The Oil Drum - Discussions about Energy and Our Future

Seven States of Energy Debt

Gail the Actuary — Wed, 10 Feb 2010 14:16:19 +0000

This is a guest post by Gregor Macdonald. Gregor's blog is gregor.us.

The inevitable coming of the sovereign debt panic finally engulfed Europe last week as the derisively (or perhaps affectionately) named PIGS spilled their slop on the continent. But Portugal, Ireland, Greece, and Spain are hardly worthy of so much attention. In truth, they are little more than the currently favored proxies among the leveraged speculator community (cough) for the larger problem of all sovereign debt. Indeed, the credit default swaps on these smaller European satellite states were not alone this week in making large moves higher. UK sovereign risk rose strongly, and so did US sovereign risk. With a downgrade warning from Moody’s to boot.

Notable among three of the PIGS are their relatively small populations, and small contributions to either world or European GDP. While Spain has a population over 45 million, Portugal and Greece have populations roughly equal to a US state, such as Ohio–at around 10 million. And Ireland? The Emerald Isle has a population similar to Kentucky, at around 4 million. While the PIGS are without question a problem for Europe, whatever problems they present for Brussels are easily matched by the looming headache for Washington that’s coming from large, US states such as California, Florida, Illinois, Ohio, and Michigan.

I’ve identified seven large US states by four criteria that are sure to cause trouble for Washington’s political class at least for the next 3 years, through the 2012 elections.

These are states with big populations, very high rates of unemployment, and which have already had to borrow big to pay unemployment claims. In addition, as a kind of Gregor.us kicker, I’ve thrown in a fourth criterion to identify those states that are large net importers of energy. Because the step change to higher energy prices played, and continues to play, such a large role in the developed world’s financial crisis it’s instructive to identify those US states that will struggle for years against the rising tide of higher energy costs.

First, let’s consider a large state that didn’t make my list. Texas didn’t make the list because its unemployment rate has not risen high enough to reach my cutoff: a state must register broad, U-6 underemployment above 15%, and currently Texas has only reached 13.7% on that measure. Also, Texas’s total energy production nearly perfectly matches its total energy consumption. Of course, Texas has indeed had to borrow more than billion dollars so far to pay unemployment claims, thus technically bankrupting its unemployment trust fund. That meets my criteria. But, it’s instructive to note Texas’ energy production capacity in this regard, as that produces dollars. And one of the big reasons US states are under so much pressure, like their European counterparts, is that they cannot print currency. Being able to produce oil and gas is the next best thing to printing currency. So, Texas doesn’t make my list.

The seven states to make my list are California, Florida, Illinois, Ohio, Michigan, North Carolina, and New Jersey. Each has a population above 8 million people. Each has had to borrow more than a billion dollars, so far, to pay claims out of their now bankrupt unemployment insurance fund. Also, each state currently registers broad, underemployment above 15% as indicated by the U-6 measure for the States. And finally, each state is a large net importer of either oil, natural gas, electricity, or all three of these energy sources.

Let’s consider the overall predicament for residents of states like California, with its epic housing bust, Ohio and Michigan at the end of the automobile era, or North Carolina and New Jersey in light of the financial sector’s demise. Not only have states such as these permanently lost key sectors that once drove their economies, but, residents in these states are over-exposed to structurally higher energy costs. The prospect for wage growth in the United States is now dim. We are already recording year over year wage decreases in real terms. The culprit? Energy and food costs. My seven states are squeezed hard at both ends: no wage growth at the top, and no relief through cheaper energy costs at the bottom.

US wage growth in real terms has been stagnant for years. And the most recent decade of higher oil prices has been particularly punishing to states over-leveraged to the automobile like California, Florida, and North Carolina where highway and road systems dwarf public transport. While it’s true that states like Ohio and California produce some oil and gas, the size of their populations overwhelm any production with outsized demand for electricity and gasoline. In contrast, and as I mentioned, it will be revealing to see how this depression ultimately plays out in such states as Colorado, New Mexico, Wyoming, Oklahoma, North Dakota, and Louisiana which are all net exporters of energy.

Were it not for peak oil, gasoline prices would have fallen to a dollar during this depression as oil returned to the lows of the late 1990’s–if not even lower. Petrol at 90 cents a gallon would begin to chip away at the painfully decreasing spread between punk wages and energy input costs, currently endured by underemployed Americans. Natural gas and coal prices are also much higher than they were at the lows of the 1990’s. And I need not remind: while energy prices are very 2010, the American workforce has lost so many jobs that our labor force has indeed returned the 1990’s.

21st century energy prices overlaid on a 20th century economy? That’s no fun at all. The mainstream economics profession, perhaps unsurprisingly, still does not pay enough attention to the interweaving of long-term stagnant wage growth, higher energy inputs, and the resulting credit creation that OECD countries took as the solution to resolve that squeeze. Given that one of out of eight Americans takes food stamps, a visit to states like Illinois, Florida, Ohio, and North Carolina would reveal that the difference between 15 dollar oil and 75 dollar oil, and 2 dollar natural gas and 5 dollar natural gas is large.

My seven states of energy debt represent a full 35% of the total US population. As with other US states, they face looming policy clashes between protected state and city workers on one hand, and the growing ranks of the private economy’s underemployed on the other. The recent circus at the LA City Council meeting was a nice foreshadowing that the days of unlimited borrowing by governments–against future growth based on cheap energy–is coming to an end. Washington can print up dollars and fund these states for years, if it so chooses. But just as with the 70 million people in Portugal, Italy, Greece and Spain, the 108 million people in these seven large states are probably facing even higher levels of unemployment as austerity measures finally slam into their cashless coffers, and reduce their ability to borrow.

