The Oil Drum - Discussions about Energy and Our Future

How Relocalization Worked

Nate Hagens — Sun, 22 Nov 2009 11:59:14 -0400

Below the fold is a guest essay by John Michael Greer, author of The Long Descent, a book I have read and recommend. The post examines the importance and viability of relocalization from a historical perspective.

How Relocalization Worked

by John Michael Greer

(Original can be found here.)

One of the points that I’ve tried to make repeatedly in these essays is the place of history as a guide to what works. It’s a point that deserves repetition. A good many worldsaving plans now in circulation, however new the rhetoric that surrounds them, simply rehash proposals that were tried in the past and failed repeatedly; trying them yet again may thus not be the best use of our limited resources and time.

Of course there’s another side to history that’s more hopeful: something that worked well in the past can be a useful guide to what might work well in the future. I’d like to spend a little time discussing one example of this, partly because it ties into the theme of the current series of posts – the abject failure of current economic notions, and the options for replacing them with ideas that actually make sense – and partly because it addresses one of the more popular topics in the ongoing peak oil discussion, the need for economic relocalization as the age of cheap abundant energy comes to an end.

That relocalization needs to happen, and will happen, is clear. Among other things, it’s clear from history; when complex societies overshoot their resource bases and decline, one of the things that consistently happens is that centralized economic arrangements fall apart, long distance trade declines sharply, and the vast majority of what we now call consumer goods get made at home, or very close to home. Now of course that violates some of the conventional wisdom that governs economic decisions these days; centralized economic arrangements are thought to yield economies of scale that make them more profitable by definition than decentralized local arrangements.

When history conflicts with theory, though, it’s not history that’s wrong, so a second look at the conventional wisdom is in order. The economies of scale and resulting profits of centralized economic arrangements don’t happen by themselves. They depend, among other things, on transportation infrastructure. This doesn’t happen by itself, either; it happens because governments pay for it, for purposes of their own. The Roman roads that made the tightly integrated Roman economy possible, for example, and the interstate highway system that does the same thing for America, were not produced by entrepreneurs; they were created by central governments for military purposes. (The legislation that launched the interstate system in the US, for example, was pushed by the Department of Defense, which wrestled with transportation bottlenecks all through the Second World War.)

Government programs of this kind subsidize economic centralization. The same thing is true of other requirements for centralization – for example, the maintenance of public order, so that shipments of consumer goods can get from one side of the country to the other without being looted. Governments don’t establish police forces and defend their borders for the purpose of allowing businesses to ship goods safely over long distances, but businesses profit mightily from these indirect subsidies nonetheless.

When civilizations come unglued, in turn, all these indirect subsidies for economic centralization go away. Roads are no longer maintained, harbors silt up, bandits infest the countryside, migrant nations invade and carve out chunks of territory for their own, and so on. Centralization stops being profitable, because the indirect subsidies that make it profitable aren’t there any more.

Ugo Bardi has written a very readable summary of how this process unfolded in one of the best documented cases, the fall of the Roman Empire. The end of Rome was a process of radical relocalization, and the result was the Middle Ages. The Roman Empire handled defense by putting huge linear fortifications along its frontiers; the Middle Ages replaced this with fortifications around every city and baronial hall. The Roman Empire was a political unity where decisions affecting every person within its borders were made by bureaucrats in Rome. Medieval Europe was the antithesis of this, a patchwork of independent feudal kingdoms the size of a Roman province, which were internally divided into self-governing fiefs, those into still smaller fiefs, and so on, to the point that a single village with a fortified manor house could be an autonomous political unit with its own laws and the recognized right to wage war on its neighbors.

The same process of radical decentralization affected the economy as well. The Roman economy was just as centralized as the Roman polity; in major industries such as pottery, mass production at huge regional factories was the order of the day, and the products were shipped out via sea and land for anything up to a thousand miles to the end user. That came to a screeching halt when the roads weren’t repaired any more, the Mediterranean became pirate heaven, and too many of the end users were getting dispossessed, and often dismembered as well, by invading Visigoths. The economic system that evolved to fill the void left by Rome’s implosion was thus every bit as relocalized as a feudal barony, and for exactly the same reasons.

Here’s how it worked. Each city – and “city” in this context means anything down to a town of a few thousand people – was an independent economic center; it might have a few industries of more than local fame, but most of its business consisted of manufacturing and selling things to its own citizens and the surrounding countryside. The manufacturing and selling was managed by guilds, which were cooperatives of master craftsmen. To get into a guild-run profession, you had to serve an apprenticeship, usually seven years, during which you got room and board in exchange for learning the craft and working for your master; you then became a journeyman, and worked for a master for wages, until you could produce your masterpiece – yes, that’s where the word came from – which was an example of craftwork fine enough to convince the other masters to accept you as an equal. Then you became a master, with voting rights in the guild.

The guild had the legal responsibility under feudal municipal laws to establish minimum standards for the quality of goods, to regulate working hours and conditions, and to control prices. The economic theory of the time held that there was a “just price” for any good or service, usually the price that had been customary in the region since time out of mind, and the municipal authorities could be counted on to crack down on attempts to push prices above the just price unless there was some very pressing reason for it. Most forms of competition between masters were off limits; if you made your apprentices and journeymen work evenings and weekends to outproduce your competitors, for example, or sold goods below the just price, you’d get in trouble with the guild, and could be barred from doing business in the town. The only form of competition that was encouraged was to make and sell a superior product.

This was the secret weapon of the guild economy, and it helped drive an age of technical innovation. As Jean Gimpel showed conclusively in The Medieval Machine, the stereotype of the Middle Ages as a period of technological stagnation is completely off the mark. Medieval craftsmen invented the clock, the cannon, and the movable-type printing press, perfected the magnetic compass and the water wheel, and made massive improvements in everything from shipbuilding and steelmaking to architecture and windmills, just for starters. The competition between masters and guilds for market share in a legal setting that made quality and innovation the only fields of combat wasn’t the only force behind these transformations, to be sure – the medieval monastic system, which put a good fraction of intellectuals of both genders in settings where they could use their leisure for just about any purpose that could be chalked up to the greater glory of God, was also a potent factor – but it certainly played a massive role.

The guild system has nonetheless been a whipping boy for mainstream economists for a long time now. The person who started that fashion was none other than Adam Smith, whose The Wealth of Nations castigates the guilds of his time for what we’d now call antitrust violations. From within his own perspective, Smith had a point. The guilds were structured in a way that limited the total number of people who could work in any given business in any given town, and of course the just price principle kept prices from fluctuating along with supply and demand. Thus the prices paid for the goods or services produced by that business were higher, all things considered, than they would have been under the free market regime Smith advocated.

The problem with Smith’s analysis is that there are crucial issues involved that he didn’t address. He lived at a time when transportation was rapidly expanding, public order was more or less guaranteed, and the conditions for economic centralization were coming back into play. Thus the very different realities of limited, localized markets did not enter into his calculations. In the context of localized economics, a laissez-faire free market approach doesn’t produce improved access to better and cheaper goods and services, as Smith argued it should; instead, it makes it impossible to produce many kinds of goods and services at all.

Let’s take a specific example for the sake of clarity. A master blacksmith in a medieval town of 5000 people, say, was in no position to specialize in only one kind of ironwork. He might be better at fancy ironmongery than anyone else in town, for example, but most of the business that kept his shop open, his apprentices fed and clothed, and his journeymen paid was humbler stuff: nails, hinges, buckles, and the like. Most of this could be done by people with much less skill than our blacksmith; that’s why he had his apprentices make nails while he sat upstairs at the table with the local abbot and discussed the ironwork for a dizzyingly complex new cutting-edge technology, just introduced from overseas, called a clock.

The fact that most of his business could be done by relatively unskilled labor, though, left our blacksmith vulnerable to competition. His shop, with its specialized tools and its staff of apprentices and journeymen, was expensive to maintain. If somebody else who could only make nails, hinges, and buckles could open a smithy next door, and offer goods at a lower price, our blacksmith could be driven out of business, since the specialized work that only he could do wouldn’t be enough to pay his bills. The cut-rate blacksmith then becomes the only game in town – at least, until someone who limited his work to even cheaper products made at even lower costs cut into his profits. The resulting race to the bottom, in a small enough market, might end with nobody able to make a living as a blacksmith at all.

Thus in a restricted market where specialization is limited, a free market in which prices are set by supply and demand, and there are no barriers to entry, can make it impossible for many useful specialties to be economically viable at all. This is the problem that the guild system evolved to counter. By restricting the number of people who could enter any given trade, the guilds made sure that the income earned by master craftsmen was high enough to allow them to produce specialty products that were not needed in large enough quantities to provide a full time income. Since most of the money earned by a master craftsman was spent in the town and surrounding region – our blacksmith and his family would have needed bread from the baker, groceries from the grocer, meat from the butcher, and so on – the higher prices evened out; since nearly everyone in town was charging guild prices and earning guild incomes, no one was unfairly penalized.

Now of course the guild system did finally break down; by Adam Smith’s time, the economic conditions that made it the best option were a matter of distant memory, and other arrangements were arguably better suited to the new reality of easy transport and renewed economies of scale. Still, it’s interesting that in recent years, the same race to the bottom in which quality goods become unavailable and local communities suffer has taken place in nearly the same way in most of small-town America.

A torrent of cheap shoddy goods funneled through Wal-Mart and its ilk, in a close parallel to the cheap blacksmiths of the example, have driven local businesses out of existence and made the superior products and services once provided by those businesses effectively unavailable to a great many Americans. In theory, this produces a business environment that is more efficient and innovative; in practice, the efficiencies are by no means clear and the innovation seems mostly to involve the creation of ever more exotic and unstable financial instruments: not necessarily the sort of thing that our society is better off encouraging.

Advocates of relocalization in the age of peak oil may thus find it useful to keep the medieval example and its modern equivalent in mind while planning for the economics of the future. Relocalized communities must be economically viable or they will soon cease to exist, and while viable local communities will be possible in the future – just as they were in the Middle Ages – the steps that will be necessary to make them viable may require some serious rethinking of the habits that now shape our economic lives.

Making holes and cracks around oil and gas wells

Heading Out — Sun, 22 Nov 2009 11:09:33 -0400

This is a continuation of the tech talks, discussing technical topics, that I write on Sundays. For the past few weeks I have been writing about some of the techniques used in producing the gas from shales, and that will likely continue for another week or two. Because of the need to condense the topic into a relatively short post I would ask those familiar with the topics to understand that I have had to shorten the description and gloss over some details in order to keep the main theme clear. But further comments to help readers understand the techniques better (or questions when it isn't) are appreciated.

Equipment used for hydraulic fracturing a well (Primer)

There is a simple test that I use in one of my introductory classes, where I give the students a rectangle of paper and ask them to pull it apart, then I give them a rectangle with a cut half way through it perpendicular to the length, and half-way down, and ask them to pull that apart. It tears apart much more easily, and it is how I start a lecture on the role of cracks in causing materials to fail. You apply that principle about every time you pull open a package with a serrated top. The deeper cuts focus the force you are pulling with over a small area, making it easier to part the package and extract the candy, nuts or whatever without having to pull so hard that, when the package tears, you throw the contents around the neighborhood.

Today I want to talk a little more about perforating the wall of a well, and a bit more about hydrofracing. They are not necessarily used together, but both are ways of getting cracks out from the immediate wall of the wellbore so that the valuable fluid on the other side can have an easier path into the well.

To begin with the topic of perforating a well, I have written about this earlier, but more from the point of the tools used to do the job. What I’d like to do here is to talk a little more about it from the rock point of view. As I mentioned last time the rock right around the well can be subject to a high enough pressure that it will partially fail, or crush, and this can lower the amount of fluid that can get through, or alternately it might have been damaged in some other way. By bringing in a tool with a set of shaped charges in it, and then firing these at the appropriate place this problem can be overcome.

Arrangement of shaped charges (the yellow cylinders) – when the explosive goes off the cones collapse and small liquid metal jets shoot out of the open end, through the casing, concrete and into the rock, creating a channel. (Core Labs)
The charges aren’t all necessarily fired at one time or place, even though, for the illustration below, they appear to be.

Representation of shaped charges firing and penetrating the casing, cement and wall (OSHA)
The jet of metal that shoots out of the cone will travel into the rock roughly 10 cone diameters, as a rough rule of thumb, and this carries a channel, or tunnel, out through the damaged rock into the surrounding reservoir. The collapse and creation of the channel happens very fast:

Penetration of a perforating charge into Plexiglas after 3, 12, 21 and 30 microseconds. Marks are in cone diameters. (after Konya*)

The channel is initially hollow, and drives a set of small and large cracks out into the rock around the line of the charge.

Jet penetration through Plexiglas (note the lateral cracks away from the line of penetration. The dark section is due to a change in background. (after Konya*)

However, while it is easier to show the damage that the jet does by showing how it penetrates Plexiglas, this is not rock, but it does show some of the events that occur. When, for example, (vide the discussion on jointed shale last week) the jet shoots into rock where there are clear joint planes defined, then these act to stop the crack growth (perhaps in the way that those who used to remember stopping cracks growing in old cars by drilling a hole at the end of the crack. It distributes the stress that was causing the crack to grow when focused on the tip, over a larger area so that it drops below the critical level). Or the stress is high enough to cause cracks to form and be reflected back at the jet.

Jet damage confined between two adjacent planes when the charge is fired into plates that run parallel to the direction of the jet. (after Konya*)
If the charge is not carefully designed and used, therefore, it might not be as effective as initially hoped, and this becomes even more true if the pieces of metal that are formed when the cone collapses are carried into the channel and partially block it. There are different strategies, depending on the well and the surrounding rock and it is one of those things in life where, if you got it right the results are almost immediately obvious – as is the converse.

Creating cracks that go out into the surrounding rock has become a vital part of the economic production of gas from the shales around the country, as we have discussed, and having a starting crack in the right direction, whether it is a natural joint in the rock, or a crack that has been deliberately created helps control where the crack starts and how it grows.

Crack growing out from a drilled hole in Plexiglas, the small notch at the top of the hole controlled the direction of the growth of the crack (We put ink in the hole to show how the fluid goes into the crack).
In the above picture you can see that when the hole was pressurized, a crack grew, and ink flowed into the crack, as it formed, but, when the pressure came off, the crack closed and most of the ink was forced back out of the crack. (We created the pressure by firing an air rifle pellet into the hole).

So if we are going to have a useful crack we need to have it open after we take the pressure back off – after all we need to get the fluid back out of the well, so that the gas can pass up the well for collection.

Now it is not quite as easy to grow the crack, or prop it open as I may have suggested earlier, and to explain some of the issues in a little more detail I am going to use an example and some details from the Modern Shale Gas Primer.

When you decide to frac the well, and each well is different, as is just about every location, so there is a significant amount of preparation and knowledge required to work out the procedure required at that particular point. Bear in mind that the crack that you are going to have to grow needs to stay in the shale layer, and not go out beyond it into the surrounding rock. One of the reasons for this is, apart from giving the gas a path to the well, if it goes outside the reservoir rock then the gas can escape, or, alternately, other fluids can gain access to the well. This is particularly true of the Barnett where the rock immediately below it, the Ellenberger limestones, can hold a lot of water that can muck up the gas recovery if it gets into the fractures. (Given this degree of control and the large distance below the ground to the reservoir rock, this is why a lot of the fears that the frac job will damage the ground water tend to be dramatically overstated).

In the example cited, which is from the Marcellus shale, the treatment of the frac takes a total of 18 steps, and because some of these are fairly similar I am going to go through them in groups. First the hole is treated with an acid, to clean away any remaining debris and mud from the drilling operation and to clean any fractures around the hole, so that they can be used to help the frac grow. After the acid the hole is filled with an initial polymeric fluid, largely water, but containing the “Banana Water” that I referred to in an earlier post. This is a friction reducing agent and will help carry the particles used to hold the crack open into the crack in the first place. The problem with that polymer is that some of the choices available, while good at reducing the friction to help move the particles, aren’t that good at holding the particles in suspension, and the last thing we need is for them to settle out in the bottom of the well, and so in the subsequent steps in the process as the particles (or proppants) are added, there is usually a second polymer in the mix to hold them in suspension.

Once the hole is full of the slickwater (the official term for the first polymer solution) the initial frac is made with a fine sand suspended in the fluid. To keep the crack open all along its length we need sand along the path and the crack gets narrower as it grows deeper. So for the first several stages of the crack growth the fluid is filled with successively greater concentrations of the fine sand, so that, in this way, it can penetrate to the deepest part of the fracture.

In the example cited there are some seven of these sub-stages with the fluid being pumped into the well at some 3,000 gpm but varying the fluid:proppant density to carry more and more of the particles into the fracture. Once these stages have been completed, then the job is finished by pumping an additional eight sub-stages of fluid, with this second set containing a larger size of proppant particles. In this way the area closest to the mouth of the fracture will be held wider apart to make it easier for the gas to escape. As with the first set of sub-stages, the concentration of proppant in the fluid increases as the stages progress. In total, in the example given, some 450,000 lb of proppant was used to make the fracture, together with some 578,000 gallons of water.

Once the fracture is created, then the well is flushed to clean out the different fluids, and make it easier for the gas to get out out of the rock and into the well. (It also removes any loose and ineffective proppant so that it doesn’t later become a nuisance). If you think that this would need a lot of equipment you are right!

Equipment used for hydraulic fracturing a well (Primer)

Since there is some discussion of the effects of the different constituents of the fracing fluid on local waters I thought I would end with the listing of common chemicals used in that liquid, which is provided in the Primer.

As usual this has had to be a very brief review of the technology and may have oversimplified to the point of not being clear, so all technical comments and questions are appreciated.

* The initial photos in this post were taken as part of the dissertation of Dr Konya, "The use of Shaped Explosive Charges to Investigate Permeability, Penetration and Fracture Formation in Coal, Dolomite and Plexiglas" Missouri S&T, 1972.

