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Tilting at Windmills

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February 18, 2006
By: Kevin Drum

OIL ROUNDUP....What with the United States being addicted to oil and all, I figure it's worthwhile to round up the latest oil news once in a while. Here's today's summary:

Nigeria: A Nigerian militant commander in the oil-rich southern Niger Delta has told the BBC his group is declaring "total war" on all foreign oil interests....It recently blew up two oil pipelines, held four foreign oil workers hostage and sabotaged two major oilfields.

Venezuela: Venezuelan President Hugo Chavez has warned he could cut off oil exports to the United States if Washington goes "over the line" in what he has said are attempts to destabilize his left-leaning government...."Many countries ask us for more oil and we have had to tell many countries we can't send them more" because Venezuela, the world's fifth largest oil exporter, ships 1.5 million barrels of oil a day to the United States, he told supporters at the presidential palace.

Iran: China is hastening to complete a deal worth as much as $100 billion that would allow a Chinese state-owned energy firm to take a leading role in developing a vast oil field in Iran....The speed with which China and Iran are moving to conclude their agreement and begin development appears to signal China's intent to limit the U.S.-led drive for sanctions against Iran to curb what Washington describes as Iran's rogue effort to develop nuclear weapons.

In related news, longtime peak oil pessimist Ken Deffeyes is now even more pessimistic. He claims that predictions of the date of peak oil are no longer necessary: we passed the peak in December 2005 and it's all downhill from here. I actually find his calculations fairly unconvincing, but a few years here or there aren't really that important anyway. Whatever the real date is, we're close enough to it that pretty much anyone with control over a million barrels of oil per day has a lot of leverage in world affairs. And there's a disturbingly large number of people who have control over that amount of oil.

Kevin Drum 1:13 PM Permalink | Trackbacks | Comments (273)

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Comments

If we run out of peak oil, we can start using dip oil.

But, Dick will still shoot lawyers.

Posted by: Matt on February 18, 2006 at 1:32 PM | PERMALINK

You forgot the "news" about oil prices dropping.

Posted by: cmdicely on February 18, 2006 at 1:32 PM | PERMALINK

I don't think Chavez has all that much control over where his oil goes; supertankers can easily change flags and make U-turns anywhere in the ocean. But if he actually tries to cut off oil sales to the US I suspect he will rapidly be Saddam-ized and deposed, whether via actual seizure of his oilfields or other indirect methods.

If he wants to be a real bastard he can join the Iranian oil bourse and require all Venezuelan oil be purchased in euro; that would upset the apple cart quite a bit and be very hard to counteract.

Cranky

Posted by: Cranky Observer on February 18, 2006 at 1:39 PM | PERMALINK

What about Chavez's threats to shut down US refineries that are owned by his government? It amounts to about 6% of our capacity.

Posted by: ranaaurora on February 18, 2006 at 1:51 PM | PERMALINK

And there are still people buying Hummers. What will the anthropoligists of the future say about us?

Posted by: hobo on February 18, 2006 at 1:58 PM | PERMALINK

Is it just my imagination or is GM running TV ads on its big SUVs like never before? Giving us what we are asking for, no?

Posted by: lou on February 18, 2006 at 2:05 PM | PERMALINK

> And there are still people buying Hummers. What will the
> anthropoligists of the future say about us?

The prehistoric residents on Easter Island cut down all their trees. After the trees were gone their economy collapsed from the damage to the environment and the population dwindled. They didnt move, they died. The effects of cutting down the trees would have been obvious long before the last few were chopped. They did it anyway.

I think that *present-day* anthropologists are bewildered by our actions.

Posted by: troglodyte on February 18, 2006 at 2:08 PM | PERMALINK

Just a question or two.

1 ) Does the accusations of Venezuela
... President Hugo Chavez. That our
... Goverment tried to kill him have
... Anything to do with oil?

2 ) Is our goverment putting two and
... two together. Iran and China ?
... Could makeing this oil deal
... have anything to do with China
... quietly building up both military
... and nuclear strength?

NO I AM NOT PARANOID. THESE ARE REAL
NEWS STORIES. THE QUESTION IS ARE THEY
CONNECTED?
I leave it to a enlightened reader to
ponder.

Posted by: HONEYP on February 18, 2006 at 2:09 PM | PERMALINK

ranaauroa:

I doubt this Administration would stand still if Chavez shut down refineries or exports for that matter. To be fair, most of the oil the U.S. imports comes from Canada and Mexico (not Nigeria, Venezuela, or the Middle East). Even with all the bad "news" Kevin posted, we are still at overall lows for oil prices. Some traders scrambled to cover short positions ahead of the long holiday weekend, but keep in mind that since the State of the Union, oil prices had dropped nearly $12 per barrel.

The front-month March crude futures on the New York Mercantile Exchange rose $1.42 to $59.88 per barrel. April crude, which takes over as the front-month contract next week and already has much more open interest, closed at $61.15 a barrel, up $1.02. Among petroleum products, gasoline was the leading advance, with the March contract rising 7.66 cents to $1.4890 a gallon. March heating oil was gained 3.21 cents to close at $1.6574 a gallon. The Nymex closed early, at 1 p.m. EST Friday and will remain closed Monday in observance of Presidents Day.

Analysts were split over whether the recent price spikes represent a bear market correction or the start of a more substantial push to the upside.

"Prices didnt' rally enough to rule out further lows," said Walter Zimmerman, an analyst with United Energy. "In fact some of the markets like heating oil stopped right where a bear market correction should have stopped. The test would be if the strength continues into next week."

Posted by: cmdicely on February 18, 2006 at 2:13 PM | PERMALINK

Hey, rumor has it that Brazil has been working on nuclear weapons since 1977.

You draw the parallels.

Posted by: Ten in Tenn on February 18, 2006 at 2:19 PM | PERMALINK

Dont be fooled by short-term fluctuations in oil prices. The long term pattern has been predictable for years. Most of the quants who game the commodity markets are focussed on short-term movements, because they are rewarded by their employers and investors for short-term gains. How else can you explain why people have been pouring money into mortgage-backed securities in the past 6 months? I hope those folks dont want their money back.

Deck chairs on the Titanic, baby.

Posted by: troglodyte on February 18, 2006 at 2:20 PM | PERMALINK

HoneyP:

China is making big deals on oil and resources all over the planet. Weirdly, our economic security is tied in with their growth now. You think we are going to do anything to stifle their development? I can't imagine a worse scenario for the future of the planet.

No one wants to admit the fact that we are 6 billions strong and growing toward 9 billion by mid century. That the one big sucking sound we hear is the mass footprint of all of us. Can't imagine a good way out of this for anyone and our leaders most definitely are not showing a way out.

Posted by: lou on February 18, 2006 at 2:21 PM | PERMALINK

Anybody old enough to remember the first great OPEC monopoly oil market attack will remember that it didn't take long for market forces to start chewing up that monopoly. Prices shot up, the money got too damn attractive, and OPEC members started cheating. Prices fell through the floor not long afterwards.

I'm more worried about what the oil futures markets would do in a panic if some country shut down exports for whatever reason than I am about any actual supply shortage this would create.

And every barrel, however few, we get from our own domestic sources in Alaska, off the coast, and everywhere else we aren't being allowed to drill, is one barrel that won't enrich the oil-soaked nutballs of the world. The positive psychological effect that opening new domestic fields would have on the markets can't be discounted either.

Posted by: tbrosz on February 18, 2006 at 2:23 PM | PERMALINK

I doubt this Administration would stand still if Chavez shut down refineries or exports for that matter.

Posted by: cmdicely

Another reason it is not likely the Us would put up with much crap from Chavez. Most of the oil from Venezueala is from joint ventures with major oil corporations like Unocal and ConocoPhillips. So we have vested interests there.

Posted by: Fat White Guy on February 18, 2006 at 2:25 PM | PERMALINK

I'm not saying that would be the wisest course of action, FWG. I just think a thread "to round up the latest oil news once in a while" should include, you know, all the relevant news.

Posted by: cmdicely on February 18, 2006 at 2:31 PM | PERMALINK

>is one barrel that won't enrich the oil-soaked nutballs of the world.

Err, you don't work in the oil bidness, do you? Just 'cause a guy is an American citizen doesn't preclude him from being an oil-soaked nutball.

I can spare you my Bush-Cheney hatred and still come up with a full house of names of important people with US mailboxes that are as or more dangerously loony than any average OPEC head of state.

Posted by: doesn't matter on February 18, 2006 at 2:32 PM | PERMALINK

It is nice to make grand statements about "not taking crap" from Venezuela. But our military is currently tied down in Iraq. If we havent invaded Cuba in all these years, what are the chances we will invade Venezuela? And how would we justify it to others? If we say we dont like getting dissed, I can think of a lot of nations that feel dissed by the US. Sow the wind, as they say . . .

Posted by: troglodyte on February 18, 2006 at 2:34 PM | PERMALINK

Kevin points out the militants' attacks on oil infrastructure in Nigeria. Why aren't terrorists putting more effort into attacking big oil on a worldwide scale? A coordinated attack would really put the hurt on the world economy. Maybe they don't want to do anything that would really rally the nations of the world into fighting them. Better to keep the host alive through slow parasitism rather than making the lethal kill.

Posted by: lou on February 18, 2006 at 2:35 PM | PERMALINK

Kevin Drum >"...And there's a disturbingly large number of people who have control over that amount of oil."

And almost none of them sane/rational

Mark March 20th on your calendar - Iran oil bourse opens (hmmmm, exactly three years after the Iraq misadventure began...)

I`ll go w/the Simmons perspective which is show us your numbers & we`ll audit them to make sure

Ya know, the old trust but verify attitude

Market shmarket, there ain`t no such thing as a "free" market in SyrianaLand

"The pessimist complains about the wind; the optimist thinks it will change; the realist adjusts the sails." - William Arthur Ward

Posted by: daCascadian on February 18, 2006 at 2:36 PM | PERMALINK

Hugo needs the money as much or more than we need the oil. The Venezuelan economy has become even more dependent on Oil Revenues and their poverty rate continues ot increase. It's over 45%.

The real danger lies in knowing how crazy this man is. Rationally he can't stop selling Oil because it'll kill his economy while having relatively little influence here. He can't just sell it someplace else because that's just meaningless.

For all of his bluster he has also been talking about increasing drilling by 20%. Venezuela also has huge deposits of Tar Sands. Ironically most of the oil workers he fired are now working in Alberta. Hugo has big plans and a 45% poverty rate. He needs all the cash he can get.

Posted by: rdw on February 18, 2006 at 2:37 PM | PERMALINK

cmdicely, the question isn't whether we'll stand still. It's whether our flurry to react (to any threat to our gasoline/petroleum supply) will amount to any forward motion. Starting an economic or military conflict with a petroleum exporter is not going to be a good way to reduce gasoline prices. I doubt Citgo would actually shut down the refineries (unless we supported another coup), but the threat and the possibility of "maintenance" and "safety" related reductions in output are real.

Also -- 1) Oil is fungible. 2) Monthly price trends are not controlled by long term supply-demand issues. 3) The people that know world petroleum supply issues the best are using their record profits to invest in the stock of their own companies, buy up small companies with known reserves, and sign long term contracts with state petroleum companies around the world. Maybe peak oil is bogus, but that's not what the big money says.

Posted by: ranaaurora on February 18, 2006 at 2:40 PM | PERMALINK

rdw >"...He can't just sell it someplace else because that's just meaningless..."

Oh yea, China sure is "just meaningless"

he, he, he

you are SO out of touch & you clearly have NO idea how the oil bidness actually functions

"Terrorists do not need pretexts for their barbarism." - Judge Alvin Hellerstein

Posted by: daCascadian on February 18, 2006 at 2:48 PM | PERMALINK

lou wrote: "No one wants to admit the fact that we are 6 billions strong and growing toward 9 billion by mid century. That the one big sucking sound we hear is the mass footprint of all of us. Can't imagine a good way out of this for anyone and our leaders most definitely are not showing a way out."

How about we excercise some self control and not pop out quite so many babies? just for starters. i, for instance, plan to have none. nada. zip. zero.

Posted by: EM on February 18, 2006 at 2:48 PM | PERMALINK

lou:

Why aren't terrorists putting more effort into attacking big oil on a worldwide scale? A coordinated attack would really put the hurt on the world economy.

There are other nations at least as hungry for oil as the U.S., including China. As you point out, making everybody in the world mad at them, including powerful nations with fewer scruples than the U.S., is not a good idea, even for terrorists.

Al Qaeda has found themselves in a similar situation, with a lot of Arab nations out to get them that really weren't before, thanks to their lack of discretion in picking their victims.

Posted by: tbrosz on February 18, 2006 at 2:48 PM | PERMALINK

> The positive psychological effect that opening new domestic
> fields would have on the markets can't be discounted either.

It is fairly common knowledge in the global oil patch that the remaining undeveloped US oilfields dont amount to much relative to our consumption. You can bet that Texas oilmen will agree with the tbtosz position, because they profit from it directly. Responsible US government leaders should be figuring out a balanced approach to deal with our predicament. But the POTUS and VPOTUS are both Texas oilmen, so dont expect much nuance.

We as a nation have been benefitting from a historic global market imbalance for several years now. The Chinese have been gobbling our bonds and keeping the dollar up, but at some point the market will devalue our currency. Our federal and trade deficits are simply too large to be sustained. If the price of oil stays the same in dollars when the dollar devalues, then Japan and the Euro-zone get cheap oil. With constricted supply, this wont happen. The Japanese and Europeans at best will come out even. Guess which major economy bears the brunt of the coming supply crunch? Thats right. Us. The price of oil in dollars will jump. The Chinese might choose to decouple the yuan from the dollar. Hard to predict what would happen next.

Get an apartment close to your work. Buy a smaller car. If you sell the SUV now, someone might buy it.

Posted by: troglodyte on February 18, 2006 at 2:49 PM | PERMALINK

And there are still people buying Hummers. What will the anthropoligists of the future say about us?

They won't say anything. They'll be flightless birds, or glow-in-the-dark insects, or some other species. That's who inherits the earth next, I think.

Posted by: craigie on February 18, 2006 at 2:49 PM | PERMALINK

And every barrel, however few, we get from our own domestic sources in Alaska, off the coast, and everywhere else we aren't being allowed to drill, is one barrel that won't enrich the oil-soaked nutballs of the world.

Except that we can get much more oil, much faster, by the newfangled technique of "conservation." Perhaps you've heard of it?

Oh, but that would require government. Better to have market forces cause huge disruptions first, so that everyone gets the point.

Posted by: craigie on February 18, 2006 at 2:52 PM | PERMALINK

I'm not saying that would be the wisest course of action, FWG. I just think a thread "to round up the latest oil news once in a while" should include, you know, all the relevant news.

Posted by: cmdicely

I was not suggesting that either. I was just trying to provide more insight into the mix. I work for ConocoPhillips and we have a joint venture with Venuzuela and send people from our refinery down there to help out once in a while. So I think that might keep Chavez from turning off the oil.

Posted by: Fat White Guy on February 18, 2006 at 2:53 PM | PERMALINK

Oh yea, China sure is "just meaningless"

It doesn't matter where he sells it as long as he does not change total supply. It doesn't matter where we buy it. Oil is Oil

Posted by: rdw on February 18, 2006 at 3:05 PM | PERMALINK

In response to the various statements about the United States not standing still for Chavez, etc., we need to remember that forceful action by the United States would result in the sabotage of the Venezualan oil system much as the Iraqi oil system is now being sabotaged.

Posted by: Thinker on February 18, 2006 at 3:06 PM | PERMALINK

Even if oil peak was 30, 50, or 100 years off, Bush's drive to capture supply is insane.

It's insane economically.

It's insane politically.

By insane, I mean reckless, monumentally expensive, and prone to backfire spectacularly.

Oh: and it's destined to fail. It can't be done.
re
It was really only a matter of time before producer nations coordinated their resistance in defense of their sovereignty.

Those oil fields are national resources, and forced extraction as a policy is bankrupt in every sense of the word. There's no just cause for it.

And many Americans cheered when Chavez' nationalism -- and that's what it is, rather than a "left-leaning" govt, regardless of social policy -- faced down the US-aided coup and told Bush off.

This was entirely predictable. A series of trumped up provocations and manufactured lies used to intervene in "left-leaning," "unstable," or "brutal regimes" (which we armed, advised, and trained) isn't going to us or them that military action is A-OK.

It IS going to convince them that coordinated action, along with nuclear capability, is the only answer to a "superpower" -- gee that's super -- that isn't bound by law, the facts on the ground, or any reasonable appeal to humane or rational behavior.


But more important, Bush cannot possibly succeed in capturing oil supply. And the backdraft will cost the rest of us a heavy price.

Iran has too many options. And acquiring a nuclear capability is obviously their only option for survival. It's also their right. Stalin had 'em. Why not Iran? They're human beings, and they've seen what we've done. In Iraq, elsewhere, and in the face of fact and reason. They have the right to defend themselves, and the right to develop generally.

And there's no way to stop that process.

If we actually try, militarily, just think: the cost in lives and money is too great. The return is too small. And the damage irreversible. It would radicalize moderate sectors in a huge swath of countries. And they'll get the bomb anyway.

And who is the UN to tell them no?? Who are WE? -- the British in 1776?

Iran has too many options. The deal with the Chinese only proves that. AND given China's share of American bonds, their growing military, and their rapidly upgrading infrastructure, technology, multiplying land grant universities, and strengthening economic muscle -- it's pretty clear we're not keeping our eye on the ball.

Not saying China's "the enemy" -- just that the method, the problem, where we're being outfoxed, AND the cure -- are all being misconstrued. But that'll happen when your Preznit is blind drunk -- on power. Or, just blind.

I buy gas from Citgo -- and go out of my way to do it. I consider it a patriotic act.

Posted by: SombreroFallout on February 18, 2006 at 3:09 PM | PERMALINK

tbrosz -- Anybody old enough to remember the first great OPEC monopoly oil market attack will remember that it didn't take long for market forces to start chewing up that monopoly. Prices shot up, the money got too damn attractive, and OPEC members started cheating. Prices fell through the floor not long afterwards.

So you think supply demand issues are fundamentally the same as they were in the 1970's? If not, do market forces have a way to magically bypass pipelines that terrorists blow up or suck residual oil out of spent oil fields?

As for Chavez getting 45% of his GDP from oil and being completely dependant on it . . . Let's explore that logic. If oil prices go up by 110% on Sunday and on Tuesday he reduces output by 9.09% is he going to have a terrible recession? How much have oil prices gone up in the last 4 years? How much has their national debt gone down?

Posted by: ranaaurora on February 18, 2006 at 3:09 PM | PERMALINK

The Chinese have been gobbling our bonds and keeping the dollar up, but at some point the market will devalue our currency. Our federal and trade deficits are simply too large to be sustained.

This is nonsense. Our budget deficit is only 2.6%. Tha's lower than much of the developed world and much lower than the average of 4.2% in the 80's. If the market expected a devaluation they would not be buying our bonds. Bondholders suffer the most.

The US economy is in fine shape. France & Germany have higher deficits, lower growth, and higher unemployment. We will follow 3.5% GDP growth in 2005 with another stellar 3.5% in 06 and 07.

Posted by: rdw on February 18, 2006 at 3:10 PM | PERMALINK

Thinker >"...we need to remember that forceful action by the United States would result in the sabotage of the Venezualan oil system much as the Iraqi oil system is now being sabotaged."

For more on such matters one could go here

"For to win one hundred victories in one hundred battles is not the acme of skill. To subdue the enemy without fighting is the acme of skill" - Sun Tzu

Posted by: daCascadian on February 18, 2006 at 3:12 PM | PERMALINK

If oil prices go up by 110% on Sunday and on Tuesday he reduces output by 9.09% is he going to have a terrible recession? How much have oil prices gone up in the last 4 years? How much has their national debt gone down?

Hugo wishes he had such skill as to manage the market. OPEC drove prices sky high in the 70's and lost pricing control for 20 years. Prices today are STILL lower.

Hugo is using his Oil revenues the same way all socialists do. He's been pissing it away. The simple ass has been sending subsidized Oil to Taxechuchetts as a way of trying to embarrass Bush. Venezuela has a 45% poverty rate and that clown is sending cash to the 2nd richest state in the world?

And you think he's smart enough to manage the oil market?

Watch what he does. Don't listen to him. He needs the cash more than we need the oil. That's why he's trying to sign deals to pump more oil.

There's a lot of investment in a lot of places to pump more oil. It's not just Canada and Venezuela. So far in 2005 and YTD in 2006 the increase in demand has been dramatically lower than expected. I think the IEA predicted increase demand in the 4th Qtr of 500K barrels but the actual was less than 80k. The 1st Qtr is also running well under expectations.

This is well before a lot of the conservation measures have been implemented. The market works


Posted by: rdw on February 18, 2006 at 3:23 PM | PERMALINK

http://www.financialsense.com/editorials/petrov/2006/0120.html

Interesting view on Iran the euro and dollar

Posted by: Neo on February 18, 2006 at 3:26 PM | PERMALINK

I buy gas from Citgo -- and go out of my way to do it. I consider it a patriotic act.

Oil is priced globally. It doesn't matter even a little bit where you buy your oil.

Posted by: rdw on February 18, 2006 at 3:26 PM | PERMALINK

It's always the buyer that has the leverage in any transaction - unless you panic like Kevin.

A nation mostly dependant on crude oil revenues is at far, far greater economic risk than any modern nation buying the oil from them.

Substitutes to crude oil are available, just not quite competitive with the cost of crude. Crude oil producers know this.

Posted by: mark on February 18, 2006 at 3:29 PM | PERMALINK

> need to remember that forceful action by the
> United States would result in the sabotage of the
> Venezualan oil system much as the Iraqi oil system
> is now being sabotaged.

We in the reality-based world know that. Rove and Rumsfeld, however, think they can just create a new reality whenever they want by "acting". They will simply assume that there would be no insurgency in the face of a US attempt to seize the Venezuelan oil fields and, poof, new reality. No insurgency.

Cranky

Posted by: Cranky Observer on February 18, 2006 at 3:31 PM | PERMALINK

Thank God the price of Oil is up to $60. The way that Bush and Cheney piss off the world, it's a wonder that any Country will sell us oil.

At least the dollar still has some value.

Posted by: Possum on February 18, 2006 at 3:34 PM | PERMALINK

rdw -- my you're a fast troll.

The hypothetical didn't state Chavez was exercizing any control over anything. I'm just saying that high oil prices do not make Chavez more of a slave to exporting oil. If anything, high oil prices (which make oil a bigger fraction of the countries GDP) give Chavez the luxury of cutting back or maintaining static production.

The current tax structure for multinationals in V would seem to indicate the government strongly favors gas exploration over petrolem exploration in the short term.

Posted by: ranaaurora on February 18, 2006 at 3:43 PM | PERMALINK

> It doesn't matter even a little bit where
> you buy your oil.