Photograph: from FREZNO, a new book of photos by Tony Stamolis, available now at Process Books. (I bought a copy and it’s brilliant. For those who study California, it’s a must-have addition to your bookshelf).

Industry Taskforce on Peak Oil and Energy Security

Euan Mearns — Wed, 10 Feb 2010 14:15:18 +0000

In London this morning (10th February 2010) the UK industry task force on peak oil and energy security launched a new report warning of the dangers of the forthcoming oil crunch.

On 10 February 2010 at the Royal Society, six UK companies - Arup, Foster + Partners, Scottish and Southern Energy, Solarcentury, Stagecoach Group and Virgin - joined together to launch the second report of the UK Industry Task-Force on Peak Oil and Energy Security (ITPOES).

The report, titled “The Oil Crunch - a wake-up call for the UK economy”, finds that oil shortages, insecurity of supply and price volatility will destabilise economic, political and social activity within five years.

The Task-Force warns that the UK must not be caught out by the oil crunch in the same way it was with the credit crunch and states that policies to address Peak Oil must be a priority for the new government formed after the 2010 election.

The report may be downloaded from the link above (about 860 KB). We hope to have a report from the launch later today or tomorrow. Discuss ......

Drumbeat: February 10, 2010

Leanan — Wed, 10 Feb 2010 14:03:05 +0000

We’re running into oil rather than running out

Oil pessimists explain that given its finite nature, the world’s growing reliance on oil could soon lead us into a cold, 21st century Dark Age. They are far from the first to believe that they are Cassandra. When Jimmy Carter was in the White House, he warned that the world’s reserves would run dry by the turn of the millennium.
The “peak oil” frenzy of the 1970s has reared its head again. The world’s increasing demand and a fixed, finite supply should have led us to a point of no return by now. So what happened?
The gross demand for oil has remained well below the amount of the world’s oil reserves. In 1971, the demand for oil was at 49.4 billion barrels per year and world reserves were estimated to hold 521 billion barrels, according to the US department of energy. According to the theories of the oil pessimists, this would mean that the world would be out of oil in a little more than a decade. Instead of facing doom in the 1980s as the depletionists predicted, the amount of oil in reserves increased to approximately 700 billion barrels as demand increased. Since 1971, when reserves held 521 billion barrels, the world has consumed 900 billion barrels of oil, and today, reserves are currently at an estimated 1.36 trillion barrels.

Jeremy Leggett: Society ignores the oil crunch at its peril

With modern economies geared to their rivets on just-in-time supply of copious amounts of affordable oil, society surely ignores this risk issue at its massive peril.
But that is what BP, Exxon, Saudi Aramco and many other institutions of the hydrocarbon era would have us do. And theirs is the perceived wisdom. I do not know of a single company, outside the taskforce group, where peak oil is on the agenda as a serious risk issue. As for government, Whitehall's official line is typical, as things stand: there is 40 years of oil supply, no need to worry, and certainly no crisis. To be fair, that view may be in the process of changing, in the light of recent events in the energy markets.

Policies 'must anticipate' oil price rises

A group of business leaders are calling for urgent action to prepare the UK for peak oil, the point at which supply can no longer meet world demands ending cheap oil.
John Miles, global leader for energy resources and industry at Arup and one of the report's authors, analyses the prospect of peak oil.

Peak oil warnings turn up in the strangest places

It’s always intriguing to see how companies come out on the big - and often controversial - questions of energy future.

Readers Respond on "Squeezing More Oil from the Ground"

In “Squeezing More Oil from the Ground,” Leonardo Maugeri, director of strategies and development of an international oil company, expresses the conventional view of his profession, assuming a world of near-infinite oil resources to be produced under market forces. Maugeri is particularly dismissive of our Scientific American article “The End of Cheap Oil” [March 1998]. It is difficult to find fault with at least its title, considering that the average price of oil over the preceding 10 years was $28 a barrel but rose to $45 over the ensuing decade to reach a peak of almost $150 in 2008.

Think further ahead about oil, buyers told

Fossil fuel buyers need to buy further in advance and reduce their dependency on oil-based fuels if they are to cope with an impending oil crunch.
The advice follows mounting fears over “peak oil” – the point at which the world's oil output reaches a maximum, and either plateaus or goes into terminal decline.

North Dakota Production Surprises

One of the canons of the peak oil crowd is that a decline in oil production from the "mature" United States is a given that no amount of exploration and development can arrest.
An examination of recent developments in North Dakota indicates that the application of new technology renders this claim suspect. Oil production in North Dakota had been declining for years, peaking in the mid 1980s at close to 150,000 barrels per day, and then beginning a 20 year decline to approximately 80,000 barrels per day by 2003.

Oil near $74 as weak dollar offsets high supplies

Oil prices rose to near $74 a barrel Wednesday, boosted by a weaker dollar but held back by a report showing unexpected growth in U.S. crude inventories, casting more doubt on the recovery in the world's biggest economy.

OPEC: Global oil demand will be higher than forecast

OPEC expects the world will need more of its crude oil this year than previously forecast, as the organization lowered its outlook for production of natural gas liquids.
The Organization of Petroleum Exporting Countries, responsible for 40 percent of global supplies, predicted in a monthly report today that consumers worldwide will need 28.75 million barrels a day of OPEC crude in 2010. While that's 150,000 barrels a day more than anticipated in last month's report, the resulting “call on OPEC” in 2009 is unchanged from last year.

New report: Consumers spent modestly in January

NEW YORK — Americans backed off from holiday spending in January, but retail sales rose for a third month in a row compared with a year earlier, largely because of gas price hikes, according to figures released Wednesday by a key data service.

