just be simply an artifact of [Christian] missionaries telling stories."


Lipo thinks the story of Easter Island's civilization being responsible for its own demise might better reflect the psychological baggage of our own society than the archeological evidence.

"It fits our 20th century view of us as ecological monsters," Lipo said. "There's no doubt that we do terrible things ecologically, but we're passing that on to the past, which may not have actually been the case. To stick our plight onto them is unfair."
-- by JD


As many of you are already aware, Professor Kenneth Deffeyes of Princeton University rocked the peak oil world in February 2006 with this juicy little nugget of doom:

Doomers and primitivists everywhere were electrified, but, sadly, the dream came crashing down yesterday when Deffeyes backpedaled and printed a retraction:
I do have an apology to make for a line in my February Current Events comment on this website. After stating that the world oil peak had already occurred on December 16, 2005, I reported that the Bush administration hoped to double the direct solar electric generation from the present one percent to two percent by the year 2025. My fingers got away from me and typed out: "By 2025, we'll be back in the Stone Age." I'm sorry that some readers thought that I actually meant that we would be wearing furs and hunting buffalo with flint spear points. It's called "hyperbole."Source
Yah, I know how those finger slips go, Ken. It happens to me a lot, but I usually just erase with the delete key and retype. Generally, I don't break the goof out of the body of the main text, and highlight it in yellow with a snappy black border.

Of course, now that Ken has exposed himself as a slapstick comedian who can't be taken seriously, I'm starting to wonder about all his other apocalyptic statements. Like this one from Feb. 27, 2006:
Where is the economic impact of peak oil going to be felt acutely and when?

Geologists like to look back in time, and I'm not that good at futurology. I borrow the analogy of the Four Horsemen of the Apocalypse: war, famine, pestilence and death.Source
Apparently Ken's tongue got away from him here. What's that? You really thought he meant "war, famine, pestilence and death?" You silly fool. He's being clever and ironic. It's called "hyperbole".
-- by JD


News flash:
SINGAPORE, March 9 (Reuters) - Oil prices slipped under $60 a barrel on Thursday taking losses for the week to 6 percent after OPEC decided to keep pumping at near full rates and U.S. crude inventories built to the highest level in nearly seven years.Source
I'm not sure how the peak oilers explain this one. After all, Professor Kenneth Deffeyes of Princeton University (one of the best-paid, most widely respected geologists in the world) claims we already peaked months ago. And as recently as Aug. 6, 2005, Matthew R. Simmons (one of the best-paid, most widely respected investment bankers in the world) was claiming that by now we'd be seeing a global oil shortage of 2 to 5 million barrels per day.
-- by JD

Wednesday, March 08, 2006


In 240. CLEANING THE PETROLEUM CRACK PIPE, I discussed EOR using CO2, and how it can be used to get more oil out of old holes we already know about.

The DOE issued a press release on this subject on March 3, 2006, and the figures are pretty remarkable. The DOE calls CO2-EOR a "game changer" and says:
State-of-the-art enhanced oil recovery with carbon dioxide, now recognized as a potential way of dealing with greenhouse gas emissions, could add 89 billion barrels to the recoverable oil resources of the United States, the Department of Energy has determined. Current U.S. proved reserves are 21.9 billion barrels.

The 89-billion-barrel jump in resources was one of a number of possible increases identified in a series of assessments done for the Department which also found that, in the longer term, multiple advances in technology and widespread sequestration of industrial carbon dioxide could eventually add as much as 430 billion new barrels to the technically recoverable resource.

Beginning efforts to develop the 89-billion-barrel addition to resources would depend on the availability of commercial CO2 in large volumes. If this oil could be added to the category of proven reserves, the U.S. would have the fifth largest oil reserves in the world behind Iraq, which has 115 billion barrels, based on present estimates; and an additional 430 billion barrels would make it first, ahead of Saudi Arabia with 261 billion barrels.Source
That last bit about surpassing Saudi Arabia is obviously a little too optimistic, but you gotta admire that chutzpa!

It does make you wonder though: If CO2-EOR can quintuple reserves in a played-out, running-on-fumes province like the US, what's it going to do to reserves in Saudi Arabia, or reserves world-wide, when it really catches on? The mind reels.

There is lots more interesting data on EOR (and other related phenomena) in the various reports referenced by the above press release, but let's focus in on one detail. This is the chart for already discovered oil in the U.S. (Source, p. 2):

Let's compare this with Colin Campbell's country assessment for the U.S. from ASPO newsletter #23 (click to enlarge):

Hmmm... Looks like we've got a major SNAFU here. Campbell gives a total past+future production for the U.S. of 195Gb, while the DOE report gives actual past+reserves (to date) as 208Gb. And that's not even counting EOR. If we add in EOR, we get 308Gb. And that's just from existing fields. Undiscovered fields, reserve growth and U.S. oil sands have the potential to add 300Gb on top of that (Source: same as above, Table EX-1, p. EX-4). And even after all that, there'll still be 1,124Gb left in the crackpipe in the U.S. alone, so we can go after that with whatever funky technologies we come up with in the meantime.