Exactly. The only reason that BP, Exxon, Citgo, and the others have North American marketing and advertising budgets in the billions is so that the cuties at the Madison Avenue ad firms will take the dudes from Texas to those fancy New Yawk strip joints for lunch and then for expensive steaks and Broadway shows. The ad campaigns themselves don't make a lick of difference. rdw is introducing shareholder resolutions at all the major oil companys to have the ad campaigns terminated.

Cranky

Posted by: Cranky Observer on February 18, 2006 at 4:00 PM | PERMALINK


KEVIN DRUM: pretty much anyone with control over a million barrels of oil per day has a lot of leverage in world affairs. And there's a disturbingly large number of people who have control over that amount of oil.

Sorry. After reading your post, each included link, and all of the comments, I fail to understand how the situation would be less disturbing if but a small number of people had control over oil.


HONEYP: Does the accusations of Venezuela President Hugo Chavez. That our Goverment tried to kill him have Anything to do with oil?

Does the sun have anything to do with weather? But a better question than one about Chavez "accusations," would be: Does the fact of our government's support of a temporarily successful coup against Chavez have anything to do with his hostility toward this administration? Answer: Chavez is human.


Posted by: jayarbee on February 18, 2006 at 4:40 PM | PERMALINK

Of course, if we really cared about the oil situation, we'd do some more drilling off the coast of California. Well, we would except that Senators Feinstein and Boxer oppose new drilling.

Same story off the coast of Florida, even 150 miles off the coast. Same story off the coast of North Carolina and Virginia. Ditto anywhere near anything that isn't already drilled throughout the West.

We can argue about whether ANWR should be drilled (I don't have a problem with that), or whether we should drill near Yellowstone (short answer: no). But when we leave whole swaths of our country and coastline off limits, we invite the problems we have with Hugo, Nigeria, Iran, etc.

Drilling more at home wouldn't solve the oil problem: it will take E85, coal liquification, pebble-bed nuclear technology, conservation, etc. to fix that. It would help, and it would demonstrate to a number of people around the world that we're serious.

Posted by: Steve White on February 18, 2006 at 4:43 PM | PERMALINK

Well, at least the Nigerian militant leader is good for his word.

Steve, you could lease the whole country and not see a net increase in domestic petroleum production. Build a gas pipeline to Alaska's north slope, Beufort sea, and Mckenie River delta and you'll change domestic energy supply significantly.

Posted by: ranaaurora on February 18, 2006 at 4:55 PM | PERMALINK

> Oil is priced globally. It doesn't matter even a little bit where
> you buy your oil.

Then why did we spend all that money and might to drive Saddam Hussein from Kuwait in 1991? According to your logic, Saddam would have had to sell us the oil no matter what.

> The US economy is in fine shape. .... We will follow 3.5% GDP
> growth in 2005 with another stellar 3.5% in 06 and 07.

These statements are based on wishful thinking. Can you say "housing bubble"? The latest estimates are that 38% of mortgages that originated in 2005 are attached to home "owners" who have less than a 5% equity position, meaning that they could not break even after fees by selling their house. These people are gambling that home prices are still going up. In bubble real-estate zones there is a growing overhang of inventory and stagnant prices. If you live in Florida you have seen the growing number of For Sale signs. Since consumer spending drives the US economy and consumers have been financing their spending with home equity, the prospects for continued robust GDP growth are cloudy.

But Hey, maybe you know something I dont, rdw. I love to hear that it was based on more than boosterism.

Posted by: troglodyte on February 18, 2006 at 5:04 PM | PERMALINK

If anything, high oil prices (which make oil a bigger fraction of the countries GDP) give Chavez the luxury of cutting back or maintaining static production.

You suggestion gave Hugo a lot more credit as a manager than he deserves. Or anyone else for that matter.

If Hugo had a fixed budget for this year and more than a few out years as well as the certainty prices would stay high I would agree with you.

But Hugo has duanting social problems with a 45% poverty rate and as you've seen he's quite ambitious internationally. When these socialist get more money they spend it. They don't build rainy day funds with earmarks in the event of lower prices. Almost every nation not named Saudi Arabia pumps as much as they can get away with, cheating regularly, in order to bring in as much revenue as they can collect. It's nice to have $400B in oil reveneus to spend. It's even nicer to have $500B.

These governments have is they don't know where prices will be a year from now. They all know what happened in 1980. prices still haven't recovered.

The market proved a text book example of it's efficiency. Investment sky-rocketed and supplies increased. Conservation took hold and demand dropped. OPEC lost control of pricing for MOST of the next 20 years.

The market is sending signals the exact same thing is happening now.

In the US demand was down 1.8% in 2005 and is running down 1.7% in 06. In light of 3.5% GDP growth this is fantastic and we haven't scratched the surface of conservation. In 2004 we had 3 hybrid models available in limited supply. They might sell 1M by 2008. Each model rolled out in 2008 will have significantly better mileage than the vehicle it replaces. Some will burn ethanol.

Hugo could easily find himself addicted to $60 Oil when the price is $50 or lower.

Posted by: rdw on February 18, 2006 at 5:08 PM | PERMALINK

"It would help . . ."

Uh, not really. Not significantly.

" . . . and it would demonstrate to a number of people around the world that we're serious."

This comment shows that you're not serious. What would show the world we're serious is when dramatically reduce consumption. That won't happen because of domestic drilling. It will happen when we (1) reduce overall use and (2) shift to other energy sources besides oil. That would be "serious."

Posted by: Joel on February 18, 2006 at 5:14 PM | PERMALINK

But Hey, maybe you know something I dont, rdw. I love to hear that it was based on more than boosterism.

My economic data comes directly from JP Morgan. They put out a 25-30 page Domestic Review each week and an 80 page Int'l review tracking 50 or so of the largest economies. The forecast is excellent Domestically and Globally thru 2007.

This weeks summary included in increase in Japans GDP forecast to 3% and the global rate to a healthy 3.5% up from 05's 3.3%. As usual Europe is the laggard. This week the German forecast for 06 was lowered to 1.8%.

No country is expected to approach recession in the next two years. All of the basket cases of the late 90's have made significant strides including Argentina, Turkey and Thailand. Global inflation is at or near historic lows.

I don't recall a healthier global economy in my lifetime.

On the chance conservation does kick in and supplies increase the possibility of significantly lower crude is very real and would obviously been a further boon. I believe JPs forecast is for $65. Anything lower is a positive.

Posted by: rdw on February 18, 2006 at 5:22 PM | PERMALINK

ranaaurora
". . . Let's explore that logic. If oil prices go up by 110% on Sunday and on Tuesday he reduces output by 9.09% is he going to have a terrible recession? How much have oil prices gone up in the last 4 years? How much has their national debt gone down?"

Didn't we just have a discussion about how algebra is hard? And on Saturday no less!

Posted by: John on February 18, 2006 at 5:22 PM | PERMALINK

rdw

1 million hybrid-electric cars by 2008 is a good start, but how many SUVs will be sold in that time?

Are you suggesting that we should take heart that gas-station lines are in our future, as the market forces the US to reduce its demand? I dont disagree with you that this is a likely outcome, but most Americans wont like it. They will ask why they were not warned, and why the govt didnt prepare better. And that robust GDP growth will be history.

Posted by: troglodyte on February 18, 2006 at 5:26 PM | PERMALINK

I'm not saying that would be the wisest course of action, FWG. I just think a thread "to round up the latest oil news once in a while" should include, you know, all the relevant news.

Posted by: Dan B. on February 18, 2006 at 5:36 PM | PERMALINK

rdw

Is the phrase "Option no-Doc ARM" anywhere in that JP Morgan document? The new Fed Chairman was smart enough to hedge on his economic outlook this past week, citing concerns about all the teaser rates that will start to reset this year.

It may matter, or it may not. We will see. At least Bernanke seems to reside in a reality-based community.

Did the JP Morgan outlook explain the inverted yield curve in a way that left you bullish?

Would you consider investing in Las Vegas condos? There are many to choose from, and the local real estate market can do nothing but grow.

Posted by: troglodyte on February 18, 2006 at 5:37 PM | PERMALINK

It will happen when we (1) reduce overall use and (2) shift to other energy sources besides oil. That would be "serious."

The market reacts to pricing on both the supply and the demand side. Canada is now tripling supply from the Tar Sands from 1M to 3M a day and last week the govt announced they will fund a $500M commitment to build a natural gas pipeline to access their huge northern supplies.

Virtually all of this is destined for US markets.

At the same time Demand was down 1.8% in 2005 and 1.7% so far in 2006 in the US. That will result in a reduction of near 450K barrels a day.

If the US can continue at 1.5% per thru 2010 demand will be lower by 1M and supply higher by as much as 2M.

Considering the amount of investment in solar, wind, ethanol and other alternatives as well as conservation 1.5% could be conservative. It seems equally likely Canada and the EU would follow a similar pattern.

I have doubts about ethanol but Detroit can produce ethanol burning vehicles at a marginal cost near $250 and from what I've read idle farmland can produce significant amounts of product to make a serious dent in gasoline demand. If the price points work it's a slam dunk.

The beauty of capitalism is that an army of smart people are looking to solve the problem. As long as we minimize the govt roll and let markets work we'll be fine.

Posted by: rdw on February 18, 2006 at 5:41 PM | PERMALINK

"Canada is now tripling supply from the Tar Sands from 1M to 3M a day. . . "

Uh, that means they're betting on high prices. Oil from tar sands is not an alternative to cheap crude from the ME, it is an alternative to no oil. Don't look for boom times in the US when oil from tar sands and shale is profitable. Lots of jobs will be lost in that economy, rdw. Yes, the marketplace works, but it often leaves bloody footprints.

Posted by: Joel on February 18, 2006 at 5:49 PM | PERMALINK

Did the JP Morgan outlook explain the inverted yield curve in a way that left you bullish?

The short end is high as the Fed tries to take liguidity out of the economy and prevent over-heating and eventual inflation. The low long-term end reflects investor confidence inflation is not a serious issue nor the long term health of the US economy including the dollar.


Would you consider investing in Las Vegas condos? There are many to choose from, and the local real estate market can do nothing but grow.

I wouldn't buy condo's anywhere. That's me. There's little question some parts of the real estate market are over-priced and due for a correction but there's nothing exceptional about that and it's probably healthy unless you've been speculating. Overall construction is doing exceptionally well and we're seeing a very nice rotation as some heat comes out of the residential side and strength returns to the commercial/industrial/office side.

S/E PA and South Jersey are booming. Philly just absorbed about 100,000 new center city residents, construction of 40 story office bldg at 30th street and a 50 story office bldg in center city. Vacancy rates are still dropping. The next mini-boom will be casinos.

In case you are wondering the team of economists at JP are aware of the yield curve AND real estate. Plus their forecast is not especially bullish. They are at 3.5% vrsus a consensus of 3.3%.

Posted by: rdw on February 18, 2006 at 5:56 PM | PERMALINK

Lots of jobs will be lost in that economy, rdw

Why would a single job be lost in the USA if we replace 1M of Saudi Oil with 1M of Tar sands oil. We pay the same price.

The cost of producing tar sands oil is near $15 a barrel. This does not include the capital investment. My understanding is over $60B of investment has been committed and over $25B funded. Alberta has been a boom town for 3 years. It's happening.

This commitment gets them to 3M. If tomorrow prices drop to $30 some will be cancelled by most of the investment will go forward. Once the investment is make they'll pump forever as long as the price of oil is $16 or more.

The same holds true for the huge natural gas extraction planned for the frozen north. That won't be near as expensive and once the pipeline is built the gas is extremely cheap. It's also more attractive because it's so clean.

once the investment is made they'll be pumping away.

Posted by: rdw on February 18, 2006 at 6:04 PM | PERMALINK

And that robust GDP growth will be history

IN the last 3 years this economy has absorbed a near tripling of oil prices AND grew at it's fastest pace in 20 years.

Energy as a % of GDP is about half what it was in 1980 and falling further. In 2005 crude/gas demand dropped 1.8% while the economy grew 3.5%.

The 2% of GDP that is energy is not going to kill this economy.

As far as SUVs it's almost assured they'll see the biggest efficeincy gains including hybrid conversion. They work just as well in SUVs are in any other car. They can also burn ethanol just as easy and all of the weight reduction techniques that apply to a compact will apply to a SUV. The relacement for the 1998 blaser in 2008 will probably get 2x's the mileage.


Posted by: rdw on February 18, 2006 at 6:12 PM | PERMALINK

Joel >"...Oil from tar sands is not an alternative to cheap crude from the ME..."

Not since it takes 4 to 7 barrels of oil equivalent energy to produce 1 barrel of output

Losing deal, no algebra needed

"Lack of awareness of the basic unity of organism and environment is a serious and dangerous hallucination." - Alan Watts

Posted by: daCascadian on February 18, 2006 at 6:16 PM | PERMALINK

rdw

Capitalism works in many beneficial ways, as you demonstrate. Spreading out the responsibility for innovation is often most efficient. Im not disagreeing with you on that.

However, capitalism is driven by short-term psychology. Economic theorists can set up models for how a rational person should plan for retirement, and most Americans dont do it. Unrestricted capitalism is prone to boom and bust cycles. The individual actors look around at what worked last year, copy it, and bubble markets get created. Also, it is much much easier to get rich by cheating people if you can get away with it. Unregulated capitalism offers many opportunities. All you need to do is withhold the information an investor needs to make a sound choice, and you have him/her where you want them.

So all this talk about how capitalism would solve our problems if the government would just go away is goofy. Sort of like Karl Marx telling us that once the workers took over the means of production, then government would be unnecessary. We all know how that goofball idea turned out!

Posted by: troglodyte on February 18, 2006 at 6:17 PM | PERMALINK

"Why would a single job be lost in the USA if we replace 1M of Saudi Oil with 1M of Tar sands oil. We pay the same price."

None would be lost if we simply traded one source of oil for another at the same price, silly. That's not the point.

The point is that oil sands are profitable is because oil prices are high enough to make them profitable, not because oil sands are cheap. Oil prices are higher because demand is growing faster than supply. This is not going to change, it is only going to continue.

Oil sands profitability is a symptom of the problem, not the cause of the problem. The problem is that oil production has peaked worldwide and demand will continue to grow. The fact that there are lots of oil molecules left in the ground is not a consolation to the reality-based community, because we realize that it will only get more expensive to extract, and thus everything else that depends on oil (i.e., everything) will get more expensive. People will simply stop buying lots of stuff that has to be shipped or requires lots of petroleum to produce. The jobs of people in the USA who used to provide those goods and services will be lost.

I'm sorry this is so hard for you.

Posted by: Joel on February 18, 2006 at 6:29 PM | PERMALINK

"Why would a single job be lost in the USA if we replace 1M of Saudi Oil with 1M of Tar sands oil. We pay the same price."

None would be lost if we simply traded one source of oil for another at the same price, silly. That's not the point.

The point is that oil sands are profitable is because oil prices are high enough to make them profitable, not because oil sands are cheap. Oil prices are higher because demand is growing faster than supply. This is not going to change, it is only going to continue.

Oil sands profitability is a symptom of the problem, not the cause of the problem. The problem is that oil production has peaked worldwide and demand will continue to grow. The fact that there are lots of oil molecules left in the ground is not a consolation to the reality-based community, because we realize that it will only get more expensive to extract, and thus everything else that depends on oil (i.e., everything) will get more expensive. People will simply stop buying lots of stuff that has to be shipped or requires lots of petroleum to produce. The jobs of people in the USA who used to provide those goods and services will be lost.

I'm sorry this is so hard for you.

Posted by: Joel on February 18, 2006 at 6:32 PM | PERMALINK

"Not since it takes 4 to 7 barrels of oil equivalent energy to produce 1 barrel of output"

Thanks, daC. I was hunting for that figure.

Not a "losing deal" but a more expensive deal. Which was my point. We haven't repealed the second law of thermodynamics. When it gets more expensive to get the same job done, productivity falls. When worker productivity falls, there are fewer profits and fewer jobs to be had.

For all his enthusiasm for capitalism, rdw just doesn't seem to grasp this elementary capitalist concept.

Posted by: Joel on February 18, 2006 at 6:40 PM | PERMALINK

daCascadian: Not since it takes 4 to 7 barrels of oil equivalent energy to produce 1 barrel of output

So where are the Canucks getting the energy for their tar sands operations?

Posted by: alex on February 18, 2006 at 6:43 PM | PERMALINK

"So where are the Canucks getting the energy for their tar sands operations?"

Natural gas.

http://www.feasta.org/documents/wells/contents.html?one/panel1.html

Posted by: Joel on February 18, 2006 at 6:51 PM | PERMALINK

I'm sorry this is so hard for you

It's not remotely hard.

The USA economy is booming right along with Oil at $60. At $60 the Tar Sands are hugely profitable and are 2nd only to Saudi Arabia for recoverable supply. Although current plans are to move to 3M a day that could easily be tripled if the market could assume the supply. If in fact prices do stay at $60 investment will continue to flow into Alberta for increased capacity.

BTW: The increase in total global demand in the 4th Qtr was microscopic.

Posted by: rdw on February 18, 2006 at 7:03 PM | PERMALINK
Anybody old enough to remember the first great OPEC monopoly oil market attack will remember that it didn't take long for market forces to start chewing up that monopoly. Posted by: tbrosz
Anyone who knows the story of the Oil Embargo of 1973 knows the effects lingered for most of the decade.

The embargo was lifted in March 1974 after negotiations at the Washington Oil Summit, but the effects of the energy crisis lingered on throughout the 1970s. The price of energy continued increasing in the following year, amid the weakening competitive position of the dollar in world markets; and no single factor did more to produce the soaring price inflation of the 1970s in the United States.

it is not likely the Us would put up with much crap from Chavez. Posted by: Fat White Guy

What would you do invade? That invasion force would consist of you and what army?
Why aren't terrorists putting more effort into attacking big oil on a worldwide scale? Posted by: lou

Sabotage has cost Iraq Six Billion dollars
BAGHDAD, Feb 18 (KUNA) -- Iraq has lost over USD 6 billion throughout 2005 due to sabotage operations against its oil sector facilities, a senior official told KUNA on Saturday.
Hugo needs the money as much or more than we need the oil. The Venezuelan economy has become even more dependent on Oil Revenues and their poverty rate continues ot increase. It's over 45%. Posted by: rdw

Clueless. The poverty rate is falling in Venezuela because of Chavez' policies thereby undoing years of abuse and oppression by the oligarchs in that country.
Our budget deficit is only 2.6%. Tha's lower than much of the developed world and much lower than the average of 4.2% in the 80's.Posted by: rdw

The American debt is approaching 9billion USD, which is almost one year's GDP.
He's been pissing it away. The simple ass has been sending subsidized Oil to Taxechuchetts as a way of trying to embarrass Bush. Posted by: rdw

It was the oligarchs in Venezuela who were pissing away the nation's wealth. Chavez is investing and improving lives of the countries peasants, a worthy goal not shared by Republicans. The amount given to the elderly and the poor is Mass was not much, but it was more than Republicans did.
Hugo could easily find himself addicted to $60 Oil when the price is $50 or lower. Posted by: rdw

Which is the most likely average price in the next year, $50, $60, $70, higher? I'm betting it will be to the higher number baring a possible recession.

Posted by: Mike on February 18, 2006 at 7:05 PM | PERMALINK

"The increase in total global demand in the 4th Qtr was microscopic."

2006 is expected to see a recovery in Chinese and US demand growth.

http://omrpublic.iea.org/

Posted by: Joel on February 18, 2006 at 7:14 PM | PERMALINK


TROGLODYTE: Sort of like Karl Marx telling us that once the workers took over the means of production, then government would be unnecessary. We all know how that goofball idea turned out!

Turned out? You're not seriously suggesting that "goofball idea" was ever actually put into practice, are you? Where, exactly, have workers ever taken over the means of production?


Posted by: jayarbee on February 18, 2006 at 7:45 PM | PERMALINK

2006 is expected to see a recovery in Chinese and US demand growth.

The IEA forecasted > 500K increase in average daily demand in the 4th Qtr. It came in at 80K. They've also reduced estimates for the 1st and 2nd Qtr of 06 and so far 1st Qtr demand is lower than the reduced estimates.

At $60 there are major opportunities for profitable alternatives to drive down demand for crude via substitution as well as opportunities for conservation.

It's been well over a year since GE and several other huge consumers of energy pledged to reduce
energy consumption by 30%. It's a profitable investment for them and a no brainer. Intel has changed their focus for improving chip speed to improving energy efficiency. There are countless opportunities in countless areas for incremental improvements in everything that can add up to major savings.

The gist of a Scientific American Article in the 9/05 edition was that because crude has been cheap for so long energy efficiency hasn't been a focus. Yet in that period there has been a constant stream of improvements in an array of products and areas. The Auto industry was not motivated by MPG. They are now. One of the steel companies announced plans to build a plant in Mississippi to produce rolled steel for autos at 1/2 the thickness and weight of the current product. Steel is competing with the manufacturers of composites for the business. That's just one example of one part of a car and it will absolutely help improve mileage. But not until 2007 or so. This kind of innovation is happening in 1,000 ways.

At $60 money will continue to pour into the Tar Sands and it's very possible we'll see investment in plants to convert coal to Deisel fuel. We have a 400 year supply of coa. The market works.

Posted by: rdw on February 18, 2006 at 7:52 PM | PERMALINK

Regarding Venezuela, now we would be a good time for the US to throw it's weight behind the Dominican complaint to the UN Law of the Sea Convention disputing the Venezuelan claim to Bird Island and the 150,000 km^2 EEZ around that speck of sand that sinks underwater with every hurricane - check these images here and here.

The rights to the offshore oil and gas prospects are threatened if the island sinks. Dominica is only 70 km away so if the island sinks its EEZ would extend out to 200 nm. If Venezuela can retain the right to the island then Dominica's EEZ only extends to 35 km. Further, Dominica claims that Venezuela isn't entitled to an EEZ because the Law of the Sea requires that islands be habitable in order to have a EEZ. Bird Island clearly isn't therefore it's only entitled to a 12 nm boundary.

The US can back the Dominican argument are remove 150,000 km^2 of oil and gas from Venezuelan control and allow the more friendly Dominican gov't to control those rights.

That's the way to play politics with Chavez.

Posted by: TangoMan on February 18, 2006 at 7:57 PM | PERMALINK

" . . . we'll see investment in plants to convert coal to Deisel fuel."

Heh. When that becomes profitable, you'll be walking to work, rdw. Coal-to-oil is certainly feasible, but it ain't cheap, either financially or environmentally.

Posted by: Joel on February 18, 2006 at 8:00 PM | PERMALINK

There is plenty of oil out there - in fact big oil better be careful or the price will pluge again.

Gasoline prices climb as much as 4% despite stock climb,/b.
Investor's Business Daily (subscription) - Feb 15, 2006
... the Energy Department said motor gasoline inventories rose 2.2 ... The API said they jumped 8.1 million to ... the recent downward movements in crude oil and gasoline ...

Oil May Fall for a 5th Week on US Supply Gains, Survey Shows
Bloomberg - Feb 16, 2006
... Crude-oil inventories jumped 4.9 million barrels to 325.6 million, the highest since June. Gasoline inventories have jumped 11 percent in the past seven weeks. ...