Kuwait Holds Oil Price Discount on Weak Asian Demand

(Bloomberg) -- Kuwait Petroleum Corp. maintained a discount for its official crude oil price to Asia as refiners kept processing rates low amid weak fuel demand.

Iraq Offers Indian Refiners More Crude on Planned Output Gain

(Bloomberg) -- Iraq is offering to supply more crude oil to Indian refiners on long-term contracts as the Middle Eastern country boosts output.
Iraq is offering to increase crude sales to India by as much as 60 percent, said an oil ministry official who was at the meeting between India’s Oil Minister Murli Deora and Iraq’s Industry and Minerals Minister Fawzi Hariri in New Delhi today. Indian Oil Corp., the nation’s second-biggest refiner, currently buys about 11 metric million tons, or about 220,000 barrels a day, of Iraqi crude, Chairman Sarthak Behuria said.

Saudi Arabia keeps March crude supplies steady

TOKYO/LONDON - Top oil exporter Saudi Arabia will supply steady volumes to most customers in March as demand recovers and prices stay in its comfort zone.
Sources at seven of the Asian term buyers said on Wednesday state oil firm Saudi Aramco told them they would continue to receive fully contracted crude volumes for March, something it did for January and February for most of the region.

Commodities Are Poor Inflation and Currency Hedges

Just because the value of paper money is declining doesn't mean the value of a static asset has to increase.

Saudi Arabia, Angola, Iran remain top 3 oil suppliers to China

Saudi Arabia, Angola and Iran remained the three largest oil sources for China in 2009, with the three supplying 47.7 percent of China's total imports, according data released Wednesday by the General Administration of Customs (GAC).

Georgia to Build Black Sea Oil Port to Boost Caspian Flows

(Bloomberg) -- Georgia plans to build another Black Sea port to boost transit fees from cargo shipments such as crude oil from the Caspian Sea region.
The Supsa port will cost “half a billion dollars” and take less than two years to build once the government gives the final okay, said Shalva Tsakadze, head of Black Sea Product Ltd., the developer of the project.

Scrap UK's wind farm plans, says Gazprom boss

Plans to build thousands of wind farms in the UK are irrational and should be scrapped in favour of more gas plants, according to the deputy chairman of the Russian energy firm Gazprom.

Warsaw nears Russia gas deal

Poland's government may finally approve a long-awaited gas deal with Russia later today, Treasury Minister Aleksander Grad said.

Kazakhstan halts oil exports to Slovakia, Hungary

MOSCOW (Reuters) - Kazakhstan has halted Urals crude oil supplies to Slovakia and Hungary via the Druzhba pipeline amid a trade dispute with Ukraine, prompting Russian oil firm LUKOIL to intervene to compensate for the loss, traders said on Tuesday.

'Kurdistan taps back on in days'

Oil exports from Iraq's northern Kurdistan region should resume in the "coming days", Iraq's Oil Minister Hussain Shahristani told reporters today.

Shell takes proposed Philippines seizure to nation's high court

The Philippines won't seize oil imports belonging to Royal Dutch Shell Plc until the nation's high court issues a final ruling, Executive Secretary Eduardo Ermita said.
“Shell brought the case to the Supreme Court,” Ermita told reporters today in Malolos, Bulacan north of Manila. “We will observe status quo.”

Nigeria oil rebels say watching political developments

LAGOS (Reuters) - The main militant group in Nigeria's oil-producing Niger Delta said on Wednesday it was monitoring developments after Vice President Goodluck Jonathan assumed presidential powers, but declined to comment further.
"We are monitoring the unfolding drama and will react at the appropriate time," the Movement for the Emancipation of the Niger Delta (MEND) said in an email to Reuters.

Bangladesh to Deploy Floating Unit for LNG Imports

(Bloomberg) -- Bangladesh, which has delayed exploration awards to ConocoPhillips and Tullow Oil Plc after disputes with neighbors, may deploy a floating liquefied natural gas unit this year to plug a shortage of gas, an official said.

Toyota recalls new Prius in latest safety fix

WASHINGTON/DETROIT (Reuters) – The spiraling crisis at Toyota Motor Corp deepened on Tuesday as the automaker said it would recall thousands of Camry sedans as well as nearly half a million new Prius and other hybrid cars to fix steering and braking problems.
U.S. regulators also said they are reviewing dozens of complaints about potential steering problems in newer Toyota Corollas.

High-speed rail: Skipping your town

NEW YORK (CNNMoney.com) -- Most of the $8 billion in high-speed rail funds that President Obama awarded last month will not be used for high-speed projects, but rather to improvements designed to make existing lines faster.
Only $3.5 billion is being spent on truly high-speed rail, a sum that's not remotely close to what's needed to build a 21st century rail network. The money is going toward two projects -- one in California and the other in Florida -- that have yet to begin construction.

Obama Pushes Sanctions to Block Iran’s Path Toward Nuclear Bomb

(Bloomberg) -- President Barack Obama said the U.S. is shifting toward sanctions pressure on Iran to prevent the development of a nuclear weapon, when asked about the Iranian regime’s move to step up uranium enrichment.

Kuwait projects huge deficit in next fiscal year

Spending is expected to reach 56.1 billion dollars, a rise 33.5 percent from the current year's estimates of 42.1 billion dollars.
The draft budget projects an oil income of 29.9 billion dollars for the coming fiscal year, with the oil price forecast raised from 35 dollars a barrel this year to 43 dollars in 2010/2011.