On the one hand, U.S. production using conventional methods has been on the decline for a long time, but the production numbers are getting lower and lower, and that means it is getting easier and easier to reverse the declining trend. After all, you can't decline past zero.

On the other hand, we've got this new "game changing" technology, which is catching on and even now producing 660,000bd world-wide according to Oil & Gas Journal. So it looks to me like just a matter of time before the U.S. decline reverses, and we get a secondary EOR hump. Hopefully, Colin Campbell will live long enough to witness the glory of it all.

This further reinforces how misleading the "Growing Gap" can be. The U.S. hits on the idea of pumping CO2 into its old reservoirs, and bing: 7 and a half Prudhoe Bays worth of new oil appear. So where is Campbell going to put that oil into his scary "Growing Gap" curve? Well... probably... he's going to try to ignore it and downplay it for as long as possible. When that fails, he'll be like the Andrew Fastow of peak oil, desperately trying to squirrel it away in the past somewhere through "backdating", so the new discovery numbers don't exceed the expectations of the peak oil community and cause his theory to go bankrupt.
-- by JD
Thanks to Jan-Willem Bats at Our Technological Future for the tip. Be sure to visit Jan-Willem's site and check out the totally amazing video clip of the "Robotic Pack Mule". It takes a lickin' and keeps on tickin'!!!


In #220 I commented on the recent rumor that Kuwait's oil reserve figures were inflated. The imminent peak people, in their usual grasping at straws, made this very poorly substantiated rumor into centerpiece-of-the-week of their argument that PEAK OIL IS HERE NOW (insert scary organ music).

Yesterday, however, the Kuwaiti oil minister put this rumor to bed. It turns out that Petroleum Intelligence Weekly published without getting their facts straight:
"The report contained some right information but not the whole picture," Energy Minister Sheikh Ahmad Fahd al-Sabah told reporters before leaving for Vienna to attend an OPEC meeting.

"The information is related to only 31 reservoirs we are currently working on. It does not include reserves in another 74 reservoirs which are not developed," Sheikh Ahmad said.

The minister told a press conference late Monday that Kuwait had discovered new reserves estimated at 10-13 billion barrels of light crude in northern Kuwait.

"The new discovery increases our reserves by 10 percent," said Sheikh Ahmad, adding that the previous reserves were estimated at about 90 billion barrels.

"We still have too many reservoirs that we have not touched yet. There is a great potential of raising our reserves considerably."Source
Aren't those stats amazing? Kuwait has 74 untouched reservoirs just sitting there, gathering dust, and they just discovered 10-13Gb of light crude. Looks like it's time to push the snooze button again.

Of course this news won't stop the peak oilers. If some 3rd hand, unseen, anonymously leaked report in PIW says they don't have the reserves, they'll take that at face value. If the Kuwaitis say they do have the reserves, they'll just say the Kuwaitis are lying. See how slick that works? They're right no matter what anybody says. That's the beauty of conspiracy theory.

There is one big loose end on this story, though. How come PIW won't show us the documents they claim to have seen? If they've got the hard evidence on Kuwait, why won't they show it? Is PIW even qualified to definitively interpret documents in Arabic?
-- by JD

Monday, March 06, 2006


I've previously commented on the "Olduvai Theory" of Richard Duncan Ph.D., one of the fringe pseudo-scientists who has attached himself to peak oil. Richard has recently resurfaced with a new paper entitled The Olduvai Theory: Energy, Population, and Industrial Civilization. I'm not going to bother refuting this quack science. EnergySpin has already done an amusing job of that here.

AngryChimp over at the Oil Drum was claiming that the paper was "peer-reviewed", so it's probably best to point out that the "journal" in which this article was published (The Social Contract) is an anti-immigration rag published and edited by overt racists.

Here's the Southern Poverty Law Center on "The Social Contract":
The Social Contract Press
Petoskey, Mich.

With a strong focus on immigration, The Social Contract Press (TSCP) sells books from its on-line bookstore and publishes a quarterly journal, The Social Contract. TCSP says it favors lowering immigration levels merely "to reduce the rate of American's population growth, protect jobs, preserve the environment, and foster assimilation."