Drumbeat: November 22, 2009

Leanan — Sun, 22 Nov 2009 10:47:58 -0400

Financial Sense Newshour interviews Matthew Simmons

Part 1: Matthew R. Simmons Chairman Simmons & Company International
Topic: The Future of Energy
Kenneth J. Gerbino Chairman Titan Oil Recovery Inc
Topic: Current Condition of the Energy Markets
Glenn Labhart Chair, Energy Oversight Committee Global Association of Risk Professionals (GARP)
Topic: Energy Risk Professional: Understanding the Energy Markets

The dawn of the Third Industrial Revolution

"The most hated man in science" said that it may be too late to save civilization.
Civilization is on the cusp of the Third Industrial Revolution and "our Second Industrial Revolution is on life support," according to Jeremy Rifkin, president and founder of the Foundation on Economic Trends said.
We are in emergency mode. Our dependence on non-renewable resources for energy is breaking the economic system we rely on, he said.

Iraq hopes output hike will fuel prosperity

Iraq hopes a petrodollar gush it will uncork by tripling oil output will drag it out of chaos into prosperity, but there is just as much chance the new wealth will fuel fresh conflict.
Home to the world's third-largest oil reserves, Iraq also plans to leap to third place among oil producers – spurring hope among war-weary Iraqis of a windfall to drive development and job creation after decades of economic decline.
But rampant corruption, political inertia and ethnic feuding over oil-producing regions like Kirkuk mean that years of sectarian bloodshed could just as easily be followed by years of fighting for control of oil, experts and Western officials say.

Keeping Our Sights Set on a Recovery

Even though crude prices managed to break $80 per barrel by Wednesday, investors quickly began taking profits. By Friday, oil prices had fallen by 3.5%. In the API's Monthly Statistical Report, U.S. oil production averaged 5.36 million barrels per day. The last time U.S. crude production was that high was June 2005.
Unfortunately, our country's production troubles are far from solved. In fact, the truth is that U.S. oil production peaked in 1970. Ever since then, we've been sliding down the backside of peak oil.

Reliance Makes Cash Offer for Bankrupt LyondellBasell

(Bloomberg) -- Reliance Industries Ltd., owner of the world’s largest oil-refining complex, made a cash offer to buy a controlling stake in closely held LyondellBasell Industries AF, the bankrupt chemicals and fuels maker.

Heritage Oil to Sell Uganda Fields to Italy’s Eni, Times Says

(Bloomberg) -- Heritage Oil Plc will sell its fields in Uganda to Eni SpA of Italy for more than $1.5 billion, the London-based Sunday Times said, without saying where it got the information from.

Tim DeChristopher's wild legal ride

He disrupted an oil and gas lease auction last year by posing as a buyer. Now a judge has rejected his last-ditch defense strategy.

Smart power grid: Singapore to introduce intelligent energy management system

The Singapore government continues to execute on its long-term energy strategy. With the advent of Peak Oil, the era of cheap energy and certainly cheap electricity is over. The next best things to do, then, are to look into renewable/alternative energy sources, energy conservation, and certainly, energy management systems, such as grid tie solar systems, and intelligent electrical power distribution systems such as this "Intelligent Energy System".

U.S. airline industry once again goes under scrutiny

For the third time in 16 years the federal government is forming a blue-ribbon panel to try to save the USA's troubled airline industry, which has racked up $58.5 billion in losses and shed 158,000 jobs this decade.
...But a $20 billion price tag for fixing the industry's biggest problems and a failure to implement most of the suggestions from two previous commissions have many analysts and former government officials questioning whether anything will come from this latest effort.

Opec wants compensation if climate deal cuts oil use

The chief of the Opec oil cartel said that oil-producing countries should be compensated for lost revenues if UN climate talks in Copenhagen next month reach a deal that cuts the use of oil.
In an interview with The Times, Abdullah Salem al-Badri, of Libya, who is due to speak in Copenhagen, said that richer oil-consuming countries such as Britain and the US should acknowledge that historically they have created most carbon dioxide emissions and should not be allowed to block poorer countries from raising living standards for their own people.

Tax those carbon gluttons

The fun starts with the government giving you maybe $2,000 as a carbon dividend. You like it so far? Thought so. And the government gets the money by imposing a tax on everything that emits carbon dioxide into the air. The total amount raised by the carbon tax is the same amount that’s being distributed as a dividend. So it’s a wash. The government is no better off at the end of the day.
But you’re better off — if you’ve been frugal with energy, living in a snug house with solar hot water and wood heat, travelling on public transport, eating local food. You lose a bit of your dividend in taxes on gasoline and electricity and what-not — but you get to keep a good chunk of your carbon dividend. Let’s say you pay $400 more in taxes. That money just reduces your windfall dividend. The carbon tax still leaves you $1,600 ahead. How does that sound, sonny?

Investors must ask about shale gas cost

Mr Berman contends that shale gas wells’ production declines at a dramatically faster rate than the companies’ estimates. Reasonable people can dispute the accuracy of his projected decline curves. I have found Mr Berman open to debate and willing to consider contrary evidence.
Whether he or his critics are closer to the truth about shale gas decline rates, it does seem clear to me that Wall Street has underestimated the real cost of shale gas, and overestimated how fast its production can be expanded.
This matters. By now, close to half of the gas rigs in the US, and most of the development money for the fuel, is going to shale plays.
If the companies and investors are wrong, there may be tens of billions of dollars of over-investment, that might be more productively spent on conventional onshore gas, or on drilling US offshore prospects. This is not just an investors’ bet, but a core national energy policy.

Sinopec bid to take part in Iraq oil deals rebuffed

BAGHDAD (Reuters) - China's Sinopec Corp sought to pay participation fees to bid for oilfields on offer in Iraq's second bidding round but was rebuffed, an official with the Iraqi Oil Ministry said on Sunday.
"Sinopec asked to pay the participation fee to get the data package but we refused due to the deals they have with the Kurdish Regional Government," said Sabah Abdul Kadhim, head of the legal and commercial section of the Petroleum Contracts and Licensing Directorate.

Valero's Major Announcement a Telling Economic Indicator

Valero Energy has just announced it is shutting down its Delaware City Refinery. This is a major news announcement because refiners should be seen as a canary in the coalmine for end-user demand and Valero is one company in the oil patch which has been loath to cut workers to improve the bottom line. This announcement is an indicator that, despite a technical recovery, the economy still has major obstacles to overcome.

Chavez says Venezuela in recession, by US yardstick

CARACAS (Reuters) - Oil-exporting Venezuela is in recession, its socialist President Hugo Chavez said on Saturday, adding that the capitalist system of measuring economic growth was established in the United States.

China vs. U.S.: economic power vs. military might; which will prevail?

The U.S. and China, with their huge economies, are totally dependent upon a steady, guaranteed supply of petroleum into the future. While supplies of oil have been very plentiful for many decades, that situation is beginning to rapidly change. Our very painful experience with $147 per barrel of oil in 2008 may have dissipated for now but experts predict that, in the not too distant future, the world will experience huge escalations in prices as supply will not be able to keep up with demand.

Iraq's Oct. oil exports drop due to attacks

BAGHDAD (AP) - An Iraqi official says insurgent attacks caused a 4 percent drop in the country's oil exports in October compared to the previous month, but that revenues were up due to higher prices.
Oil Ministry spokesman Assem Jihad says exports averaged 1.877 million barrels a day in October, grossing $4.187 billion with an average price of $71.94 a barrel.

FACTBOX - How countries have coped with the oil "curse"

Iraq is poised to strike deals with international oil companies that could vault it into third place in the table of oil producing nations.
Emerging from years of sectarian slaughter and war triggered by the 2003 U.S. invasion, it desperately needs the billions of dollars in development and reconstruction funds that a large increase in oil exports will bring. [ID:GEE5AL043]
But oil riches often cause more economic damage than benefit, a phenomenon known as the oil or resource "curse."
Following are descriptions of how other countries have dealt with their oil wealth.

Bright Future for Petrobras and Brazil, Part 2

Petrobras may be exporting close to 3 million barrels a day by 2020. My readers won't be surprised to know that I also think the price of oil in 2020 will be much higher than it is today. In conclusion: the recent changes in Brazil's economic, energy, and banking policies mean it is safe to invest in Brazil and safe to invest in Petrobras. Anyone who agrees with me that the future of planet Earth is one in which worldwide oil supply will not keep pace with worldwide oil demand would probably also agree that Petrobras should be a core energy holding.

20 Fastest-Growing Asian Energy Companies - Platt's

Platts, the highly respected energy consulting company, released its Platts Top 250 Global Energy Company Rankings for 2009 this week. One of the sub-sectors of this ranking is the Fastest Growing Energy Companies in Asia.

Seismic rumbles in the forests

The sheer size and number of Marcellus Shale drill sites and their truck traffic are altering Pennsylvania land use.

BP, the killer they like to forgive

This week UK magazine the New Statesman announced its ranking of ’20 green heroes and villains.’ Among the “panel of environmental experts” judging the awards was John Browne, the UK peer whose reputation was earned at the helm of global petrochemicals giant BP.
Lord Browne may be especially well qualified to assess environmental villainy. In 2007, environmental crimes committed under his leadership at BP attracted the “largest criminal fine ever for air violations” handed down by the US Environmental Protection Agency (EPA). The firm is still on probation for the incidents EPA said had “terrible consequences for people and the environment”.

Radiation leak at Three Mile Island

THREE MILE ISLAND - (WPVI) -- We are learning more this morning about a reported radiation leak at Three Mile Island.
The Nuclear Regulatory Commission says later today it is sending two radiation specialists to the plant near Harrisburg.

Historic Peak Oil Motion Defeated In Australian Senate

In Australia the Australian Greens recently attempted to introduce what, to the best of my knowledge (please let me know otherwise ASAP), may be the first ever Peak Oil motion introduced into a national assembly. Unfortunately, in the Federal Parliament of pro-coal, fossil fuel-obsessed, climate criminal Australia (the world’s worst per capita greenhouse gas polluter), the motion was defeated 31 to 6 on 20 November 2009 with the five Australian Greens Senators supporting the motion and one supposes South Australian independent Senator Nick Xenophon as the sixth supporting vote.

What a deeper river would mean to commerce

Plans by the Army Corps of Engineers to deepen the navigation channel from 40 feet to 45 feet to accommodate bigger commercial ships have generated heated opposition from environmental groups and state officials in New Jersey and Delaware.
So, what difference would those five extra feet make to the steamship companies that sail the river, and to the businesses that use ships to move goods into and out of local ports?

Berkshire Well Positioned for Buffett's Prediction on Electric Cars

Twenty years is a short period of time for a radical shift to an all-electric vehicle fleet. Battery technology will need to improve significantly to make it cost effective without government subsidies. Electric vehicles will also need to have a range comparable to gasoline vehicles along with the ability to either quickly recharge the battery or swap it for a new one. BYD’s e6 has shown that a 250 mile range is already possible and a 50% recharge can be done in just ten minutes. Better Place has developed technology to exchange fully charged batteries in an automated process.

Electric carmaker Tesla preparing IPO: sources

SAN FRANCISCO (Reuters) - U.S. electric sports car maker Tesla Motors plans to go public soon, two sources familiar with the matter said, amid growing interest in green technology and battery-powered vehicles.

China harnesses mountain wind power

DALI, China (AFP) – In the mountains above the southwestern Chinese town of Dali, dozens of new wind turbines dot the landscape -- a symbol of the country's sky-high ambitions for clean, green energy.
At an altitude of 3,000 metres (9,800 feet), Dali Zhemoshan is the highest wind farm in China, where renewable energy has become a priority for a government keen to reduce its carbon emissions and which has taken full advantage of the global trade in carbon credits.

A climate change dust-up

One side sees hacked e-mail as a sign of a 'Warmist Conspiracy.' The other says it's being taken out of context. Analysts don't expect it to have much effect on the Senate greenhouse gas bill.

Rising sea levels threaten Caribbean region

According to a recently updated World Bank study on climate change in Latin America, Alfonso and his neighbors have reason to be concerned. Not only are the effects of global warming more evident in Latin American coastal cities, the report says, but the phenomenon could worsen in coming decades because sea levels will rise highest near the equator.
...According to some scenarios that the authors of the World Bank study say are not that far-fetched, Cartagena and the rest of the Caribbean coastal zone could see sea levels rising as much as 2 feet, possible more, by the end of the century. Even at the lower end of projections, parts of this city would be knee-deep in sea water.

Information and Crude Complexity

Nate Hagens — Sat, 21 Nov 2009 10:16:16 -0400

This is a guest post by WebHubbleTelescope.

Abstract (please read this as a set of squished-together PowerPoint bullet points):
People become afraid when you mention theory. Everyone talks about entropy without actually understanding it. Simplicity can come out of complexity. "Knowledge" remains a slippery thing. We think that science flows linearly as previous knowledge get displaced with new knowledge. Peak oil lies in this transition much like plate tectonics at one time existed outside of the core knowledge. We define knowledge by whatever the scientific community currently believes. “Facts are not knowledge. Facts are facts, but how they form the big picture, are interconnected and hold meaning, creates knowledge. It is this connectivity, which leads to breakthroughs …” You will either think you understand the following post, or know for a fact that you don't.

Scientific theories get selected for advancement much like evolution promotes the strongest species to survive. New theories have to co-exist with current ones, battling with each other to prove their individual worth [Ref 1]. That may partly explain why the merest mention of "theory" will tune people out, as it will remind them of the concept of biological evolution, which either they don't believe in, or consider debatable at best. Generalize this a bit further and you could understand why they could also reject the scientific method. If we admit to this as a chronic problem, not soon solved, the idea of accumulating knowledge seems to hold a kind of middle ground, and doesn't necessarily cause a knee-jerk reaction like pushing a particular theory would.¹ So, what kinds of things do we actually want to know? For one, I will assert that all of us would certainly want to know that we haven't unwittingly taken a sucker's bet, revealing that someone has played us. I suspect that many of the diehard TOD readers, myself included, want to avoid this kind of situation. In my mind, knowledge remains the only sure way to navigate the minefield of confidence schemes. In other words, you essentially have to know more than the next guy, and the guy after that, and then the other guy, etc. TOD does a good job of addressing this as we constantly get fed the unconventional insights to explain our broader economic situation.

Ultimately we could consider knowledge as a survival tactic -- which boils down to the adage of eat or be eaten. If I want to sound even more pedantic, I would suggest that speed or strength works to our advantage in the wild but does not translate well to our current reality. It certainly does not work in the intentionally complex business world, or even with respect to our dynamic environment, as we cannot outrun or outmuscle oil depletion or climate change without putting our thinking hats on.

This of course presumes that we know anything in the first place. Nate Hagens had posted on TOD earlier this year the topic "I Don't Know". I certainly don't profess to have all the answers, but I certainly want to know enough not to get crushed by the BAU machine. So, in keeping with the traditions of the self-help movement, we first admit what we don't know and build from there. That becomes part of the scientific method, which a few of us want to apply.

As a rule, I tend to take a nuanced analytical view to the way things may play out. I will use models of empirical data to understand nagging issues and stew over them for long periods of time. The stewing is usually over things I don't know. Of course, this makes no sense for timely decision making. If I morphed into a Thompson's gazelle with a laptop cranking away on a model under a shady baobob tree on the Serengeti, I would quickly get eaten. I realize that such a strategy does not necessarily sound prudent or timely.

Nate suggests that the majority of people use fast and frugal heuristics to make day-to-day decisions (the so-called cheap heuristic that we all appreciate). He has a point in so far as not always requiring a computatonal model of reality to map our behaviors or understanding. As Nancy Cartwright noted:

This is the same kind of conclusion that social-psychologist Gerd Gigerenzer urges when he talks about “cheap heuristics that make us rich.” Gigerenzer illustrates with the heuristic by which we catch a ball in the air. We run after it, always keeping the angle between our line of sight and the ball constant. We thus achieve pretty much the same result as if we had done the impossible—rapidly collected an indefinite amount of data on everything affecting the ball’s flight and calculated its trajectory from Newton’s laws.

This points out the distinction between conventional wisdom and knowledge. A conventionally wise person will realize that he doesn't have to hack some algorithm to catch a ball. A knowledgeable person will realize that he can (if needed) algorithmically map a trajectory to know where the ball will land. So some would argue that, from the point of timely decision making, whether having extra knowledge makes a lot of sense. In many cases, if you have some common sense and pick the right conventional wisdom, it just might carry you in your daily business.

But then you look at the current state of financial wheeling-dealings. In no way will conventional wisdom help guide us through the atypical set of crafty financial derivatives (unless you stay away from it in the first place). Calvin Trillin wrote recently in the NY Times that the prospect of big money attracted the smartest people from the Ivy Leagues to Wall Street during the last two decades, thus creating an impenetrable fortress of opaque financial algorithms, with the entire corporate power structure on board. Trillin contrasted that to the good old days, where most people aiming for Wall St careers didn't know much and didn't actually try too hard.

I reflected on my own college class, of roughly the same era. The top student had been appointed a federal appeals court judge — earning, by Wall Street standards, tip money. A lot of the people with similarly impressive academic records became professors. I could picture the future titans of Wall Street dozing in the back rows of some gut course like Geology 101, popularly known as Rocks for Jocks.

I agree with Trillin that the knowledge structure has become inverted; somehow the financial quants empowered themselves to create a world where no one else could gain admittance. And we can't gain admittance essentially because we don't have the arcane knowledge of Wall Street's inner workings. Trillin relates:

"That’s when you started reading stories about the percentage of the graduating class of Harvard College who planned to go into the financial industry or go to business school so they could then go into the financial industry. That’s when you started reading about these geniuses from M.I.T. and Caltech who instead of going to graduate school in physics went to Wall Street to calculate arbitrage odds."

“But you still haven’t told me how that brought on the financial crisis.”

“Did you ever hear the word ‘derivatives’?” he said. “Do you think our guys could have invented, say, credit default swaps? Give me a break! They couldn’t have done the math.”

If you can believe this, it appears that the inmates have signed a rent-controlled lease on the asylum and have created a new set of rules for everyone to follow. We have set in place a permanent thermocline that separates any new ideas from penetrating the BAU of the financial industry.

I need to contrast this to the world of science, where one can argue that we have more of a level playing field. In the most pure forms of science, we accept, if not always welcome, change in our understanding. And most of our fellow scientists won't permit intentional hiding of knowledge. Remarkably, this happens on its own, largely based on some unwritten codes of honor among scientists. Obviously some of the financial quants have gone over to the dark side, as Trillin's MIT and Caltech grads do not seem to share their secrets too readily. By the same token, geologists who have sold their soul to the oil industry have not helped our understanding either.