Will Peak oil plunge again on another glut of oil oil is a boom business always has been always will be.

Just like it did with the oil market crash of the early 1980s when gasoline prices dropped and finally ended at .68 cents a gallon just have look at the real news buried behind the hype.

-- just have to look at the news on inventories - gasoline inventories increase but so does the price of gasoline - AND suddenly the market crashes - just like it did in the early 80's and before that time too.

As always Kevin - you have no real clue about oil prices and so called peaks at all. Oil is not due to peak for another 50 years. That was the word before Bush came into office.

Posted by: Cheryl on February 18, 2006 at 8:01 PM | PERMALINK

thus everything else that depends on oil (i.e., everything) will get more expensive. People will simply stop buying lots of stuff that has to be shipped or requires lots of petroleum to produce. The jobs of people in the USA who used to provide those goods and services will be lost.

This is total nonsense. The US is a service economy. Energy as a % of GDP is down to 2% and headed rapidly lower. The US has absorbed a more than doubling of crude prices yet had it's strongest 3 year growth period in over 20 years. Net job adds the last Qtr wer 229K and the unemployment rate has dropped from 6.4% to 4.7%.

At current trends GDP will be up over 7% in 2005 and 2006 while petroleum demand will be down 3.5%. That's a stunning 10.5% improvement in energy efficiency in 2 years BEFORE a ton of investment has started to pay off.

Posted by: rdw on February 18, 2006 at 8:02 PM | PERMALINK

cheryl,

Good points. Also not covered there is the fact about 4% - 5% of refinery capacity is off line for planned maintenance and inventories are STILL growing. Also while the damage to refineries from Katrina has been 'almost' completely repaired the production of natural gas has taken longer. Yet natural Gas prices have already collapsed from over $15 to less than $7.50 in a few weeks. By this summer that natural gas production is expected to be back online putting more downward pressure on prices.

Gulf natural gas production will be much higher in 2006 versus 2005 further reducing import demand.

Posted by: rdw on February 18, 2006 at 8:11 PM | PERMALINK

"The US is a service economy."

Oh my god. You are just witless, aren't you.

Truck drivers are services. Airlines are services. How do you think goods are transported in this country? Nobody in all those businesses you think of when you think of "service" goes anywhere without oil, and when they get there, they don't do anything without oil. Food doesn't grow in this country without oil, rdw.

Give up already. You're out of your depth here.

Posted by: Joel on February 18, 2006 at 8:11 PM | PERMALINK

The American debt is approaching 9billion USD, which is almost one year's GDP.

American Debt is $8T and GDP in 2006 will exceed $13B. That's a fairly safe 62% of GDP and wll below most developed nations.

Posted by: rdw on February 18, 2006 at 8:18 PM | PERMALINK

"However, capitalism is driven by short-term psychology."

Nonsense. People sometimes thing more short-term than they ought to, but that is not a feature of capitalism.

rdw is completely right that oil demand growth came in lower than expected. Duh. That's because of the price. It's not just supply growth that responds to prices, demand growth does too. At a certain level of prices, demand growth would go to zero and then negative.

The two most important things that would happen at $120 oil:

1. Global GDP growth would adjust slightly downwards.

2. The composition of global GDP growth would shift from countries that consume large amounts of oil per marginal dollar of GDP to countries that are less dependent on oil.

In other words, the reduction of demand in the US might accelerate a bit from negative 1.5% per year to a slightly higher figure, but hardly enough to shift GDP growth sharply downwards. US consumers are simply wealthy enough to pay more. And US businesses pay such small amounts of their total expenses for oil that double the price would only result in very minor production cuts.

Countries like China and India on the other hand, would likely see sharper GDP growth reductions as a doubling of the oil price would have a more disproportionate effect on their companies' income statements.

Posted by: cecce on February 18, 2006 at 8:26 PM | PERMALINK

Mike:

Another comment on Venezuela's poverty statistics here.

Posted by: tbrosz on February 18, 2006 at 8:28 PM | PERMALINK

Heh. When that becomes profitable, you'll be walking to work, rdw. Coal-to-oil is certainly feasible, but it ain't cheap, either financially or environmentally.

Last year the Governor of Montana was touring the country looking for investors to build a coal to diesel plant expected to be profitable at $35 per barrel. No one is going to invest in $35 per barrel when the Tar Sands are $15 but at some point Alberta becomes too crowded and Montana becomes attractive.

A more interesting and promising story was in Qatar where the govt was looking to use German WWII technology to convert natural gas to diesel.
QATAR has huge reserves but transport is an issue. This is supposed to be similar to the Montana technology. This is supposed to solve the problem of emissions. Diesel is far more energy efficient but dirty.

If either of these options are as promising as they sound they'll end $60 oil

Posted by: rdw on February 18, 2006 at 8:34 PM | PERMALINK

tbrosz - fwiw, the Economist this week supported the idea that VZ poverty rates are down. It would be bizarre were they not, given the stimulation to the economy from extra cash. But it only further highlights how dependent they are...

Posted by: cecce on February 18, 2006 at 8:35 PM | PERMALINK

"No one is going to invest in $35 per barrel when the Tar Sands are $15 . . . "

Well, better late then never, I suppose.

No one is going to produce blood from turnips either, unless it becomes economically feasible. And when it does, we'll be pretty fucking desperate. I understand the math, rdw. The difference between you and me is not understanding what is possible. The difference is that I understand that when economic conditions make these things profitable, things will be very different then they are today. These are stop-gap alternatives, but the conditions where they obtain are different from today. Lots of dislocation for lots of voters. People with guns are gonna get pissed.

Of course, in the happy-talk universe, its all good. Just like the gigantic and growing national debt is ok with you.

Posted by: Joel on February 18, 2006 at 8:47 PM | PERMALINK

Give up already. You're out of your depth here.

You are clueless. Energy represents about 2% of total GDP and it's sinking.

Crude prices more than doubled while the economy is booming and unemployment is dropping.

Even on a Fed Ex truck the primary cost BY FAR is the driver. Gasoline is at most 10% of the total cost of a truck.

I just paid $2.25 and I'll bet that's lower than the average price of the last year. There's a very good chance crude prices in 2006 will be lower than in 2005 and will reduce inflation.

Posted by: rdw on February 18, 2006 at 8:49 PM | PERMALINK

it's refreshing to see you make detailed arguments in support of your positions, rdw. I may have to differentiate your from the trolls. In fact, I can't even refute these predictions and analyses in depth. I mean, I'm intellectually capable, but it's not worth my time to investigate the question at that depth unless there's a paycheck coming from it. Rational behavior forces me to be a generalist.

Personally, I could believe that oil prices could fall in 2006 and demand could stabilize. It did in fact happen in the 1970's. I'm pretty skeptical that it's going to happen - I could believe that US demand could stabilize with those incremental improvements, but the demand explosion is coming or going to come from the developing world, and they're not going to be able to afford the high-tech and revamped infrastructure to make major changes away from oil.

The Canadian info is very nice, but as I understand it's a relative trickle. I read an article about all the nifty tricks Saudi Arabia can do to get production up a few million more barrels a day, but it's a drop in the bucket if total global demand rises by 50% in the next 20 years. I'm not sure of my details, but I know the Tar Sands aren't larger than that.

If your argument with liberals is that they claim that market prices have no impact on the behavior of invididuals and companies, you've been barking up the wrong tree. I'm a liberal, and sure they do. If markets didn't "work" at all, in some fashion, they wouldn't be in use. The problem with radical free-marketers is that they think that because somewhere, sometimes, market mechanisms accomplish efficiental societal outputs, that all markets everywhere always do the same thing. It's kind of like the thinking that because somewhere in some time tax cuts helped some economy, the solution to every economic problem at all times are tax cuts. It's very easy to come up with situations in which markets are imperfect - if they weren't, the stock market would never crash, there would be no such thing as a recession, monopolies and cartels wouldn't exist, and fraud would be literally impossible. After all, the outcomes are undesirable and subverive of or contrary to real market mechanisms. There is no economically rational reason why they occur - sure the invididual behavior is rational, but the system is not designed to create these responses, in fact, quite the opposite.

If left to itself, a market will depopulate itself - wealth will concentrate, profit margins will increase to infinity, competition will be eliminated, innovation will stagnate, volatility will increase, and eventually the system will crash. The reason markets survive is because governments correct their small excesses while they are too small to bring the system down.


Posted by: glasnost on February 18, 2006 at 8:50 PM | PERMALINK

tbrosz: Another comment on Venezuela's poverty statistics here.

See also

http://www.cepr.net/publications/venezuela_2005_06.pdf

which specifically addresses the article you linked.

The poverty stats previously only included cash income, disregarding free medical care and subsidzied food. These have changed a lot under Chavez. Whether you or I believe that subsidizing food (as opposed to boosting incomes) is a good way to reduce poverty is immaterial to the fact that not including non-cash income is inaccurate at best, and maybe downright dishonest.

Also, whether Chavez's domestic economics are good or bad is of little importance to most Americans. Nevertheless he's been ridiculously hyped as the reincarnation of Che Guevera. The commies are coming!

Who gives a shit. Maybe poodle skirts will come back too.

Posted by: alex on February 18, 2006 at 8:51 PM | PERMALINK

rdw: Gasoline is at most 10% of the total cost of a truck.

Even less - they run on diesel.

Posted by: alex on February 18, 2006 at 8:54 PM | PERMALINK

"If left to itself, a market will depopulate itself - wealth will concentrate, profit margins will increase to infinity, competition will be eliminated, innovation will stagnate, volatility will increase, and eventually the system will crash."

And you learned this where?

Posted by: bobnweave on February 18, 2006 at 8:57 PM | PERMALINK

"There's a very good chance crude prices in 2006 will be lower than in 2005 and will reduce inflation."

There you have it, folks. 2006 is all we care about. We'll all die at the end of the year, and nothing that happens after that will matter. Guess we'll all be raptured, or something. According to rdw, anyway.

For the reality-based community, we know that oil-sands, "shale oil" and coal gasification are solutions that are feasible only when oil hits unprecidented highs, and only short-term solutions then. rdw is whistling past the graveyard.

Posted by: Joel on February 18, 2006 at 8:58 PM | PERMALINK

love the ironic handle, glasnost. but you need to stop getting your analysis from the little red book and das kapital.

Posted by: bobnweave on February 18, 2006 at 8:59 PM | PERMALINK

"Even less - they run on diesel."

Right. Which is why I referred to oil, not gasoline. Diesel does still come from oil. rdw confuses oil with gasoline. But the price of diesel is still coupled to the price of oil, IIRC.

Posted by: Joel on February 18, 2006 at 9:03 PM | PERMALINK

Ken Deffeyes is just flogging a book. He may have worked with Dr Hubbert and knows a lot about exploration of oil, but he knows little about how markets work, apparently.

Basically, all of the "peak oil" alarmism is focused on production rates. I've seen very little analysis so far on what would happen once the peak arrives (as of course it will). The peakists all apply static analysis of how world economic growth will be affected by a slow decline in overall oil production. Almost certainly this analysis is wrong. The recent history of the US and Europe show that positive economic growth is easily compatible with negative growth in oil consumption. It would probably be possible on a global scale too.

When you see peakists talking about going back to the Stone Age etc, it only highlights how unserious their thinking is.

Posted by: cecce on February 18, 2006 at 9:08 PM | PERMALINK

"Right. Which is why I referred to oil, not gasoline. Diesel does still come from oil. rdw confuses oil with gasoline. But the price of diesel is still coupled to the price of oil, IIRC."

Which still does not address rdw's point. He said the US economy is service based and thus not so dependent on oil. Your brilliant retort was that transportation is a service. He pointed out that energy is a minor part of total cost of transportation. You only quibble about diesel vs gasoline.

Any REAL arguments left?

Posted by: cecce on February 18, 2006 at 9:12 PM | PERMALINK

"When you see peakists talking about going back to the Stone Age etc, it only highlights how unserious their thinking is."

When you see critics of Deffeyes claiming that he talks of a return to the stone age, it only highlights their illiteracy.

I've read Deffeyes. Cites, please, of Deffeyes claiming a return to the Stone Age.

Posted by: Joel on February 18, 2006 at 9:12 PM | PERMALINK

People with guns are gonna get pissed.

What are you babling about?

Because we have a President who undertands markets we're not going to get the govt screwing things up and Carter designed gas lines.

Montana can't attract investment on a process with a $35 price point because there are too many other better opportunities. They'll get 10M a day from the Canadian Tar Sands and then start investing in the Venezuelian tar sands before they invest in Montana.

Once Canada gets up to 3M a day, all but baked in the cards, Oil is dropping below $50.

Global demand increased by 80K a day in the 4th Qtr over the 4th Qtr 04. At that rate Canada can meet growing demand for the next 20 years.

OPEC spare capacity is rated at 1.4M barrels and say and expeted to increase to 1.9M by mid year.
This as USA demand is decreasing AND Canada is increasing productions as well.

Posted by: rdw on February 18, 2006 at 9:13 PM | PERMALINK

I actually hope that oil prices don't come down too much. We can live w/ $60/bbl, and we need high prices to force people and companies to conserve and find alternatives.

The problem w/ oil prices is their volatility. Big improvements were made in the 1970's, but everybody stopped trying when oil prices dropped. Uncertainty also discourages investment.

Long term prices will rise. Peak oil will eventually occur (or has, or in 50 yrs, whatever). The longer you have to adapt the better. We've already pissed away 20 yrs.

Posted by: alex on February 18, 2006 at 9:15 PM | PERMALINK

Why is anybody bothering to argue with rdw and his takes from the Pangloss School of Market Economics? What you should do is just buy him a one-way ticket to the world's premiere libertarian fantasy camp.

Posted by: Dustbin Of History on February 18, 2006 at 9:16 PM | PERMALINK

Wouldn't it be more productive to focus on alternatives and practical adjustments than bemoan the ultimate obvious? 'The Sky is Falling' mentality gets us nowhere.

I'm betting that a large percentage of those in denial want to follow an aggressive policy of correction. Energy independence with environmental emphasis can inspire true patriotism. Are we waiting for the current energy cartel to to lead the way?

Posted by: Michael7843853 G-O in 08! on February 18, 2006 at 9:18 PM | PERMALINK

"Once Canada gets up to 3M a day, all but baked in the cards, Oil is dropping below $50."

Only if the Canadian government subsidizes it. It's not 3M a day at any price, rdw. But I wouldn't expect you to understand that. You're a great cheerleader, but you really don't understand the economics of oil. I'm tired of you and your happy talk. The future will give the lie to your pollyanna bloviations. As a professional scientist, I prefer data over theory. Your mileage obviously differs.

Posted by: Joel on February 18, 2006 at 9:20 PM | PERMALINK

Joel: As a professional scientist, I prefer data over theory.

Obviously then economics is not your scientific field.

Posted by: alex on February 18, 2006 at 9:22 PM | PERMALINK

rdw confuses oil with gasoline. But the price of diesel is still coupled to the price of oil, IIRC."

I'm not confusing gasoline with Oil. I have been talking about total petroleum product as reported in the weekly petroleum status report (US gov) and the IEA (Int'l energy Agency)

My point with diesel was only to highlight the incredible richness of capitalist markets in finding cost efficient solutions to problems. There is an attempt underway to convert natural gas to clean burning diesel fuel which if cost effective will be very good for markets.

Qatar would immediately scale up to produce major quantities for the European and Asian markets where Diesel is commonly used. This product would have the huge advantage of being much cleaner. Qatar has the 3rd largest reserves of NG in the world. And diesel IS typically refined from oil. To the extent Qatar can supply NG based Diesel that lowers demand for Crude.

This is one of the 1,000's of opportinities to diversify our energy sources away from Oil and substitute a much cleaner product.

Posted by: rdw on February 18, 2006 at 9:29 PM | PERMALINK

When you see critics of Deffeyes claiming that he talks of a return to the stone age, it only highlights their illiteracy. I've read Deffeyes. Cites, please, of Deffeyes claiming a return to the Stone Age. Posted by: Joel

Idiot. Why didn't you just click the link that Kevin provided in his post? Here's Deffeyes:

"By 2025, we're going to be back in the Stone Age."

http://www.princeton.edu/hubbert/current-events.html


Posted by: cecce on February 18, 2006 at 9:30 PM | PERMALINK

As a professional scientist, I prefer data over theory.

I have no idea what you are but you are not a scientist.

Tar sands oil cost $15 to produce. If Crude is selling at $50 they make $35 for each barrel. Why would Canada subsidize 200% profits?

At 3M a day x's $50 that's $55B a year in revenues and $39B in pre-tax profits.

Posted by: rdw on February 18, 2006 at 9:36 PM | PERMALINK

I actually hope that oil prices don't come down too much. We can live w/ $60/bbl, and we need high prices to force people and companies to conserve and find alternatives. The problem w/ oil prices is their volatility. Big improvements were made in the 1970's, but everybody stopped trying when oil prices dropped. Uncertainty also discourages investment. Long term prices will rise. Peak oil will eventually occur (or has, or in 50 yrs, whatever). The longer you have to adapt the better. We've already pissed away 20 yrs. Posted by: alex

You and me both, alex. $60 oil has caused no major problems, not just for the strong US economy but also more vulnerable 3rd world economies. If the price were to drop now it would be a serious setback for efforts to develop alternatives. And just to ensure progress towards energy independence, why not have a $30 tariff on imported oil (and the equivalent for refined products) to the US?

Posted by: cecce on February 18, 2006 at 9:37 PM | PERMALINK

We've already pissed away 20 yrs.

No we haven't. 20 years of low oil prices made for much higher profits and increased wealth for everyone except producers. Also there have been incremental improvements in virtually every field. It's a matter of putting them to work, dropping demand, increasing supply and starting another 20-yr low price cycle.

We are probably no more than 3 years removed from a virtuous cycle in autos whereby the average vehicle sold will have 25% + better gas mileage than the vehicle it replaces. The normal replacement cycle will lower gasoline demand each year for more than a decade without any special efforts.

Lower power Chips in PCs, much lower power storage devices and better power management software will also reduce energy demand in the home and office. Without trying.

Capitalism is so efficient it's just going to happen.


Posted by: rdw on February 18, 2006 at 9:50 PM | PERMALINK

Also, the share of oil of global total primary energy supply (TPES) has gone down from 53% in 1973 to about 40% now. If the rate of decline accelerates slightly, it's hard to see how this leads to a geopolitical calamity or a new "stone age".

Posted by: cecce on February 18, 2006 at 10:12 PM | PERMALINK

Capitalism is so efficient it's just going to happen.

And the rich get richer and the poor get bread and circuses. Fuck That. Radical Capitalism will bleed us to the point of collapse and leave with the cash.
The whole point of capitalism is to destroy competition. If the capitalists destroy the US in pursuit of short term profits, their financial prominence will lead us back to feudalism.

Energy and utilities should be government controlled with avenues for innovation. The people who create what causes capitalistic success are seldom those who profit the most.

Posted by: Michael7843853 G-O in 08! on February 18, 2006 at 10:14 PM | PERMALINK

A bit off thread but I called this.

U.S., Japan opening a new era of missile defense

Realignment plan includes beefing up ballistic shield

By Juliana Gittler, Stars and Stripes
Pacific edition, Sunday, February 12, 2006

TOKYO Among sweeping changes called for in an interim U.S.-Japan military realignment report, the two countries are on a trajectory to place a massive new missile detection radar system in Japan.


Just another step in the widely predicted alliance with our new best buds. The foremost military alliance in the world will be the USA, Japan, the UK, South Korea and Australia. (possibly India)

This is the new NATO.

France and Germany are absolutely out. They will not get this radar nor will they be protected by our missle defense system. If Iran does lob a missle their way they'll have to duck.

Canada can recover. Harper seems to be a smart and skilled politician and the Canadians are doing important work in Afghanistan.

Denmark and Italy and Eastern Europe will be protected as well.

You read it here 1st. The strongest military alliance over the next 50 years will be the USA and Japan.

Posted by: rdw on February 18, 2006 at 10:22 PM | PERMALINK

Capitalism is so efficient it's just going to happen.

And the rich get richer and the poor get bread and circuses. Fuck That. Radical Capitalism will bleed us to the point of collapse and leave with the cash.
The whole point of capitalism is to destroy competition. If the capitalists destroy the US in pursuit of short term profits, their financial prominence will lead us back to feudalism.

Energy and utilities should be government controlled with avenues for innovation. The people who create what causes capitalistic success are seldom those who profit the most.
Posted by: Michael7843853 G-O in 08! on February 18, 2006 at 10:14 PM | PERMALINK

Posted by: Michael7843853 G-O in 08! on February 18, 2006 at 10:40 PM | PERMALINK

Back to oil/energy. A look at the numbers might be helpful:

http://www.iea.org/dbtw-wpd/Textbase/nppdf/free/2005/key2005.pdf

The amount of oil or equivalents consumed per capita in the US is high (7.84 TOE/capita) but our ECONOMY's energy dependence is very low. The total TOE/$000 GDP is only 0.22, which is just slightly above the OECD average of 0.20.

In contrast, Asia has an economic oil dependency of 0.72 and China is at 0.92. India is even worse off at 1.02 TOE/$000s.

Basically, to the extent world GDP growth is reduced after "peak oil" most of the reduction in growth rates will take place in countries like china and india.

Posted by: cecce on February 18, 2006 at 10:41 PM | PERMALINK

cecce

Stoneage talk is gibberish.

Also not mentioned but suggested by that 40% TPES figure is the producers do not want to see $120 Oil because substitution will collapse demand immediately and permanently as well as increase supply. They learned in 1980 once you lost control of pricing it's hard to get it back.

Once the capital investments are make in the tar sands or other large projects they never cut production. They have to keep running to recover their costs even if profits are

If the US holds or cuts demand and Canada adds 1M bbl capacity the USA will cut ME imports by 1M bbl. If Canada adds 2M the USA will cut ME imports entirely and VZ by as much as 800K bbl. Chavez will not be able to afford the reduction in revenues and thus sell it elsewhere. Meaning the Saudis will be expected to absorb production cuts. They do not want to set off this kind of chain reaction and will be very careful in allowing price increases above $65.

BTW: the 4 week moving average of crude imports is down 4.2% or 429k bbl. That is impressive even allowing for good weather. Considering inventories for all products are well above average ranges 2006 is off to an outstanding start

Posted by: rdw on February 18, 2006 at 10:48 PM | PERMALINK

Click the link and check out what Ken Deffeyes' background. It's a bit more than he knew King Hubbert (actually lunched with him daily at Shell in Houston.) He grew up in the oil patch, worked in the oil capital of the world and taught at Princeton. His credentials are impeccable from both the business and academic side. Sorry, Kevin, my money is on Ken.

Peak oil is the combination of oil left in the ground and the rate of its production. The estimation of the world's original oil reserves has been static for a while at 2.013 trillion barrels. We passed the estimated halfway point of 1.0065 trillion barrels actually produced in December 2005. Half is gone (the easy half), half is in the ground. This was the methodology that King Hubbert used to accurately predict the US peak oil in the early '70s.