Jeff Rubin: Why Obama has fallen from grace

There are many factors associated with Barack Obama’s plunging popularity. Botched health care reform certainly hasn’t helped. Neither has a near-double-digit national jobless rate, nor a $1.6-trillion budget deficit. But what outrages American voters most is the billions of dollars given to Wall Street investment bankers, who continue to live la dolce vita and flaunt their arrogance in taxpayers’ faces.
As I’ve argued before in this blog and in chapter 7 of my book, it wasn’t too-big-to-fail financial institutions but the interest rate shock from soaring oil prices that deep-sixed the economies of both the US and the rest of the oil-guzzling world. Interest rates didn’t just rise from around one per cent to almost six per cent because no one was minding the store at the Federal Reserve Board. It was soaring oil prices that did all that heavy lifting.

Eastern Syria faces ‘catastrophe’

DAMASCUS // Free market economic reforms have helped create a “catastrophe” in eastern regions of Syria, greatly exacerbating the effects of a devastating drought, according to leading critics of government policy.
Speaking at a weekly meeting of the Syrian economics society, a group of high-profile academics said a decision to end fuel and seed subsidies just as the drought was at its peak had destroyed the livelihoods of hundreds of thousands of farmers.

Robert Kenner: Big Food will do everything to stop you talking about this

LS: What do you hope people will take away from the film?
RK: That the system is unsustainable. We've created a world where we're using up our natural resources and, in doing so, robbing our children and our grandchildren. We have to think about growing and producing food in a fairer way.

Agricultural Commodities in Light of Peak Oil

The subject of Peak Oil seems timely this week, as it has been pointed to in a number of news-worthy articles and video interviews. It is imperative to stay informed on this issue. This article hopes to provide some of the latest pertinent information on the subject while tying together how agricultural and oil commodities may relate to Peak Oil.

New Santa Cruz action group tackles affordable housing as larger concern about peak oil

SANTA CRUZ -- Transition Santa Cruz, a new grass-roots group working to reduce the local demand for fossil fuels, has re-energized the decades-old debate about creating more affordable housing.
The group, which has attracted about 500 members, is examining affordability and development in the context of creating self-supporting communities to prepare for "peak oil," or the point at which global demand for oil surpasses the supply. That means also advocating for jobs, more public transit and more locally produced food -- all with a light footprint on the environment.

Solutions for a Post Carbon World

With the avalanche of opinions on the challenging issues that face Montanans and the world today, it’s hard to know where to get reliable information. We know the conundrums of climate, energy, resource depletion, and the economy are complex and interrelated, but it can be difficult to grasp exactly how they fit together. And just what are we going to do to slow these run-away trains?
I recently got some clarity on this subject when I attended a gathering for the Fellows of the Post Carbon Institute. The Fellows are a think-tank focused on today’s interconnected sustainability crises —a one-stop shop for cutting edge thinking on the transition to a post-carbon world.

Chinese farms cause more pollution than factories, says official survey

Farmers' fields are a bigger source of water contamination in China than factory effluent, the Chinese government revealed today in its first census on pollution.
Senior officials said the disclosure, after a two-year study involving 570,000 people, would require a partial realignment of environmental policy from smoke stacks to chicken coops, cow sheds and fruit orchards.

For L3C companies, profit isn't the point

NEW YORK (CNNMoney.com) -- When organic dairy farmer Vaughn Chase received a letter informing him that processor H. P. Hood would no longer be taking his milk, he feared he'd be forced out of business.
Three years earlier, he had invested $25,000 in converting his 600-acre family farm to meet the U.S. Department of Agriculture's organic certification standards. But now he couldn't find another organic processor willing to take the milk from his remote farm in Maine. With the price of non-organic milk plummeting below production costs, returning to conventional farming wasn't an option either.

Japan’s Solar Panel Sales Rise to Record on Subsidy

(Bloomberg) -- Japan’s solar-panel sales by capacity rose to a record in 2009 led by domestic demand after the government offered incentives to switch to renewable power.
Sales increased 21 percent to 1,387.03 megawatts last year, the Japan Photovoltaic Energy Association said today. The figure is the highest since 1981, when the group started releasing data. Domestic sales more than doubled to 483.96 megawatts, while exports fell 2.4 percent to 903.07 megawatts.

Ecuador May Develop $6 Billion Dam Project After Shortages

(Bloomberg) -- Ecuador may develop a $6 billion hydroelectric project to create energy supplies for new mines and avert power shortages similar to the ones the South American country experienced in 2009.

U.S. Officials Plan $78.5 Million Effort to Keep Dangerous Carp Out of Great Lakes

CHICAGO — Federal authorities on Monday presented a $78.5 million plan intended to block Asian carp, a hungry, huge, nonnative fish, from invading the Great Lakes.

The Rise of ‘Green’ Modular Homes

Kevin Clayton, the chief executive of Clayton Homes, a modular home manufacturer based in Maryville, Tenn., predicted last year that his company’s “i-house” — a solar modular home — would command 10 percent of its profits.
That prediction hasn’t quite panned out, but the manager of Clayton’s i-house division, Brandon O’Connor, says it is raising production of the energy-efficient model — even as other builders are cutting projects in the down economy.

When Coal Flows Between Countries, Who ‘Owns’ the CO2?

Once emitted, carbon dioxide is a “globally well mixed gas” that knows no borders. Every year, commerce becomes increasingly “globally well mixed” as well. So if the world moves toward a system for tracking emissions, who is responsible for a particular batch of carbon dioxide — the company that mined and sold the coal, the power plant that burned it, the consumer who buys the exported widget made with the electricity generated by that combustion, or…?

Another Snowstorm: What Happened to Global Warming?