Given all that, it doesn't surprise me that we cannot easily convince people that we can understand finance or economics or even resource depletion like we can understand other branches of science. Take a look at any one of the Wilmott papers featuring negative probabilities or Ito calculus, and imagine a quant using the smokescreen that "you can't possibly understand this because of its complexity". The massive pull of the financial instruments, playing out in what Steve Ludlum calls the finance economy, does often make me yawn in exasperation out of the enormity of it all. Even the domain of resource depletion suffers from a sheen of complexity due to its massive scale -- after all, the oil economy essentially circles the globe and involves everyone in its network.

Therein lies the dilemma: we want and need the knowledge but find the complexity overbearing. Thus the key to applying our knowledge: we should not fear complexity, but embrace it. Something might actually shake out.

Complexity

The word complexity, in short order, becomes the sticking point. We could perhaps get the knowledge but then cannot breech the wall of complexity.

I recently came across a description of the tug-of-war between complexity and simplicity when I happened across a provocative book called "The Quark and the Jaguar : Adventures in the Simple and the Complex" by the physicist Murray Gell-Mann. I discovered this book while researching the population size distribution of cities. One population researcher, Xavier Gabaix, who I believe has a good handle on why Zipf's law holds for cities, cites Gell-Mann and his explanation of power laws. Gell-Mann's book came out fifteen years ago but it contains a boat-load of useful advice for someone that wants to understand how the world works (pretentious as that may sound).

I can take a couple of bits of general advice from Gell-Mann. First, when a behavior gets too complex, certain aspects of the problem can become more simple. We can rather counter-intuitively actually simplify the problem statement, and often the solution. Secondly, when you peel the onion, everything can start to look the same. For example, the simplicity of many power-laws may work to our advantage, and we can start to apply them to map much of our current understanding². As Gell-Mann states concerning the study of the simple and complex in the preface to the book:

It carries with it a point of view that facilitates the making of connections, sometimes between facts or ideas that seem at first glance very remote from each other. (Gell-Mann p. ix)

He calls the people that practice this approach "Odysseans" because they "integrate" ideas from those who "favor logic, evidence, and a dispassionate weighing of evidence", with those "who lean more toward intuition, synthesis, and passion" (Gell-Mann p. xiii). This becomes a middle ground for Nate's intuitive cognitive (belief system) approach and my own practiced analysis. Interesting in how Gell-Mann moved from Caltech (one of Trillin's sources for wayward quants) to co-founding the Santa Fe Institute where he could pursue out-of-the-box ideas³. He does caution that at least some fundamental and basic knowledge underlines any advancements we will achieve.

Specialization, although a necessary feature of our civilization, needs to be supplemented by integration of thinking across disciplines. One obstacle to integration that keeps obtruding itself is the line separating those who are comfortable with the use of mathematics from those who are not. (Gell-Mann p.15)

I appreciate that Gell-Mann does not treat the soft sciences as beneath his dignity and he seeks an understanding as seriously as he does deep physics. He sees nothing wrong with the way the softer sciences should work in practice, he just has problems with the current practitioners and their methods (some definite opinions that I will get to later).

For now, I will describe how I use Gell-Mann and his suggestions as a guide to understand problems that have confounded me. His book serves pretty well as a verification blueprint for the way that I have worked out my analysis. As it turns out, most of what Gell-Mann states regarding complexity I happily crib from, and allows me to use an appeal to authority card to rationalize my understanding. (For this TOD post I was told to not use math and since Gell-Mann claims that his book is "comparatively non-technical", I am obeying some sort of transitive law⁴ here) As a warning, since Gell-Mann deals first and foremost in the quantum world, his ideas don't necessarily come out intuitively.

That becomes the enduring paradox -- simplicity does not always relate to intuition. This fact weighs heavily on my opinion that cheap heuristics likely will not provide the necessary ammunition that we will need to make policy decisions.

BAU (business as usual) ranks as the world's most famous policy heuristic. A heuristic describes some behavior, and a simple heuristic describes it in the most concise language possible. So, BAU says that our environment will remain the same (as Nate would say "when NOT making a decision IS making a decision"). Yet we all know that this does not work. Things will in fact change. Do we simply use another heuristic? Let's try dead reckoning instead. This means that we plot the current trajectory (as Cartwright stated) and assume this will chart our course for the near future. But we all know that that doesn't work either as it will project CERA-like optimistic and never-ending growth.

Only the correct answer, not a heuristic, will effectively guide policy. Watch how climate change science works in this regard, as climate researchers don't rely on the Farmer's Almanac heuristics to predict climate patterns. Ultimately we cannot disprove a heuristic -- how can we if it does not follow a theory? -- yet we can replace it with something better if it happens to fit the empirical data. We only have to admit to our sunk cost investment in the traditional heuristic and then move on.

In other words, even if you can't "follow the trajectory" with your eye, you can enter a different world of abstraction and come up with a simple, but perhaps non-intuitive, model to replace the heuristic. So we get some simplicity but it leaves us without a perfectly intuitive understanding. The most famous example that Gell-Mann provides involves Einstein's reduction of Maxwell's four famous equations in complexity by 1/2 to two short concise relations; Einstein accomplishes this by invoking the highly non-intuitive notion of the space-time continuum. Gell-Mann specializes in these abstract realms of science, yet uses concepts such as "coarse graining" to transfer from the quantum world to the pragmatic tactile world, with the name partially inspired by the idea of a grainy photograph (Gell-Mann p.29). In other words, we may not know the specifics but we can get the general principles, like we can from a grainy photograph.

Hence, when defining complexity it is always necessary to specify a level of detail up to which the system is described, with finer details being ignored. (Gell-Mann p.29)

The non-intuitive connection that Gell-Mann triggers in me involves the use of probabilities in the context of disorder and randomness. Not all people understand probabilities, and in particular how we apply them in the context of statistics and risk (except for sports betting of course), yet they don't routinely get used in the practical domains that may benefit from their use. How probabilities work in terms of complexity I consider mind-blowingly simple, primarily due to our old friend Mr. Entropy.

Never mind that entropy ranks as a most anti-intuitional concept.

Simplicity

Reading Gell-Mann's book, I became convinced that applying a simple model should not immediately raise suspicions. Lots of modeling involves building up an artifice of feedback-looped relationships (see the Limits to Growth system dynamics model for an example), yet that should not provide an acid test for acceptance. In actuality, the large models that work consist of smaller models built up from sound principles, just ask Intel how they verify their microprocessor designs.

My approach consists of independent research and then forays into what I consider equally simple connections to other disciplines, essentially the Odyssean thinking that Gell-Mann supports.

I would argue that the fundamental trajectory of oil depletion provides one potentially simplifying area to explore. I get the distinct feeling that no one has covered this, especially in terms of exactly why the classical heuristic, i.e. Hubbert's logistic curve, often works. So I have merged that understanding with the fact that I can use it to also understand related areas such as:

I collectively use these to support the oil dispersive discovery model -- yet it does bother me that no one has happened across this relatively simple probability formulation. You would think someone would have discovered all the basic mathematical principles over the course of the years, but apparently this one has slipped through the cracks.

Gell-Mann predicted in his book that this unification among concepts would occur if you continue to peel the onion. To understand the basics behind the simplicity/complexity approach, consider the complexity of the following directed graphs of interconnected points. Gell-Mann asks us which graphs we would consider simple and which ones we would consider complex. His answer relates to how compactly or concisely we can describe the configurations. So even though (A) and (B) appear simple and we can describe them simply, the graph in (F) borders on ridiculously simple, in that we can describe it as "all points interconnected". So this points to the conundrum of a complex, perhaps highly disordered system, that we can fortunately describe very concisely. As humans, the fact that we can do some pattern recognition allows us to actually discern the regularity from the disorder.

Figure 1: Gell-Mann's connectivity patterns.
However, what exactly the pattern means may escape us. As Gell-Mann states:

We may find regularities, predict that similar regularities will occur elsewhere, discover that the prediction is confirmed, and thus identify a robust pattern: however, it may be a pattern that eludes us. In such a case we speak of an "empirical" or "phenomenological" theory, using fancy words to mean basically that we see what is going on but do not yet understand it. There are many such empirical theories that connect together facts encountered in everyday life. (Gell-Mann p.93)

That may sound a bit pessimistic, but Gell-Mann gives us an out in terms of always considering the concept of entropy and applying the second law of thermodynamics (the disorder in an isolated system will tend to increase over time until it reaches an equilibrium). Many of the pattens such as the graph in Figure 1(F) have their roots in disordered systems. Entropy essentially quantifies the amount of disorder, and that becomes our "escape hatch" in how to simplify our understanding.

In fact, however, a system of very many parts is always described in terms of only some of its variables, and any order in those comparatively few variables tends to get dispersed, as time goes on, into other variables where it is no longer counted as order. That is the real significance of the second law of thermodynamics. (Gell-Mann p.226)

One area that I have recently applied this formulation to has to do with the distribution of human travel times. Brockmann et al reported in Nature a few years ago a scalability study that provoked some scratching of heads (one follow-on paper asked the questions "Do humans walk like monkeys?"). The data seemed very authentic as at least one other group could reproduce and better it, even though they could not explain the mechanism. The general idea, which I have further described here, amounts to nothing more than tracking individual travel times over a set of distances, and thus deriving statistical distributions of travel time by either following the cookie trails of paper money transactions (Brockmann) or cell phone calls (Gonzalez). This approach provides a classic example of a "proxy" measurement; we don't measure the actual person with sensors but we use a very clever approximation to it. Proxies can take quite a beating in other domains, such as historical temperature records, but this set of data seems very solid. You will see this in a moment.

Figure 2: Human travel connectivity patterns, from Brockmann, et al.
Note that this figure resembles the completely disordered directed graph shown by Figure 1(f). This gives us some hope that we can actually derive a simple description of the phenomenon of travel times. We have the data, thus we can hypothetically explain the behavior. As the data has only become available recently, likely no one has thought of applying the simplicity-out-of-complexity principles that Gell-Mann has described.

So how to do the reduction⁵ to first principles? Gell-Mann brings up the concept of entropy as ignorance. We actually don't know (or remain ignorant of) the spread or dispersion of velocities or waiting times of individual human travel trajectories, so we do the best we can. We initially use the hint of representing the aggregated travel times -- the macro states -- as coarse-grained histories, or mathematically in terms of probabilities.

Now suppose the system is not in a definite macrostate, but occupies various macrostates with various probabilities. The entropy of the macrostates is then averaged over them according to their probabilities. In addition, the entropy includes a further contribution from the number of bits of information it would take to fix the macrostate. Thus the entropy can be regarded as the average ignorance of the microstate within a macrostate plus the ignorance of the macrostate itself. (Gell-Mann p.220)

In the way Gell-Mann stated it, I interpret it to mean that we can apply the Maximum Entropy Principle for probability distributions. In the simplest case, if we only know the average velocity and don't know the variance we can assume a damped exponential probability density function (PDF). Since the velocities in such a function follow a pattern of many slow velocities and progressively fewer fast velocities, but with the mean invariant, the unit normalized distribution of transit probabilities for a fixed distance looks like the figure to the right (see link for derivation). To me it actually looks very simple, although people virtually never look at exponentials this way, as it violates their intuition. What may catch your eye in particular is how slowly the curve reaches the asymptote of 1 (which indicates a power-law behavior). If normal statistics acted on the velocities, the curve would look much more like a "step" function, as most of the transits would complete at around the mean, instead of getting spread out in the entropic sense.

Further since the underlying exponentials describe specific classes of travel, such as walking, biking, driving, and flying, each with their own mean, the smearing of these probabilities leads to a characteristic single parameter function that fits the data as precisely as one could desire. The double averaging of the microstate plus the macrostate effectively leads to a very simple scale-free law as shown by the blue and green maximum entropy lines I added in Figure 3.

Figure 3: Dispersion of mobility for human travel. The green line indicates agreement with a truncated Maximum Entropy estimate, and the blue dots indicate no truncation
I present the complete derivation here and the verification here. If you decide to read in more depth, keep in mind that it really boils down to a single-parameter fit -- and this over a good 5 orders of magnitude in one dimension and 3 orders in the other dimension. Consider this agreement in the face of someone trying to falsify the model; they would essentially have to disprove entropy of dispersed velocities.

It has often been empasized, particularly by the philosopher Karl Popper, that the essential feature of science is that its theories are falsifiable. They make predictions, and further observations can verify those predictions. When a theory is contradicted by observations that have been repeated until they are worthy of acceptance, that theory must be considered wrong. The possibility of failure of an idea is always present, lending an air of suspense to all scientific activity. (Gell-Mann p.78)

Further, this leads to a scale-free power law that looks exactly like the Zipf-Mandelbrot law that Gell-Mann documents, which also describes ecological diversity (the relative abundance distribution) and the distribution of population sizes of cities, from which I found Gell-Mann in the first place.

Since we invoke the name of Mandelbrot, we need to state that the observation of fractal self-similarity on different scales applies here. Yet Gell-Mann states:

Zipf's law remains essentially unexplained, and the same is true of many other power laws. Benoit Mandelbrot, who has made really important contributions to the study of such laws (especially their connection to fractals), admits quite frankly that early in his career he was successful in part because he placed more emphasis on finding and describing the power laws than on trying to explain them (In his book The Fractal Geometry of Nature he refers to his "bent for stressing consequences over causes."). (Gell-Mann p.97)

Gell-Mann of course made this statement before Gabaix came up with his own proof for city size, and obviously before I presented the variant for human travel (not that he would have read my blog or this blog in any case).

Barring the fact that it hasn't gone through a rigorous scientific validation, why does this formulation seem to work so well at such a concise level? Gell-Mann provides an interesting sketch showing how order/disorder relates to effective complexity, see Figure 4 below. At the left end of the spectrum, where minimum disorder exists, it takes very little effort to describe the system. As in Figure 1(a), "no dots connected" describes that system. In contrast, at the right end of the spectrum, where we have a maximum disorder, we can also describe the system very simply -- as in Figure 1(f), "all dots connected". The problem child exists in the middle of the spectrum, where enough disorder exists that it becomes difficult to describe and thus we can't solve the general problem easily.

Figure 4: Gell-Mann's complexity estimator. "the effective complexity of the observed system (can have) more to do with the particular observer's shortcomings than with the properties of the system observed." (Gell-Mann p.56)
So in the case of human transport, we have a simple grid where all points get connected (we can't control where cell phones go) and we have a maximum entropy in travel velocities and waiting times. The result becomes a simple explanation of the empirical Zipf-Mandelbrot Law [wiki]. The implication of all this is that through the use of cheap oil for powering our vehicles, we as humans have dispersed almost completely over the allowable range of velocities. It doesn't matter that we have one car that is of a particular brand and that an airliner is prop or jet, the spread in velocities while maximizing entropy is all that matters. Acting as independent entities, we have essentially reached an equilibrium where the ensemble behavior of human transport obeys the second law of thermodynamics concerning entropy.

Entropy is a useful concept only when a coarse graining is applied to nature, so that certain kinds of information about the closed system are regarded as important and the rest of the information is treated as unimportant and ignored. (Gell-Mann p.371)

Consider one implication of the model. As the integral of the distance-traveled curve in Figure 3 relates via a proxy to the total distance traveled by people, the only direction that the curve can go in an oil-starved country is to shift to the left. Proportionally more people moving slowly means that fewer proportionally will move quickly -- easy to state but not necessarily easy to intuit. That is just the way entropy works.

Figure 5: Assuming that human travel statistics follows the maximum entropy velocity dispersion model, a reduction in total travel will likely result in a shift as shown by the dotted blue curve.
But that does not end the story. Recall that Gell-Mann says all these simple systems have huge amounts of connectivity. Since one disordered system can look like another, and as committed Odysseans, we can make many analogies to other related systems. He refers to this process as "peeling the onion". Figuratively as one can peel a particular onion, another layer can reveal itself that looks much like the surrounding layer. I took the dispersive travel velocities way down to the core of the onion in a study I did recently on anomalous transport in semiconductors.

Often in physics, experimental observations are termed "anomalous" before they are understood.
-- Richard Zallen, "The physics of amorphous solids", Wiley-VCH, 1998

If you can stomach some serious solid-state physics take a peek at the results -- it's not like you will see the face of Jesus, but the anomalous behavior does not seem so anomalous anymore. Like Gell-Man states, these simple ideas connect all the way through the onion to the core.

Scaling

The big sweet Vidalia onion that I want to peel is oil depletion. All the other models I work out indirectly support the main premise and thesis. They range from the microscopic scale (semiconductor transport) to the human scale (travel times) and now to the geologic scale. I assert that in the Popper sense of falsifiability, one must disprove all the other related works to disprove the main one, which amounts to a scientific form of circumstantial evidence, not quite implying certainty but substantiating much of the thought process. It also becomes a nerve-wracking prospect; if one of the models fails, the entire artifice can collapse like a house of cards. Thus the "air of suspense to all scientific activity" that Gell-Mann refers to.

So consider rate dispersion in the context of oil discovery. Recall that velocities of humans become dispersed in the maximum entropy sense. Well, the same holds for prospecting for oil. I suggest that like human travel, all discovery rates have maximum dispersion subject to an average current-day-technology rate.

A real eye-opener to me occurred when I encountered Gell-Mann's description of depth of complexity. I consider this a rather simple idea because I had used it in the past, actually right here on TOD (see the post Finding Needles in a Haystack where I called it "depth of confidence"). It again deals with the simplicity/complexity duality but more directly in terms of elapsed time. Gell-Mann explains the depth of complexity by invoking the "monkeys typing at a typewriter" analogy. If we set a goal for the monkeys to type out the compleat works of Shakespeare, one can predict that due solely to probability arguments they would eventually finish their task. It would look something like the following figure with the depth D representing a crude measure of generating the complete string of letters that comprises the text.

Figure 6: Gell-Mann's Depth (d) is the cumulative Probability (P) that one can gain a certain level of information within a certain Time (T).
No pun-intended, Gell-Mann coincidentally refers to D as a "crude complexity" measure; I use the same conceptual approach to arrive at the model of dispersive discovery of crude oil. The connection invokes the (1) dispersion of prospecting rates (varying speeds of monkeys typing at the typewriters) and (2) a varying set of sub-volumes (different page sizes of Shakespeare's works). Again, confirming the essential simplicity/complexity duality, the fact that we see a connectivity lies more in the essential simplicity in describing the disorder than anything else.