Ken also points out that the oil industry is not investing in major new infrastructure or exploration drilling. Why invest given the future of production?

And it is correct that he said that by 2025 we would be back to the stone age. This point was made in response to the media prediction that solar energy would double to 2% of our energy requirements by 2025. I read this as a sarcastic response, not a hard and fast prediction that we will all be watching our flint reserves closely then.

He emphasizes that we need to conserve in a big way and work on realistic alternatives like biodiesel and coal gasification. Not unreasonable. He says don't count on a miracle.

Maybe declining oil production will be no big deal and the free market will solve all our problems. Peak oil is much more predictable than its impact on our society. If you want some real gloom and doom reading, check out Jim Kunstler at Clusterfuck Nation.

I love Deffeyes' punch line:

"That's it. I can now refer to the world oil peak in the past tense. My career as a prophet is over. I'm now an historian."

Posted by: Nat on February 18, 2006 at 10:50 PM | PERMALINK

Nat, no doubt Deffeyes knows a lot about oil and oil production. However that's not the point. There are lots of people predicting peak oil or saying it's already happened. They might all be wrong, but I wouldn't bet on it.

The question is what happens then and this is a bit beyond the domain of oil geologists.

Whether or not this is a calamity of global proportions is of course unknown right now but I would certainly bet against it. There are just so many alternatives. Plus peak oil will only cause a (slow at first) decline in production. The experience of Europe and the US clearly show that positive economic growth and negative oil consumption growth are not incompatible.

Posted by: cecce on February 18, 2006 at 11:06 PM | PERMALINK

The gas lines and rationing were no fun back in the 70's. Not looking forward to a repeat of those times.

Posted by: Neo on February 18, 2006 at 11:11 PM | PERMALINK

All you prosperous bastards disregard the catastrophe for the lower middle class and down. Very enlightened. A society without a sense of community is devoid of morality.

Posted by: Michael7843853 G-O in 08! on February 18, 2006 at 11:22 PM | PERMALINK

Neo, Carter is no longer president. He has retired from presidenting. He's an ex-president.

Posted by: bobnweave on February 18, 2006 at 11:22 PM | PERMALINK

Michael, get yourself a better handle. What is that, your inmate number? And your moralizing is boring and pointless.

Posted by: bobnweave on February 18, 2006 at 11:26 PM | PERMALINK

Anyone with a grain of sense would learn how to ride a horse

Posted by: Thinker on February 18, 2006 at 11:31 PM | PERMALINK

You talking to me, cupcake?

Posted by: Michael7843853 G-O in 08! on February 18, 2006 at 11:32 PM | PERMALINK

Time to start pushing hard for the development of American energy resources, and increasing the rate of development of the Canadian tar sands.

All you prosperous bastards disregard the catastrophe for the lower middle class and down.

Those will be the people producing the fuel.

I repeat an earlier recommendation: read the January 27 2006 Science: articles on pp 484-489 and 506-508. The Republican energy plan of 2005 is just in time, though of course it could be improved. And it will be improved.

Posted by: republicrat on February 18, 2006 at 11:37 PM | PERMALINK

rdw, one area where I agree with the alarmists is that peak oil will enhance the ability of major producers to hold us all hostage (the developing world more than the US and Europe, but us too) by threatening to cut production at various times of crisis.

I think whatever the government can do to help with r&d or regulations or taxes and tarriffs would be a good thing. Yes, I agree the market will ultimately solve all these problems in the long run. Probably. Or almost certainly. However, there remains a risk that it will not which is a national security concern, not just a matter of economics. Also, in the long run we're all dead as Keynes said. I am open to government solutions that would speed up what the market might achieve on its own. These I would support:

1. Gasoline taxes. The price mechanism is a wonderful thing and transportation is the major driver of domestic crude demand (through gasoline). This has worked in Europe and has caused no major problems.
2. A tariff on oil and refined products. To encourage reduced consumption and increased domestic production and encourage growth in domestic refinery capacity.
3. Regulations mandating a certain proportion of all vehicles to be flex fuel (methanol, ethanol, and gasoline, and any combination of the three), hybrids, and plug-in hybrids.
4. All these three can be escalated over time.
5. Support for r&d and basic energy research.

Posted by: cecce on February 18, 2006 at 11:41 PM | PERMALINK

cmdicely on February 18, 2006 at 2:13 PM

Definitely part of the whole picture.

The upcoming 25 years will see a serious restructuring of our fuel economy, but there is no reason to worry about long-term shortages.

Posted by: republicrat on February 18, 2006 at 11:43 PM | PERMALINK

also, from today's BBC online: hydrogen fuel can be made from solar energy by heating zinc oxide to make zinc and O2, then reacting the zinc with water to make H2 and zinc oxide. The zinc is recycled. Upscaling the process will obviously take time, capital and labor, but the US has pelnty of the raw materials and labor.

Of all the industrialized and industrializing nations, the US has the most secure fuel supplies. It would be worth the investment in domestic fuel supplies just to drive down the price of imported oil.

Posted by: republicrat on February 18, 2006 at 11:50 PM | PERMALINK

A country that consumes primarily foreign produced merchandise is ultimately doomed. Even conservative economists have to know that even if they wont admit it. Self serving statistical models and theories are just that. Common sense is very underrated in todays world, take a gander at The Culture of Narcissism by Chistopher Lasch for a perspective on 'experts'.

Posted by: Michael7843853 G-O in 08! on February 18, 2006 at 11:50 PM | PERMALINK

I just think a thread "to round up the latest oil news once in a while" should include, you know, all the relevant news.

Completing the news is why Kevin Drum has open threads; and reading the complimentary ideas is why it is worthwhile to spend time reading.

well said, cmdicely

Posted by: republicrat on February 18, 2006 at 11:52 PM | PERMALINK

"The pessimist complains about the wind; the optimist thinks it will change; the realist adjusts the sails." - William Arthur Ward

Don't be absurd. It was the optimist who made the sails.

Posted by: republicrat on February 18, 2006 at 11:55 PM | PERMALINK

They will ask why they were not warned, and why the govt didnt prepare better. And that robust GDP growth will be history.

The president's energy plan is being enacted now. Nothing can stop it except excessive environmentalism (reasonable environmentalism is ok) and possibly left-wing obduracy.

Posted by: republicrat on February 19, 2006 at 12:05 AM | PERMALINK

Very interesting thread and not terribly trollish.

Question for the alt-energy geeks: This is not the most efficient way to use the energy from hydrogen, but on a blog last year I heard tell of a ceramic-block IC engine that runs so hot it can crack water into hydrogen, making it an engine that effectively runs on water.

Obviously the engine would have to be primed in some way to get it hot enough, or maybe excess hydrogen could be captured and stored for startup.

Anyone hear tell of this, or can point me in a googling direction?

Bob

Posted by: rmck1 on February 19, 2006 at 12:18 AM | PERMALINK

I thought the president's energy plan was a secret.

Posted by: Neo on February 19, 2006 at 12:19 AM | PERMALINK

cecce,

I don't think anyone knows when we'll hit peak oil or can know. They would have to have knowledge of where all of the oil is and how much and that simply is not known.

I am against Govt intervention as a general rule and I dispute your notion high gas taxes in Europe did anything aside from line goverment bureaucrats pockets and force people into tiny cars. I am not aware of Europe being a font of innovation.

If retail gasoline were to drop below some level say $1.40 I might support a tax to be used to find R&D but I'm even queasy on that. Ideally we'd get govt out of it entirely. Not drilling in ANWR is absurd. Not drilling offshore is absurd. The impossible costs layered on nuclear are absurd.

There seems to be an argument for Govt to get involved in ethanol to mandate service stations carry it and car makers sell the equipment. yet the more I read about ethanol the more confusing it is. It's not at all clear this is a cost effective alternative OR that is as safe as I had been led to believe.

It seems an open market is the best way to sort this stuff out with the Govt trying to make it a level playing field. An open market competition will be the best way to find the most efficient way to produce and deliver ethanol and verify if it is a comptitive product.

As far as helping R&D I'd like to wait to see what $60 BBL does to attract private R&D dollars. To the extent there is real potential they'll get investigated for commercialization. I am expecting the field is generating a lot of investment and it's time to let thing develop at a 'normal' pace.

Posted by: rdw on February 19, 2006 at 12:22 AM | PERMALINK


> TROGLODYTE: Sort of like Karl Marx telling us that once the
> workers took over the means of production, then government
> would be unnecessary. We all know how that goofball idea
> turned out!

> Turned out? You're not seriously suggesting that "goofball >
> Turned out? You're not seriously suggesting that "goofball >
> idea" was ever actually put into practice, are you? Where,
> exactly, have workers ever taken over the means of production?

This is a fair criticism, but it almost proves my point. In the cases where some aspect of Marx' prescription was attempted, the elites bamboozled the little guys (I wont use the word "workers" here because it would sound anachronistic). The history of 20th-century Communist regimes tells us that the means of production, once in the hands of a firm government, never leave those hands, never benefit from capitalism's power of innovation, and falter badly after a generation. For 21st century Communist regimes e.g., China, better government management of industries is producing better economic growth, but cronyism is rampant and the governemt has decided to invest its foreign exchange in US Treasury Notes instead of the local market. They could change their policies in the future, but the prospect of handing over much power out of the elites to the lower economic rungs is laughable.

In the western democracies we have tried the experiemnt with varying success. Workers can take over a company if its business prospects are toxic to outside investors. Then they depend on enlightened management for the benefits. The "owner operators" of United Airlines are losing their pensions in the bankruptcy deal, and the management is walking off with big money.

Yeah, there is evidence that Marx's concept is pretty goofball in practice. You cant get there from here. Unfettered capitalism is more attainable, but also toxic to the economically unwary (most of us). All the pretty ideas dont fly in practice. We are left with the hard work of flexible government oversight of a mixed economy.

Posted by: troglodyte on February 19, 2006 at 2:28 AM | PERMALINK

Does rdw ever sleep? Or is he the pseudonym of a tag-team of Chicago-school graduate students? A little like Lassie in the old TV show . . .


Anyway, I am glad to see that the libertarians agree that bigtime changes in the way we do business are needed to adjust to the oil situation. When you think of what is necessary in that change, I think that the prospects are not as rosy as they believe. But hey, if rdw wants to be my frontman to tell the McMansion owners in the exurbs that heating their pads is not feasible anymore and they should be glad of it, Im happy to let him (or them) take the spear. The exurbanites will change their oil consumption habits one way or the other.

Posted by: troglodyte on February 19, 2006 at 3:03 AM | PERMALINK

Does rdw ever sleep? Or is he the pseudonym of a tag-team of Chicago-school graduate students

Probably a single obsessive compulsive libertarian with few personal relationships who lives in a place with relatively bad weather. Capable google user and self described expert of many aspects of the world that are discussed in government, academic, and lay web sites. Education might be in business or economics at the undergraduate or masters level. Not too different from many here, other than a remarkable stamina for sitting and a somewhat disturbing excitability displayed upon being challenged. Might be explained by extensive experience with competitive marathon video games.

Posted by: B on February 19, 2006 at 5:52 AM | PERMALINK

Does rdw ever sleep? Or is he the pseudonym of a tag-team of Chicago-school graduate students

Probably a single obsessive compulsive libertarian with few personal relationships who lives in a place with relatively bad weather. Capable google user and self described expert of many aspects of the world that are discussed in government, academic, and lay web sites. Education might be in business or economics at the undergraduate or masters level. Not too different from many here, other than a remarkable stamina for sitting and a somewhat disturbing excitability displayed upon being challenged. Might be explained by extensive experience with competitive marathon video games.

Posted by: B on February 19, 2006 at 5:57 AM | PERMALINK

Is there an echo in here?

Is there an echo in here?

Its OK, rdw is busy looking up facts. Internet facts have variable quality, but that is why we have a discussion. I appreciate that. Much better than a typical troll.

> who lives in a place with relatively bad weather.

sounds like the Chicago school to me, at least this week. Kinda hard to absorb the disappointment about the Bears this January.

Posted by: troglodyte on February 19, 2006 at 6:56 AM | PERMALINK

South East PA

Never play video games

mba, cfa

post when bouncing around the internet or watching tv.

4 kids 3 grandkids so bored isn't an issue

Posted by: rdw on February 19, 2006 at 8:19 AM | PERMALINK

SE PA is a fine place to hail from. Congrats on the grandkids.

Posted by: troglodyte on February 19, 2006 at 8:34 AM | PERMALINK

How many peak oil points have come and gone? It's absurd to continue to sit around and complain about this year after year while enviromentalist continue to block the ANWR, California and Gulf coast exploration and drilling opportunities. Will a peak oil point ever materilaize? Of course, that is why it is so important to begin TODAY to look at our own resources for oil(ANWR and the coasts) and to begin to develop greener energy. Free markets are incredibly wonderful adaptive forces that will hasten the introduction of newer more sustainable energies once the technology is available. I predict that will be within 20 years. So we either get our shit together and act TODAY, or sit around and complain some more. Your choice.

Posted by: Jay on February 19, 2006 at 9:40 AM | PERMALINK

Conservatives are the ones with no new ideas in the area of energy and the environment. They think "drill and pump" is an energy policy. They also want to continue to push nuclear power - numbnuts Bush made a speech about it yesterday. Current nuclear power plants are inherently unsafe and unprofitable without huge govt. subsidies. Wait until we have an American Chernobyl that renders huge areas of a state uninhabitable for 50,000 years...It'll happen.

We need to pursue aggresively, alternative technologies, including solar, wind, geothermal, tidal and others, as well as invest in raw R&D on things we may not even be able to concieve of - anti-matter, anti-gravity, mining the stars, etc.

I don't know why conservatives have so little confidence or trust in Yankee ingenuity. Why do they hate America so much????

Posted by: Stephen Kriz on February 19, 2006 at 9:46 AM | PERMALINK

Ah, the CFA designation. rdw, I remember how hard those tests were.

However, I have a beef with your statement: "I dispute your notion high gas taxes in Europe did anything aside from line goverment bureaucrats pockets and force people into tiny cars..."

Yes, people in Europe have voluntarily adopted cars with better gas mileage (muscle cars and SUVs are still available). But this has done more for the continent than line bcrat pockets. It has also left Europe much less dependent on oil both with respect to TOE/capita and TOE/$000 GDP than we are here in the US. That makes Europe even less vulnerable to oil price shocks than we are (the 3rd world is obviously MUCH more vulnerable than either).

About your assertion that Europe's not a fount of innovation: I normally take a backseat to noone in touting the inventiveness and flexibility over US capitalism over Euroweenie statism and dirigisme, but did you really think that the CAR INDUSTRY was a good example? Seems like that would be one of the best counterexamples - otherwise why are their companies thriving and ours going out of business?

Posted by: cecce on February 19, 2006 at 9:48 AM | PERMALINK

"Wait until we have an American Chernobyl that renders huge areas of a state uninhabitable for 50,000 years...It'll happen."

Err, except that did not happen at Chernobyl.

Posted by: cecce on February 19, 2006 at 9:51 AM | PERMALINK

And there are still people buying Hummers. What will the anthropoligists of the future say about us?

They won't say anything. They'll be flightless birds, or glow-in-the-dark insects, or some other species. That's who inherits the earth next, I think.
Posted by: craigie

"Insects won't inherit the earth," Cornell University entomologist Thomas Eisner once said. "They own it now."

Posted by: CFShep on February 19, 2006 at 9:52 AM | PERMALINK

Not all the Eurozone car companies are doing that well, but cecce's point is a good one. What Europe has, and the USA lacks at the moment, is an infrastructure that will absorb the lifestyle changes necessary when oil becomes more scarce. Im in Europe for a year and I dont own a car. If I were to live here permanently I would want a car and I would buy one, but the transport system is a good primary or secondary option. In the US very few regions can boast this. When the market forces us to invest in transit systems, there will be transition cost. My friend RDW will discount the transition costs and focus on the final outcome, but the costs will still be borne. Government action can make the transit investments now, before the market demands it.

And the Eurozone aint virtuous by nature -- sprawl will grow whenever responsibility for transit becomes atomized. Try getting around in Sicily sometime.

Posted by: troglodyte on February 19, 2006 at 9:59 AM | PERMALINK

With today's technology (yankee ingenuity), nuclear energy is very safe and affordable. Chernobyl happened because of the Soviet Unions arcaic practices. "Drilling and pumping" are our only options at this point and that is why it is imperative that we begin to look at our own resources to sustain us in the short term. Why do liberals have such little faith in yankee ingenuity? Apparently the left feels that we are so inept we can not drill a postage stamp size area in ANWR without obliterating the entire region. I will agree with you on one point though Mr. Kriz, we should not limit ourselves on the availability of newer energies, although mining the stars may be get a little dicey.

Posted by: Jay on February 19, 2006 at 9:59 AM | PERMALINK

"Government action can make the transit investments now, before the market demands it."

Sure. Although most of the solutions can and ought to be provided by individual market actors - once incentivized to change by sensible tariff and tax increases. If a tarriff on import of oil and a gas tax is "revenue neutral" i.e., is offset by other tax cuts, then there should be no real objection from even the libertarians.

Once the govt has made policy changes to discourage use of gasoline and - most importantly - all imported petroleum products, then it can get out of the way and the market can probably take care of the rest.

Posted by: cecce on February 19, 2006 at 10:20 AM | PERMALINK

I have a nifty little pdf doc called "Oil Sands Fever - The Environmental Implications of Canada's Oil Sands Rush".

I found it at a recent and very good LATimes piece called, I think, "Saudi Canada". Explains a lot of the issues for anyone who cares to look it up.

Boils down to the fact that oil sands mining is one of the most environmentally destructive techniques yet devised. Any 'price' which does not factor these enormous environmental costs into the equation is obviously fraudulent on a scale only possible with government complicity.

Boston Globe has a great three part series "Oil in Africa" which is still available at their site.


Just as you can't consider the consequences of the '73 imbargo solely with reference to the US economy. The vast transfers of wealth that initiated still resonate throughout the world in hundreds of ways. The fact that our currency has depreciated some 80% since 1969 is just one of those ways.

I've read estimates that Africa, was in point of fact, the epicenter where the imbargo played itself out in terms setting back economic gains for at least a generation. Several hundreds of thousands died in famines and other disruptions as a direct consequence. It's also when Africa started sliding down their huge debt spiral.

Posted by: CFShep on February 19, 2006 at 10:20 AM | PERMALINK

CFShep - just look at the numbers in the PDF I linked to earlier:

http://www.iea.org/dbtw-wpd/Textbase/nppdf/free/2005/key2005.pdf

With a TOE/GDP fraction of 0.87, 0.72, and 0.32, respectively, for Africa, Asia, and Latin America, the economic damage from continued increases in the oil price will primarily hurt (in order):

1. Africa
2. Asia
3. Latin America

These economies are just way more dependent on oil than we are in the US and Europe.

$120 oil won't hurt us all that much, but it will be tragic for most people in the 3rd world.

Posted by: cecce on February 19, 2006 at 10:39 AM | PERMALINK

Jay:

Your response is the equivalent of an 8-year old saying "I know you are, but what am I?". Infantile.

Nuclear power as it currently exists is NOT safe and it is NOT economically viable. Do some reading - every plan to build more nuclear reactors involves massive government subsidies. Why are conservatives so enamored of big government handouts?

One final piece of advice - Grow up!

Stephen Kriz

Posted by: Stephen Kriz on February 19, 2006 at 10:45 AM | PERMALINK

Correction:

http://www.salon.com/tech/htww/2006/02/07/oil_sands/

Andrew Leonard's "How the World Works" over at Salon. Contains about a dozen links to other sources of information on the subject.

"You know, the only trouble with capitalism is capitalists. They're too damn greedy." Herbert Hoover

Posted by: CFShep on February 19, 2006 at 10:47 AM | PERMALINK

Skewered again by the brilliant wit of a liberal - "grow up". Jeez. How large would the government subsidies be to develop greener energies Mr. Kriz, ever done the math on that one? Specifically mining the stars, or would that be a completely private venture?

Posted by: Jay on February 19, 2006 at 10:56 AM | PERMALINK

"Even less - they run on diesel."

I'm reminded of a particularly frantic Sunday brunch.

We'd run out of eggs and my husband had been dispatched on a urgent mission to buy some more. I'd gone to the "86" board and written in VERY LARGE CAPTIAL LETTERS: EGGS!!!! Eggs are in the mail."

(86 in f&b parlance translates to 'Shit outta luck")

A ditzy waitron then turned in orders from three tables containing a total of 15 omelets.

I apprehended her, dragged her over to the 86 board, and asked her to read aloud to me what was written there.

"Ummm....it says 'eggs'. But I didn't order any eggs. I ordered omelets."

Posted by: CFShep on February 19, 2006 at 11:00 AM | PERMALINK

http://www.wired.com/wired/archive/12.07/oil.html
.....
It's a laborious process, to say the least - 2 tons of sand yields just one barrel of oil - but nowhere near as painstaking as it used to be. In the 1920s, Karl Clark, a University of Alberta chemist, discovered that steam could tease pitch out of sand. His breakthrough piqued Big Oil's interest, but no one could make the process cost-effective. In the 1950s, a few desperate hopefuls suggested detonating a subterranean nuclear bomb to blast the gunk to the surface. When Syncrude started, it relied on draglines, huge cranelike devices weighing more than 15 full 747s. Attached to these $100 million machines were enormous buckets; the draglines would scrape the buckets across the earth to scoop up huge chunks of sand - a tough process to coordinate come winter.
....
For starters, the company spends more than $100 million a year on natural gas to heat the facilities and fuel the hydrotransport system.
....
Cutting expenses is always good, but the real payoff for Syncrude will come if its R&D lab can find a way to get at the trillion barrels of oil that currently lie so far below ground that they are beyond the industry's grasp. All the heavy oil companies are experimenting with new methods that will allow them to go deeper. One possible solution comes in the form of a process known as steam-assisted gravity drainage. In SAG-D, steam is forced through a well into the subterranean oil sands, melting them and separating the bitumen. The oily parts then seep into a second well and rise to the surface. At least a dozen SAG-D projects are under way, the most successful of which, operated by Imperial Oil, is producing 116,000 barrels per day. The problem is that creating the steam requires a lot of energy. A less energy-intensive alternative: vapor-assisted petroleum extraction, a technology that injects gaseous hydrocarbons into the earth. When the heavy oil surfaces, the hydrocarbons are stripped off and recycled. One company, Canada's Petrobank, is experimenting with an air injection method that blasts out the bitumen with compressed air. There's also been some renewed interest in nuclear energy - not in the form of a bomb, but as a way to generate necessary steam.

No one's suggesting that Alberta's version of beach tar will wean us off Middle East oil anytime soon. After all, it took Syncrude two decades to bring production costs down to $10 per barrel. And that's still more than triple the cost of producing Saudi Arabian crude, which is so light that it requires much less refining. "Some of it is so good, you can put it right in your car," says Michael Economides, a chemical engineer at the University of Houston and a consultant to the Russian oil giant Yukos. By contrast, Economides says the heavy oil that Syncrude mines is "shit."