As the meteorologist Jeff Masters points out in his excellent blog at Weather Underground, the two major storms that hit Philadelphia, Baltimore and Washington, D.C., this winter — in December and during the first weekend of February — are already among the 10 heaviest snowfalls those cities have ever recorded. The chance of that happening in the same winter is incredibly unlikely.
But there have been hints that it was coming. The 2009 U.S. Climate Impacts Report found that large-scale cold-weather storm systems have gradually tracked to the north in the U.S. over the past 50 years. While the frequency of storms in the middle latitudes has decreased as the climate has warmed, the intensity of those storms has increased. That's in part because of global warming — hotter air can hold more moisture, so when a storm gathers it can unleash massive amounts of snow. Colder air, by contrast, is drier; if we were in a truly vicious cold snap, like the one that occurred over much of the East Coast during parts of January, we would be unlikely to see heavy snowfall.

How to Write Letters to the Editor

Gail the Actuary — Tue, 09 Feb 2010 14:30:28 +0000

This is a guest post by Oil Drum reader Carl Henn.

I spend a lot of time reading The Oil Drum. It helps me to understand the nature of the energy and economic problems we face. These problems are complex and important, so it is easy to spend an inordinate amount of time trying to understand them. But it has become clear to me that we will have to address our problems without fully understanding the mess we are in. The average Oil Drum reader understands our problems far better than the average citizen. The average Joe may yet not have heard of Peak Oil, let alone the Export Land Model. We need to do more to share our knowledge. We are at the point where the overall understanding of Peak Oil will increase if a few of us read a bit less Oil Drum and write a few more letters to the editor.

I know many folks here have worked hard for years to spread the word. I salute your effort, and write today only to promote a tool that is too little used – letters to the editor.

Letters to the Editor are free and reach thousands of people. We can use them to spread awareness and understanding of our energy problems. I’ve been writing L2Es for 30 years have had several hundred letters printed. A few tips for getting printed:

Read the coverage of the topics you intend to respond to. You are much more likely to be printed if you respond to their editorial or news coverage rather than submitting a letter that doesn’t relate to recent stories.

Respond quickly, hopefully within a day, not later than a week.
E-mail it. Snail mail is too slow and needs to be retyped after receipt.
Put the letter in the body of the e-mail, not in an attachment. Newspapers fear viruses and don’t open attachments.
Don’t send longer letters than that paper typically prints. Usually not more than 300 words and in some papers 150 is all they’ll take.
Never use facts or figures you aren’t sure of.
Include your name, address and phone number. Most won’t print anonymous letters, and they frequently call or e-mail to confirm authorship and exclusivity.

As an Oil Drum reader you have probably already taken one key step – becoming well informed about your topic. This will be enough to respond to any number of articles and editorials in your local paper or the magazines you subscribe to. You may need to do more research to get up to speed on relevant local issues. Your local or state government is probably trying to build a highway or parking garage near you, which provides many opportunities for explaining peak oil. Or they may still be converting farmland to sprawl development, or cutting transit while still providing free parking. We live in a target rich environment.

The Writing Process

There are many approaches. Use what works for you. I try to read the newspapers at lunch. Most are online these days. Mull over the topics while walking the dog or hanging the laundry. Think about the facts you need, the concepts you wish to present, and metaphors you might use.

1^st draft: Get it out into words; don’t worry about spelling or organization.
2^nd draft: Fix spelling & grammar, read to see if it makes sense.
3^rd draft: Let it rest a bit. Go get a snack or read some e-mail to get distracted a bit before coming back. Now read it again. Revise and improve.

Remember your word count. If it’s over what they are likely to print, cut it back. Better for you to cut it than for them to not print it. You can drop the softening words like “as I see it”, “I would suggest” and “in my opinion”. You can frequently drop adjectives and retain the core meaning. If you are well over the count, drop whole sentences. You may need to present just one idea rather than a few. Practice a concise writing style. Be Steinbeck, not Faulkner.

In school you were taught to begin with a topic sentence, give two or three sentences in support and a concluding sentence that summarizes what you just said. That can work as a letter to the editor, but isn’t necessary. It moves slowly and eats up a lot of words. Another approach is to use a logic chain. Show people a better way to think about the topic. You can start in one place and end in another.

They may have taught you in school to never start a sentence with “but”. Forget that. “But” is a fabulous sentence starter in letters to the editor.

You may use humor, but avoid sarcasm. People might not get it, or you may come off as a know it all or jack ass. Never make fun of someone’s name.

Attack ideas or proposals, not motives or people. It’s rarely helpful to ascribe evil motives to people.

Be sure to include the title and date of the article or editorial you are responding to in your first sentence. You can work it into the sentence, or put it in parentheses at the end.

Some newspapers just won’t print about Peak Oil. It’s still good to send them L2Es. Management may change hands, or maybe a letter will finally sink in someday. Or look for other outlets in the same paper. The Washington Post will rarely acknowledge Peak Oil except to deny it’s a problem on their opinion page, but I still managed to get it in through the “Dr. Gridlock” column. Don’t overlook newspapers that you typically disagree with. The more you disagree, the more opportunities you have for letters to the editor. I’ve had a boatload printed in the Washington Times with whom I typically disagree.

If you are printed, be sure to read the next few weeks' papers to see if they print a reply. Some papers will print a rebuttal to a reply. Even if they don’t, it's good for the editor to know you had a good reply.

Here are a few sample letters. Feel free to steal these words when sending in your own letters. You may find a few words that I took from you… (Thanks)

Washington Times
http://www.washingtontimes.com/news/2010/feb/05/even-if-the-globe-isnt-w...
http://www.washingtontimes.com/news/2007/may/13/20070513-100738-4097r/?p...
http://www.washingtontimes.com/news/2009/dec/23/oil-lamp-getting-darker/

Washington Examiner
http://www.washingtonexaminer.com/opinion/Letters-from-Readers-8629405.html
http://www.examiner.com/a-1444895~Letters__June_17__2008.html
http://dev.www.washingtonexaminer.com/opinion/Letters-from-Readers-86294...