The final connection (3) involves the concept of increasing the average rate of speed of the typewriting monkeys over a long period of time. We can give the monkeys faster tools without changing the relative dispersion in their collective variability⁶. If this increase turned out as an exponential acceleration in typing rates (see Figure 10), the shape of the Depth curve would naturally change. This idea leads to the dispersive discovery sigmoid shape -- as our increasing prospecting skill analogizes to a speedier version of a group of typewriting monkeys. See the figure to the right (click image to see larger version) for a Monte Carlo simulation of the monkeys at work [link].

It doesn't matter that we have one oil reservoir that has a particular geology and that this somehow deflects the overall trajectory, as we would have to if we considered a complete bottom-up accounting approach. I know this may disturb many of the geologists and petroleum engineers who hold to the conventional wisdom about such pragmatic concerns, but that essentially describes how a thinker such as Gell-Mann would work out the problem. The crude complexity suggests that we turn technology into a coarse grained "fuzzy" measurement and accelerate it to see how oil depletion plays out. So if you always thought that the oil industry essentially flailed away like various monkeys at a typewriter, you would approximate the reality more so than if you believed that they followed some predetermined Verhulst-generated story-line. So this model embraces the complexity inherent of the bottom-up approach, but ignoring the finer details and dismissing out of hand that determinism plays a role in describing the shape.

Luis de Sousa gives a short explanation of how the deterministic Verhulst equation leads to the Logistic here and it remains the conventional heuristic wisdom that one will find on wikipedia concerning the Hubbert Peak Oil curve. However, Verhulst generated determinism does not make sense in a world of disorder and fat-tail statistics, as only stochastic measures can explain the spread in discovery rates. This becomes the mathematical equivalent of "not seeing the forest for the trees". Pragmatically, the details of the geology do not matter, just like the details of the car or bicycle or aircraft you travel in does not matter for modeling Figure 3.

This approach encapsulates the gist of Gell-Mann's insights on gaining knowledge from complex phenomena. His main idea is the astounding observation that complexity can lead to simplicity. I am starting to venture onto very abstract ice here, but the following figure represents where I think some of the models reside on the complexity mountain.

Figure 7: Abstract representation of our understanding of resource depletion.
Notice that I place the "Limits to Growth" System Dynamics model right in the middle of the meatiest complexity region. That model has perhaps too many variables and so will mine the swamps of complexity without adding much insight (or in more jaded terms, any insight that you happen to require). Many people assume that the Verhulst equation, used to model predator-prey relationships and the naive Hubbert formula of oil depletion, is complex since it describes a non-linear relation. However the Verhulst actually proves too simple, as it includes no disorder, and doesn't really explain anything but a non-linear control law. The only reason that it looks like it works is that the truly simple model has a fortuitous equivalence to the simplified-complex model⁷, which exists as the dispersive discovery model on the other right-hand side of the spectrum. On the other hand, consider that the export land model (ELM) remains simple and starts to include real complexity, approaching the bottom-up models that many oil depletion analysts typically use.

Further to the left, I suggest that the naive heuristics such as BAU and dead reckoning don't fit on this chart. They assume an ordered continuance of the current state, yet one can't argue heuristics in the scientific sense as they have no formal theory to back them up⁸. The complementary effect way to the right suggests enough disorder that we can't even predict what may happen, the so-called Black Swan theory proposed by Taleb.

On the bulk of the right side, we have all the dispersive models that I have run up the flag-pole for evaluation. These all basically peel the onion, and follow Gell-Mann's suggestion that all reductive fundamental behaviors will show similarities at a coarse graining level. This includes one variation that refer to as the dispersive aggregation model for reservoir sizing. This has some practicality for estimating URR and it comes with its own linearization technique along the same lines as Hubbert Linearization (HL). You may ask if this is purely an entropic system, why would reservoirs become massive?

Sometimes people who for some dogmatic reason reject biological evolution try to argue that the emergence of more and more complex forms of life somehow violates the second law of thermodynamics. Of course it does not, any more than the emergence of more complex structures on a galactic scale. Self-organization can always produce local order. (Gell-Mann p.372)

Gell-Mann used the example of earthquakes and the relative scarcity of very large earthquakes to demonstrate how phenomenon can appear to "self-organize". Laherrere has used a parabolic fractal law, a pure heuristic to model the sizing of reservoirs (and eathquakes), whereas I use the simple dispersive model as shown below.

Figure 8: Dispersed velocities suggests a model of aggregation, much like Gabaix suggests for aggregation of cities. Very few large reservoirs and many small ones, just as in the distribution of cities.
These dispersive forms all fit together tighter than a drum. That essentially explains why I think we can use simple models to explain complex systems. I admit that I have tried to take this to some rather unconventional analogies, yet it seems to still work. I keep track of these models at http://mobjectivist.blogspot.com

Figure 9: Popcorn popping kinetics follows the same dispersive dynamics [link]

Discussion

I found many other insights in Gell-Mann's book that expand the theme of this post and so seem worthwhile to point out. I wrote this post with the intention of referencing Gell-Mann heavily because many of the TOD comments in the past have criticized not incorporating a popular science angle to the discussion. I consider Gell-Man close to Carl Sagan in this regard (w/o the "billions" of course). I essentially used the book as an interactive guide, trying to follow his ideas by comparing them to models that I had worked on.

Evidently, the main function of the book is to stimulate thought and discussion.
Running through the entire text is the idea of the interplay between the fundamental laws of nature and the operation of chance. (Gell-Mann p.367)

The role of chance, and therefore probabilities, seems to rule above all else. Not surprising from a quantum mechanic.

Gell-Mann has quite a few opinions on the state of multi-disciplinary research, with interesting insight in regards to different fields of study. He treats the problems seriously as he believes certain disciplines have an aversion to accommodating new types of knowledge. And these concerns don't sit in a vacuum, as he spends the last part of the book discussing sustainability and ways to integrate knowledge to solve problems such as resource depletion.

The lnformational Transition

Coping on local, national, and transnational levels with environmental and demographic issues, social and economic problems, and questions of international security as well as the strong interactions among all of them, requires a transition in knowledge and understanding and in the dissemination of that knowledge and understanding. We can call it the informational transition. Here natural science, technology behavioral science, and professions such as law, medicine, teaching, and diplomacy must all contribute, as, of course, must business and government as well. Qnly if there is a higher degree of comprehension, among ordinary people as well as elite groups, of the complex issues facing humanity is there any hope of achieving sustainable quality.

It is not sufficient for that knowledge and understanding to be specialized. Of course, specialization is necessary today But so is the integration of specialized understanding to make a coherent whole, as we discussed earlier. It is essential, therefore, that society assign a higher value than heretofore to integrative studies, necessarily crude, that try to encompass at once all the important features of a comprehensive situation, along with their interactions, by a kind of rough modeling or simulation. Some early examples of such attempts to take a crude look at the whole have been discredited, partly because the results were released too soon and because too much was made of them. That should not deter people from trying again, but with appropriately modest claims for what will necessarily be very tentative and approximate results.

An additional defect of those early studies, such as Limits to Growth, the first report to the Club of Rome, was that many of the critical assumptions and quantities that determined the outcome were not varied parametrically in such a way that a reader could see the consequences of altered assumptions and altered numbers. Nowadays, with the ready availability of powerful computers, the consequences of varying parameters can be much more easily explored. (Gell-Mann p. 362)

Gell-Mann singles out geology, archaelogy, cultural anthropology, most parts of biology for criticism, and many of the softer sciences, not necessarily because the disciplines lack potential, but because they suffer from some massive sunk-cost resistance to accepting new ideas. He gives the example of distinguished members of the geology faculty of Caltech "contemptuosly rejecting the idea of continental drift" for many years into the 1960's (Gell-Mann p. 285). This extends to beyond academics, as I recently I came across some serious arguments about whether geologists actually understand the theory behind geostatistics and the use of a technique called "kriging" to estimate mineral deposits from bore-hole sampling (just reporting the facts). And then Gell-Mann relates this story on practical modeling within the oil industry:

Peter Schwartz, in his book "The Art of the Long View", relates how the planning team of the Royal Dutch Shell Corporation concluded some years ago that the price of oil would soon decline sharply and recommended that the company act accordingly The directors were skeptical, and some of them said they were unimpressed with the assumptions made by the planners. Schwartz says that the analysis was then presented in the form of a game and that the directors were handed the controls, so to speak, allowing them to alter, within reason, inputs they thought were misguided. According to his account, the main result kept coming out the same, whereupon the directors gave in and started planning for an era of lower oil prices. Some participants have a different recollections of what happened at Royal Dutch Shell, but in any case the story beautifully illustrates the importance of transparency in the construction of models, As models incorporate more and more features of the real world and become correspondingly more complex, the task of making them transparent, of exhibiting the assumptions and showing how they might be varied, becomes at once more challenging and more critical. (Gell-Mann p. 285)

Trying to understand why some people tend to a very conservative attitude, Gell-Mann has an interesting take on the word "theory" and the fact that theorists in many of these fields get treated with little respect.

"Merely Theoretical" -- Many people seem to have trouble with the idea of theory because they have trouble with the word itself, which is commonly used in two quite distinct ways. On the one hand, it can mean a coherent system of rules and principles, a more or less verified or established explanation accounting for know facts or phenomena. On the other hand, it can refer to speculation, a guess or conjecture, or an untested hypothesis, idea or opinion. Here the word is used with the first set of meanings, but many people think of the second when they hear "theory" or "theoretics". (Gell-Mann p.90)

Unfortunately, I do think that this meme that marginalizes peak oil "theory" will gain momentum over time. Particularly, in terms of whether peak oil theory has any real formality behind it, as certainly no one in academic geology besides Hubbert⁹has really addressed the topic. Gell-Mann suggests that many disciplines simply believe that they don't need theorists. TOD commenter SamuM provided some well-founded principles to consider when mounting a theoretical approach, especially in responding to countervailing theories, i.e in debunking the debunkers. I am all for continuing this as a series of technical posts. ¹⁰

In the field of economics, Barry Ritholtz has also recently suggested a more scientific approach in The Hubris of Economists, yet he doesn't think that modeling necessarily works in economics (huh?). He might well consider that economics and finance modeling assumes absolutely no entropic dispersion. Taleb suggests that they should include fat-tails. The amount of effort placed in applying normal statistics has proven out as a colossal failure. We get buried daily in discussions on how to best to generate a course-correction within our economy, balanced between a distinct optimism and a bleak pessimism. At least part of the pessimism stems from the fact that we think the economy will forever stay conveniently complex beyond our reach. I would suggest that simple models may help just as well and that it allows us to understand when non-cheap heuristics and complex models work against our best interests (i.e. when we have been played).

The "cost of information" addresses the fact that people may not know how to make reasonable free market decisions (for instance about purchases) if they don't have the necessary facts or insights. (Gell-Mann p.325)

Above all, Gell-Man asks the right questions and provides some advice on how to move forward..

If the curves of population and resource depletion do flatten out, will they do so at levels that permit a reasonable quality of human life, including a measure of freedom, and the persistence of a large amount of biological diversity, or at levels that correspond to a gray world of scarcity, pollution, and regimentation, with plants and animals restricted to a few species that co-exist easily with mankind? (Gell-Mann p.349) We are all in a situation that resembles a fast vehicle at night over unknown terrain that is rough, full of gullies, with precipices not far off. Some kind of headlight, even a feeble and flickering one, may help to avoid some of the worst disasters. (Gell-Mann p.366)

I hope that I have illustrated how I have attempted to separate the simple from the complex. If this has involved too much math, I apologize.

I admit that we still don't understand economics though.

References

Murray Gell-Mann, "The Quark and the Jaguar : Adventures in the Simple and the Complex", 1995, Macmillan
Calvin Trillin, "Wall Street Smarts", NY Times, October 13, 2009
Nassim Nicholas Taleb, "The Black Swan: The Impact of the Highly Improbable", 2007, Random House
D. Brockmann, L. Hufnagel & T. Geisel, "The scaling laws of human travel", Nature, Vol 439|26, 2006.
Marta C. González, César A. Hidalgo & Albert-László Barabási,, "Understanding individual human mobility patterns", Nature, Vol 453, 779-782 (5 June 2008).

Figure 10: A damped exponential contains a maximum entropy amount of information, such as the decay of radioactive material. The rising exponential usually occurs due to a degree of feedback reinforcing some effect, such as technology advances.

Notes

¹The TV pundit Chris Matthews regularly asks his guests to "tell me something I don't know". That sounds reasonable enough until you realize that it would require beyond mind reading.
²Power laws are also fat-tail laws, which has importance wrt Black Swan theory.
³See this Google video of Gell-Mann in action talking about creative ideas. Watch the questions at the end where he does not suffer fools gladly.
⁴Unfortunately the transitive law is a mathematical law which means that we can never escape math.
⁵In terms of coarse graining, explaining the higher level in terms of the lower is often called "reduction".
⁶In marathon races, the dispersion in finishing times has remained the same fraction even as the winners have gotten faster.
⁷See this link with regard to Fermi-Dirac statistics. That also looks similar but comes about through a different mechanism.
⁸Excepting perhaps short-term Bayes. Bayesian estimates use prior data to update the current situation. BAU is a very naive Bayes (i.e. no change) whereas dead reckoning is a first order update, the derivative.
⁹Who was more of a physicist and did it more out of curiosity than anything else.
¹⁰I also see many TOD comments that show analogies to other phenomena that basically don't hold any water at all. We do need to continue to counter these ideas if they don't go anywhere, as they just add to the noise.

Drumbeat: November 21, 2009

Leanan — Sat, 21 Nov 2009 09:23:30 -0400

Oil's expanding frontiers

In 1914, the Bureau of Mines said U.S. oil reserves would be exhausted by 1924. In 1939, the Interior Department said the world had 13 years worth of petroleum reserves. Then a global war was fought and the postwar boom was fueled, and in 1951 Interior reported that the world had ... 13 years of reserves. In 1970, the world's proven oil reserves were an estimated 612 billion barrels. By 2006, more than 767 billion barrels had been pumped and proven reserves were 1.2 trillion barrels. In 1977, Scold in Chief Jimmy Carter predicted that mankind "could use up all the proven reserves of oil in the entire world by the end of the next decade." Since then the world has consumed three times more oil than was then in the world's proven reserves.
But surely now America can quickly wean itself from hydrocarbons, adopting alternative energies -- wind, solar, nuclear? No.
Keith O. Rattie, CEO of Questar Corporation, a natural gas and pipeline company, says that by 2050 there may be 10 billion people demanding energy -- a daunting prospect, considering that of today's 6.2 billion people, nearly 2 billion "don't even have electricity -- never flipped a light switch." Rattie says energy demand will grow 30 percent to 50 percent in the next 20 years and there are no near-term alternatives to fossil fuels.

The SEC Surrenders to the Oil Industry

What are the consequences of allowing multi-billion-dollar systemically important multinational corporations to report their assets using proprietary mark-to-model tools involving discredited Monte Carlo simulations? I think we all know the answer to that one. But unbelievably, after such shenanigans contributed enormously to the greatest financial meltdown in living memory, the SEC is now set to allow more or less exactly the same thing in the oil industry.

Mexico eyes risk contracts to offset Cantarell downturn

LOS ANGELES - Mexico’s state-owned Petroleos Mexicanos and the Secretaria de Energia (Sener) are preparing risk contracts that will be offered to oil companies—international and domestic—in order accelerate the search for oil and gas, according to local media.
Mexico’s daily El Universal reports that the contracts are the result of concern over output generally, but especially at Cantarell, which represents a loss of 272.425 billion pesos/year ($20.859 billion) in tax revenue for the country, or 2% of estimated gross domestic product for 2009, at current oil prices.

Dark truth about Latin American energy

Several Latin American countries have recently been hit by major power shortages, raising concerns that the region is facing a serious energy crisis.
In some countries, like Venezuela and Ecuador, blackouts have become increasingly regular.
But there have also been other less frequent outages as far afield as Cuba and Brazil.

What Can the U.S. Learn from China’s Energy Policy?

China’s economy is growing at a rate of 9 percent per year, and forecasts have its fast pace of economic growth continuing, though at a slightly lower rate. Eager to bring more of its citizens out of poverty, China will not let energy be a bottleneck for such growth. Because it has limited domestic oil and gas resources, China is investing globally to ensure supply. The world’s most populous country is also expanding its coal-fired electricity capacity at breakneck speed and making a major commitment to nuclear energy. In smaller quantities, and under international pressure from the environmental community, China is also constructing solar- and wind-powered generating facilities, to the point that 30 percent of its wind capacity cannot be supported by its electric grid. Yet even with all these other technologies, coal will remain China’s mainstay for a very long time since coal is its most abundant and least expensive resource.

Marathon on the Prowl in Poland's 'Unconventional' Gas Fields

Marathon Oil is seeking to exploit "unconventional" gas fields in Poland, the company said Thursday. The Houston-based energy company joins U.S. majors ConocoPhillips and ExxonMobil Corp. in tapping the eastern European oilpatch. The area is one of the few resource-holding regions of the world still open to international oil companies.
Unconventional fields are harder to exploit and more complex than conventional fields. The move also comes at a time when demand for gas produced in Europe is expected to grow vigorously as countries intensify their efforts to reduce their dependence on Russia as a supplier.

Ethiopia records deflation of 3.7 percent

Inflation in the vast Horn of Africa nation hit a high of 64.2 percent in July 2008, driven by record high food and fuel prices, but it has fallen every month since.
"The main reason for the decline in General Consumer Price Index in October 2009 is the fall in the prices of food components especially cereal," the Central Statistical Agency said in a statement, adding that prices of non-food items had increased.

Chickens come home to roost in backyards around the USA

Small Midwestern farmers are increasingly trying to raise a diversity of organic produce beyond corn, oats and soybeans. But that movement faces an uphill battle, Bailey says, when locals who are passionate about high-quality eggs bypass their local farmers.
"We have a lot of small farmers around here making chickens and eggs available for sale," Bailey says. "My fundamental question is: Why aren't we supporting the regional economy?"