But it publishes a number of racist works, including a reprint of the "gripping" 1973 book, The Camp of the Saints (see Fear and Fantasy), a French racist fantasy novel about the obliteration of Western civilization by dark-skinned hordes from India. The novel, like the race war fantasy The Turner Diaries, has become a key screed for American white supremacists.

The Social Contract is edited by Wayne Lutton, who recently the joined the editorial advisory board of the newspaper of the white supremacist Council of Conservative Citizens (CCC).

At a 1997 CCC conference, Lutton said Third Worlders "have declared racial demographic war against us. ... Why are their populations exploding? Because ... our people have exported medical technology and we feed them.

"Had we left them alone, many of them would be going extinct today."

The Social Contract has published articles by James Lubinskas of the racist American Renaissance magazine; Brent Nelson, who like Lutton is on the advisory board for the CCC's periodical, and Sam Francis, current editor of the CCC tabloid.

John H. Tanton, publisher of The Social Contract Press and founder of the Federation for American Immigration Reform, was instrumental in a 1996 effort to add an anti-immigration plank to the Sierra Club platform, a move that nearly split the environmental group permanently.

To editor Lutton, America essentially is a white man's country. "We are the real Americans," he declared in 1997, "not the Hmong, not Latinos, not the Siberian-Americans. ... As far as the future, the handwriting is on the screen. The Camp of the Saints is coming our way."Source

John H. Tanton, publisher of the "The Social Contract" has said that unless U.S. borders are sealed, America will be overrun by people "defecating and creating garbage and looking for jobs."Source

This is yet another example of peak oilers in bed with racists, as we've previously seen in 67. BRITISH RACISTS ATTEND "PEAK OIL UK" CONFERENCE, 125. MORE RACIST CONNECTIONS, and 106. THE GREENING OF HATE.

Wayne Lutton, Ph.D. (2nd from right, Duncan's editor at The Social Contract) with Virginia Abernethy at a meeting of white supremacists, June 11, 2004. Note the confederate flag in the foreground.Source

Apparently the racist stance of this publication doesn't bother its other well-known peak oiler contributors, like Albert Bartlett and Roscoe T. Bartlett. Kind of makes you wonder. If these people aren't racists, why are they writing for a racist organization?

-- by JD

Saturday, March 04, 2006


One of the oldest and most frequently parroted arguments for imminent peak oil is this:
The real reason no new refineries have been built for almost 30 years is simple: any oil company that wants to stay profitable isn't going to invest in new refineries when they know there is going to be less and less oil to refine.Source:LATOC
The fact that oil companies have not been building new refineries recently suggests they are well aware they will need fewer, not more, in future.Source:An idiot who reads LATOC
If there were oil in the future and they knew, they would be building refineries.Source:Another idiot who reads LATOC
Kenneth Deffeyes references this argument amongst all the other superficial tripe in his recent "four horsemen of the apocalypse" interview.
With the oil companies, you have to watch what they do and not what they say. What they're doing is taking in $10 billion and $20 billion a quarter in profits and handing it out as increased dividends, buybacks of their stocks, giving it to their executives. They're not drilling, they're not building new pipelines and not building new refineries. If there were good prospects out there, they'd be out there drilling like crazy.
In the previous entry (#253), we've already discussed why the majors aren't drilling like crazy. They're being shut out from all the best spots by NOCs (National Oil Companies), war and fiscal instability/disincentives. Intellectually dishonest soundbite-peddlers like Deffeyes continue to pretend that the only oil companies in the world are the "majors" (IOCs, International Oil Companies like BP, ExxonMobil etc.) -- conveniently ignoring the key fact that the majors are actually bit players, and the NOCs control 77% of the world's oil resources (click to enlarge):

When we approach this topic honestly, and include NOCs in "oil companies", this peak oiler argument about nobody building refineries turns out to be just more ill-founded hype and deceipt:
New refineries will dramatically increase the Middle East oil exports to US and Europe - FT
New refineries will dramatically increase the Middle East oil exports to US and Europe

Financial Times reports that Europe and the US are expected to become increasingly dependent on the Middle East as an exporter of refined petroleum products over the next 10 years. New FT research shows that refining capacity in the Middle East is to overtake that of Russia and the former Soviet republics, where underinvestment has plagued the energy sector.

Aggressive policies to build big refineries that will boost capacity in the Persian Gulf by 60% will dramatically increase the region’s exports to US and Europe, just as Washington looks to break its dependence on oil from the Persian Gulf.