Baltimore Sun
http://articles.baltimoresun.com/2007-03-26/news/0703260138_1_rosewood-c...
http://articles.baltimoresun.com/2006-07-19/news/0607190228_1_icc-oil-su...

Atlantic Monthly
http://www.theatlantic.com/doc/200610/letters

Government Executive Magazine
http://www.govexec.com/features/1005-01/1005-01letters.htm

Gazette Newspaper
http://www.gazette.net/stories/06172009/montlet173628_32547.shtml
http://www.gazette.net/stories/03252009/montlet174547_32489.shtml
http://www.gazette.net/stories/08132008/montlet173746_32465.shtml
http://www.gazette.net/stories/010208/montlet154220_32398.shtml

Drumbeat: February 9, 2010

Gail the Actuary — Tue, 09 Feb 2010 04:15:25 +0000

UK gas rises as suspected field faults hit gas supply: sources

A gas shortage caused by several suspected faults affecting UK North Sea gas fields lifted prompt gas prices toward 40 pence/therm, traders said.

The Britannia gas field in the North Sea was said to have tripped after flows into Mobil's St Fergus terminal halved to 12 million cubic meters/day although that was not confirmed. The sharp decline started at around 09:00 GMT, with flows stabilizing at the new level thereafter.

Another unconfirmed fault was said to have cutback supplies into the Bacton Seal terminal, where flows have reduced to around 16 million cu m/d from 20 million cu m/d earlier in the day. Further aggravating several UK supply glitches, the Norwegian Langeled pipeline scaled back flows by 10 million cu m/d to 60 million cu m/d.

National Grid showed the system was 6 million cu m/d short, with demand estimated at 410 million cu m/d--still far outstripping seasonal norms.

Will Energy Plant Explosion Mean Higher Electric Rates?

In order to make the project come together, the state authorized Connecticut Light & Power to promise 15 years' worth of payments to Kleen Energy — in essence locking ratepayers into a long-term deal.

According to the plant owners' website, that contract would guarantee a 'strike price' of $13.40 per kilowatt/month. So if the wholesale market is paying $10 per kilowatt, the utility would have to pay $3.40 extra to Kleen Energy. But if the wholesale market is paying $15.40, Kleen would, in effect, have to pay CL&P $2.

These payments would account for 60 percent of the plant's revenues. With that contract, Kleen Energy was able to secure $1.3 billion in financing, including a debt issue by Goldman Sachs, trade journal ProjectFinance reported last year.

Austin Energy Revamps Solar Incentive Program

The municipal electric utility said the new approach saves $2.4 million over the life of the program compared to the old way of administering the program for those customers.

Rather than provide an upfront rebate on the installation of solar systems, Austin Energy will pay for each kilowatt-hour of electricity produced over a 10-year period. This is known as a fixed performance-based incentive (PBI) and it achieves two goals. First, it provides a fixed payment flow to a system owner by which payback can be calculated and second, it encourages proper design and maintenance of systems to maximize their production.

Over the next five years, the PBI program is expected to pay, on average, 8 cents per kWh of solar energy produced with program funding sufficient for almost 260 solar systems, each up to 20 kW in size. Total PBI payments over the next 14 years under the plan are projected at $4.8 million.

Venezuela offers carrot or stick in energy crisis

Facing anger at a major shortfall in electricity supply, Venezuela President Hugo Chavez promised consumers and businesses big discounts for slashing energy consumption, but ordered fines if they do not comply.

Spain Power Grid Can Feed 10M Electric Cars-Iberdrola Chmn

pain's electricity system can supply power to some 10 million electric cars if charging were to be made at night when general demand is low, Ignacio Galan, chairman of electricity company Iberdrola SA (IBE.MC), said Tuesday.

A gradual buildup of an electric car fleet will help the European Union to reach its targets for greenhouse gas emission cuts and renewable power penetration, he added. Galan spoke during a meeting with European Union competition ministers in the northern Spanish city of San Sebastian, Iberdrola said in a release.

Galan cautioned, however, that electric cars still need to overcome hurdles related to batteries, the buildup of a recharge system, and regulation.

Global oil prices to rise, weak refining to continue: Barclays

Global oil prices are set to strengthen while refining margins will remain weak over the next several years, Barclays Capital said in its Global Energy Outlook Monday.

The report cites Barclays' "preference for crude oil- and upstream-biased investments, relative to natural gas and downstream oil," adding there is "price support for crude in 2010 and even more so in 2011 as demand recovers, inventories return to balance and new supply slows."

In contrast, Barclays analysts said they "expect refining capacity additions to exceed demand growth at least until 2012."

Peak Oil Is a Crock

The good news about supply? Peak oil is a crock. There’s plenty of oil. It’s just harder to get to it now than it was 20 years ago. By the way, there’s also plenty of natural gas. Problem is, the natural gas is trapped in shale rock. And the oil is deep underground or below miles of sea or mixed with sand or in places where the underground pressure to bring it up has fizzled out.

The question isn’t whether the technology exists to get hundreds of billions of barrels out of the ground. The technology is there. But in many cases, deploying it is an expensive proposition.

How to light a fire under the oil companies? The answer doesn’t lie in government subsidies and grants. That’s the last thing the oil sector needs. Let the marketplace motivate them. Let supply run low and prices run high. With fat profit margins to fall back on, new technologies will be unleashed.

Ghana Blocks Exxon Oil-Field Deal

The government of Ghana blocked the estimated $4 billion sale of a stake in a huge oil field, foiling months of talks between potential buyer Exxon Mobil Corp. and the stake's owner, Kosmos Energy LLC.