Slow Money: Bringing Money Down to Earth

Three trillion dollars a day zooms around the planet in currency markets alone. Our current financial system has, by cutting money off from people and place, allowed it to start circulating at such crazy speeds and in such complexity that no one can really understand it anymore. Even the experts don’t understand the consequences of what’s now going on. The derivatives and sub-prime mortgage mess is just one manifestation of that.
The way we slow money down is by bringing it down to Earth: connecting it directly to the land and to places where investors live. As long as how you’re investing is completely disconnected from where you live—meaning it’s just dictated by distant markets, distant companies, abstract securities—then the money can kind of circulate in this wild, crazy, volatile, and ultimately destructive fashion. If you bring money back down to Earth, connecting it to the place where you live, and all the way to the land itself, then you will be slowing money down and having a healthier outcome for all concerned.

A Growing Climate Change Movement Emerges

Groups like the anarchist-influenced Camp for Climate Action, known for its weeklong gatherings of mostly young people that end in direct action, and the suffragette- inspired Climate Rush have worked with international fixtures like Greenpeace since 2007 to wage a campaign against E.ON. They’ve shut down a coal conveyer belt, blockaded company headquarters in Nottingham, occupied the roof of the PR firm it employs and won a major criminal trial using climate change as a legal defense.
Due to such widespread and effective activism, many see Britain as a climate movement leader. British weekly political magazine The New Statesman recently said, “Climate change activism is more developed in this country than anywhere else in the world.”

Permafrost thaw threatens Russia oil and gas complex: study

MOSCOW (AFP) – Thawing permafrost caused by global warming is costing Russian energy firms billions of dollars annually in damage control and shrinking Russia's territory, Greenpeace warned in a new study Friday.
According to the report by the environmental watchdog, up to 55 billion roubles (1.9 billion dollars) a year is spent on repairs to infrastructure and pipelines damaged by changes in the permafrost in western Siberia.
"For Russia, the biggest threat of the permafrost melt is to oil and gas company infrastructure," said Vladimir Chuprov, who heads Greenpeace's energy programme in Russia.

Natural gas prices fall 12 percent in November: U.S. natural gas inventories higher than at any point in the nation's history

The recession has kept natural gas demand low most of the year. With manufacturers shuttering factories and closing offices, the country is using less electricity and power plants are burning less natural gas.
Analyst Stephen Schork noted that with industrial production still weak, home heating would be the primary source of natural gas demand for the rest of the year.
"What does that say about the current recovery, or lack thereof?" Schork said in a research note.

Smaller oil and gas players 'on way to recovery'

The rising oil price has helped the UK's energy industry move towards recovery, a survey of smaller firms in the oil and gas sector suggests.
Ernst & Young's index of activity registered a strong gain of 35% in the third quarter of this year, and a rise of 114% since the start of this year.
The survey found more than half of oil and gas company bosses said they were looking at acquisitions.

Irish Government Urged To Resist Fossil Fuel Tax Increase

Many commentators in the Republic of Ireland are forecasting a general tax across all fossil fuels in the country's forthcoming Budget.
Ahead of the Budget, The Oil Firing Technical Association (OFTEC) has pointed out that many Irish consumers are already struggling to pay existing bills. In that context, a new carbon tax on home heating fuel would be most unwelcome, claims the training, standards and registration agency for the oil heating industry throughout the British Isles.

Next year looks brighter for Mexico's economy

MEXICO CITY — Rising oil prices and increased exports are slowly dragging Mexico's economy out of a severe recession, but the nation's financial system still confronts fundamental challenges, national leaders and experts say.

Outages dim Chavez popularity

Power failures, unpaid civil servants and falling oil revenue play havoc with support for the Venezuela leader.

Weak gas demand has refineries closing

WILMINGTON, Del. — Refineries from New Mexico to New Jersey are under severe economic pressure because of falling demand for fuel, with a number of facilities shutting down in recent months.
...Refineries in the Northeast are particularly vulnerable because many are older, operate less efficiently and must compete with gasoline imported from Europe.

Valero refinery shutdown punches another hole in Delaware's economy

The shutdown of Valero's refinery in Delaware City will have a devastating effect on the state and local economies while leaving a lingering question about whether a buyer could ever be found for the site, experts say.
While elected leaders clung to hope Friday that the 400-acre facility will not stay shuttered for long, economists offered a far less optimistic view -- at least for the next five to 10 years.

Delaware drivers to feel effect of Valero refinery closing at the pump

It takes drivers at Hillside Oil in Newark just 12 minutes to roll their 8,000-gallon heating oil trucks to the terminal at Valero's Delaware City refinery. Within a half hour of leaving, they're back.
Hillside gets 90 percent of its product from the refinery. But with it closing down for good, its drivers, and those serving similar area business, are going to have to prepare for a longer haul, said Bill Tuerke, the office manager there.
Will it drive up prices? Tuerke said he doesn't know, but having to send trucks to Philadelphia and back every day is bound to have an impact, he said.

Delaware environmental advocates saw Valero refinery as nemesis

Just about the time the federal Clean Air Act became law in 1963, Jake Kreshtool started checking up on the companies that spewed pollution in Delaware's air.
His industrial nemesis: the oil refinery at Delaware City.
"Their strategy was always delay, delay, delay," the longtime environmental advocate, former labor lawyer and former gubernatorial candidate said.

Dimock families say drilling harmed their health and homes

DIMOCK TWP. - In a field between Ronald Carter's trailer and the gas drilling site less than 500 feet from his front porch, a group of neighbors shared nightmarish stories Friday morning about the natural gas extraction they say has changed their lives and homes.
The 15 families were there to announce a lawsuit they filed Thursday against Cabot Oil and Gas Corp., the Texas-based natural gas operator that has drilled 63 wells in a 9-square-mile area around their homes in Susquehanna County, and has permits to drill about 60 more.

Henri Proglio Should Focus on EDF Rather Than Areva

Proglio called for a “rethink” of France’s nuclear industry, and especially of the shareholdings of reactor builder Areva, Les Echos reported two days ago, citing an interview. Proglio is “disappointed” by delays and safety concerns at two reactors being built by Areva and EDF and said France is “poorly represented” in a bid for a nuclear reactor contract in the Middle East.

2009 Vehicles sold were a Tad more efficient

U.S. consumers bought a slightly more fuel-efficient fleet of cars and trucks for 2009 than the model year before, but the vehicles Americans chose still burn considerably more fuel per mile and emit more greenhouse gases than the levels the government is targeting for 2016.

Buffett's advice on life: priceless

Goetgeluk asked what Buffett thought of the peak oil theory — that oil production has peaked and will only decline in the future — and what he believed would replace carbon fuel.
Buffett told him that in 20 years, he believes all the cars on the road will be electric. He's already invested in a Chinese company working on the technology to make it happen.

The Critical Unraveling of U.S. Society

Regardless of your beliefs, due to climate change, we are on the verge of experiencing major water shortages spreading “across the country. Sooner rather than later…” California has already been hit by extreme drought and water is in very short supply. As the Arctic continues to melt, California will continue to experience extreme drought. A new study revealed: “when Arctic sea ice disappears, the jet stream—high-altitude winds with a profound influence on climate—shifts north, moving precipitation away from California.” A recent “sweeping water-reform bill” in California temporarily eased public outcry, but the problem remains. The U.S. is confronted by a serious water crisis.

Study sees transit saving Californians' energy, cutting greenhouse gas

A new study says Californians could save billions each year and cut greenhouse gas emissions by developing neighborhoods within easy access of public transportation.

'Carbon tax' is sensible, and perhaps inevitable, advocate says

Dieter Helm of Oxford says climate change policy should focus not on carbon production, but carbon consumption. A tax on carbon-heavy activities places the emphasis where it belongs, he says.

Scientific evidence supports carbon storage technique

WHILE full carbon capture and storage systems have yet to be proven on an industrial scale, scientists say all the technology is in place for the technique to become a major player in the battle against climate change.
Dr Richard Pike, chief executive of the Royal Society of Chemists and a former oil industry consultant suggests fears about the "unproven" nature of CCS have been overblown, and the cost of installing the technology is likelier to be a bigger barrier than any risk of it not working.

Top U.N. Scientist Laments U.S. Pace on Climate Actions

The United Nations' top climate scientist does not expect any major breakthroughs on global warming next week when President Obama hosts Indian Prime Minister Manmohan Singh, because the United States has not acted to curb its greenhouse gas emissions.

Drowning in the Garden of Eden

In August, Seychelles presented a report about its fate to the United Nations that reads like a script for a science-fiction apocalypse. It says that if nothing is done to correct global warming, rising seas will submerge 60 percent of the country's islands by the end of this century, possibly sooner. Drought, disease and fire will scourge the land. People will fight to the death for water and food. And the inhabitants will find themselves, as the report puts it, "in the unprecedented situation of being citizens of a state that no longer has a territory."
Imagine your country disappearing underwater forever. Where do you belong? Where do you go?

Bill McKibben: Obama needs to feel the heat

Obama's excuse is that the Senate won't sign tough climate legislation, so there's no use pushing for it. (And he's right -- the Senate is tough. At 350.org, an organization I co-founded that is dedicated to solving the climate crisis, we're working to organize candlelight vigils at senators' offices around the country.) But that's conceding the game without taking a shot -- he hasn't done any of the things Nasheed has tried to rally his nation and other nations.

The Day Global Warming Stood Still

"I proudly declare 2009 as the 'Year of the Skeptic,' the year in which scientists who question the so-called global warming consensus are being heard," Inhofe said to Boxer in a Senate speech. "Until this year, any scientist, reporter or politician who dared raise even the slightest suspicion about the science behind global warming was dismissed and repeatedly mocked."
Inhofe added: "Today I have been vindicated."
The Ada (Oklahoma) Evening News quotes Inhofe: "So when Barbara Boxer, John Kerry and all the left get up there and say, 'Yes. We're going to pass a global warming bill,' I will be able to stand up and say, 'No, it's over. Get a life. You lost. I won,'" Inhofe said.

Global Warming Research Exposed After Hack

Judging from the data posted, the hack was done either by an insider or by someone inside the climate community who was familiar with the debate, said Robert Graham, CEO with the consultancy Errata Security. Whenever this type of incident occurs, "80 percent of the time it's an insider," he said.

Limbaugh distorts apparently stolen emails to falsely claim global warming is "made up"

Rush Limbaugh -- who had previously condemned the "thugs" who hacked then-Gov. Sarah Palin's email account -- joined right-wing bloggers in touting a series of emails that were apparently stolen from the UK's Climate Research Unit [CRU]. Limbaugh proceeded to distort at least one of the emails in order to falsely suggest that it is evidence that global warming is "made up" and that leading climate scientists have been engaged in "substantial fraud."

Lester R. Brown: A hotter planet means less on our plates

China is the world's leading producer of wheat. India is No. 2. These two countries also dominate the world's rice harvest. But unlike in the United States (the third-largest wheat producer), where wheat is watered largely by rainfall, most crops in China and India are irrigated. The vanishing of mountain glaciers in Asia therefore represents the biggest threat to the world food supply that we have ever seen.
Americans may be tempted to see melting glaciers on the Tibetan plateau as China's problem. And they are. But they are also our problem. We live in an era of fully integrated global food markets; a major harvest shortfall in one corner of the world will drive up prices everywhere.
If China can no longer grow enough wheat and rice to feed its 1.3 billion people and goes shopping for massive quantities of grain, global food costs will rise dramatically. When domestic food prices skyrocketed in the 1970s, the United States restricted exports of grain and soybeans. This time around, with China holding $800 billion in U.S. Treasury securities, we won't be in any position to limit exports. China is our banker. China's food shortage will be our shortage, too.

The Renewables Gap: The Political Challenge of Affecting a Societal Transition to Renewable Sources of Energy

jeffvail — Fri, 20 Nov 2009 10:11:59 -0400

Below is a summary of my presentation, The Renewables Gap, from the ASPO 2009 conference. The intent of my presentation was to highlight the political challenge of affecting a societal transition to renewable sources of energy. In particular, I focus on wind and solar, though it seems to me that the problem will be largely the same (if not worse) if we attempt to rely on other “renewables.” My initial presentation focused on attempting to illustrate the Renewables Gap as an energy problem. While I briefly addressed the political aspects of this problem in my presentation, on reflection I’ve chosen to focus more carefully on this aspect of the Renewables Gap.

Frankly, I've never been very pessimistic about our theoretical ability to adapt to peak oil. It’s what I fear we will actually do in response—or, rather, what we won’t do—that concerns me. I feel the same way about our ability to transition to alternative sources of energy—the challenge that I’ve termed the Renewables Gap. I’m quite confident that we have the theoretical ability to deal with the problem. However, if you accept that “politics” is the process of allocating scarce resources in a society, then it is the political problem posed that appears most daunting. Like many things involving peak oil, we’re sure to have all the political will that we need to deal with the problem at only some point after our window of opportunity to act has closed. The challenge is figuring out how to spread awareness of the nature of the problem and willingness to commit scarce resources to its solution before there is a crisis. Here, again, my pessimism is grounded in what I fear we will not do. I don’t pretend to offer any easy solution (the desire for which gives much insight into the nature of this very problem). My goal here is only to provide a framework for thinking about this problem:

If we seek to mitigate peak oil with renewable energy, we need to first ask what do we need to mitigate. My answer: the decline in NET energy produced from oil, not the decline in overall production. If, hypothetically, 20 years from now we’re producing 100 million barrels of oil per day, but it requires 100 million barrels of oil worth of energy input to do so, we have ZERO energy left for the operation of society at large. From the perspective of a society attempting to maintain itself, this is functionally very similar to producing no oil at all. Therefore, we must remain focused on the NET energy available to society.

What I want to quantify is the amount of net-energy that we need to replace going forward. A “classic” peak oil decline graph shows a plateau, followed by a gradually accelerating decline. Let’s consider why that’s so. What happens when we hit a plateau—as we arguably have now? The existing fields are declining at rates between 3% and 15% per year. But, because we’re scrambling to bring new production on-line, the overall level of production is buoyed for some time. We’re compensating for this underlying decline with more expensive oil—both financially and energetically. That keeps the level of OVERALL oil production steady, but the rate of NET energy production from oil is falling.

For the purpose of exploring the solution space of society’s transition to alternative energy, I’ve decided to frame the issue with two simple, exponential rates of NET energy decline: 5% and 10% per year. The graph below shows these rates of decline starting from a hypothetical year zero (because, again, my goal here is not to state that global peak net energy occurred in 2002, 2020, etc.). I’ll call these the “low” and “high” range scenarios. Certainly this simple exponential function is overly simple, and these numbers may be higher or lower than many estimates. That’s fine—my goal here is to frame the issue, not to predict the future reality of global net energy production. I’ll be discussing the potential to use renewable wind and solar power to mitigate these rates of decline.

First, I’d like to note the systemic effects of solar and wind energy’s unique energy-return profiles: the vast majority of the energy invested in these sources comes up front, before they ever begin to generate. Between 80% and 90% of the total energy ever required to build, operate, and maintain these systems must be invested UP FRONT. I won’t discuss other renewables such as tidal, geothermal, nuclear, and biofuels at this time, though I welcome discussion of how these options may impact the solution space.

Next, it’s necessary to point out what is obvious to many: these renewables produce ELECTRICITY, not oil. I’m talking here about using them to replace oil, so it’s necessary to address conversion issues. How many GWh are needed to replace 1 mbpd of oil production?
A straight BTU-to-BTU conversion: replacing 1 million barrels of oil per day production, or 365 million barrels of oil per year, equates to 70.78 Giga-Watt-Years.

Clearly, however, oil and electricity are not the same thing. Some people have suggested that you only need 1/3 this much electricity to mitigate peak oil because oil fired electricity generation can be only 33% efficient. I think that modern oil-fired electricity is actually somewhere between 50% and 66% efficient, but we need to explain the validity of using the BTU-to-BTU conversion:

First, because we need to replace oil, not electricity, and because relatively little oil is used to generate electricity, it’s incorrect to use this oil-fired electricity efficiency number.

Second, our infrastructure is currently adapted to burning oil in many applications. Therefore, to the extent we want to use renewably-generated electricity to replace this oil, we need to adapt this oil-burning infrastructure to electricity. For example, if you want to replace transportation fuel with plug-in electric cars, you need to invest in significant new infrastructure in the form of cars, batteries, charging stations, etc.

Third, any form of mitigation using renewably-generated electricity will require significant additional investment in the transmission grid to handle higher loads and to balance or store electricity due to the variable availability of renewable generation.

I don’t know if it’s possible to calculate the exact energy balance here. However, I’ll assume for the present analysis that, in order to mitigate peak oil with renewably-generated electricity, we’ll need to generate effectively the same number of BTUs of electricity as we’re losing in oil. Maybe slightly more, maybe slightly less, but I think the BTU-to-BTU figure of 70.78 Giga-Watt-Years per million barrels of oil per day lost is pretty close.

Another argument is that we don’t need to produce as much energy renewably as we lose to peak oil because conservation and improved efficiency can largely make up the difference. There’s some truth here, but it’s only ½ the equation. That’s because two factors—population growth and the desire of the world’s poor to improve their standard of living—will cancel out some or all of the gains from efficiency and conservation. For example, if population increases by 30% over the next 20 years, that alone will negate a 23% reduction in global per capital oil consumption.

Additionally, at least 5 Billion people and growing want to “improve” their level of energy consumption to Western levels. In India, car sales are up 26% over last year, to 120,000 cars per month. Admittedly, these cars tend to be more efficient than in America, but this is new demand, and it far more than cancels out the fact that the Tata Nano gets 56 miles per gallon. Similarly, on a global scale, Jeavons’ Paradox will reduce the effectiveness of energy efficiency as a tool to reduce demand. Finally, while markets or force may deny the world’s poor access to Western levels of energy consumption, the geopolitical consequences of such disparity will actually serve to accelerate energy scarcity.

Another key question is: how much up-front energy input will be required to build out enough renewables to mitigate the decline in net energy from oil production? We know how much energy must be produced to meet this target, so the answer to this question is a function of the EROI and the lifespan of our renewable options. Here, I’m only evaluating wind and solar photovoltaic. I recognize that many people hold the belief that wind and solar energy have very high EROI values on the order of 40 or 50, and energy payback times on the order of months, not years, I’ve chosen to use significantly lower EROI values for this analysis.