....

And say goodbye to the Boreal forests. Kiss 'em goodbye for all time.

Want to hear about diamond mining up there? Involves draining entire lakes...

Posted by: CFShep on February 19, 2006 at 11:38 AM | PERMALINK

Nuclear power as it currently exists is NOT safe and it is NOT economically viable. Do some reading - every plan to build more nuclear reactors involves massive government subsidies. Why are conservatives so enamored of big government handouts?

Steven,

How many times did you watch the China Syndrome?

Nuclear is safe, cheap and very clean and will be a major part of the solution to containing both energy costs and pollution. China has a horrendous air polution problem and requires huge amounts of clean energy now. They have 8 huge plants in operation now, 2 scheduled to come online in 2006 and 6 more by 2010.

The plants in China were actually cheaper to build than the plants built here in the 70's. China expects to become self-sufficient in design and construction by 2010 and then start an aggressive program to expand nuclear power 5 fold by 20250

This isn't rocket science. They have exploding power demands and currently get 80% of their power from fossil fuels. The pollution is becoming a nightmare and they are more paranoid about being dependent on the Middle East than we are.

That same scenario obviously applies to India and Indonesia. Look at it from the point of view of a GE executive. This is a tremendous business opportunity with few of the headaches of construction in the west.

There will be more nuclar plants built in the next 20 years than any 20 year period in history.

Posted by: rdw on February 19, 2006 at 12:04 PM | PERMALINK

So what do we do if China gets Iran's oil?
(Given our addiction)

highlights from history:

Germany marched through Russia to get Romanian energy fields. Nazi machine pretty much destroyed at Stalingrad.

Japan bombs Pearl Harbor to stop pesky US fleet from interfereing with its energy needs. Japan finally stoppecd with 2 a-bombs.

US invades Iraq to control Iraqi oil. US now controls big mess.

Future history:

China gets Iran's oil. US destroys pipelines, transports, etc. Now we have really less oil and peak oil is old news--now it's no oil.

Moral--stop the addiction, take the 12 step program.

Try other sources of energy. To make sure this works give Dick Cheney all future royalties on these new sources.

Posted by: Rootless Cosmopolitan on February 19, 2006 at 12:30 PM | PERMALINK

And Chernobyl (itself a bad example as it used obsolete plant designs and horrible Soviet engineering and management) was also much less bad than the hype. According to the UN the long-term effects, both to health and to the environment were not that big of a deal:

The governments of Ukraine, Belarus and Russia, the three countries most affected by radioactive fallout from Chernobyl, should strive to end the "paralyzing fatalism" of tens of thousands of their citizens who wrongly believe they are still at risk of an early death, according to the study released Monday.

The 600-page report found that as of the middle of this year, the accident had caused fewer than 50 deaths directly attributable to radiation, most of them among emergency workers who died in the first months after the accident.

http://www.washingtonpost.com/wp-dyn/content/article/2005/09/05/AR2005090501144.html

Another anti-nuclear myth bites the dust...

Posted by: cecce on February 19, 2006 at 12:32 PM | PERMALINK

And, it turns out that Environmental Hysteria (now, there's a new mental disease in dire need of research and federal disability benefits) is bad for you. In fact, it is worse than any actual environmental degradation is:

"In fact, the report said, apart from radiation-induced deaths, the "largest public health problem created by the accident" was its effect on the mental health of residents who were traumatized by their rapid relocation and the fear, still lingering, that they would almost certainly contract terminal cancer. The report said that lifestyle diseases, such as alcoholism, among affected residents posed a much greater threat than radiation exposure."

Perhaps, we should do a cost-benefit analysis: Does the Sierra Club/Greenpeace/etc cause more damage to people's health than their environmental "advocacy" prevents?

Posted by: cecce on February 19, 2006 at 12:39 PM | PERMALINK

rdw:

As an environmentally sympathetic person, I have mixed feelings about nuclear power although I'm the last thing from a booster. True, the lack of air pollution is a huge selling point. But don't be deceived by the imagined efficency; conventional fission power will never be "too cheap to meter."

Nukes are not nearly as efficient in terms of the throughput of the entire fuel cycle as oil. There's a tremendous amount of electricity required in mining and processing fissile uranium. We get a much smaller yield of energy than we do from gas, coal or oil generation. Then, of course, there's the still-unsolved problem of waste storage. Yucca Mountain isn't working out as well as anyone had hoped.

There are also problems with unanticipated metal fatigue from continuous neutron bombardment and other metallurgical issues that weren't factored in for American plants -- although newer generations of nuke plants are confronting that issue. Our currently functioning nuke plants will have to be mothballed sooner than their original design specs, and one plant in Ohio barely averted a corrosion catastrophe several years ago.

Mainly though, the original conceivers of nuclear energy never planned that light and heavy water processed uranium reactors would provide the foundation for nuclear power. They were test beds, designed to get the American people accustomed to nuclear energy before fast breeder reactors came online. Breeders both make more plutonium than they consume and can refine U238 ore directly into fuel, "burning the rocks" as the nuke boosters say. Throughput energy yield would be vastly increased with breeders and truly competitive with fossil fuels.

Two huge, intractible issues with breeders, though: 1) Breeders produce plutonium -- the best bomb fuel -- and plutonium, though one of the most toxic substances known to man, is an alpha emitter that can be handled with gloves and smuggled out of a plant in a thermos. A plutonium economy would be a weapons proliferation nightmare. And 2), breeders require a primary coolant that's highly conductive for neutrons, and all the designs propose liquid sodium in a jacket around the core. Liquid sodium is corrosive, extremely toxic and explodes on contact with air and water.

In France -- the most advanced nuclear power nation -- they've shut down their breeder project. In America, the Fermi II test breeder suffered a partial core meltdown in the early 60s, and the Clinch River breeder project, nearly completed, was defunded by Congress in the early 80s. Our closest things to breeders are fuel processing plants part of the DOD, and most of them have been shut down as well.

Breeders represent the great promise of nuclear energy. Breeders are also too dangerous to rely on for commercial power.

Bob

Posted by: rmck1 on February 19, 2006 at 12:41 PM | PERMALINK

ceece:

How about the mental disease of reflexive environmentalism-bashing?

It's as old as humanity. It's called mean-spiritedness.

Bob

Posted by: rmck1 on February 19, 2006 at 12:47 PM | PERMALINK

> and plutonium, though one of the most
> toxic substances known to man

rmck1,
I am in full agreement with your analysis, but I have never seen a single shred of scientifically-valid evidence backing up this Greenpeace meme. Compared to the nerve and viral agents developed by the Soviet Union, plutonium isn't even in the same solar system, much less the same league, of toxicity. Unless it is fashioned into a bomb of course ;-(

Cranky

Posted by: Cranky Observer on February 19, 2006 at 12:56 PM | PERMALINK

Oh, well, why don't you sue the UN then for hurting your feelings... Since they're so mean spirited up there in Turtle Bay.

Posted by: cecce on February 19, 2006 at 12:57 PM | PERMALINK

ceece:

I've read your posts on global economics. You're too intelligent and well-informed to debate with nyah nyahs :)

Bob

Posted by: rmck1 on February 19, 2006 at 1:08 PM | PERMALINK

When the market forces us to invest in transit systems, there will be transition cost. My friend RDW will discount the transition costs and focus on the final outcome, but the costs will still be borne.

I don't discount transition costs. I ignore them in this example because it is not going to happen.

The beauty of capitalism is to provide goods the people want as to a controled system where the economic system provided what the system wants. Americans love their cars and will not embrace an extended transit system.

Every year Americans become even more disbursed and the concept they'll move to transportation hubs is absurd. No one is going to move to save $10 a day on gass. My life does not and will not revolved around a bus schedule.

Posted by: rdw on February 19, 2006 at 1:17 PM | PERMALINK

Cranky:

Well, you can handle plutonium. In fact, one power plant executive in the 60s -- an ardent nuclear power booster -- threatened at one point to go on local TV and *eat* a small hunk of plutonium, just to prove how safe it was :) Fortunately, nobody let him do it.

Alpha emitters produce weak radiation (beta and gamma are much more powerful) which is blocked by the dead outer layer of the skin (make sure you have no cuts, though). However, if you take the most miniscule amount -- a few angstroms' worth, maybe only a few atoms -- of plutonium internally, you are guaranteed cancer because the alpha emissions destroy chemical bonds, which in turn produce free radicals in a chain reaction.

It might be more accurate to call plutonium the most carcinogenic substance known to man.

Bob

Posted by: rmck1 on February 19, 2006 at 1:27 PM | PERMALINK

Cranky:

The tiniest speck of plutonium in the body will fry your cellular DNA.

Bob

Posted by: rmck1 on February 19, 2006 at 1:32 PM | PERMALINK

"The beauty of capitalism is to provide goods
the people want as to a controled system where
the economic system provided what the system wants."

Gods, I love rdw :)

Bob

Posted by: rmck1 on February 19, 2006 at 1:35 PM | PERMALINK

tbrosz:
"And every barrel, however few, we get from our own domestic sources in Alaska, off the coast, and everywhere else we aren't being allowed to drill, is one barrel that won't enrich the oil-soaked nutballs of the world. The positive psychological effect that opening new domestic fields would have on the markets can't be discounted either."
-

Jay in Oregon:
And every barrel, however few, we CONSERVE from our own domestic CONSUMPTION, whether in Alaska, on the coasts, and everywhere else we don't use, is one barrel that won't enrich the oil-soaked nutballs of the world. The positive psychological effect that CONSERVATION and REDUCTION would have on the markets can't be discounted either.

--

Drill or conserve. Seems like an easy enough decision even for Bush apologists who continue to advocate plunder and greed as the new Bush apologist excuses.

Posted by: Jay in Oregon on February 19, 2006 at 2:31 PM | PERMALINK

cecee and rdw:

I don't know what you people are smoking, or if you are in denial or if you are such robots enthralled to conservative propaganda or what, but nuclear power is inherently unsafe. Deaths following the Chernobyl catastrophe were far higher than 500 and it is not an economically viable means of producing energy. You can Google the information yourself. I would direct you to one of the scariest sites on the Internet, called Kidd of Speed, where a motorcyclist tours the area around Chernobyl:

http://www.kiddofspeed.com/default.htm

If this is the conservative's dystopic vision of the world, you are welcome to it. Just don't ask me to share the same hemisphere with you....

Posted by: Stephen Kriz on February 19, 2006 at 3:18 PM | PERMALINK

Look, krizzofspeed, if that is your real name, why don't you look at the ACTUAL report, done by the UN, of what has ACTUALLY happened in Chernobyl, rather than just mindless propaganda.

Less than 50 people have died as a direct result of the accident, most of those were clean-up workers who died shortly thereafter.

Not only that, there has not even been perceptible effects on Fertility. And in the areas which were abandoned after the accident (unnecessarily, as it were), wildlife is now thriving like never before.

Posted by: cecce on February 19, 2006 at 3:52 PM | PERMALINK

Stephen:

The results of the 1996 International Conference on Chernobyl are summed up here.

The problems with nuclear energy also have to be balanced against the alternatives we're living with right now.

A typical nuclear power plant turns out about a gigawatt, night and day, all year around. While it's not impossible to build gigawatt solar and wind production facilities, and figure out a way to store energy when production is low, it isn't going to happen very soon.

Any solution to our overall energy and environmental problem that doesn't have some nuclear power in there somewhere is impractical.

On the other hand, any solution to our energy problem that relies ONLY on nuclear plants is stupid. There is room for ALL the answers. Cleaner burning fossil fuels. Distributed power production using local solar and wind plants. Use of location-specific solutions where you can, like tidal, geothermal, and hydroelectric (the latter is where Canada gets most of its power).

I can see a tipping point in the next ten years for photovoltaic power on roofs. Fuel cells that crack natural gas for electricity (not sure where the carbon ends up) are up and coming, too.

Locally-produced power has a big advantage: when we're talking conservation, we need to remember that a lot of power gets eaten up transmitting it across hundred of miles to customers.

I read about one group proposing local, very small nuclear plants. Okay, I think there they may have lost me.

Posted by: tbrosz on February 19, 2006 at 4:09 PM | PERMALINK

Deffeyes is a tough guy to disagree with. If you disagree with his calculations you'd better have more than newspaper clippings to counter it.

Posted by: Jeffrey Davis on February 19, 2006 at 4:14 PM | PERMALINK

The "50 deaths from Chernobyl" gag is a grimly comic one. The mickey-mockers should put their money where their mouths are -- there is plenty cheap land in The Ukraine around Chernobyl, just ripe for the plucking. Have at it, mockers. Go make your millions.

Other interests? Others concerns? Other (Cheney word) "priorities"? Knock me down with a feather.

Posted by: Jeffrey Davis on February 19, 2006 at 4:21 PM | PERMALINK

is tbrosz the unibomber?

Posted by: Rootless Cosmopolitan on February 19, 2006 at 4:39 PM | PERMALINK

So no facts, Jeffrey Davis? You don't need no steenkin facts? No sources? You have nothing?

I thought so.

Posted by: cecce on February 19, 2006 at 6:26 PM | PERMALINK

True, the lack of air pollution is a huge selling point. But don't be deceived by the imagined efficency; conventional fission power will never be "too cheap to meter."

No one is suggesting we'll ever have energy too cheap to meter. Nuclear expansion in the 3rd world is a done deal. It's going to happen. China and India might grow 8% per year for the next two decades with intense demand for electricity. They already have severe pollution issues and simply cannot afford significant expansion using fossil fuels. Right now the ONLY thing that can meet large scale demands quickly is nuclear.

The governments of China, India, Indonesia and the entire 3rd world are not remotely impressed with Greenpeace and they don't have anywhere near the reguatory cost of construction. It's a far more cost effective option outside the USA.

Th advantage to the US is testing will be done on the other side of the world. If there is a disaster it won't be our disaster. If it is successful we'll be able to copy.
We are going to find out if reports of safer and more efficient designs are true. They are certain to be built.

Posted by: rdw on February 19, 2006 at 7:21 PM | PERMALINK

I can see a tipping point in the next ten years for photovoltaic power on roofs. Fuel cells that crack natural gas for electricity (not sure where the carbon ends up) are up and coming, too.

I wish I were as optmistic as you but we've been 10 years away from solar power for 35 years. We are always 10 year away. While efficiences have doubled since 1970 it's still not a practical product aside from remote applications for for landscape lights. The same is true for fuel cells.

It may well be with so much more investment and the progress of the last 20 years to build on we'll see continued improvements but we done have any breakthroughs on the horizon. I agree with your point that well see positive contributions from a wide variety of sources in the short and near term and will eventually see major progress from solar, wind and other renewables

Posted by: rdw on February 19, 2006 at 7:31 PM | PERMALINK

"We are always 10 years away"

Aren't we also always 30 years away from having working fusion reactors? ;)

Posted by: cecce on February 19, 2006 at 8:07 PM | PERMALINK

Aren't we also always 30 years away from
having working fusion reactors?

I was going to add that but I haven't read about fuion in solong I assumed they gave up.

Posted by: rdw on February 19, 2006 at 8:22 PM | PERMALINK

Au contraire, my friend. They're spending gazillions on an "experimental" reactor in France.

www.iter.org

Heh. Wonder what the over/under is on that one being a waste of money?

Posted by: cecce on February 19, 2006 at 8:26 PM | PERMALINK

Question for the alt-energy geeks: This is not the most efficient way to use the energy from hydrogen, but on a blog last year I heard tell of a ceramic-block IC engine that runs so hot it can crack water into hydrogen, making it an engine that effectively runs on water.

The GM fuel cell truck ran on gasoline. The reformer, which extracted the H2 from the gasoline, was so hot from burning C that it could separate the H2 from the O in water, so water was mixed into the gaoline both to provide extra H2 and to cool the reformer.

Posted by: republicrat on February 19, 2006 at 9:31 PM | PERMALINK

I thought the president's energy plan was a secret.

Consider the law passed by congress in 2005. before then, the president posted his plan on his campaign web site in 2004.

Posted by: republicrat on February 19, 2006 at 9:38 PM | PERMALINK

alex >"...economics is not your scientific field."

Economics never has been nor is it now a science

Yes, it uses a lot of complicated mathematics but it isn`t a science; could be someday tho

"Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist." - John Maynard Keynes

Posted by: daCascadian on February 20, 2006 at 3:16 AM | PERMALINK

rdw:

> "True, the lack of air pollution is a huge selling point.
> But don't be deceived by the imagined efficency; conventional
> fission power will never be "too cheap to meter.""

> No one is suggesting we'll ever have energy too cheap to meter.

Well, that was the slogan in the 50s, when "Atoms For Peace"
was all the rage. Turned out we created a subsidized industry
that never turned a profit selling power. "Too cheap to meter"
turned into "too expensive to sell in a free market" :)

The idea has always been that nuclear power -- however expensive --
is somehow limitless in a way that fossil fuels are not. Wrong.

> Nuclear expansion in the 3rd world is a done deal. It's going
> to happen. China and India might grow 8% per year for the next
> two decades with intense demand for electricity. They already
> have severe pollution issues and simply cannot afford significant
> expansion using fossil fuels. Right now the ONLY thing that
> can meet large scale demands quickly is nuclear.

You think uranium grows on trees? You think the energy to process
uranium into fuel lays on the ground in big ripe chunks like manna
from heaven? The terrible irony here is that the energy used to
process uranium ore (238, 307 yellowcake, etc) into the U235 suitable
for a light water reactor comes from *cough* fossil fuels. And the
only way around that problem is breeder technology, which no doubt
the IAEC will never permit because it produces excess plutonium.

> The governments of China, India, Indonesia and the entire
> 3rd world are not remotely impressed with Greenpeace

You're such a douche, rdw. "Ooh, ooh, smelly hippies smelly hippies!"
The objections to large-scale nuclear power in the developing world
have nothing to do with fucking Greepeace. They have to do with the
fact that 1) the world has a finite supply of uranium just as it has
a finite supply of fossil fuels, 2) refining uranium for an entry-
level light-water reactor (the Canadian CANDU heavy water reactors
can burn yellowcake directly but the technology is more complex)
takes vast amounts of energy which doesn't come from "cheap, clean
nuclear power" and 3) nobody has yet figured out a way to store hot,
unstable waste compounds which are highly radioactive for centuries.

Oh yeah, and countries like the up-and-coming Indonesia eventually
leveraging their nuke industry into making nuclear weapons.

> and they don't have anywhere near the reguatory
> cost of construction. It's a far more cost
> effective option outside the USA.

But that doesn't make them objectively cost effective
when you consider, once again, the entire fuel cycle.

There was none of this post-TMI regulatory hoo-ha in the
50s and 60s during the space race and Better Living Thru
Chemistry when the entire country was 110% behind nuke
power. The fucking shit didn't turn a profit *then*, either.

Yeah you're right, rdw. Who are these fucking hippie assholes
demanding evacuation plans for densely populated urban areas.

> The advantage to the US is testing will be done on the other
> side of the world. If there is a disaster it won't be our
> disaster. If it is successful we'll be able to copy.

That's what we love about you, rdw. The
sensitivity of a Port Authority toilet seat.

> We are going to find out if reports of safer and more
> efficient designs are true. They are certain to be built.

Yeah, about as certain as Iran is going to be allowed to reprocess
uranium. Changing over from Peak Oil to Peak Uranium isn't going
to solve the global energy problem. Decentralized solutions, the
sort of things that your Republican buddy tbrosz has mentioned in
this thread (sans, of course, the home nuke plants) are the answer.

republicrat:

> "Question for the alt-energy geeks: This is not the most
> efficient way to use the energy from hydrogen, but on a
> blog last year I heard tell of a ceramic-block IC engine
> that runs so hot it can crack water into hydrogen,
> making it an engine that effectively runs on water."

> The GM fuel cell truck ran on gasoline. The reformer,
> which extracted the H2 from the gasoline, was so hot
> from burning C that it could separate the H2 from the
> O in water, so water was mixed into the gaoline both
> to provide extra H2 and to cool the reformer.

Woah, interesting. "burning C" -- what is C?

Bob

Posted by: rmck1 on February 20, 2006 at 3:22 AM | PERMALINK

Greepeace = Greenpeace

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hospital. Before the test, the patient will be given a local anesthetic (a drug that causes a loss of feeling for a short

period of time). Some pressure may be felt, but usually there is no pain.

Your doctor may also look inside the abdomen (peritoneoscopy) with a special tool called a peritoneoscope. The peritoneoscope

is put into an opening made in the abdomen. This test is also usually done in the hospital. Before the test is done, a local

anesthetic will be given.

If tissue that is not normal is found, the doctor will need to cut out a small piece and have it looked at under a microscope

to see if there are any cancer cells. This is called a biopsy. Biopsies are usually done during the thoracoscopy or

peritoneoscopy.

The chance of recovery (prognosis) depends on the size of the cancer, where the cancer is, how far the cancer has spread,

your age, how the cancer cells look under the microscope, how the asbestos

Cancer or malignant mesothelioma responds to treatment.

Posted by: sss on February 20, 2006 at 4:52 AM | PERMALINK

Well, that was the slogan in the 50s, when "Atoms For Peace"
was all the rage. Turned out we created a subsidized industry
that never turned a profit selling power. "Too cheap to meter"
turned into "too expensive to sell in a free market" :)

How about we keep the debate to contemporary history? Perhaps the last 25 years. If I remember correctly is the the early 70's when the Global Warming freaks were warning of the coming Ice Age.


The idea has always been that nuclear power -- however expensive --
is somehow limitless in a way that fossil fuels are not. Wrong.

For all practical purposes it IS limitless. 100 years would do and we have far more than 100 years worth of supply. By then solar might actually work.

Posted by: rdw on February 20, 2006 at 8:47 AM | PERMALINK

So no facts, Jeffrey Davis? You don't need no steenkin facts? No sources? You have nothing?

Deffeyes or Chernobyl?

Posted by: Jeffrey Davis on February 20, 2006 at 8:50 AM | PERMALINK

There was none of this post-TMI regulatory hoo-ha in the 50s and 60s during the space race and Better Living Thru Chemistry when the entire country was 110% behind nuke power. The fucking shit didn't turn a profit *then*, either.

Yeah you're right, rdw. Who are these fucking hippie assholes demanding evacuation plans for densely populated urban areas.

Actually Nuclear turns a very nice profit at all ends of the process. From construction, ongoing operations and shut-down. There are a number of large construction companies specializing in powerplant design (GE is but one), powerplant controls controls (Siemans is supplying China), ongoing maintenance (construction permits are so hard to get they now rebuild onsite to get extensions) supplying product, etc.

The environment in the USA is against more constuction but outside it's far more positive especially in China and Asia. The people can see their pollution and feel it after dramatic increases in respirtory problems. Nuclear is a real time solution to a nasty problem.

China's leadership is hardly concerned about the Greenpeace/anti-globization crowd. There will not be any demonstrations in China. Greenspeace boats will not attempt of interfere with Chinese shipping knowing they'll be immediately sunk.