The government accused Dallas-based Kosmos of cutting Ghana's state-run oil company out of discussions about the field's development and then sharing information about the field with potential buyers without government permission. The government in recent months itself has scouted for partners to work with Ghana's oil company, including state-run China National Offshore Oil Corp.

Ghanaian Energy Minister Joe Oteng-Adjei said state-run Ghana National Petroleum Corp. would be the only entity allowed to buy the Kosmos stake in the so-called Jubilee field.

Equipment for oil production in Jubilee Field arrive in Ghana

The sub sea equipment required for the production of oil from the Jubilee Field off the Coast of Ghana in the Western Region, have begun arriving in the country.

"This is a strong indication that the operator of Jubilee Field, Tullow Ghana Limited, is ready to produce first oil by the last quarter of this year," the company said in a statement issued in Accra on Monday.

Using Smokestack Gases to Pump Oil

Denbury Resources, Seeking Source of Carbon Dioxide for its Fields, to Scrub Emissions From Dow Chemical Plant

By mid-2011, Denbury plans to treat and ship its first batch of industrial emissions from a Dow Chemical Co. factory in Plaquemine, La., to its oil fields in Texas via a pipeline network it is building. Although the U.S. government recently announced funding for a host of other "industrial carbon capture" projects, the Dow project is unique because itappears to be economically viable without government aid.

Denbury wants to capture the entirety of the Dow plant's annual carbon-dioxide emissions, taking a liability off Dow's hands equivalent to the annual emissions of 27,000 cars. Denbury even would pay Dow as much as a few hundred thousand dollars a year pegged to rising or falling oil prices. Dow—the world's largest producer of ethylene oxide, a chemical building block used in products from beverage bottles to aircraft de-icers—says it "is open to similar [carbon dioxide] capture arrangements," spokesman David Winder said.

It's Official: The Oil Export Crisis Has Arrived (Chris Nelder)

Last March, my study of the effect of peak oil on U.S. imports had brought Mexico to the fore (“The Impending Oil Export Crisis”). As our #3 source of imports, the crashing of its supergiant Cantarell field had put the future of our oil supply into serious jeopardy.

The possibility that Mexico’s oil and gas exports to the U.S. could go to zero within seven years looked very real. . .

Now Venezuela has appeared on my radar for similar reasons…only this time we’re really going to feel it.

Welder's torch may have been cause of gas explosion at power plant

Investigators are focusing on a welder's torch as the possible cause of Sunday's deadly blast at the Kleen Energy Power Plant, sources said.

The explosion that killed five and injured more than a dozen occurred immediately after the purging, or cleaning, of the underground, natural-gas pipeline that runs about 800 to 1,000 feet through the Kleen Energy plant.

Sources familiar with the investigation and with the purging operation said that welding work wasn't entirely halted during or immediately after the purging Sunday morning. This operation can result in an accumulation of natural gas that must be vented from rooms and enclosures before other ignition sources, such as a welder's blow torch, can be safely introduced, experts said.

Gas-pipe purging linked to seven big explosions since 1997

The cause of the explosion at the Kleen Energy natural-gas plant has yet to be determined. But a federal safety board had recently urged stronger safety codes for the process of gas-pipe purging, which was under way at the plant in Middletown, Conn.

US urged new safety standards days before Middletown explosion

The US Chemical Safety Board, citing seven instances where workers died purging gas lines, released urgent new recommendations just three days before the Middletown explosion in Connecticut Sunday that killed at least five people.

Peak Oil in 5 Years:Virgin Boss Branson's Warnings

Of course it should be taken into account that Branson runs a major UK rail operator when he talks of the urgency of government action on peak oil. Similarly, Solarcentury founder Jeremy Leggett is hardly an impartial bystander. . .

Only a few short years ago, Peak Oil seemed to be the topic of choice for paranoid bloggers, the more radical environmentalists and fringe survivalist groups. Now the conversation is getting decidedly mainstream. Heck, even some folks at the IEA say peak oil could come sooner than we think. Given the context of our recent financial upheavals, Branson and Leggett's warnings to play it safe rather than sorry seem timely indeed. How else are we supposed to vacation in space when the oil runs out?

Despite millions in tax credits, wind-energy firms aren't hiring

Despite the Obama administration's efforts to create jobs making wind turbines in America, some companies say that sluggish demand for wind energy is holding them back.

The growth in wind-farm installations in the U.S. was a product of federal stimulus spending. Nonetheless, wind-equipment manufacturers cut as many as 2,000 jobs last year. According to the American Wind Energy Association, a trade group, the drop in U.S. jobs is due, in part, to the lack of a long-term national policy that would require a certain percentage of American electricity to come from renewable sources.

About half the wind turbines installed in the U.S. were made overseas.

A check with some companies that want to get into the wind-manufacturing business found that even some qualifying for clean-energy-manufacturing tax credits aren't able to create jobs quickly because they don't see enough demand for wind energy.

China denies $US60bn coal deal with Clive Palmer's Resourcehouse

CHINA's largest power company has denied it has signed a $US60 billion ($69.4bn) deal with mining millionaire Clive Palmer.

Mr Palmer said on the weekend his company, Resourcehouse, had signed a $US60bn, 20-year coal export contract with China Power International Development.  Announcing the deal, Mr Palmer said it was Australia's biggest ever export contract and would bring Resourcehouse's giant China First thermal coalmine in Queensland a step closer to reality.  But China's state-controlled Xinhua news agency has reported that China Power International Development, a unit of major power producer China Power Investment Corp, has denied the reports that it had signed a $US60bn coal-supply deal with Resourcehouse.