The Organisation of the Petroleum Exporting Countries, the cartel that controls 40 per cent of the world’s oil supplies, plans to increase its refining capacity by almost 6m barrels a day, or 50%, in the next seven years.Source: INTERTANKO Feb. 14, 2006
-- by JD

Thursday, March 02, 2006


As reported on Feb. 28, 2006 in an article in Resource Investor, Lord Browne (the head of BP) had some interesting things to say about peak oil recently:
“[Peak oil] is a myth you will find reinforced in most newspapers every day… [that oil and gas are running out, and that we are walking towards the edge of the cliff.] I went into one bookshop here in London and found that there was a special display of 14 different books published over the last year with titles such as 'The End of Oil' and 'Twilight in the Desert.' The idea that oil is running out is simply untrue. There is no physical shortage of oil or gas. The reality is that the physical resource base is strong, and the amount which we can recover from that base is being expanded by technology all the time," he said.Source
Note, however, that Lord Browne is not saying everything is hunky-dory. He says we have a serious problem. The problem is not that we are running short of oil, but rather that the countries which do have large volumes of oil (particularly Saudi Arabia, Russia, Iran and Iraq) are sitting on it. As he puts it:
Unless the geologists succeed in finding new and so far unidentified provinces…we will all be dependent on supplies from just three areas – West Africa, Russia and, most important of all, the five states around the Persian Gulf, led by Iran, Iraq and Saudi Arabia.

The resources on which we are going to rely are closed to investment by any private company. The decisions on investment and production are controlled by Governments…which may not always be aligned with the interests of international consumers. (Source: same as above)
It's pretty easy to read between the lines here. Essentially, he is accusing these countries of being monopolists, engaging in anti-competitive practices in order to milk the wallets of their consumers. Now, Iraq obviously can't be branded with this label due to the war. They're sitting on their oil, but it's not their fault (or at least not the fault of the Iraqi government). So let's leave them out of it.

Let's look instead at Saudi Arabia. The country (like Iraq and Iran) is literally covered with oil fields which have already been discovered, as you can plainly see in the following maps from the USGS. Each green dot indicates an oil field, and the vast majority of these fields are undeveloped, just sitting there, idle under the sand. (Click to enlarge):

So the question is: Why don't these countries open up to foreign investment, so companies like BP can get in there and pump that oil?

I think we all know the answer to that question. They don't do that because they are monopolists, and they can make a lot more money by loafing and letting the price rise. It's classic cartel behavior. They don't want anybody else pumping their oil for the same reason that Disney doesn't want anybody else selling their movies and Mickey Mouse paraphernelia; they'll get undercut by more efficient competition and they won't be able to exact their monopolist's royalty.

Of course, the peak oilers have a different view of this situation. They say Saudi Arabia, Iran, Iraq and Russia are all tapped out, running at capacity. We are at peak and it is geologically and technically impossible for these countries to increase their oil production further. But if that's the case, then what do they have to lose by opening up to foreign investors like BP? The majors will just move in, waste a bunch of money trying to produce oil which isn't there, and leave. I don't get it. What are they being so protective of, if there's nothing there?

All the big fish are closed to competition, just like Lord Browne says (click to enlarge):

"From 1995 to 2004, fewer than 30 new wildcat [exploration] wells were drilled in Saudi Arabia, compared with more than 15,700 in the United States."Source
That sounds like loafing to me.

Venezuela: They have heavy massive heavy oil deposits just like Canada. But Canada's production is on-fire, going up every year because it is open to foreign investment, and the investment is pouring in. Venezuela, on the other hand, is discouraging investment, and making frequent threats to stop supplying oil. That also sounds like loafing to me.
-- by JD


In #200, I noted that Matt Simmons has been backing off from his Saudi collapse rhetoric. I was finally able to obtain the Barron's interview by Sandra Ward, and the contrast is quite striking, so I'd like to share the relevant fair-use quote with you.

Here's Matt Simmons from an interview (Saudi oil shock ahead) in Petroleum News, Sept. 11, 2005:
Simmons also suggests that Saudi production is very near its peak. But the feedback he has received from technical people who have read the book, leads him now to believe that Saudi Arabia has "actually exceeded sustainable peak production already."

"And I think at the current rates they are producing these old fields, each of the fields risks entering into a rapid production collapse," he said.Source
Here's Matt Simmons from an interview with Barron's (Personal Wealth: Twilight for oil?), Jan. 30, 2006:
The very best criticism — the most detailed and the best written — was called Another Day in the Desert* and was written by a very highly regarded firm in Calgary. But where they went wrong was their assertion that my claim is Saudi Arabia's oil is about to go into a sudden and irreversible production collapse. That's wrong. The summary of my book is the myth that the oil fields could grow forever is false.
What a farce. You don't need to write a 448 page book to demonstrate that the oil fields can't grow forever. That's a common sense truism which everyone agrees with -- even extreme optimists like Mike Lynch and Peter Odell.
-- by JD

*) More info available here.