We could talk about this boundary and EROI calculation issue until we’re all blue in the face—my intent here is not to argue that some specific number is correct, but rather to point out the uncertainty and potential range. At the lower end of the range, I’ve proposed a proxy of price to account for ALL inputs and outputs. There are significant problems with this methodology, such as dealing with financing costs, but it has the distinct advantage of allowing us to account for all inputs—regressed infinitely—rather than drawing some sort of artificial boundary. IF you look at modern wind turbines using the price proxy, you get something like an EROI of 4. I’ll call that my “low” value.

Now let’s consider more conventional calculations. Wind seems to be most promising at the moment, and I’m looking specifically at a 2009 paper by Kubiszewski, Cutler, and Endres entitled “Meta-analysis of net energy return for wind power systems.” The authors review 50 different studies of wind EROI. In a section entitled “Difficulties in calculating EROI,” they make this statement:

“Studies using the input-output analysis [one method of calculating EROI] have an average EROI of 12 while those using process analysis [another method] an average EROI of 24. Process analysis typically involves a greater degree of subjective decisions by the analyst in regard to system boundaries, and may be prone to the exclusion of certain indirect costs compared to input-output analysis.”

What I take away from that is that there seems to be a range of 12-24, but the authors—a highly respected group—suggest that the “24” figure fails to account for many inputs. That suggests to me that an EROI of 12 is more accurate.

For our purposes, though, my intent is to explore the solution space, so I’ve selected what I think is an optimistic upper “high” EROI value of 20. I think this is unrealistically high—especially because this figure doesn’t even account for the intermittency, transmission, and storage energy costs that must be considered in such a large-scale societal transition—but for now let’s use 4 and 20. Feel free to recalculate using your own preferred numbers…

With apologies for the long introduction, here’s the reveal:

How much energy must we invest if we want to ramp up renewable generation to keep pace with declining net energy from oil? This graph answers that question using a 5% net energy decline and a renewable EROI of 20.

In this scenario, to mitigate the year-1 decline in net energy from oil, we’d need to invest 467 GWy of energy in year one without any production in return—that’s the equivalent of almost 7 million barrels per day. Then in year two it’s about 130 GWy more invested than cumulative production to that point, or about a 2 million barrel per day deficit. Not until year-three will the cumulative renewable generation be more than the investment deficit for that year—meaning that not until year 3 will we begin to have surplus energy available to mitigate the actual decline in oil production (which by this point leaves us 12 million barrels per day behind the peak oil decline curve.

That’s the “Renewables Gap.”

And here’s the pessimistic quadrant – 10% net energy decline, and a renewables EROI of 4:

In this pessimistic scenario, the up-front energy investment is more than 4,600 GWyears in year one. That’s 58 million barrels of oil per day diverted to renewable energy production. Plainly impossible. And the level of renewable energy production wouldn’t even catch up to the level of energy invested EACH YEAR until year 7.

Here you can see the boundaries of the Renewables Gap—the optimistic assumptions on top, pessimistic on the bottom. The lines represent, under each scenario, the net energy supplied by oil, minus the energy invested that year in building renewable energy production, plus the energy produced that year by the renewables brought on-line to date:

To be sure, we can slow the initial rate of investment in renewables in order to lessen this dramatic initial impact, but that option results in falling even further behind the net energy decline curve. We can also bootstrap the energy produced by renewables to provide the energy required for the next round of renewables—if the EROI is 20, this will work to some extent, but it will still have the effect of making us fall even further behind the decline curve. If the EROI is 4, it’s simply unworkable—we never catch up.

Is it theoretically possible to close this gap more quickly? Sure—by investing more energy up front, which actually serves to exacerbate the problem over the short term. We’ll be chasing our tail. It might be possible to catch up—to make a significant public sacrifice up front and kick start the program—IF the economy as a whole is healthy. The Renewables Gap puts us in a Catch-22 situation: using renewables to mitigate peak oil will make the situation worse before it makes it better. Our ability to absorb the up-front costs of transitioning across this gap is a function of our economic health, but to the extent that our economy remains healthy enough to do so we are unlikely to muster the political will to address the problem.

Just to provide some context for the size of this gap: Under the optimistic scenario, this is the equivalent of adding one new China to world oil demand immediately, and maintaining that for many years. Under the pessimistic scenario, this is the equivalent of adding more than 9 new China’s to world oil demand.

Now I recognize that there are energy conversion issues, there are calculation issues, there are timing issues—simply too many variables to make any definitive statements here. But what I hope I’ve highlighted here is this CONCEPT of the Renewables Gap problem, and the uncertainty of our ability to bridge that gap.

As a civilization, we still have a small and shrinking bank of net-energy surplus with which to build our future. We have to make tough choices about how to spend it. Perhaps our most fundamental choice will be this: do we spend it attempting to bridge the Renewables Gap—despite our uncertain ability to do so? Or do we consider whether that energy could be better spent building a fundamentally different future?

Hopefully this analysis provides a useful framework for further analysis. I recognize that some will dismiss this problem entirely with the argument that wind actually has an EROI of 75 and an energy payback time of 5 months. At the risk of being inflammatory, that reminds me of a bumper sticker that says “WARNING: In event of rapture, this car will be unmanned.” My point is that, at least here and now, my intent is not to proselytize or attack and defend issues of faith. Instead, I hope that, for some, this analysis highlights three important issues for further thought and debate:

1. The energy requirements of a massive transition to a society much like ours but powered by alternative sources of energy.

2. The political challenges of affecting such a transition.

3. If #1 or #2 make such a transition either physically or politically impracticable, what then?

Here are my Excel calculations for those who would like to plug in their own numbers...

Australian Senate: Peak Oil motion defeated 31:6

Phil Hart — Fri, 20 Nov 2009 10:02:22 -0400

Senator Christine Milne:

Australia needs to kick the oil addiction before peak oil kicks it for us by driving prices sky high.

"We must start planning now to bring on the sustainable alternatives of renewably-powered electric vehicles, both public and private, and tackle the climate and peak oil crises together.

"The International Energy Agency whistleblower's report is shocking but unsurprising to those of us who have watched the refusal by Australian governments to acknowledge the peak oil threat."

Notice of motion

I move that the Senate:

a) Notes that:

i. Neither the former Howard government nor the Rudd government implemented the first recommendation of the 2007 Senate Rural and Regional Affairs and Transport Committee report into Australia’s future oil supply and alternative transport fuels, namely, that Geoscience Australia, ABARE and Treasury reassess both the official estimates of future oil supply and the 'early peak' arguments and report to the Government on the probabilities and risks involved, comparing early mitigation scenarios with business as usual.

ii. Of the nine recommendations of that Report, only recommendation 6 relating to incentives for fuel efficient vehicles have even been considered let alone addressed.

iii. In the week beginning 8 November 2009, the International Energy Agency issued its annual 'World Energy Outlook', predicting that global oil demand is forecast to rise from 85m barrels per day 2008 to 105m barrels per day in 2030.

iv. A whistleblower at the International Energy Agency has claimed "it has been deliberately underplaying a looming shortage for fear of triggering panic buying" and that a "senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves".

(b) Calls on the government to immediately develop a national plan to respond to the challenge of peak oil and Australia’s dependence on imported foreign oil.

The Motion was defeated 31:6 with the five Greens Senators supporting the motion and presumably South Australian independent Senator Nick Xenophon as the sixth supporting vote.

The major parties are not just ignorant of 'peak oil'. They are, with clarity of purpose, voting against any attempt to respond or even investigate further.

Drumbeat: November 20, 2009

Leanan — Fri, 20 Nov 2009 09:44:12 -0400

Mexico oil output rises slightly in Oct from Sept

MEXICO CITY, Nov 20 (Reuters) - Mexican oil production increased slightly in October from the previous month, lending credence to the government's argument that a steep decline in output appears to be stabilizing.
Mexico produced 2.602 million barrels per day of crude oil in October, state oil monopoly Pemex said on Friday.
That was a decline of 5.6 percent from a year earlier but was a hair above the 2.599 million bpd produced in September. It was the second straight month showing a slight increase.
Mexican oil production is down by about a quarter from a 2004 peak because its once-largest field, Cantarell, is declining.

U.S. natural gas rig count falls for second week

NEW YORK (Reuters) - The number of rigs drilling for natural gas in the United States fell for a second straight week, dropping two to 726 this week, according to a report on Friday by oil services firm Baker Hughes in Houston.
The U.S. natural gas drilling rig count has gained in 14 of the last 18 weeks after bottoming at 665 on July 17, its lowest level since May 3, 2002, when there were 640 gas rigs operating.
But the rig count is still down sharply since peaking above 1,600 in September of last year, standing at 785 rigs, or 52 percent, below the same week in 2008.

Texas high court agrees to rehear Exxon case

DALLAS — The Texas Supreme Court has agreed to grant a rehearing in the nearly 15-year legal battle over accusations that Exxon Mobil Corp. sabotaged abandoned wells.

Saudi Arabia set for Asia crude benchmark switch, but when?

SINGAPORE: Saudi Arabia is all but certain to adopt the Dubai Mercantile Exchange's (DME) Oman crude oil futures contract as its benchmark one day, oil traders say. Now the main question is when, not if, it makes the switch. The growing confidence that state exporter Saudi Aramco will eventually abandon the Dubai/Oman crude assessment price as its basis for Asian exports is bolstered by two things: the tone of recent discussion between Aramco and its customers; and its abrupt switch to a Gulf sour crude benchmark for all US sales.

The 10-billion-barrel battle

Henry Lyatsky is a man on a mission.
The Calgary-based oil industry consultant is on a one-man campaign to lift the moratorium on offshore oil drilling on Canada’s West Coast.
While his message gets a sympathetic ear in in his home town, the centre of Canada’s oil industry, his mission is more of an uphill battle in British Columbia.

U.S. Fears Iraq Development Projects May Go to Waste

BAGHDAD — In its largest reconstruction effort since the Marshall Plan, the United States government has spent $53 billion for relief and reconstruction in Iraq since the 2003 invasion, building tens of thousands of hospitals, water treatment plants, electricity substations, schools and bridges.
But there are growing concerns among American officials that Iraq will not be able to adequately maintain the facilities once the Americans have left, potentially wasting hundreds of millions of dollars and jeopardizing Iraq’s ability to provide basic services to its people.

The Oil Casino: SEC Heading for Monte Carlo, Part III

Let's examine a simple idea. In every producing oil well, formation, or field there is a finite quantity of recoverable hydrocarbons. This so-called Ultimately Recoverable Resource is definitively known in retrospect after secondary injection, infill and flank development, or fracturing, chemical or steam enhancements that lifted every drop that makes economic sense.
In a mature field, where reservoir performance is fully understood, no sane person will spend more than $1 to recover less than $1 of oil & gas. Wells are abandoned, rigs withdrawn, and the field is sold. Smaller operators might be able to eke out a bit more value from "sub-prime" acreage or strata. They have lower overheads and more leisure to search for crumbs.

Chris Nelder. logi Energy-China: The Vampire Squid of Commodities. Part Two

Rodgers has no doubt that China understands peak oil and expects future supply disruptions, which is why it’s accumulating foreign assets and diversifying its import options.
Peter Dea, the president of oil and gas exploration and production company Cirque Resources LP, made the same point a bit more obliquely, rhetorically asking if China had no doubts about the future of oil, why would they have recently outbid Exxon Mobil for new drilling in Ghana?

America's Pending Collapse

In an essay, written by Richard Heinberg entitled “Should We Prop-up a Dying Economy” (19 October 2009), he argues that the economists and the people who follow physical science disagree sharply about where this economy is going. Peak Oil, whether it is present now or just years away, will mean that the economy will contract. The economists state that growth can happen in any environment, yet it is apparent that when oil prices spiked in 2008, the auto industry and the airline industry almost went belly-up. Shrinkage of energy means shrinkage in the economy, we have all been under the notion that we can borrow against a growing economy. The facts are that if the economy does not grow, there will be very little in the growth of capital to repay debts that are leveraged at an average of an average of 350% of debt to GDP ratio. Where will new capital come from?

Valero Closes Delaware Plant, the Third Shut in U.S.

(Bloomberg) -- Valero Energy Corp. said it will permanently close its Delaware City, Delaware, refinery because of “very poor economic conditions.” The 190,200 barrel-a-day plant is the third U.S. refinery to shutter because of weak fuel demand.
The plant was losing $1 million a day this year, Bill Day, a spokesman for Valero said in a telephone interview. Valero considered strategic alternatives for the plant, including shutdowns of certain processing units, and a sale.
Western Refining Inc. said Nov. 9 it would close its 16,600 barrel-a-day Bloomfield refinery in New Mexico and use the plant as a terminal. Sunoco Inc.’s Eagle Point refinery in New Jersey stopped production earlier this month and was idled indefinitely because of low demand and increased foreign competition, according to Chief Executive Officer Lynn Elsenhans.
Petroplus Holdings AG suspended operations at its 117,000 barrel-a-day refinery in northeast England and is converting the site into storage and a terminal, CEO Jean-Paul Vettier said Nov. 5.
The table below shows refineries that are slated for sale, closure or conversion, and units idled for economic reasons.

Recovery over a barrel

After a fall in demand during the depths of the crisis, the IEA now expects global demand for oil to be 84.2 million barrels a day this year and more than 86.2 million barrels a day next year.
Then there is the looming problem of Peak Oil - the stage when demand outstrips the world's capacity to produce it.
In September, a Macquarie Bank report found we had already hit that wall. Report author Iain Reid says production capacity will peak at 89.6 million barrels a day this year. By 2012, demand will exceed this.

Utility shut-offs soar for poor PG&E customers

The report's authors aren't sure why the number of disconnected customers is growing so quickly at PG&E, compared with other utilities in the state. PG&E rate hikes last fall and this spring may have played a role. So may the utility's new SmartMeters.
The advanced electricity and gas meters, being installed throughout Northern and Central California, allow PG&E to shut off service via a wireless signal, without sending an electrician to the home. The easier process may be leading to more shut-offs, said Dana Appling, director of the utility commission's Division of Ratepayer Advocates, which issued the report.
"All they have to do is flip a switch," she said, adding that her division doesn't have solid proof that the meters are leading to more disconnections.

Consolidation to hit solar in 2010: BP Solar

LOS ANGELES (Reuters) - More consolidation could hit the solar power industry in 2010, as tough competition and falling prices whittle away companies that are sitting on high cost assets and loaded with debt, the chief executive of BP Solar told Reuters on Thursday.
BP Solar, a unit of BP Plc, and other solar companies are seeing demand for the renewable energy systems pick up after a dismal year of difficult financing and a tumble in panel prices, but panel prices will continue to drop.

Vermont Yankee nuclear plant critics renew campaign to block 20-year license extension

BURLINGTON, Vt. (AP) — Hoping to sway lawmakers, two of the state's most famous residents and one of its former governors joined groups opposed to the Vermont Yankee nuclear power plant in announcing a push for Town Meeting Day votes on whether the plant should keep operating past 2012.
Ice cream icons Ben Cohen and Jerry Greenfield and former Gov. Phil Hoff lent their voices to those who want the Legislature to turn thumbs down on Vermont Yankee's request for a 20-year license extension.

What Peak Oil Can Do for Climate Change

With all eyes focused on the Copenhagen climate summit in less than three weeks, perhaps its time for the peakists to find a new purpose.
The reason is simple. Money isn't interested in problems; it's only interested in solutions. And wherever capital goes is where the changes will be made.

Industrialized Nations Unveil Plans to Rein in Emissions

With less than three weeks remaining before negotiators gather in Copenhagen to hammer out a global response to climate change, a rapid-fire succession of countries are unveiling national plans that serve as opening bids for reining in heat-trapping emissions.

U.N. Report Calls for More Environmental Protection in Wartime

A report released this month by the United Nations Environment Program and the Environmental Law Institute calls for stronger international laws to protect the environment during times of war.
The report found that although existing laws of war — including aspects of the Geneva Convention — address environmental protection, their wording is imprecise. Strengthening, enforcing and clarifying existing legislation could help protect “natural assets” during wars, the study says.

Cuba tries to keep the lights on: Cuba gets plenty of oil from Venezuela. So why is it adopting "extreme measures" to avoid blackouts?

But just as Cuba’s petroleum trade has soared, revenue is plummeting from other key exports like nickel, pharmaceuticals and tobacco products. Foreign trade is down 36 percent this year, as the global recession and $10 billion in damage from three 2008 hurricanes have drained Cuba’s finances.
Thus, analysts say, the more oil Cuba can save, the more it can sell abroad.
“I think it is actually a prudent effort on the part of the government that acknowledges the reality that Cuba is in dire need of hard currency,” said Jonathan Benjamin-Alvarado, a U.S. expert on Cuban energy at the University of Nebraska at Omaha.
“The extent to which they can conserve or curb consumption in order to reserve refined fuels for re-export is logical, but yet another hardship for the people,” he added.

Valero to Permanently Close Delaware City Refinery as Demand Declines

(Bloomberg) -- Valero Energy Corp. said it will permanently close its Delaware City, Delaware, refinery because of losses at the plant.

Pennsylvania residents sue over gas drilling

DIMOCK, Pennsylvania (Reuters) - Residents of a small rural Pennsylvania town sued Cabot Oil & Gas Corp (COG.N) on Friday, claiming the company's natural-gas drilling has contaminated their water wells with toxic chemicals, caused sickness and reduced their property values.
The lawsuit, filed in U.S. District Court in Pennsylvania, accuses the company of violating state environmental laws by allowing drilling chemicals to escape from gas wells, where they are used in a technique called hydraulic fracturing.

Total Says Shtokman Natural Gas Start Delayed 2 Years

Shtokman, a natural gas field in Russia's Arctic waters that is one of the world's largest gas deposits, will start producing two years later than OAO Gazprom's planned launch date, according to one of the partners in the megaproject.

Shell seeks to reassure analysts on major projects

Royal Dutch Shell Plc will aim to reassure investors on the costs and profitability of its Pearl gas-to-liquids and QatarGas projects during a field trip for analysts.