The real advantage here to the industry is the ability to test new designs. They've made claims new designs make meltdowns impossible AND greatly lesson disposal issues. If true we'll know in 10 years. At a time when the USA is debating operating extensions the industry will have a much more attractive product. The same people demonstrating in the 60's will be in their 80's. We now know Chernoble was grotesquely exaggerated. Most Americans will not accept watching China enjoy safe, cheap, pollution-free nuclear power when our alternative is coal. (which actually is doing VERY well)

BTW: Forget the cost argument. Nothing is sillier than anti-business libs fretting a single US Utility will lose money a dime in Nuclear. You'd prefer they all went bankrupt. Common-sense tells us they aren't in it to lose money and they know a lot more about making money than you.

We have a much different generation following us. They've all been to business school. They know investments. They might smoke pot but they'll never be hippies. They don't protest. The anti-globilization freakshow are all professional protestors. The sons and daughters of well-to-do libs anxious to recreate the glory days of 68. Mommy and Daddy support them and a few other whackjobs chip in but there's only narrow support.

The 60's are dead and they're not coming back. We're all investors now.

Posted by: rdw on February 20, 2006 at 9:19 AM | PERMALINK

Decentralized solutions, the sort of things that your Republican buddy tbrosz has mentioned in this thread (sans, of course, the home nuke plants) are the answer.


That's also exactly as I've been saying already IS happening from a 1,000 different sources from tin-rolled steel to reduce auto-body weights 50% to increased ethnol to low-power chips and even something as simple as solar powered landscape lights.

Nuclear is a big part of that as China, India and others must reduce their dependence on Oil while facing dramatic demand increases.

I don't know how much Oil two 1,000 Mw's Nuclear power plants will replace in China this year when they come online but it'll be a tad more than my solar powered lights.

Nuclear is a very significant piece of the solution to high oil prices and may in fact be the most significant.

Posted by: rdw on February 20, 2006 at 9:32 AM | PERMALINK

rdw: I don't know how much Oil two 1,000 Mw's Nuclear power plants will replace in China

None. Nuclear plants are a substitute for coal plants. Even in the US only a few % of electricity is generated from oil.

BTW, 2GW of nuke plants ain't much. China is currently building 55GW of new capacity - mostly coal fired. Even the optimistic Chinese gov't figures say that by 2020 they'll only move from 2% to 6% nuclear.

Meanwhile, in the heart of Old Europe, France gets 75% of its electric power from nukes. Of course those are evil gov't run nukes, so they don't count.

Posted by: alex on February 20, 2006 at 9:49 AM | PERMALINK

I buy gas from Citgo -- and go out of my way to do it. I consider it a patriotic act.

Oil is priced globally. It doesn't matter even a little bit where you buy your oil.

Posted by: rdw on February 18, 2006 at 3:26 PM |

It's not about the price, goofball.

It's about the throughput.

Posted by: SombreroFallout on February 20, 2006 at 10:00 AM | PERMALINK

Nice work, rdw. Don't know who rmick is but intellectually he's out to lunch. Uranium is an ubiquitous resource on earth and about as common as tin and zinc. If we only count the economically recoverable - and known - resources, a small subset of the total, the OECD estimates about 3.5 million tons of it available today. Given that there has been almost no exploration for the past 20 years, the real resources are almost certainly much greater, probably enough for 100-200 years of usage (the IAEA suggests 140 years).

Posted by: cecce on February 20, 2006 at 10:07 AM | PERMALINK

Around 400 people live in the 30sq kilometer area called the Exclusion Zone around Chernobyl. That's a lot of land available for the scoffing doubter. A man could grow rich! Accumulate wealth! (The magic words: accumulate wealth...!!!) Just go. Heppeeseffee. Land rush times.

Posted by: Jeffrey Davis on February 20, 2006 at 10:45 AM | PERMALINK

None. Nuclear plants are a substitute for coal plants. Even in the US only a few % of electricity is generated from oil.

Not completely true. These two plants aren't displacing just oil but China is most desperate about becoming dependent on OIL from any source they cannot control. They are also quite nervous about the obvious health risks of coal. Many of their cities have seen dramatic increases in air pollution due to coal. They are looking to limit oil dependency 1st and coal 2nd.

BTW: an increase in production from 2% to 6% in an economy growing this fast is quite substantial.

BTW2: Are you aware of how much of that capacity will be hydro? My understanding two huge projects are expected to come online by 2010.

BTW3: China is not the only story here and the French roll is quite interesting. My understanding is the French are among the innovators developing safer, more-efficient designs that won't use or produce weapons grade product AND will produce waste with a dangerous life of

Nuclear fits in exceptionally well within the total package. My sis-in-law was in 3 cities in China last year as it wasn't unusual to see people wearing surgical masks the air is that dirty.

BTW4: These examples of substitution are critical at the margns. If in fact the US can continue to reduce demand at the 1.7% - 1.8% rate of the last 18 months for another 18 months that represents over 600M less daily oil demand. At the same time OPEC and Canada are adding capacity. The last IEA report predicted spare OPEC Capacity will increase from 1.1M bbl to 1.6 bbl in the 1st half '06.

4th Qtr demand increases came in only 20% expected levels and the IEA has lowered F/H 06 estimates only marginally and the L/H not at all. They seem overly optimistic. Inventories in the US are at very high levels amid decreasing demand and increasing supply from Canada. OPECs spare capacity could be much higher than predicted.

If so crude is greatly over priced at $60. Plus the longer is stays there the more focused industry remains on energy efficience. These 1.7% demand reductions will become embedded in our replacement cycle as everything we use will be replaced with something that uses a lot less. This is Saudia Arabia worst nightmare. It's happened before.

Posted by: rdw on February 20, 2006 at 10:49 AM | PERMALINK

It's about the throughput

Keep on thinking lib.

I'll do what 99.9% of sane people do. I find the lowest price.

Your the kind of fool who thinks he can warm the ocean when you're swimming by pissing in it.

Posted by: rdw on February 20, 2006 at 10:53 AM | PERMALINK

Damn, you 34343. Have you no shame? If I figure out where you live, 34343, then you're going to lose a digit.

Posted by: cecce on February 20, 2006 at 11:06 AM | PERMALINK

Whoa, so many threads. Where to start?

Oil? Okay.

As oil becomes more expensive we will develop alternatives - but they better not depend too much on oil because oil so becoming more expensive.

So we could design a car with a ceramic block that runs so hot it can crack water into H and it could burn the H. Wow. Feed that H back into the block and we've got perpetual motion. Uh oh. Somebody once said that is impossible.

I know, build hybrid cars. Except it turns out their fuel economy isn't much better than a regular car of the same size. I know, plug it in the wall. Except around here the electricity is generated by coal. So I'm swapping coal for oil. Many places generate electricity with natural gas.

Oh, but Canada needs that natural gas to create the steam to leach the oil out of their sand so they can refine it into gasoline for us.

But our demand did not grow as expected last winter. Is conservation working? Or maybe it was the mild winter. Yeah, we can global warm our way out if this problem.

Finally nukes, meaning uranium. Plenty of that around, even in my MN back yard. Ummm, but we really can't mine the suburbs of Minneaopolis, can we?

Obviously not. Total amount of anything is not really meaningful. The questions are location and concentration.

Getting real for the moment - there will be a few more nuke plants and a lot more coal burning. To get to the oil stage we passed through the coal stage, so we are really taking a step backward in our energy usage. You can't BS that fact. Coal sucks, but not as bad as wood or other biofuels.

We will see a whole bunch of little changes first, starting with 'conspicuous consumption' becoming socially unacceptable.

And who knows, some day rdw may actually ride a bus.

Posted by: Tripp on February 20, 2006 at 11:07 AM | PERMALINK

I have to say the 'more efficient' computer chip has GOT to be the best example of marketing hype over reality. It is brilliant in a way. It ranks right up there with the hybrid car for allowing ignorant consumers to feel good about "making a difference" without actually having to do anything or actually, ummm, making any difference.

You want to make a real difference? Invent a low weight automobile-quality glass.

You aren't an inventor but still want to make a difference? Ditch the goddamn SUVs. You could double your fuel economy overnight while sacrificing nothing but your vanity.

Posted by: Tripp on February 20, 2006 at 11:21 AM | PERMALINK

This is Saudia Arabia worst nightmare. It's happened before.

I'm trying to remember when. Oh, yeah. Got it. Some cracker president who actually took energy seriously. What was his name again?

Posted by: Jeffrey Davis on February 20, 2006 at 11:22 AM | PERMALINK

Jeffrey,

Something like 'Barter' wasn't it?

Would you like to invest with me in a startup company that will make locking gas caps that support the newer sealed gas tank designs?

I understand the young bucks around these parts never heard of them. I figure this summer is when we'll start to see the need. Again.

Posted by: Tripp on February 20, 2006 at 11:32 AM | PERMALINK

(giggles). Tripp still thinks it's about individual do-gooders "making a difference" - the point rdw was making is that our system is more than flexible enough to absorb any changes in the relative prices of commodities (such as oil, coal, etc) and/or changes in the supply of oil without major life disruptions. It doesn't matter what is substituted - only that something over time will.

Your subjective "feelings" have nothing to do with it, Tripp.

Posted by: cecce on February 20, 2006 at 11:35 AM | PERMALINK

And my prediction is that if we ever see rdw on a bus it will be his individual choice, not a necessity. Personally, I prefer the subway.

Posted by: cecce on February 20, 2006 at 11:37 AM | PERMALINK

And my prediction is that if we ever see rdw on a bus it will be his individual choice, not a necessity. Personally, I prefer the subway.

And if I ever work in Downtown Philly again I'll be on the train or subway everyday. I worked downtown for almost 25 years and probably never drove in.

When I was born Philly had somewhere near 3M residents. Now it has 1.5M. The region has tripled in polulation during this period and they ALL live in the burbs along with 1.5M former philly residents.

The near-in-burbs have some public transportion but nothing has been added in 40 years and nothing is planned.

My point is expecting or planning for these surburban types to buy into mass transit is a non-starter. There is absolutely no chance. surbanites don't want it and won't pay for it. They'd buy a horses before picking up a bus schedule. In 10 years it's likely fewer people will use mass transit rather than more.

If Gas prices double consumers will demand and eventually get substantially better mileage. If GM or Ford can't comply Toyota will. If the steel companies want the business they'll find a way to cut their weight to keep it. Ditto for every other parts manufacturer. The market is working.

Posted by: rdw on February 20, 2006 at 12:15 PM | PERMALINK

> The tiniest speck of plutonium in the
> body will fry your cellular DNA.

Having worked in nuclear power plants, I am familiar with plutonium, its chemistry, and its range of affects on the human body. The problem here is two-fold: first, there are plenty of non-nuclear substances which if ingested will result in a high probability of cancer within a year. Plutonium, not so much.

Second, the actual record of people who were exposed to waaaaaaaay more plutonium than they should have been in the 1940s, 50s, and 60s is that while they get cancer at higher-than-normal rates, it is nowhere near as quick, fatal, or lifespan reducing as is commonly thought.

Personally I know several people who worked in non-nuclear chem labs in the 1960s and 70s and died quite young of bizarre cancers; while I wouldn't knowingly expose myself to plutonium it is not high on my list of worries.

Cranky

Posted by: Cranky Observer on February 20, 2006 at 12:20 PM | PERMALINK

I'm trying to remember when. Oh, yeah. Got it. Some cracker president who actually took energy seriously. What was his name again?

Jimmy was a clown. That dumbass created the gas lines with Govt created shortages. Reagan came in, deregulated and the price collapsed within a year.

I have no doubt many liberals added insulation to their homes and bought smaller cars because that's what Jimmy said. Conservatives pretty much ignored him. We added insulaton because it was a smart business move. The market directed a major investment in insulation because it was cheaper than paying high heating bills.

It's called market driven common sense.

Posted by: rdw on February 20, 2006 at 12:21 PM | PERMALINK

You want to make a real difference? Invent a low weight automobile-quality glass.

They're was ahead of you.


You aren't an inventor but still want to make a difference? Ditch the goddamn SUVs. You could double your fuel economy overnight while sacrificing nothing but your vanity.

I love my SUV. When it goes I'll buy another with better gas mileage. If nothing else it gives me the sense of riding down the road with each arm extended flipping the bird to liberal passerby's. I know they hate my SUV. I figure on average that adds about $3,000 to it's value.

Posted by: rdw on February 20, 2006 at 12:25 PM | PERMALINK

You want to make a real difference? Invent a low weight automobile-quality glass.

They're way ahead of you.

Posted by: rdw on February 20, 2006 at 12:26 PM | PERMALINK

Plutonium is dangerous to lung tissue because of the gossamer nature of lung cell walls. Alpha radiation isn't particularly danger EXCEPT to those kinds of cells. Solid chunks of plutonium aren't dangerous except as a source of airborne plutonium. Since plutonium is extraordinarily heavy it takes amazingly fine milling to produce particles that will remain aloft for any significant distance from its source. So, yes, plutonium is dangerous, but you not only have to work at it, you have to know a lot about what you're trying to do.

Posted by: Jeffrey Davis on February 20, 2006 at 12:27 PM | PERMALINK

our system is more than flexible enough to absorb any changes in the relative prices of commodities (such as oil, coal, etc) and/or changes in the supply of oil without major life disruptions. It doesn't matter what is substituted - only that something over time will.

Thank you. Very well stated.

Posted by: rdw on February 20, 2006 at 12:28 PM | PERMALINK

Jimmy was a clown. That dumbass created the gas lines with Govt created shortages. Reagan came in, deregulated and the price collapsed within a year.

Gasoline deregulation began under Carter. Reagan's deregulation, needed to be coupled with some behind-the-scenes shenannigans (aka treason) to end the Iranian embargo on oil. The source of the long lines.

No Iranian embargo, no long lines. If you didn't know it, and were posting from forgetfulness, try to remember it.


Posted by: Jeffrey Davis on February 20, 2006 at 12:31 PM | PERMALINK

Reagan's deregulation, needed to be coupled with some behind-the-scenes shenannigans (aka treason) to end the Iranian embargo on oil. The source of the long lines.

From wikipedia

The 1979 (or second) oil crisis occurred in the wake of the Iranian Revolution. In the wake of protests, the Shah of Iran, Mohammad Reza Pahlavi, fled his country in early 1979, allowing Ayatollah Khomeini to gain control. The protests shattered the Iranian oil sector. While the new regime resumed oil exports, it was inconsistent and at a lower volume, forcing up prices. Saudi Arabia and other OPEC nations increased production to offset the decline, and the total loss in production was just about 4%. However, a widespread panic resulted, driving the price far higher than would be expected under normal circumstances. In the United States, the Carter administration instituted price controls. This resulted in long lines appearing at the gas stations as they had six years earlier. As the average vehicle of the time consumed between 2-3 liters of gas an hour while idling, it was estimated at the time that Americans wasted up to 150,000 barrels of oil per day idling their engines in the lines at gas stations.

In 1980, following Saddam Hussein's Iraqi invasion of Iran, oil production in Iran nearly stopped, and Iraq's oil production was severely cut as well. Yet oil lines did not reappear in the United States other than a few isolated incidents.

Jimmy did start to deregulate prices but phased them out. Reagan ended them immediately on his 1st day in office.

1981 was Morning in America.

Posted by: rdw on February 20, 2006 at 12:40 PM | PERMALINK

It's about the throughput

Keep on thinking lib.

I'll do what 99.9% of sane people do. I find the lowest price.

Your the kind of fool who thinks he can warm the ocean when you're swimming by pissing in it.


Posted by: rdw on February 20, 2006 at 10:53 AM

1. I'm a conservative -- moreso than yourself.
2. I want the ocean cooler, and don't aim to do it myself. This is a literal and metaphorical point.
3. It's about choosing where my dollars circulate.

Anything spent on oil leaves the regional economy. Anything spent on local and renewable options -- which may take the form of conservation, alternative travel modes, living closer to work, and efficiency on the demand side -- will necessarily reduce a) my dependence; b) my financial/economic position, as well as that of my community; and c) improve national security; d) improve quality of life.

Why? Because it's cheaper than any of your options.

Posted by: SombreroFallout on February 20, 2006 at 1:04 PM | PERMALINK

In 1980, following Saddam Hussein's Iraqi invasion of Iran, oil production in Iran nearly stopped, and Iraq's oil production was severely cut as well. Yet oil lines did not reappear in the United States other than a few isolated incidents.

Note: 1980.

Hmmm. Who was president in 1980? Oh, yeah. James Earl Carter. Reagan took over Jan 20, 1981.

Damn clever of Reagan to solve the problem before he took office.

Posted by: Jeffrey Davis on February 20, 2006 at 1:06 PM | PERMALINK

Hmmm. Who was president in 1980? Oh, yeah. James Earl Carter. Reagan took over Jan 20, 1981.

Damn clever of Reagan to solve the problem before he took office.

He was damn clever. It was damn clever of those students to release their hostages 15 seconds BEFORE Reagan was sworn in wasn't it?

The Iran-Iraq war started in Sept 1980 and lasted until 1988. The slowdown in production did not bite until 1981.

Posted by: rdw on February 20, 2006 at 1:46 PM | PERMALINK

Anything spent on oil leaves the regional economy.

Nonsense. The service stations aren't non-profits. The distributers aren't non-profits and the refineries aren't non-profits. Exxon might not be in the Philly area but we have among largest refineries on the east coast.

Posted by: rdw on February 20, 2006 at 1:49 PM | PERMALINK

Anything spent on local and renewable options -- which may take the form of conservation, alternative travel modes, living closer to work, and efficiency on the demand side -- will necessarily reduce a) my dependence; b) my financial/economic position, as well as that of my community; and c) improve national security; d) improve quality of life.


All true and as we've been proving in America the market is the best way to allocate resources. Not some socialist geeks!

Posted by: rdw on February 20, 2006 at 1:50 PM | PERMALINK

The Iran-Iraq war started in Sept 1980 and lasted until 1988. The slowdown in production did not bite until 1981.

And long lines at the pumps ended in by fall of 1979. It's been nearly 30 years now, but I think the lines were all but gone by the end of the summer of 79.

Posted by: Jeffrey Davis on February 20, 2006 at 1:53 PM | PERMALINK

cecce,

It doesn't matter what is substituted - only that something over time will.

Oh. My. God.

Do you actually believe that? You think enough economic incentive can create ANYTHING?!

I don't think you understand how unique oil is. It is the stored accumulation of millions of years of solar power in a form fairly easy to extract, transport, and process.

Hey, there would be a HUGE market for the fountain of youth. Why hasn't that been invented? How about a faster than light drive, or maybe near instantaneous transport? Why haven't we seen those?

Posted by: Tripp on February 20, 2006 at 2:06 PM | PERMALINK

rdw,

If Gas prices double

You honestly think this is an 'if' and not a 'when?'

Wow. You do know oil prices have tripled, right? You do understand supply and demand?

Posted by: Tripp on February 20, 2006 at 2:11 PM | PERMALINK

Wow. You do know oil prices have tripled, right? You do understand supply and demand?

From 2000 thru 2003 light crude averaged near $30. Prices have doubled and that's exactly my point. In 2003 hybrids were a toy for the Hollywood crowd. Toyota made somewhere near 50K hybrids and there were at most two other models which together didn't sell 50,000 models. I think the numbers for 2006 will be 250k Pruis models sold and there are at least 10 other models and by 2010 will be over 50 other hybrid models.

As Scientific America pointed out, for 15 years up thru 2003 crude was cheap and conservation an afterthought. Yet R&D never stopped. There's been 15 years of progress. Industry clearly now has incentive. Big Steel didn't decide to build a plant to produce rolled steel at 1/2 the weight for car bodies in 2002 because the demand wasn't there. In 2006 there's demand and the plant is under-construction. Car models by 2008 will be lighter and will get much better gas mileage.

Intel chip design for desktops was almost exclusively dedicated toward speed. They are now balancing speed with power management. By 2007 the desktops we buy will use lower power than the PCs they replace. This will be a big advantage in offices where air conditioning units are often sized based on office machinery rather than people.

GE announced in 2004 they will cut energy demand by 30% by 2010. Obviously they'll be widely copied because it makes economic sense.

Alberta Canada has attracted over $50B in committed investment to increase Tar Sands production from 1M to 3M bbl per day (by 2012 I think). Last week Canadian PM Harper reaffirmed the Gvot commitment of $500M to build a natural gas pipeline to access the huge reserves in Northern Canada.

We could easily find US and Canadian demand is down 2M bbl a day by 2012 while supply has increased by 2M bbl a day. We already know 4th Qtr global demand increased only 20% of expected levels and the F/H of 06 has been revised downward. This is all before any real conservation has kicked in.

The market works.

Posted by: rdw on February 20, 2006 at 3:09 PM | PERMALINK

And long lines at the pumps ended in by fall of 1979. It's been nearly 30 years now, but I think the lines were all but gone by the end of the summer of 79.


Correct. They only existed because Carter created them. We've finally learned from history that price controls ALWAYS create SHORTAGES.

Get the govt out of it and allow the market to work.

Posted by: rdw on February 20, 2006 at 3:12 PM | PERMALINK

I don't think you understand how unique oil is.

You don't understand how incredible capitalism is. The USA is the greatest nation on Gods green earth for a reason. We are, and will always be, a marvel of innovation.

GE is a company with $150B in annual revenues. When they say they're going to reduce energy use by 30% every single supplier to GE just heard, "Want our business? Deliver GE big time energy savings or we'll find someone else who will".

The US auto business has big time competition in Japan, Korea and Germany. All capitalist economies all seeking the same goal. If big steel in the USA is delivering 50% weight savings then so will their manufacturers. Ditto for glass and every other component manufacturers. My understanding is a 25% weight reduction leads to a 50% power requirement reduction. That 6 cyliner becomes a 3 clyinder. 28 MPG bcomes 56 MPG.

How about if we get lucky and we get a breakthrough in battery weight and capacity? Reduced power requirements alone will substantially improve utility. By 2012 we could have a legitimate electric car. Plug it in at home at night when there's excess capacity. In my region it's largely nuclear power. I could cut my gasoline demand from 20 gal a week to 10 and then to zero by 2010.

Capitalism is a beautiful thing.

Posted by: rdw on February 20, 2006 at 3:33 PM | PERMALINK

Correct. They only existed because Carter created them ...

Damn straight, "correct". You weren't crediting Carter before.

Reagan didn't have anything to do with getting rid of the gas lines. That's just the cant of the hagiography of Reagan. Carter initiated the deregulation of gas prices.

Posted by: Jeffrey Davis on February 20, 2006 at 3:56 PM | PERMALINK

Nonsense. The service stations aren't non-profits. The distributers aren't non-profits and the refineries aren't non-profits. Exxon might not be in the Philly area but we have among largest refineries on the east coast.

Not everything, obviously.

What you're claiming is that a two $6.00/hr clerking jobs at the service station is an input to the local economy capable of outweighing the dollars out of the area for cars, gas, parts, etc.

Which is utterly ridiculous.