Moscow’s Leash

Many analysts think that Gazprom’s “grip” on Europe has loosened. The company has been battered by the economic crisis, while the Continent is now coping with a glut of natural gas rather than scrambling for resources. But this is a cyclical crisis, not a structural one. Europe still needs gas, and Gazprom still wants to sell it. And although the times have changed, Europe’s energy challenges have not gone away.

China refiners agree 12 pct rise in 2010 Saudi imports

BEIJING/SINGAPORE (Reuters) - Chinese oil firms have agreed to buy a total of about 1.04 million barrels per day of crude from Saudi Arabia under a term pact finalised for 2010, roughly 12 percent above the 2009 contract level, trading sources told Reuters.
The pace of growth quickens from a rate of under 10 percent seen this year over 2008, as demand in the world's No.2 oil consumer looks poised to recover more on the back of China's solid economic expansion.

FACTBOX - India's crude imports by country in Apr-Sept 2009

(Reuters) - India imported 68.3 percent of its crude oil requirements during April-September from the Middle East, with Iran topping the chart followed by Saudi Arabia, government data showed on Friday.

BP, ConocoPhillips Reduce 2010 Spending Plans in Alaska

BP and ConocoPhillips have reduced their capital spending and developmental budgets for Alaska in 2010 because of higher costs to produce mature fields, disappointing exploratory results and the state's new tax regime, the companies said.

Energy's the topic of the week

If I could sum up one theme that spoke for the entire week of events, it would be this: innovation.
Dr Yergin, chairman of the IHS Cambridge Energy Research Associates and author of a prize-winning book on the history of the oil industry aptly noted that while the 20th century was the century of oil, the 21st century will be the century of energy innovation.
"This intense push for innovation is drive by two powerful forces - the quest for clean energy and the need to provide energy for economic growth," he said.

Electricity imports hit France's energy autonomy

France has for decades been fiercely proud of its world-beating nuclear industry but is now having to import electricity from its neighbours and could face blackouts this winter.
News of the imports prompted the environmental group Greenpeace to say Wednesday that this was further proof that France's policy of producing three quarters of its electricity from nuclear power was a big mistake.
France decided after the 1970s oil crises to rapidly expand its nuclear power capacity in order to build up reliable energy supplies, and has long exported power to its neighbours.
But ever-rising demand for electricity combined with ageing nuclear reactors have brought that policy under increasing scrutiny.

El Nino intensifies Latin America drought

MONTEVIDEO — From a devastating food crisis in Guatemala to water cuts in Venezuela, El Nino has compounded drought damage across Latin America this year.

Blackout in Brazil: The Problems With Hydropower

It’s everyone’s worst nightmare: being caught in an underground subway in the midst of a power outage. Yet, that is exactly what happened recently when Brazilian commuters in the city of São Paulo were trapped inside trains and literally had to be pulled out of subway cars. In addition to sparking problems in public transport, the blackout or apagão led to hospital emergencies and the shutting down of several airports. In all the power outage darkened approximately half of the South American nation, affecting sixty million people.
In recent years Brazil has become an economic powerhouse yet the blackout exposed vulnerabilities in the country’s infrastructure. In the wake of the power outage, government officials intent on sustaining high economic growth have tried to figure out what might have gone wrong with the country’s electrical grid. Initial reports blamed the power outage on the massive Itaipu hydroelectric dam though a spokesperson for the facility said there had been no problem at the plant.

Sustainability and Social Justice: Do the Math

According to data compiled by the UN, the Global Footprint Network, and Dr. William Rees at the University of British Columbia, total human consumption already exceeds the Earth's capacity by 30 per cent. This is known as biological 'overshoot'. The UN estimates that most natural services to human societies - forests, fish, fresh water and clean air - decline annually. As human population and consumption grow, our collective overshoot increases.
Meanwhile, the wealthy 15 per cent use about 85 per cent of the resources - the total energy and materials - the 'stuff' - that Earth provides. The 'wealthy' includes anyone who has a home, job, transport, access to education, hot showers, convenient fuel and food every day: people in the so-called 'developed' world. If you have those things, you live among the wealthy 15 per cent who use most of the world's resources.

In Kiribati, a way of life is being washed away

''The contamination of the groundwater started in the late '70s, and after that erosion started and houses started to fall into the sea,'' recalls Aata Maroieta, the 64-year-old village chief.
''The force of erosion was stronger than the sea walls and eventually the Government said, 'All you can do is relocate.' ''

Peak Oil Files: Why Is Saudi Aramco Building Supercomputers?

The biannual list of the world’s 500 fastest computers was released on Tuesday and Aramco had two new entries at No. 119 and No. 134. Both are Dell clusters, running Intel processors and both are very, very fast.
The oil industry uses Concorde-jet speed computing to aid it understanding underground reservoirs and to look for new sources of oil and gas. Aramco used another computer cluster to build a “full field model” of the Safaniya oilfield in 2008.
Clearly, Aramco is taking a sophisticated approach to understanding its remaining oil resources. And peak oilers will likely argue that Aramco’s interest in teraflops is a sign that it needs all the help it can get to ensure oil keep flowing out of its once mighty fields. After all, why bother throwing so much muscle into understanding the reservoir if there were no worries about its future performance.

IEA provides a rosy supply of crude

The International Energy Association (IEA) released its World Energy Outlook to controversy on Nov. 10. The U.K.-based Guardian newspaper quotes IEA sources admitting the agency's figures for future oil production were inflated because of U.S. pressure. The two separate sources within the IEA want to remain anonymous because they feared reprisals. Now why does this matter?
Put simply, future oil shortages are being downplayed. In 2005, the IEA predicted daily oil production would rise to 120 million barrels by 2030. But harsh criticism forced the agency to cut this estimate a number of times until finally, in 2008, the IEA claimed the world oil production would be 105 million barrels a day by 2030.

Crude prices follow world markets downward: Still, with oil near $80 per barrel, consumers are starting to feel the pinch

NEW YORK - A global sell-off on equity markets dragged down crude prices by nearly 3 percent Thursday, the first decline this week.
..."Bottom line, the race is on; between falling demand and falling production," analyst Stephen Schork said. "Regardless of the outcome, one result is almost guaranteed ... the consumer will lose. And, given that consumer spending is responsible for more than two-thirds of the U.S. economy, that does not bode well for the strength of the incipient recovery."

Macquarie Says Crude Oil May Fall to About $60 Next Quarter

(Bloomberg) -- Crude oil prices may fall to about $60 a barrel in this and next quarter on weak demand from developed countries and growing inventories, Macquarie’s oil economist Jan Stuart said today.

Analysts Split on Direction of Crude Oil Prices, Survey Shows

(Bloomberg) -- Analysts surveyed by Bloomberg News were split over whether crude oil prices will fall or be little changed next week amid a weak dollar and ample fuel supplies.
Ten of 27 analysts, or 37 percent, said futures will drop through Nov. 27. Ten more respondents predicted that oil will be little changed. Seven said futures will rise. Last week, 50 percent of those surveyed said prices would fall.
“I think we’re still in a very well-defined trading range when it comes to oil,” said Phil Flynn, vice president of research at PFGBest in Chicago. “Oil just can’t stay above $80 a barrel, but by the same token it can’t seem to stay below $77.”

Russia Waives Ukraine Gas Fine, Easing Threat of Supply Cuts

(Bloomberg) -- Russia agreed to waive fines on Ukraine for consuming less gas than contracted and said it would renegotiate volumes for next year, easing a threat to shipments of the fuel to Europe.
“We made a decision not to impose penalties, and I want to confirm it in public,” Russian Prime Minister Vladimir Putin said at a meeting with his Ukrainian counterpart Yulia Timoshenko yesterday in Yalta, Ukraine. “Despite agreements reached earlier on volumes, to avoid sanctions next year it was decided that OAO Gazprom and NAK Naftogaz Ukrainy will agree on new volumes.”

Russian transit gas via Ukraine down 26.4%

Transit of Russian gas via Ukraine to Europe fell by 26.4% 74.5 billion cubic metres in the January to October 2009 period from 101.2 Bcm in the same period in 2008, Ukraine's Fuel and Energy Ministry said today.
European countries have cut energy consumption as industrial activity has fallen due to a global economic slowdown.

Obama administration pauses on Alaska drilling

WASHINGTON – The Obama administration has delayed a decision on a request by Shell Oil Co. to drill for oil and gas in Alaska's rugged Chukchi Sea. The delay came after the oil company asked for time to respond to criticism of its plan to drill in the icy sea, a prime habitat for threatened polar bears.
Marvin Odum, president of Shell Oil Co., the U.S. unit of Royal Dutch Shell, denied Thursday that the oil company had requested the delay.
But a letter from the Minerals Management Service, an arm of the Interior Department, says Shell asked for a chance to respond to a deluge of public comments submitted to the agency about the proposal to drill off Alaska's Northwest coast.

Kazakh Credit Risk Drops Most in World as Oil Revives Economy

(Bloomberg) -- Kazakhstan is regaining bond investor confidence faster than any other country as rising oil prices spur an economic rebound.

Angola sees boost in oil money

Angola's oil revenues from taxes and fees charged to oil companies operating in the African nation are expected to rise to $16.6 billion in 2010 from $15.7 billion this year, according to the country's draft budget plan.
Angola, which rivals Nigeria as Africa's biggest oil producer, has calculated the oil revenues based on an average oil price of $58 dollars per barrel for 2010.

Angola: Senator Lugar Hails New Chapter in U.S.-Angolan Relations

Lugar noted that Angola is an important trading partner for the United States, primarily because of its oil and gas. He said Angola has now eclipsed Nigeria as the largest oil and gas producer in Africa. "Angola has demonstrated the vitality of its petroleum industries, which operate on the cutting edge of technology in deep-water oil fields off coast. On the strength of this oil extraction, Angola has maintained an average GDP growth of more than 14 percent per year since 2002. Nonetheless," he said, "Angola remains near the bottom of the U.N.'s Human Development Index," which tracks the economic well-being of a country's population.
He cited estimates that Angola may be within five to 10 years of reaching peak oil production and, therefore, he stressed the need for diversifying the country's economy in the long term, to establish alternative sources of income. Angola's success in diversifying its economy, he said, will depend on "expanding the important progress already made towards deepening democratic governance, improving public transparency, creating a business environment that is unambiguous in its law and its practice."

Housing bust halts growing suburbs

The recession and housing collapse have halted four decades of double-digit growth for nearly half of the nation's biggest rapidly expanding suburbs.
Twenty-four of the 53 cities of 100,000 or more that grew by at least 10% every decade since 1970 lost population in the last two years.

Cargill warns on self-sufficiency

The drive towards self-sufficiency in response to last year's food crisis will fail, a top executive at Cargill has warned, adding that the idea that countries "can be self-sufficient in every single food is a nonsense".
The warning by the world's largest trader of agricultural commodities comes ahead of next Monday's UN World Summit on Food Security in Rome, the first since 2002. The summit was prompted by the surge in the price of staples such as rice and wheat, which last year hit record highs, sparking food riots in countries from Bangladesh to Haiti.

LCC threats: The Environment, fuel prices, aircraft financing and fees & taxes

Inevitably, fuel prices are critical to the shape of the industry. For the lower cost carriers, fuel constitutes a higher proportion of costs and LCCs are consequently more sensitive to substantial input price increases. As jet fuel prices went through USD170 a barrel last year and rising, many LCCs were becoming seriously compromised. Peak oil promises to threaten the basic model again, as economies recover.
Even at today’s depressed levels of economic activity, oil prices are hovering around USD70, partly on speculation, partly due to production and refining issues. Once prices rise above these levels, there is a steep reduction in the value proposition of LCCs vs full service airlines.

Gold Investing Expert: Bob Moriarty Goes on Record Part II

Peak oil is real and the only thing preventing $200 a barrel oil right now is a recession that is morphing into a depression. Energy of all sorts is good.
Food is an analog of energy so agriculture is good.
Uranium is the only reasonable replacement for oil but we have waited for too long to recognize peak oil and we are going to pay for that error of judgment.

Chris Nelder, logi Energy-China: The Vampire Squid of Commodities, Part One

In his presentation on China’s oil and gas balance, Michael Rodgers of PFC Energy made one thing abundantly clear: China’s domestic oil production has nearly peaked, while its demand for oil is only going up.

CBI boss's memo to Gordon Brown: when you're in a fiscal hole, stop digging

While sanguine about the possibility that the world has passed the point of peak oil, Lambert says the CBI is concerned that action will be needed to prevent energy shortages by 2016-17. "It won't happen because people can see it coming."

Even in a season of apocalyptic films, these facts are really, really scary

In Collapse, Ruppert connects the dots between peak oil, essential human services, alternate energy sources, agricultural production, governments, money interests and strategies for survival. All power points from his recent book, A Presidential Energy Policy, Ruppert delivers them in a plain-spoken vocabulary peppered with imaginative analogies. But this is not merely an activist doc intended to support Ruppert's treatise. Smith gives us something much more: a subtle portrait of a man whose sense of duty has affected his personal life.

Water and Energy Crisis Looms on Horizon

Ocean Energy Institute founder and energy investment banker Matthew Simmons gave an hour-long keynote address at the Island Institute's 2009 Sustainable Island Living conference on Saturday morning at the Strand Theatre in Rockland. Simmons titled his talk "The Gulf of Maine: What Lies Beyond the Fossil Fuel Horizon," but his presentation ranged far outside the Gulf to encompass the globe.
Sporting a delicate windmill as a lapel pin, Simmons started off by reflecting on the concept of sustainability, a current buzzword among energy development experts. "More and more people around the world are beginning to wonder, "Does the globe have a sustainable strategy?'" Simmons said. "It's all about sustainability. Sustainability means protecting or improving our living standards. And without abundant water and energy, we are not sustainable," he said. "There's no question that our oceans are energy's last frontier."

Who cares about peak oil when you have corn cobs?

The nation's biggest ethanol firm says costs for corn-cob biofuel are coming down. But what happens to the soil?

SAfrica plans new nuclear power station by 2020

PRETORIA (Reuters) - South Africa, plagued by chronic power shortages, plans to have the country's new nuclear power plant up and running by 2020, Energy Minister Dipuo Peters told a nuclear conference on Friday.
State-owned power utility Eskom, which operates Africa's sole nuclear power plant with a total capacity of 1,800 MW, cancelled plans to build a new facility at the end of last year, citing financial constraints.

Doubts raised on nuclear industry viability

(PhysOrg.com) -- The investment in nuclear power has been growing around the world over the last few years, being viewed as a means for countries to control their energy security, avoid the price fluctuations of other energy sources, and reduce their carbon dioxide emissions, but concerns are now being raised.
A scientist from the Swiss Federal Institute of Technology predicts that supplies of uranium are running out and countries relying on imports of uranium may face shortages by 2013, while a New York Times journalist suggests new nuclear power plants are an "abysmal" investment that will never pay for itself without government financial support.

BP Invests $3 Billion in Alternative Energy Globally

(Bloomberg) -- BP Plc, Europe’s second-biggest oil company, has invested $3 billion in alternative energy globally and is on course to meet its commitment made in 2005 to spend $8 billion, said a company official.
London-based BP will focus mainly on wind power projects in the U.S., solar in India and China and biomass in Brazil, BP China President Chen Liming said at a Beijing conference today.

Beijing to Boost Alternative Energy, Electric Cars

(Bloomberg) -- Beijing plans to build a 70 megawatt solar power plant and a 50 megawatt biomass power plant as part of the city’s focus on expanding the use of alternative energy, the capital’s Development and Reform Commission said today.
The government will also develop wind power, nuclear power and geothermal power, according to a statement by the commission issued before a news briefing.

China May Lead Mergers in Asia Clean Energy, Stanchart Says

(Bloomberg) -- Asia’s renewable business led by China may see mergers and acquisitions because of overcapacity, declining raw material prices and multiple players, an official from Standard Chartered Plc said.
“There will be consolidation in the wind and solar sector in the near future, predominantly in China,” said Brad Sterley, director, renewable energy and environmental finance. “The renewable energy market is very fragmented in the manufacturing sector.”

China May Increase Wind Turbine Exports, Morgan Stanley Says

(Bloomberg) -- China may increase wind turbine sales to the U.S. and Europe because of lower domestic demand and an overcapacity in manufacturing, threatening global makers, an official at Morgan Stanley said.
Power grid constraints in China may leave as much as 4 gigawatts of wind power generation capacity lying idle, slowing further additions in producing electricity from wind, said Sunil Gupta, managing director for Asia and head of clean energy at Morgan Stanley in Singapore. As much as 40 percent of China’s wind power generating capacity may be unutilized, he said.

Md. regulators approve Garret County wind farm

BALTIMORE – The Maryland Public Service Commission has approved an application to build a 50-megawatt wind energy farm atop Backbone Mountain near Oakland in Garrett County.

Geothermal Needs Support: Industry

Indonesia needs to relax its laws to make it easier to explore for geothermal energy in protected forests if it is going to meet a target of lifting electricity demand from renewables, an industry official says.

Cabinet approves solar power programme

NEW DELHI (Reuters) – India's cabinet on Thursday approved its first solar power plan, pledging to boost output from near zero to 20 gigawatts (GW) by 2020 as part of its plan to fight global warming.

Shun beef to stop climate change, says India

NEW DELHI (AFP) – India, a stronghold of vegetarianism where the cow is a sacred animal for the majority Hindu population, has urged the rest of the world to give up eating beef to help reduce global warming.
"The single most important cause of (carbon) emissions is eating beef," Environment Minister Jairam Ramesh said during a speech on Thursday, his office told AFP.

Sex, food, and climate change

Roughly two centuries ago, British thinker Thomas Malthus famously predicted that human overpopulation would result in food shortages and mass famine. “The power of population is indefinitely greater than the power in the earth to produce subsistence for man,” he said. For a long time, his idea that mass famine would overtake humanity was rejected out of hand by those who pointed to industrial agriculture and vastly increased crop yields. Industrial agriculture proved him wrong, or so the textbooks said.
Malthus’s ideas are now back in vogue as global food futures are uncertain, due to a devastating combination of fresh water depletion; drought caused by climate change; the collapse of the world’s oceans; an increase in fuel prices (as global oil supplies peak); soil erosion caused by excessive pesticide use; and the replacement of agricultural lands by biofuel crops.

NY AG: AES Corp. agrees to pollution disclosures

NEW YORK – AES Corp., which operates several coal-fired power plants in the U.S., has agreed to put more information about global warming in its public financial disclosures.
New York Attorney General Andrew Cuomo said Thursday that AES, based in Arlington, Va., is the latest power company to agree to give investors more information about pollution.

Energy leaders back climate change deal

GENEVA (AFP) – Energy industry leaders on Thursday called for an international deal on climate change to tackle financial uncertainty and prevent potentially catastrophic global warming.
"The climate framework is the top long term issue," World Energy Council (WEC) Secretary General Christoph Frei told a UN conference on energy security.

Harvard Finds Kidney Stones, Malaria Among Global-Warming Risks

(Bloomberg) -- Kidney stones, malaria, Lyme disease, depression and respiratory illness all may increase with global warming, researchers at Harvard Medical School said.
Climate change from the burning of fossil fuels will add to risks to public health, said Paul Epstein, associate director of Harvard’s Center for Health and the Global Environment in Boston. The center and groups led by the American Medical Association are presenting data at a briefing today in Washington as a call for action to curb emissions.

Scientists baffled by global warming's time-out

Temperatures haven't risen this decade, as climatologists expected. Is it sunspots? Ocean currents? Secret volcano?

Melting sea ice dilutes water, endangers sea life

HONG KONG (Reuters) – Melting of the Arctic sea ice due to global warming is diluting surface waters and this is endangering some species of shellfish which need minerals in the water to form their shells and skeletons, scientists have found.
In a paper published in Science, they warned that this has serious implications for ecosystems in the Arctic.

Oilwatch Monthly November 2009

Rembrandt — Thu, 19 Nov 2009 10:18:26 -0400

The November 2009 edition of Oilwatch Monthly can be downloaded at this weblink (PDF, 1.24 MB, 33 pp).

Figure 1 - OECD Crude Oil & Product Stocks from January 2002 to September 2009

The Oilwatch Monthly is a newsletter that is available free of charge with the latest data on oil supply, demand, oil stocks, spare capacity and exports.

A summary and latest graphics below the fold.

Subscribe to receive Oilwatch Monthly by e-mail

Latest Developments:

1) Conventional crude production - Latest figures from the Energy Information Administration (EIA) show that crude oil production including lease condensates decreased by 21,000 b/d from July to August 2009, resulting in total production of crude oil including lease condensates of 72.50 million b/d. Crude oil production in the EIA International Petroleum Monthly for July 2009 was revised upward from 72.42 to 72.52 million b/d. The all time high production record of crude oil stands at 74.74 million b/d reached in July 2008.

2) Total liquid fuels production - In October 2009 world production of all liquid fuels increased by 630,000 barrels per day from September according to the latest fgures of the International Energy Agency (IEA), resulting in total world liquid fuels production of 85.61 million b/d. Liquids production for September 2009 was revised upwards in the IEA Oil Market Report of November from 84.92 to 84.98 million b/d. Average global liquid fuels production in 2009 up to October was 84.73 versus 86.6 and 85.32 million b/d in 2008 and 2007.

3) OPEC Production - Total liquid fuels production in OPEC countries increased by 250,000 b/d from September to October to a level of 34.25 million b/d. Average liquid fuels production in 2009 through October was 33.65 million b/d, versus 36.09 and 35.02 million b/d in 2008 and 2007 respectively. All time high production of OPEC liquid fuels stands at 36.58 million b/d reached in July 2008. Total crude oil production excluding lease condensates of the OPEC cartel increased by 110,000 b/d to a level of 28.94 million b/d, from September to October 2009, according to the latest available estimate of the IEA. Average crude oil production in 2009 through October was 28.64 million b/d, versus 31.43 and 30.37 million b/d in 2008 and 2007 respectively. OPEC natural gas liquids rincreased by 140,000 b/d from September to October 2009 at a level of 5.31 million b/d. Average OPEC natural gas liquids production in 2009 up to October was 5.02 million b/d, versus 4.66 and 4.55 million b/d in respectively 2008 and 2007.

4) Non-OPEC Production - Total liquid fuels production excluding biofuels in Non-OPEC countries increased by 380,000 b/d from September to October 2009, resulting in a production level of 49.69 million b/d according to the International Energy Agency. Average liquid fuels production in 2009 up to October was 49.52 million b/d, versus 49.32 and 49.34 million b/d in respectively 2008 and 2007. Total Non-OPEC crude oil production excluding lease condensates decreased by 167,000 b/d to a level of 41.46 million b/d, from July to August 2009, according to the latest available estimate of the EIA. Average crude oil production in 2009 up to August was 41.47 million b/d, versus 41.32 and 41.80 million b/d in respectively 2008 and 2007. Non-OPEC natural gas liquids production decreased by 48,000 from July to August to a level of 3.24 million b/d. Average Non-OPEC natural gas liquids production in 2009 through August was 3.37 million b/d, versus 3.65 and 3.79 million b/d in 2008 and 2007 respectively.

5) OECD Oil Consumption - No Update

6) Chinese & Indian liquids demand - No Update

7) OPEC spare capacity - According to the International Energy Agency total effective spare capacity (excluding Iraq, Venezuela and Nigeria) decreased from September to October 2009 by 430,000 b/d to a level of 5.2 million b/d. Of total October effective spare capacity Saudi Arabia can produce an additional 3.4 million b/d within 90 days, the United Arab Emirates 0.56 million b/d, Angola 0.19 million b/d, Iran 0.35 million b/d, Libya 0.22 million b/d, Qatar 0.12 million b/d, and the other remaining countries 0.36 million b/d.

Total OPEC spare production capacity in October 2009 increased by 60,000 b/d to a level of 3.97 million b/d from 3.91 million b/d in September according to the Energy Information Administration. Of total September spare capacity 2.80 million b/d is estimated to be from Saudi Arabia, 0.21 million b/d from Qatar, 0.16 million b/d from Angola, 0.30 million b/d from Kuwait, 0.30 million b/d from the United Arab Emirates, 0.10 million b/d from Iran, and 0.10 million b/d from other countries.

8) OECD oil stocks - Industrial inventories of crude oil in the OECD in September 2009 decreased to a level of 976 million from 986 million barrels in August according to the latest IEA statistics. Current OECD crude oil stocks are 15 million barrels higher than the five year average of 961 million barrels. In the October Oil Market Report of the IEA a total stock level of 985 million barrels was tabulated for August which has been revised upwards to 986 million barrels in the November edition. Industrial product stocks in the OECD in September 2009 increased to 1498 million from 1488 million barrels in August according to the latest IEA Statistics. Current OECD product stocks are 97 million barrels higher than the five year average of 1401 million barrels. In the October Oil Market Report of the IEA a total stock level of 1471 million barrels was tabulated for August which has been revised upwards to 1488 million barrels in the November edition.

Figure 2 - OPEC Crude Oil Production & Spare Capacity - International Energy Agency - January 2003 to October 2009.

Figure 3 - OPEC Crude Oil Production & Spare Capacity - Energy Information Administration -January 2003 to August 2009

Figure 4 - World Liquids Production from January 2002 to October 2009

Figure 5 - World crude oil production from January 2002 to August 2009

Figure 6 - OPEC Liquids Production from January 2002 to October 2009

Figure 7 - Non-OPEC liquids production from January 2002 to October 2009

Figure 8 - Non-OPEC Crude Oil production from January 2002 to August 2009

How to Set Up and Run a Bicycle Repair Company

Chris Vernon — Thu, 19 Nov 2009 10:14:36 -0400

This is a guest post from Robin Lovelace (email: www (dot) lovelacerobin (at) yahoo (dot) com), a PhD student in energy research at the University of Sheffield, UK. Robin has recently set up RobRod's Repairs, a mobile bike repair business.

1. Introduction

Many of the articles that discuss the causes and effects of humanity's unprecedented energy use are entirely theoretical, offering little practical guidance for the everyday reader.

This essay offers respite to all the people who confront our collective energy problems with a furrowed brow and an expression that is puzzled by the continuous stream of theoretical insights that explain our current circumstances. This essay confronts our collective energy problems in more practical terms - with an adjustable spanner and a puncture repair kit at the very least.

Be the change poster seen on a bicycle in York

2. Target audience

If you are young of heart and pioneering of spirit, this article is aimed at you. If you sometimes think about forming a small company in response to unprecedented global circumstances - the prospect of terminal declines in oil production and a changing climate - I suggest that you need to read this condensed chunk of knowledge, especially if you enjoy riding a bicycle and can operate a spanner.

3. Why should you set up a bicycle repair company?

Rich people (anyone earning more than $20,000 a year is rich, regardless of what their neighbours may think) burn ~200 kWh of primary chemical energy each day. Of this 70 kWh is converted into transport (MacKay, 2009: Chapter 3 and Chapter 5). (70 kWh equates to 30 miles in a 30 mpg car burning 40 kWh of gasoline and one long haul flight burning 30 kWh/day of kerosene, averaged over the year.) Conversion processes for transport include:

Petrol exploding in an internal combustion engine’s combustion chambers exerts a force on the pistons inside the bonnet of a car.
Kerosene igniting inside a turbofan combustion chamber expands, spinning the jet turbines and thrusting the oxidised waste products out the back. For every 1 kg of fuel burned, a typical commercial jet engine produces 3.16 kg of CO2, 10 g of NO2, and 1-3.5 g of CO, all important greenhouse gases (Brasseur et al., 1998).
Hydrogen molecules in natural gas (CH4) react with nitrogen in the Haber-Bosch process, creating nitrate fertiliser that improves the yield of the world's industrial agricultural systems. The food derived from farming may eventually end up metabolized in a human body, in order to power leg muscles to walk or push pedals.

All of these processes depend on fossil fuels that are running out. Thus, a good reason to set up a bicycle repair company is that, despite the lengthy food chain, cycling is the most efficient of the above methods of converting fossil fuels into personal locomotion (especially if you eat well). A typical US car consumes 100 kWh of chemical energy per 100 passenger Km (24 miles per gallon), a plane 50 kWh and a bicycle 2.4 kWh – the bicycle is 50 times more efficient, ignoring the energy costs of production of the car or the food (MacKay, 2009, 2009).[1]

Another reason for setting up a bicycle repair company may be to make money. Cycling is a strong growth industry globally. There are more bikes than cars in the world and thousands of these cycles are sat in garages in various states of disrepair. Bike repair is labour intensive, uses few resources, and provides people with a new form of transport. If you are a bike mechanic and operate a fair business in your area, you may become a valued member of your local community, especially if fuel becomes scarce.

4. Why you should not set up a bicycle repair business

Before diving in, consider your circumstances and the nature of the local economy where you live. If the answer to the following questions is no, setting up a bicycle repair company may not be such a good idea:

Is there demand for bike repairs in your area? (Test this by offering a ‘Dr Bike’ free session, or create demand through advertising/collaboration with local government)
Can you fix bikes? (Put yourself to the test by fixing as many bikes as you can – fix those of friends, family and acquaintances; work/volunteer in a local bike shop; get an official qualification)
Will you be offering something new in your area? (If there is already a good bike shop or mechanics – collaborate with them unless they are not interested)

Do not give up if you cannot say yes to all the questions. Bike repair should not be seen as a short-term money spinner like a trendy new Internet company during the dot-com boom. Bicycle repair is inevitably a social activity where you will slowly build up a network of friends and fellow cyclists who trust your abilities. But this growth will only occur in proportion with your bike repair skills: try to go too fast and you may have problems. Therefore when the answer to any of the questions is a 'maybe' instead of a definitive 'yes' perhaps you should consider abandoning the profit motive altogether, especially in the first few months or years. Remember, every time you look at a bike, or help someone else to fix one, you are gaining something priceless: important knowledge and skills that can be bought only with time. In my experience, the reward of fixing someone's bike for free is the satisfaction of providing them with increased independence from cars, money and petroleum. An option I highly recommend is volunteering for a community bike project or helping an experienced bike mechanic – that way you will learn more quickly and support a good cause.

The altruism and goodwill mentioned above does not mean you should never make money from fixing bikes. By contrast, the warm glow generated from free repairs on both sides of the equation may become one of the central selling points of your business. You may also need money in order to invest in better tools and equipment. RobRod's repairs overcame this problem with a £500 grant from a small entrepreneurs organisation. This highlights the low startup costs of bike repair industries and the possibility of acquiring funding from sources acting in the public interest.

5. What you’ll need

Tools are the most important work items a bike mechanic owns. Good tools will last decades, and it is possible to grow an affinity to tools that are used frequently. Low-quality tools can provide a cheap solution to infrequent problems, but may become a burden when they fail. For this reason, I recommend investing in high quality tools right from the beginning, as they will make bike repair more enjoyable. I have found it useful to divide my tools into two groups – one group I always bring with me, and another that I leave at home unless I know they will be used.

Frequently used tools, in rough order of frequency of use (Figure 1):

Allen keys (known as hex keys in the USA)
An adjustable spanner with a range up to 20mm +
Decent metal tire levers – could save you much time and effort
8 mm spanner – used frequently on older bikes
10 mm spanner – receives very frequent use
13 mm spanner – for adjusting seat height
15 mm spanner – the most common wheel nut size
15 mm pedal spanner – simple a thin, sturdy 15 mm spanner
Philips and flat-head screwdrivers – medium and small sizes
Pliers
Chain tool – essential for fixing chains
Spoke keys - 3.23 mm, 3.30 mm and 3.45 mm keys will fit practically all spoke nipples
15 mm and 17 mm cone spanners are frequently needed for hub servicing
Crank extractor
14 mm socket wrench
Cable cutters – essential for replacing worn cables
Plumber wrench or 30, 32, and 36 mm spanners for adjusting old headsets

Figure 1: Frequently used tools

Infrequently used tools, best used in a work shop:

Shimano freewheel and cassette removers (other, less commonly used removers exist)
Bottom bracket tool – for the Shimano 20 tooth BB cups common on newer bikes
Bottom bracket lockring
Hook spanner – for the majority of older BBs
Hack saw

Many specialized tools such as BB thread chaser, headset race hammer and truing jigs exist. Because of the cost of these tools, they are not accessible to most amateur bike mechanics. By working or volunteering in an established workshop, it may be possible to use these tools.

Along with the tools there are a number of items that are used in bicycle repair. These can be split into essential and useful items.

Essential items for basic bike maintenance:

Lubricant is necessary to make bikes perform better. Mineral oil is the cheapest and most widely available lubricant. A few drops added to chains or oxidised cables can make a bicycle more pleasant to ride at virtually no cost. Grease is necessary for servicing hub, headset and and bottom-bracket bearings, although I rarely use grease for minor repairs. A light, squirtable lubricant is extremely useful for penetrating inaccessible components and removing handlebar grips.
A high quality pump is essential for inflating tires to the correct pressure (40-80 psi is correct for most bikes, although one should always check the recommended pressure on the outer tire). As well as having gauges, track pumps require less effort to pump-up tires than do hand pumps.
Puncture repair kits are crucial. There are many types on the market, and can be acquired at low cost.
Spare inner tubes – there comes a time when puncture repairs are no longer sufficient to fix a leaky inner tube. Presta (thin) and Schrader (thick) tires are the main categories, although many diameters and thicknesses are available

Other useful items:

A bicycle work stand is near-essential if you do frequent repairs. Lightweight and compact models are available for the mobile bike mechanic.
Spare inner cables – there are different types of both gear and brake cables, so make you get the right ones
Spare outer cables – gear and brake cables are different. Buying in bulk (e.g. 30m) yields significant economies of scale and will allow you to share with buddies.
Cable tidies – allow you to finish your cable repairs with a safe and attractive finish.
Spare outer tires – will come in useful but are costly (if bought new) and bulky.
Pannier racks and baskets – these can greatly increase the utility of a bicycle.

Figure 2. Items for bike maintenance

Figure 3: The whole mobile repair kit ready to go

6. How to set up

Setting up shop can be as simple as that. However, it is highly recommended that you get public liability insurance before doing repairs for people you do not know. Personal experience leads me to recommend keeping bureaucracy to a minimum in the early stages, although it may be necessary to keep detailed logs if the project grows into a full-scale company.

It is possible to set up shop just with a bike trailer, tools and a work stand, and preferably another bike mechanic for support. This was found to be an enjoyable and profitable option for RobRod’s repairs when we would set-up on the University of York campus on sunny afternoons (Figures 4-7). Having a workshop as base of operations is highly desirable, but can be expensive. One solution is to work in collaboration with a local bike shop in the area, or to set up a bike co-operative if you have the time and experience. The potential to expand may grow as global oil production shrinks, but the key is to start small and master the art of walking before you begin to run.

Figure 4. RobRod's in operation on the University of York campus

Figure 5. Packing up shop after a hard day's work

Figure 6. The advantages of being a mobile mechanic: more business and more old bicycle donations

7. Conclusion

Bicycle repair is a practical activity that can empower individuals and communities to tackle energy-related problems with their own initiative and skill – without recourse to state intervention or mass social change. The increased usage of bikes that small-scale industries such as RobRod's Repairs induces is likely to lead to broader change relating to localisation and shifting attitudes towards energy and the local environment.

Figure 7. Be the change poster seen on a bicycle in York

Figure 8. Think outside the box

Appendix

The late Sheldon Brown has created the best website on bicycle repair available.
There are many second hand books available on bicycle repair on Amazon.
www.jakesbikes.co.uk is a bike business set up for the greater good; it inspired me to become an amateur bike mechanic.
Your best resource will be the real human beings who you work with to fix bikes.

[1] Even assuming the bicycle rider is powered by typical US food – an unhealthy choice requiring 10 units of fossil energy input for every one unit out (Pollan, 2006) – he would still consume 5 times less fossil energy per km travelled than the car driver. One could argue that the increased usage of a shower to cleanse the sweaty rider would offset this energy gain. However the argument is spurious for a number of reasons:

Bicycle riders require less energy-intensive medical treatment.
There are many hidden energy costs in driving, such as the production of the car, the urban sprawl that cars facilitate, the energy costs of road building, and economic power being inferred to those with a monopoly over private transportation.
Bicycles put people in direct contact with their immediate surroundings, leading to a greater sense of community in areas with high numbers of cyclists. This may lead to economic regionalism and hence lower transportation costs in the area.