The vast proportion of profits DO leave most localities & regions. And that deficit goes for auto manufacturing, road construction, and the oil/gas itself.

Second, who said ANYthing about Philly? If you're in Wisconsin or Missouri or Tennessee, the dollars leave the region and go straight for corporate headquarters.

The whole point is that your marginal benefit -- and it IS marginal -- doesn't do anything to offset the much larger in volume drain on our (local/regional/national) fiscal assets. Same goes at the next level up in scale. Coupla refineries scattered around doesn't do a thing to offset the drain on national assets, as dollars flow to the House of Saud, and associated business partners. It's about the national interest -- not a few salaries in Philly. NO one -- least of all oil execs who site refineries -- gives a rat's ass about Philly/Gary/Baton Rouge.

And even where there are large refineries, the externalized costs are a burden borne by that locality (health care costs, declining quality of life, exiting talent pools bound for cleaner environs, costs of environmental cleanup) -- that MORE THAN outweighs the benefits of salaries.

Absentee owners don't buy locally.

Posted by: SombreroFallout on February 20, 2006 at 4:06 PM | PERMALINK

Oh, and about your Reagan idolatry?

Iran worked with Reagan because he and his staff were easy to con. Who else would deliver a Bible and a cake with a file in it to the Ayatollah?

Carter was putting the screws to 'em. And no oil exporting nation wants a Preznit pushing energy conservation, oil independence, and national security.

Reagan sold our national security and economic souls.

Posted by: SombreroFallout on February 20, 2006 at 4:18 PM | PERMALINK

You don't understand how incredible capitalism is. The USA is the greatest nation on Gods green earth for a reason. We are, and will always be, a marvel of innovation.

GE is a company with $150B in annual revenues. When they say they're going to reduce energy use by 30% every single supplier to GE just heard, "Want our business? Deliver GE big time energy savings or we'll find someone else who will".

The US auto business has big time competition in Japan, Korea and Germany. All capitalist economies all seeking the same goal. If big steel in the USA is delivering 50% weight savings then so will their manufacturers. Ditto for glass and every other component manufacturers. My understanding is a 25% weight reduction leads to a 50% power requirement reduction. That 6 cyliner becomes a 3 clyinder. 28 MPG bcomes 56 MPG.

Problem is, it shouldn't have taken 30 years to deliver on this. So until it's in the showrooms, all this is just cheap, cheap talk.

Capitalism is great -- but not when the incentive is removed for GM, Ford, etc.

EVEN the profit incentive associated with (huge) energy savings hasn't moved them to act on the significant demand -- and the significant savings even in the RELative absence of demand -- for energy-efficient vehicles. Why not?

In fact, American auto manufacturers have gone the opposite way. They left the market for reliability and energy-efficiency to Japanese automakers. And EVEN 0-down, 0% financing didn't put a dent in consumer preference for Honda and Toyota vehicles. Wonder why?

Where are those American-built 56mpg cares?

Well?

Posted by: SombreroFallout on February 20, 2006 at 4:26 PM | PERMALINK

rdw,

My understanding is a 25% weight reduction leads to a 50% power requirement reduction. That 6 cyliner becomes a 3 clyinder. 28 MPG bcomes 56 MPG.

Wow.

Now I see why children should not play with knives.

Say your car weighs 10 pounds. Say you reduce the weight to 7.5 pounds. 200 MPG becomes 400 MPG.

No, no, if the car weighed, ummm, 1 pound and you reduced the weight to 0.75 pounds the fuel economy would be, would be, why we could power the world!

Mathematical models are useful only when used properly.

Certainly we can improve gas mileage but there are limits and the fact is that oil is running out.

Posted by: Tripp on February 20, 2006 at 4:42 PM | PERMALINK

The vast proportion of profits DO leave most localities & regions. And that deficit goes for auto manufacturing, road construction, and the oil/gas itself.

Second, who said ANYthing about Philly?

ME! I was born and raised in Philly and now live 20 miles outside.

We have two very large refineries and a group of smaller regineries with large very well paid staffs. The distribute large quantities of Oil/Gsoline/other refined produceds to the entire region using piplines and trucks and other labor intensive methods. The largest retailer of gasoline in the region is WaWa markets which is headquarter less than 10 miles from my house. The average WaWa employs about 40 full time or full time equivalent emloyees ALL of whom make over the minimum wage and many of whom get benefits including tuition aid. The managers of these stores make over $100K. That's to say nothing of those who work in finance, advertising, purchasing, etc.

It's an excellent job for a college kid or a retiree looking for part time work. WaWa is a privately held firm with an excellent record for supporting local private charities.

WaWa is capitilism at it's best. In addition to the lowest priced gas they also make excellent coffee and have free ATM machines

Posted by: rdw on February 20, 2006 at 4:46 PM | PERMALINK

"I don't think you understand how unique oil is. It is the stored accumulation of millions of years of solar power in a form fairly easy to extract, transport, and process."

Nonsense. There's nothing at all unique about it, in an economic sense. It is one of a myriad of possible energy sources and one of a fairly broad range of easily transportable (liquid) energy sources. [Please don't tell me your point was that oil has a unique chemical composition, in which case please allow me to shorten my answer to the more succinct "duh"].

Rather, the differences are marginal (a factor of marginal cost). Oil and oil products have become a dominant energy source primarily because it was so easily and cheaply available in places like Texas and Saudi Arabia. In fact, if we DO need to switch to other sources (easily doable) and those other sources do not rapidly fall in price (as they very likely will due to normal scale and learning curve effects), then there is a (probably modest) net welfare loss for us all at least in a brief transition period. But the reduction in economic growth will almost certainly be born disproportionately by 3rd world citizens, specifically the peoples of India and China.

That doesn't mean we shouldn't care about it, but Dr Peak's "new Stone Age" rhetoric is just what the doctor ordered - for selling books! Not as economic projections.

K-Drum's post hits the nail on the head, though, and he points out the one and only thing that might justify spending govt dollars or promulgating regulation to prepare for a slowdown in oil production: national security. Specifically, making sure that our worst enemies do not see further shifts in relative economic power their way.

In that case, I truly hope the US gov limits its intervention to basic research, plus tax and especially tarriff incentives and lets the market handle the rest.

[As to Trippy's ridiculous comparisons with lightspeed something-or-other and fountains of youth: I hesitate to even spend time on it, but ethanol, natural gas, clean coal, nuclear are all EXISTING technologies. We could have 500 mpg cars today, if we decided to. That's the current state of the art. Assuming continuous improvement in existing technology is not pie-in-the-sky, it's just common sense.]

Posted by: cecce on February 20, 2006 at 5:01 PM | PERMALINK

Mathematical models are useful only when used properly.

Not my estimates. Refer to Scientific American 9/05 'More profit with less carbons' by amory b. lovins.

"A midsized SUV whose halved weight cut its needed power to the wheels by two-third would have a fuel economy to 114 MPH and thus require only a 35 kilowatt fuel cell - one-third the usual size".

I'm not sure what that 114 MPH equated to but it's more than a 100% increase in MPH on a 50% weight reduction.

BTW: Lovins is suggesitng these gains can be had with off the shelf technologies and techniques. We don't need a new breakthrough that might be around the corner or 20-yrs away.

He is also suggesting we can drive total oil demand down to pre-1970 levels by 2025 without ANY radical changes in life style.

Posted by: rdw on February 20, 2006 at 5:02 PM | PERMALINK

Now I see why children should not play with knives.

Say your car weighs 10 pounds. Say you reduce the weight to 7.5 pounds. 200 MPG becomes 400 MPG.

No, no, if the car weighed, ummm, 1 pound and you reduced the weight to 0.75 pounds the fuel economy would be, would be, why we could power the world!

Tripp! Hilarious!

Very efficiently disposing of rdw's nincom-poofery.

And that efficiency didn't even require the free market to justify its logic.

Posted by: SombreroFallout on February 20, 2006 at 5:10 PM | PERMALINK

cecce,

We could have 500 mpg cars today, if we decided to.

Please tell me you're an economist? You sure sound like one. So divorced from reality.

I've got a car that gets infinity MPG. Yeah. It's called a BIKE!

Oil is a unique energy source precisely because it is cheap and economical.

There are not any replacements that are as plentiful and as cheap. If there were we'd be using them already.

There is no magic bullet because if there was one we'd be using it and we're not!

Posted by: Tripp on February 20, 2006 at 5:12 PM | PERMALINK

Where are those American-built 56 mpg cars?

Pray they are coming. In fact say an entire rosary. For you secularists that's a hours worth.

I love liberals who trash Detroit for mis-reading the market and being unprepared for high gas prices. Thomas L Freidman of the NY times wrote an article over a year ago that was gleeful GM and Ford were getting their heads handed to them.

The simple bastard never considered the transfer of 200,000 + high paying union jobs from the Northern blue sayes to the Southern Red sates. This alone will cost your party 3 electoral votes.

So pray Detroit regains its mojo and can produce what consumers are demanding. Either they make bih time gains in MPG OR the'll reduce another 100K before 2010.

BTW: Many of those 56 MPG toyota's will be American made. Lost in the news of Blue State layoffs is Red State hiring by southern, foreign auto makers.

Posted by: rdw on February 20, 2006 at 5:13 PM | PERMALINK

Certainly we can improve gas mileage but there are limits and the fact is that oil is running out.

Oil is not even near running out. The USA has all kinds of oil in alaska and off the coast we'll leave in the ground while the Canadians pump 2M's+ bbl of incremental Tar Sands oil and Natural Gas.

Our demand and Canadian demand is droping as supply increases

Posted by: rdw on February 20, 2006 at 5:17 PM | PERMALINK

I am glad to hear you have a bike, Tripper. I assume it's a two-wheeler, too, which makes you a very big boy indeed. Yet your arguments are so ... what's the word? Pedestrian.

I say there is nothing unique about oil and that the differences are of marginal cost. You say: "Oil is a unique energy source precisely because it is cheap and economical. There are not any replacements that are as plentiful and as cheap."

I see. So you repeated my point only in different words. This is what I don't get though: from the remainder of the post, and its tone, it sounds like you actually think you were *refuting* my argument. Please tell me you know the difference between refuting and repeating.

Posted by: cecce on February 20, 2006 at 5:21 PM | PERMALINK

rdw,

Sorry to burst your bubble, dude, but there is a catch. There is always a catch.

What does that super duper Lovins car cost? You know, the SUV that doubles the mileage (to what, 30 MPG)?

Oh, it's a prototype?

See I've been through this before. In the 80s my buddy actually sent away for the patent on some super carberator that would get a gazillion MPG but was suppressed by big oil. Oooooh. Ooogy booogy.

He paid twenty bucks and got this packet of information on cheap paper that essentially said "Heat the gasoline until it vaporizes before you put it into the cylinder."

So he was a handy guy and he was going to try doing that.

Unfortunately, or maybe fortunately, his wife put the kibbosh on the whole thing. For some reason she didn't like the idea of riding around on a bomb waiting to go off. Imagine that.

I've got Modern Mechanics magazines from the forties and fifties that promised "in the future" everything in the world. Some stuff we have they didn't imagine. What we DON'T have is anything that violates the laws of physics of thermodynamics.

Some things are really not possible no matter how hard capitalism tries.

Posted by: Tripp on February 20, 2006 at 5:25 PM | PERMALINK

Violating laws of thermodynamics AND physics? No, we wouldn't want to try that.

However, improving gas mileage does not require violating laws of physics. Cars running on ethanol have been around since the Model-T (which I belive is before the Forties and Fifties) and Brazil runs most of their fleet on it today. A Prius - again: TODAY - that gets 100 mpg but uses E85 instead gets pretty much exactly 500 miles per gallon of gasoline.

Posted by: cecce on February 20, 2006 at 5:30 PM | PERMALINK

Just for the record, so y'all don't think ive gone insane: yes, the Prius is a ridiculous looking vehicle and I wouldn't buy one if it was free, but that does not change my point. No new technologies need to be invented here. And further advancements would only further improve the mileage etc. This is not Modern Mechanic writing about flying cars...

Posted by: cecce on February 20, 2006 at 5:34 PM | PERMALINK

cecce,

And here you go with biofuels. Take us back from oil through coal to, essentially burning wood. Cellulose. But let's call it ethanol to sound all cool and modern.

Okay. An untralight car from US Steel burning ethanol from Archer Daniel Midlands.

Yeah. What does it cost? What does it look like? How does it scale?

Oh, that information is not available. I wonder why not? US Steel and Archer Daniel Midlands have such cool websites, too. I wonder if they are trying to, I dunno, sell something? Maybe they are hyping things a bit to get, I dunno, some MONEY?

Yeah, there will be cars in the future. They will cost more, the fuel will cost more, and they will be itty bitty econoboxes.

Posted by: Tripp on February 20, 2006 at 6:04 PM | PERMALINK

Not my estimates. Refer to Scientific American 9/05 'More profit with less carbons' by amory b. lovins.

BTW: Lovins is suggesitng these gains can be had with off the shelf technologies and techniques. We don't need a new breakthrough that might be around the corner or 20-yrs away.

Amory Lovins work is valid. But Lovins would never dream of validating much of the baloney you've served up in this area.

BIG Question for ya: Where's the auto & oil industry's application of ANY of Lovins' insight?

The "free" market requires will -- it doesn't just happen.

You're right about one thing: Lovins' demand side economic model uses already-available technology to apply energy efficiencies to capture economic gain.

NONE of that supports your supply-side dream world, NOR does it support the wrongheaded foreign policies of Bush -- which radically damages our national security.

Nor does Lovins's work support your agenda.

Energy conservation delivers the economic gain to the consumer, to the local level, and contradicts entirely the agenda of Bush, the oil companies, and the free market ideologue.

Nice that you ran across Amory Lovins. He'll transform your thinking. Racically.

Posted by: SombreroFallout on February 20, 2006 at 6:05 PM | PERMALINK

You're right about one thing: Lovins' demand side economic model uses already-available technology to apply energy efficiencies to capture economic gain.

Lovins is neither demand side nor supply side. It's irrelevent. It's about market driven efficiencies


NONE of that supports your supply-side dream world, NOR does it support the wrongheaded foreign policies of Bush -- which radically damages our national security.


It has nothing to do with foreign or domestic policy. It's about potential energy efficiency

Nor does Lovins's work support your agenda.

Energy conservation delivers the economic gain to the consumer, to the local level, and contradicts entirely the agenda of Bush, the oil companies, and the free market ideologue.

It supports GWBs agenda entirely which is let markets work.

Nice that you ran across Amory Lovins. He'll transform your thinking. Radically.

He's transformed nothing. This is an identical repeat of 1980. We get a price signal and the market reacts accordingly. It's Finance 101. If we can make an investment return investing in energy saving techniques we make the investment. Hybrids at $1.20 a gallon gas make no sense. At $2.50 they begin to make sense but only for heavy drivers. At $3.50 demand is heavy. No rocket science required.

Posted by: rdw on February 20, 2006 at 6:14 PM | PERMALINK

"Yeah, there will be cars in the future. They will cost more, the fuel will cost more, and they will be itty bitty econoboxes. "

Extremely unlikely. With economies of scale and after riding the learning curve, prices always come down. Over time, the total cost to the driver of fuel and vehicle will most likely be lower than today (adjusted for inflation, of course) just as such costs today are by and large lower than in the past.

And cars and SUVs will be available in all shapes and sizes, just as today.


Posted by: cecce on February 20, 2006 at 6:17 PM | PERMALINK

Okay. An untralight car from US Steel burning ethanol from Archer Daniel Midlands.

Yeah. What does it cost? What does it look like? How does it scale?


Go to page 81 of the 9/05 edition of the Scientific American for a picture of a snazzy lookind 5 seat SUV running off a fuel cell using NO Gasoline and off the shelf technology.

Posted by: rdw on February 20, 2006 at 6:19 PM | PERMALINK

"The "free" market requires will -- it doesn't just happen."

Yes indeedy - the will of individual producers and consumers.

The "will" of governments and do-gooders is mostly irrelevant, except when it's destructive.

Posted by: cecce on February 20, 2006 at 6:20 PM | PERMALINK

What does that super duper Lovins car cost? You know, the SUV that doubles the mileage (to what, 30 MPG)?


Ford and GM will be selling SUV hybrids getting well over 30 mph later this year.

Posted by: rdw on February 20, 2006 at 6:22 PM | PERMALINK

Btw rdw, I love that comment of Tripp's "how does it scale?" - the guy seems to think that economies of scale are negative. They can be of course, in extremely rare situations. But mostly they're not.

Posted by: cecce on February 20, 2006 at 6:24 PM | PERMALINK

Lovins is neither demand side nor supply side. It's irrelevent. It's about market driven efficiencies.

Incorrect. Know at least something about Lovins' work before you presume to characterize it. These efficiencies are not market driven. Technology driven, politically driven, sure. But nothing about the market it preventing or prompting the adoption of these technologies. Saying otherwise is just silly.

The profits have been there for the cherry-picking for 30-odd years, but banks haven't lept to finance the adoption of Lovins' methods. Market's there, but no one's driving.

It has nothing to do with foreign or domestic policy. It's about potential energy efficiency

Energy efficiency has everything to do with foreign policy -- and domestic economic policy.

It supports GWBs agenda entirely which is let markets work.

What leads you to believe, incorrectly, that Bush lets markets work? Quick! Name the form of energy production the Iraq War subsidizes to the tune of 100s of billions of $$$$. Oil, maybe? You ain't begun to factor that in.

He's transformed nothing. Again, pick up on the facts..

We get a price signal and the market reacts accordingly.

Problem is you and "the market" you're not so familiar with have not done this. It hasn't happened.

There's been lots o' signals, and there's been no reaction to them. When much could have been accomplished. That self-indulgence has squandered much of our nation's wealth, in honor, blood, and treasure.

Posted by: SombreroFallout on February 20, 2006 at 6:28 PM | PERMALINK

There's been lots o' signals, and there's been no reaction to them.

2005 - 3.5% GDP growth, Total petroleum use - 1.8%

2006e 3.5% GDP growth , total petroleum use - 1.7%

That is a STUNNING 10.5% increase in energy productivity in just two years.

Posted by: rdw on February 20, 2006 at 7:25 PM | PERMALINK

But nothing about the market it preventing or prompting the adoption of these technologies

The market is the ONLY thing prompting adoption of these technologies.

We are probably at most a year away from permanent 15% - 25% annual increases in total motor vehicle MPG improvements. Based on planned and committed efficiency improvements 2007 models will likely get on average 20% better fuel economy than the models they replace. "If" we replace 10% of the total fleet each year that's an automatic 2% reduction in gasoline demand each year, 10% after 5 year, 20% after 10 years.

This if course does not account for ethanol substitution.

Nor does it account for the fact planned weight reductions will make hybrid and pure electric more practical.

Nor does it account for the possibility dramatically increased investments in battery and fuel cell technology could replace gasoline demand entirely
The market is all-powerful.

Posted by: rdw on February 20, 2006 at 7:45 PM | PERMALINK

rdw:

> "Well, that was the slogan in the 50s, when "Atoms For Peace"
> was all the rage. Turned out we created a subsidized industry
> that never turned a profit selling power. "Too cheap to meter"
> turned into "too expensive to sell in a free market" :)"

> How about we keep the debate to contemporary history?

This is contemporary history. Nuclear's still a pretty new
technology, and it's worth noting the early history considering
that nuke boosters try to claim that post-Three Mile Island
regulations and overblown public worries killed the industry (which
is like saying that Walter Cronkite lost the Vietnam war :) In
the 50s and 60s, only lone eccentrics opposed nuclear power.

> Perhaps the last 25 years. If I remember correctly
> is the the early 70's when the Global Warming
> freaks were warning of the coming Ice Age.

Global warming wasn't on anybody's radar screen when your
Republican buddy Nixon signed the EPA into law in the early 70s,
back when most Republicans really were from Main Street -- as
opposed to today's Wall Street / trailer park coalition :)

Thing is, large-scale nuclear power isn't any answer to
global warming. Once again, large concentrations of
electricity are needed to refine uranium ore into U-235,
which is the fuel most likely to be used in a developing
country's first set of reactors, because light water reactors
are the least amenable to producing bombmaking material.

> "The idea has always been that nuclear power -- however expensive --
> is somehow limitless in a way that fossil fuels are not. Wrong."

> For all practical purposes it IS limitless. 100 years
> would do and we have far more than 100 years worth
> of supply. By then solar might actually work.

Which is like including dirty coal, shale and tar sands, and saying
that for all practical purposes fossil fuels are limitless. Uranium
is a pretty common element, but there few uranium mines as for the
most part it's mixed in with other metals. If you're talking about
large-scale nuke power development, say, with 3-500 new plants, then
mining uranium is going to become as big an issue as drilling for oil.

And the less concentrated the ore, the more energy goes into
both mining it and proccessing it into the fissile isotope.

> "There was none of this post-TMI regulatory hoo-ha in the
> 50s and 60s during the space race and Better Living Thru
> Chemistry when the entire country was 110% behind nuke
> power. The fucking shit didn't turn a profit *then*, either."

> "Yeah you're right, rdw. Who are these fucking hippie assholes
> demanding evacuation plans for densely populated urban areas."

> Actually Nuclear turns a very nice profit at all ends of the
> process. From construction, ongoing operations and shut-down.
> There are a number of large construction companies specializing
> in powerplant design (GE is but one), powerplant controls controls
> (Siemans is supplying China), ongoing maintenance (construction
> permits are so hard to get they now rebuild onsite to get
> extensions) supplying product, etc.

You know, I am no economic expert, but that's one seriously
irresponsible statement coming from a CFA. I could win the lottery,
Wooten, and decide to spare no expense in building my dream house. I
could pay the architect and contractors a little above scale because,
hey, I have the money to burn and I'm just in a good mood. They all
could turn a handsome profit -- but where did the money come from?

The government is fucking *subsidizing* the construction of nuke
plants. They're not going to get their investments back selling
the electricity; *no* nuke plant has *ever* made the money back
selling electricity. The French government owns its nuke industry.

Jesus H. Einstein, I have to explain this to a *Republican*?

Well yeah I do; you probably think that defense contracting
is a profitable venture based on the same reasoning :)

> The environment in the USA is against more constuction
> but outside it's far more positive especially in China
> and Asia. The people can see their pollution and feel
> it after dramatic increases in respirtory problems.
> Nuclear is a real time solution to a nasty problem.

Once again, you remain willfully ignorant of the fuel cycle.
Gigawatts of energy will be required to mine and refine the uranium.
Where is that going to come from? If you'll confront that, maybe you
can have a responsible conversation about nuclear power development.

If it comes from fossil electric generation, then nuclear in
itself isn't any more of an answer to air pollution than hydrogen.

> China's leadership is hardly concerned about the Greenpeace/
> anti-globization crowd. There will not be any demonstrations in
> China. Greenspeace boats will not attempt of interfere with
> Chinese shipping knowing they'll be immediately sunk.

Oh yeah, Wooten, Greenpeace did one *helluva* job with all those
enviro-sympathetic French and Canadians shutting down *their* nuke
industries. This is one seriously retarded straw bogeyman; the
hard left has a pathetically tiny influence. My brother's town
council, made up of solid Republican citizens, is another story
when it along with other Westchester communities demanded evacuation
plans for the epicenter of Indian Point which helped shut it down.

Call my Republican brother a hippie, Wooten. I dare ya :)

> The real advantage here to the industry is the ability to
> test new designs. They've made claims new designs make meltdowns
> impossible AND greatly lesson disposal issues. If true we'll
> know in 10 years. At a time when the USA is debating operating
> extensions the industry will have a much more attractive product.

Ahh, from colossal gradeschool ignorance of economics, you hookslide
into colossal gradeschool ignorance of engineering. First of all,
our operating nukes, the first in the world, were designed in the
50s and 60s and need to be mothballed at a whopping expense. By that
time, they'll all be shut down, as these nuke plants wear out a lot
faster than anticipated. No investment recoup through amortization.

Secondly, say you're correct. These are brand-new designs. You can't
retrofit the old plants; you'll have to tear them down and build from
scratch. That's another 10-15 years at earliest. So we're looking at
a half-century before the promise of new-generation nuclear power in
America becomes a reality. By that time, it all may be a moot point.

> The same people demonstrating in the 60's will be in their 80's.

This is screamingly funny considering that your above
leftie bogeyman du jour were Greenpeace/anti-globalization
activists who tend, umm, to be in their early 20s :)

> We now know Chernoble was grotesquely exaggerated.

And doubtless right-wing Chernobyl
revisionism is grotesquely exaggerated.

> Most Americans will not accept watching China enjoy safe,
> cheap, pollution-free nuclear power when our alternative
> is coal. (which actually is doing VERY well)

You know, I'm not dead-set against nuclear power. All progress
demands tradeoffs, and global warming/air pollution is an issue
that our civilization must confront. But until you lose your
retro magical thinking about nukes ("safe, cheap, pollution-free")
and confront the fuel cycle, you won't be capable of having a
serious conversation about nuclear power as part of a suite
of strategies for confronting our future energy challenges.

> BTW: Forget the cost argument. Nothing is sillier than anti-business
> libs fretting a single US Utility will lose money a dime in Nuclear.

Boy isn't *this* a devastating rebuttal. You know what it
says to me? That you don't have an answer. Just what part
of "subsidized by the government" don't you understand? It's
fine if society wants to make an investment in a power technology
through taxes. Just don't try to pretend that the price that
electric customers pay for nuke power reflects its actual cost.

> You'd prefer they all went bankrupt.

Well, ad-homs never *hurt* an argument.
But they don't help it much, either :)

> Common-sense tells us they aren't in it to lose money
> and they know a lot more about making money than you.

They know a helluva lot more about how to ooch pork from
the government than I do, that's a big 10-4, good buddy. We
subsidize farmers, Wooten, precisely so they *won't* go bankrupt.

> We have a much different generation following us. They've all
> been to business school. They know investments. They might smoke
> pot but they'll never be hippies. They don't protest. The anti-
> globilization freakshow are all professional protestors. The
> sons and daughters of well-to-do libs anxious to recreate
> the glory days of 68. Mommy and Daddy support them and a
> few other whackjobs chip in but there's only narrow support.

Nothing says "well made" like a cultural
argument to address a technological issue :)

> The 60's are dead and they're not
> coming back. We're all investors now.

And investors who make their money off of government subsidies
used to be a fiscally conservative Republican's worst enemy. But
hey, I guess they don't call it Sunbelt Bolshevism fer nuthin' :)

I guess fiscally conservative Republicans aren't coming back, either.

Bob

Posted by: rmck1 on February 21, 2006 at 8:54 AM | PERMALINK

I guess fiscally conservative Republicans aren't coming back, either.

Actually they are. John McCain will be the next President specifically because he is fiscally conservative. Ironically the top Democratic plank will be the budget deficit and no Senator is better positioned on spending/budget discipline than John McCain.

John has pulled several inside straights this year and now can actually win an important GOP primary. The gang of 14 worked out well with Roberts and Alito exceeding Conservatives high hopes. Campaign finance is not an issue ans we're likely to see Robert and Alito roll most of it back anyway. Last week big John made his boldest move ever to grab conservatives by voting to extend the tax cuts after not supporting them in 2003.

He is very shrewdly positioned. It also helps him that the right detests Hillary so much they'll hold their noses and vote for him knowing he beats her soundly.

At the end of the day we get to elect the most fiscally conservative candidate in the Senate.

Posted by: rdw on February 21, 2006 at 9:39 AM | PERMALINK

But nothing about the market it preventing or prompting the adoption of these technologies

The market is the ONLY thing prompting adoption of these technologies.

We are probably at most a year away from permanent 15% - 25% annual increases in total motor vehicle MPG improvements.

Posted by: rdw on February 20, 2006 at 7:45 PM |

The fatal flaw in your overall argument -- and the final word -- because you have no viable comeback, is this:

We've had the technology to raise vehicle MPG for years. Detroit's lost immense market share due to their refusal to apply that technology.

And they've foisted economically INefficient vehicles onto the market -- to the financial DISadvantage of working Americans everywhere.

Build it-- and they'll buy it. DON'T build it -- and Americans DO NOT HAVE THE OPTION of influencing the market in that direction. They literally cannot send a market signal if every truck and SUV gets shitty gas mileage.

For you to say otherwise, and tout the market, is at minimum disingenuous.

It's certainly less than honest.

CEOs & execs in Detroit COULD have cashed in on those market signals. They did not. So obviously something OTHER than market signals drive their decisions.

Posted by: SombreroFallout on February 21, 2006 at 9:45 AM | PERMALINK

But hey, I guess they don't call it Sunbelt Bolshevism fer nuthin'

A term I've never heard before and will never hear outside this blog.

I'm not even going to argue the economics of Nuclear. It's a waste of time. A ton of investors and employees know it's a vibrant industry with a bright future. Apparently they haven't run this by you. Their bad.

You might want to follow the news of GWBs trip to India next month. Apparently the Indians think we have lots of Uranium to sell and we think we have it to sell. Go figure!

If you makes you feel any better none of the major construction firms have plans for the USA at this time. The environment is changing but not enough and they have more foreign business than they can handle. When you have this kind of global economic boom it causes a surge in energy demand. No 3rd world leader would ever consider intentionally slowing that growth and few have active greenpeace branches. Nuclear plant produce a lot of power. It's hard to resist.

Posted by: rdw on February 21, 2006 at 9:53 AM | PERMALINK

rdw:

> Nice work, rdw. Don't know who rmick is
> but intellectually he's out to lunch.

And I don't know who ceece is, but intellectually
s/he is a free market fundamentalist :)

> Uranium is an ubiquitous resource on earth and about as common
> as tin and zinc. If we only count the economically recoverable - and
> known - resources, a small subset of the total, the OECD estimates
> about 3.5 million tons of it available today. Given that there has
> been almost no exploration for the past 20 years, the real resources
> are almost certainly much greater, probably enough for 100-200 years
> of usage (the IAEA suggests 140 years).

Gee, this is *awfully* familiar rhetoric. And the
timeframe depends, of course, on how many plants are
online. If Wooten's grand explosion of nuke power in
China is to happen, the timeframe shrinks accordingly.

Uranium refining is much more energy-intensive than oil refining,
at least for light-water reactors. Canada's CANDU heavy water
design can burn U-307 yellowcake directly, and that's a big plus
-- although heavy water reactors are somewhat more hazardous.
There's no question that currently operational American nuke plants
are technologically obsolete, and there's a legitimate question
whether or not we should replace all of them and even build more
with better designs. I'd say we need to solve the waste issue first.
We can't just keep accumulating it on-site. It's a terrorist target.

Tripp:

> So we could design a car with a ceramic block that runs so
> hot it can crack water into H and it could burn the H. Wow.
> Feed that H back into the block and we've got perpetual
> motion. Uh oh. Somebody once said that is impossible.

Well, it's obviously not perpetual motion if water can be used as a
fuel -- even if it's quite unusual to consider water as a combustion
fuel. As I said originally, this merely came from a blog comment that
piqued my curiosity and I was asking for further information; for all
I know it could be aprocryphal. I don't know the energy required to
break down water into H and O2 or whether that is less than the energy
you'd get from an H - 02 pure combustion. My gut tells me that it'd
pretty much balance out (conservation of energy), so it'd be pretty
much impossible to use water as a fuel that also cracks the water.

Cranky Observer / Tripp, on alpha emitters from wiki:

> Alpha particles emitted by radioactive nuclei are among the most
> hazardous forms of radiation, if these nuclei are incorporated
> within a human body. As any heavy charged particle, alpha particles
> lost their energy in very short distance in dense media, causing
> significant damage to surrounding biomolecules. On the other hand,
> the external alpha irradiation cannot cause any damages because
> alphas are completely absorbed by a very thin (micrometers) dead
> layer of skin as well as by few centimeters of air. However, if
> a substance radiating alpha particles is injected, ingested or
> inhaled by an organism it may become a risk, potentially inflicting
> very serious damage to the organisms' genetic makeup.

> Retrieved from "http://en.wikipedia.org/wiki/Alpha_decay"

Sorry for stating this somewhat hyperbolically and buying the
hype that plutonium is "the most toxic substance known to man."

My point, though, was the opposite sense. Plutonium *is* handleable,
taking a few precautions, and thus a breeder reactor economy producing
lots of excess plutonium needing to be carefully stored (watch you
don't pile it up else it will become critical, emitting whopping
amounts of radiation and and melting through storage materials) is
a nuclear proliferation nightmare. Not hard to multiple kilos of
it making its way onto the black market and being sold to, e.g. Iran.

Bob

Posted by: rmck1 on February 21, 2006 at 9:53 AM | PERMALINK

We've had the technology to raise vehicle MPG for years. Detroit's lost immense market share due to their refusal to apply that technology.

We had the technology but not the consumer demand. Consumers wanted large SUVs.

This story is a lot worse than you realize. The collapse of Detroit auto manufacturing will cost the unionized North 200,000 + jobs to be gained in the non-union South. This will result in the migration of as many as 1M people and the continued transfer of electoral votes in Blue states to Red states.

If GWB has done nothing he's decimated the Unions. Membership is down dramatically and the AFL-CIO is collapsing due to this issue and their hapless political choices.

I'm not sure how many union workers were available to work the voting sites on election day in 2000 or how much they contributed to Democratic candidates but if you get 50% as much in 2008 you'll be doing well.

Hillary is still of course a money tree married to a bank but she won't get 1/3 the union support her Husband received in 1992. In the ever important get out the vote efforts this is a big loss.

Posted by: rdw on February 21, 2006 at 10:05 AM | PERMALINK

And the timeframe depends, of course, on how many plants are online. If Wooten's grand explosion of nuke power in China is to happen, the timeframe shrinks accordingly

Not at all and it doesn't matter. The plants are only designed to last 40 years and by then solar may actually be ready. If not we'll use nucler another 40 years. It's just too good not to use. It's pollution free and cheap. This makes it a gimme in the 3rd world.

You can also expect France to keep their production at 80% or better of demand. It's working great for them and it's an export.

We are also lucky to be near Canada. We've got guarranted increasing supply for at least 40 more years.

Posted by: rdw on February 21, 2006 at 10:13 AM | PERMALINK

rdw:

> "But hey, I guess they don't call it Sunbelt Bolshevism fer nuthin'"

> A term I've never heard before and will never hear outside this blog.

Pretty clever, huh? :) It was coined to describe military
base culture, which clusters, of course, in conservative GOP
red states. And this is more than a little ironic, because
the towns that support military bases are essentially subsidized
by federal tax dollars; the free market has nothing to do
with whether these towns are economically viable or not.

And when bases close, the gummit handouts stop
and the surrounding communities become devastated.

The military sector is a Soviet-style centralized command economy :)

> I'm not even going to argue the economics of Nuclear.

It's because you don't know the economics of Nuclear. If you did,
you'd dutifully spit out your talking points. But since you don't,
it's obvious that your gut is telling you that I'm *right*, that
nuclear energy has nothing whatsoever to do with the Free Market.

> It's a waste of time.

More likely the cognitive dissonance would make your head explode :)

> A ton of investors and employees know it's a
> vibrant industry with a bright future. Apparently
> they haven't run this by you. Their bad.

Wooten, they're mooching off the Federal teat.

Sheesh, some kinda conservative *you* are :)

Bob

Posted by: rmck1 on February 21, 2006 at 10:25 AM | PERMALINK

rdw:

> It's pollution free and cheap.

Nuclear power is neither pollution-free, nor is it cheap.

You cite nothing. You're just repeating lies.

Until you confront the fuel cycle, you'll
have nothing serious to say in this discussion.

Bob

Posted by: rmck1 on February 21, 2006 at 10:30 AM | PERMALINK

cecce,

Btw rdw, I love that comment of Tripp's "how does it scale?"

I for one would love to hear how the Iceland hydrogen cars powered by geothermal energy and the Brazilian ETOH cars powered by fermented sugarcane scale up to worldwide use.

These are niche solutions. Their ain't enough geothermal power or sugarcane to fuel all the cars in the world.

That's what I mean by scalability. Anybody can build the damn cars. It's the energy that won't scale up to worldwide demand.

Duh.

Posted by: Tripp on February 21, 2006 at 10:36 AM | PERMALINK

rdw,

It's just too good not to use. It's pollution free and cheap. This makes it a gimme in the 3rd world.

The day Nigeria gets a nuclear plant is the day I'll believe you. Until then I don't think you have a clue what you are talking about. You've been reading too many marketing brochures from companies looking for a government handout.

Posted by: Tripp on February 21, 2006 at 10:40 AM | PERMALINK

Until you confront the fuel cycle, you'll
have nothing serious to say in this discussion.

I don't need to confront the fuel cycle when reality shows a vibrant, growing industry. China and India among others ARE on a building boom. Nuclear is here to stay and we're going to have a lot more of it.

Liberals just can't be happy. You wanted high oil prices to piss off SUV owners. You had to know it was going to crush the unionized auto industry and lead to a surge in nuclear power plant construction.

Isn't it ironic that the Chinese have never seen the 'China Syndrome"?

Posted by: rdw on February 21, 2006 at 10:41 AM | PERMALINK

These are niche solutions. Their ain't enough geothermal power or sugarcane to fuel all the cars in the world.

Who wants to use sugarcane to fuel all of the cars in the world?

The US Midwest has some idle farmland that perhaps can be put to efficient use producing the feedstock for ethanol. Many people think we can help farmers, create a small manufacturing industry (jobs) to refine ethanol and end up with a competitive product with superior pollution benefits. If it can reduce gasoline demand by 2% that's a big success.

This is capitalism at it's best. Farmers win, jobs are created, consumers win, investors win, the environment wins and we get a small measure of independence.

If in fact it's as attractive as some proponents claim it'll reduce gasoline demand by a lot more than 2%.

Posted by: rdw on February 21, 2006 at 10:51 AM | PERMALINK

rdw,
I don't need to confront the fuel cycle when reality shows a vibrant, growing industry.

Here is where we differ. It's not politics, it is that I don't share your religion. You have faith that the power of a free market and a growing industry can trump physical reality.

You are just as closed-minded and dogmatic as any Christian or Islamic fundamentalist. You just have a different religion.

I have no doubt that nuclear will be used, especially by the Chinese who are currently polluting their cities like us in the 1950s.

The thing is the US would need 350 nuclear power plants to replace our current oil usage. Think about that. Seven in every single state including Rhode Island. Even if we built them the fuel would not last for long.

But, you may say, the US is reducing its energy demands while the GDP is growing!

Yes, we are, by exporting our manufacturing (and jobs) overseas and not using the energy here in the US. This is great for US corporations, bad for US workers, and does nothing to lower worldwide demand for energy. It is a shell game.

Posted by: Tripp on February 21, 2006 at 10:52 AM | PERMALINK

The day Nigeria gets a nuclear plant is the day I'll believe you.

What are you babbling about? Nigeria is sitting on a small ocean of the sweetest crude in the world and has a 4th world economy. Electric demand is miniscule compared to Asia, India, Russia and the rest of Asia.

The manufacturers go to where there's demand. Asia has more demand than they can meet and none of the greenpeace issues. They also detest the thought of being dependent on the Middle East.

Posted by: rdw on February 21, 2006 at 10:56 AM | PERMALINK

rdw,

The US Midwest has some idle farmland that perhaps can be put to efficient use producing the feedstock for ethanol.

We do? That's news to me, and I live in the Midwest. You do know that corn and soybean are really the only exports the US has remaining, right?
As such we are using all our farmland to produce worldwide grain.

We have no idle farmland. Have you never even flown over this flyover country in the summer?

I give you credit for your 'perhaps.' Am I seeing some cracks in your rock solid faith? Is reality seeping in?

Posted by: Tripp on February 21, 2006 at 10:57 AM | PERMALINK

What are you babbling about?

Oh, I'm sorry. When you said, speaking of nuclear: It's just too good not to use. It's pollution free and cheap. This makes it a gimme in the 3rd world. I assumed you meant it was a gimme for, I dunno, a 3rd world country. Like Nigeria. If you meant that nuclear was more expensive than oil so it would only be used by a third world country if they had no oil and a ton of money to build the infrastructure then you should have said that.

Otherwise when you say "too good not to use" and "cheap" and a "gimme in the third world" I take you at your word.

I think once you get past the marketing slogans you've gotten from websites you don't really have much besides faith. It is touching, in a way, but kind of sad, too.

Posted by: Tripp on February 21, 2006 at 11:03 AM | PERMALINK

Yes, we are, by exporting our manufacturing (and jobs) overseas and not using the energy here in the US. This is great for US corporations, bad for US workers, and does nothing to lower worldwide demand for energy. It is a shell game.

Do you finlly see why Kyoto is such a disaster?

The US doesn't need more nuclear now. Our demand is shrinking as Canadian production is increasing. We have also been increasing coal production if you didn't know.

We are not shifting manufacturing overseas. We are shifting manufacturing jobs. Manufacturing is still an important component of GDP. We're just more efficient. Don't make the mistake of think we're losing 100,000 auto jobs. We're losing 100,000 unionized auto jobs. Manufacturing in the south is increasing at a rapid rate.

It's not a perfect offset but as you can tell with 4.7% and falling unemployment the economy is doing fine.

There's a bit of an advantage to >$50 oil for another year or so. The drive toward energy efficiency has to be fully embedded in the design and manufacturing process. Once Autos are through a full model cycle each and every part of been re-evalauted in terms of energy efficeincy, improved and incorporated in new designs. The 50% weight reductions promised from auto bodies has to be combined with other savings and the engine resized and redesigned. Once these commitments are made we're looking at sustained long term energy reductions on a clockwork schedule. I'll replace my 2000 Van in 2008 with a model certain to get 30%, probably 40% better mileage. Average annual fleet sales will probably get at least 20% better mileage by 2008 thus each vehicle replaced will result in lower gasoline demand each year for the 10 year replacement cycle.

Capitalism is cool.

Many think the weight savings could be so dramatic we'll do a lot better than 20% savings and have a legitimate electric vehicle.

This of course does not address the many other energy hogs such as PCs, lighting, A/C, etc that are all being improved upon.

Only the market is capable of this magic.

Posted by: rdw on February 21, 2006 at 11:16 AM | PERMALINK

Like Nigeria


Except Nigeria is a dumb example. They're sitting on an ocean of sweet crude that is effectively FREE.

They also, like 90% of Africa, are dirt poor with a farm economy than hasn't reached 16th century production standards.

Posted by: rdw on February 21, 2006 at 11:18 AM | PERMALINK

We have no idle farmland. Have you never even flown over this flyover country in the summer?

So all those farm subsidies were playing for farmers NOT to grow crops are imaginary?

This explains why farmers love the idea and every midwest senator is salivating over ethanol. Now why would anyone want another market for their product? That would only improve pricing and profits!

This is the beauty of markets. I say perhaps because I've read a lot on ethanol and it's mixed. Some say it's a gift some a curse. So let's find out. It it's too expense we won't buy it. No harm, no foul. If it works we're all happy.

Posted by: rdw on February 21, 2006 at 11:23 AM | PERMALINK

Only the market is capable of this magic.

No. That's my point exactly. Even the market cannot perform magic.

As far as subsidies for idle croplands - I'm pretty sure those went out in the 60's. Instead we impose import tarrifs to keep foreign competition out and we guarantee a minumum price for grain and dairy. I don't think we do that 'pay to not plant' thing anymore.

And please stop referring to 'farmers.' The small family farm is either dead or dieing. Anymore the concept of a "family farm" is a marketing creation pushed by Archer Daniel Midlands and Monsanto to justify corporate welfare. They are hawking ETOH because they want government subsidies, and I don't think that is what you mean when you refer to your magical mythical 'market,' right?

Posted by: Tripp on February 21, 2006 at 12:08 PM | PERMALINK

create a legitimate electric vehicle.

I have no doubt we can build such a car, but where you gonna get the electricity? How does your magical market create the electricity?

The bottom line is you cannot create enough electricity to power all the cars in the world with electricity.

Posted by: Tripp on February 21, 2006 at 12:12 PM | PERMALINK

I have no doubt we can build such a car, but where you gonna get the electricity? How does your magical market create the electricity?

In my case I'd plug it in at night. In S/E PA that probably means nuclear. A big problem in managing the grid is peak demand. The Utilities are forced to produce more at night than they need because it's often too expensive to turn turbines off and on to match peak versus low demand periods. So the plants stay on 24/7.

The plan as I read it would be for these users to plug into a special outlet timed to recharge after midnight and before 6AM. Using power formerly wasted is effectively free power.

The real advantage might be less electric/battery power but rather a step toward fuel cells. Lovins is predicting reduced weight and improved design will lower power demands by 2/3s and make hydrogen fuel cells achievable. Thus eliminating gasoline AND the need to plug in.

I have no idea if that's actually practical today. But there's little question the process of reducing weight leads to significant efficiency gains and brings us closer to the day we can eliminate gasoline.

Posted by: rdw on February 21, 2006 at 12:38 PM | PERMALINK

And please stop referring to 'farmers.'

I am surrounded by family farms and if I take a 60 mile ride to Lancaster I pass nothing but family farms.

Not that it matters. Large farms provide jobs and food and income for it's workers, managers, consumers and investors. They represent capitalism at it's best.

Posted by: rdw on February 21, 2006 at 12:41 PM | PERMALINK

No. That's my point exactly. Even the market cannot perform magic.

markets cannot create something from nothing but they are ideal for finding the best solution to these fantastically complex issues. Govt intervention is a disaster. Get the pinheads as far away as possible. Let those putting their own money and work into it find the solution.

Jimmy Carter is the perfect example of a high IQ fool. Get those people away!

If you are correct regarding farmland then it will prove rather quickly NOT to be a viable option. Invesrors don't invest to lose money. They'll pull the plug and find something else. There's always soemthing else.

Posted by: rdw on February 21, 2006 at 2:55 PM | PERMALINK




 

 

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