Clive Palmer corrects 'error' as China denies price talks have begun

MINING millionaire Clive Palmer has corrected his announcement of a $US60 billion ($69.5bn) coal-supply deal with China, after a Chinese company official said price talks had not yet started. Mr Palmer had said on the weekend that his company, Resourcehouse, had signed a major, 20-year coal export contract with China Power International Development.

China Plans to Increase LNG Imports on Gas Shortage

China plans to increase its imports of liquefied natural gas to ease a domestic shortage of the fuel, the official Xinhua News Agency reported today, citing Zhang Guobao, head of the National Energy Administration.

China’s gas companies should sign more long-term LNG contracts in order to take advantage of a global surplus of the fuel, Zhang was quoted as saying in the Xinhua report.

More on Virginia's Quest to Explore for Oil and Gas

API is closed today due to the weather. The heavy snowfall has made travel - including commuting - to and from the nation's capital extremely difficult and even dangerous. Today, I'm working from a remote location where I have heat, electricity and connectivity, making me much more fortunate than many of my colleagues who live in areas with downed trees and power lines.

On the Internet today, I had the opportunity to read an interesting article in the Los Angeles Times, which describes some of the issues surrounding Virginia's desire to explore for oil and natural gas 50 miles off its coastline.

Energy realism: ExxonMobil and wind

In other words, wind power is already amongst the cheapest source of electricity, and if any minimal accounting for some externalities is put in place (such as a price for carbon emissions), it becomes the cheapest. Of course, as we know, "cheapest" does not necessarily translate into "most profitable."

Does peak demand = peak supply?

Last week’s post about Tony Hayward’s comments on ‘peak demand’ attracted some good comments. Here’s our response as a post - since it got rather long:

Firstly, audio of the Hayward interview is now online here. There are some other interesting comments that weren’t picked up in the print reports, including the world’s ability - and particularly China and India’s - to handle high oil prices.

The dirty fuel/developing countries conundrum

Despite the largely disappointing outcome of Copenhagen and the fact that worldwide emissions are growing apace, there are still optimists in the clean energy sector. These individuals would have us believe there is a kind of unassailable momentum made up of political sentiment, fear of regulation, and consumer and shareholder insistence.

There’s some evidence for this argument, though it’s mostly limited to developed countries, where demand for some types of energy are peaking anyway. For example: a couple of weeks ago we looked at a report about the death of US coal. The news flow since then on coal has yielded quite a few arguments in favour of the optimistic line. The chief executive of Alstom, which makes all kinds of power plant turbines, was reported as saying at Davos that renewables and nuclear growth will outpace coal.

Chavez declares "electricity emergency" in Venezuela

Despite its huge crude reserves, the South American OPEC member relies on hydro-electricity for 70 percent of its power needs, and a drought has hit supply since late 2009.

"We are ready to decree the electricity emergency, because it really is an emergency," Chavez said in the first edition of a show on state radio air waves called "Suddenly Chavez."

With electricity cuts weighing on Chavez's popularity ahead of important legislative elections in September, the government blames the shortages on the drought and soaring demand during five years of economic growth until 2008.

Amtrak cuts some Tuesday service

Amtrak has cut several routes for Tuesday in advance of the approaching snowstorm due to downed trees and power lines on railroad tracks along certain routes.

Iran says it will build 10 nuclear plants, beef up military

Ali Akbar Salehi, head of Iran's Atomic Energy Organization, announced that Tehran had informed the United Nations' nuclear watchdog that it intended to launch construction of 10 new nuclear-fuel plants in the Persian calendar year starting March 2010 and begin producing 20%-enriched uranium to provide fuel for a Tehran medical reactor.

Iran Starts Higher Uranium Enrichment

Iran says it has begun enriching uranium to a higher level, defying international efforts to curb its nuclear activity.

Iranian state media reports the process started at Iran's Natanz facility Tuesday in the presence of International Atomic Energy Agency inspectors.

Iran told the IAEA Monday of its plans to enrich uranium to 20 percent in order to fuel a medical nuclear reactor.

Western powers are concerned that if Iran is able to enrich uranium to 20 percent, it could eventually produce weapons-grade uranium through the same process.

Biggest Boeing plane; successful first flight for 747-8 freighter

Boeing Co.'s giant 747-8 freighter — the biggest plane the company has ever built — successfully completed its first flight Monday, a year later than originally planned. The huge plane took off from Everett's Paine Field shortly after noon and returned to Paine at 4:18 p.m. PST after an approximately 3½-hour flight.

Lookout deck of world's tallest tower in Dubai unexpectedly shuts a month after opening

Electrical problems are at least partly to blame for the closure of the Burj Khalifa's viewing platform — the only part of the half-mile high tower open yet. But a lack of information from the spire's owner left it unclear whether the rest of the largely empty building — including dozens of elevators meant to whisk visitors to the tower's more than 160 floors — was affected by the shutdown.

The CTA's cold truth

Chicagoland commuters have grown accustomed to going to sleep with the threat of massive service cuts under their pillows, only to wake and find their problems magically gone. When Monday's rush hour dawned, though, the Chicago Transit Authority's $95.6 million deficit was still there. The bus wasn't. The CTA has been to the brink of disaster many times. It was often a bluff; there was always a bailout. It's no wonder unions and passengers seemed to expect this year's deficit to disappear. As the deadline loomed, the usual cries went up for the mayor, the governor, the General Assembly to "get involved." But the state's broke. The city's strapped. The fairy's dead.

Federal government closes: Why can't they all work from home?

closing down the federal government costs $100 million a day in lost productivity. Why can’t bureaucrats, you know, telecommute? Like everybody else does in this Era of the iPhone.

The answer to that is, they do. At least, some of them do. About 9 percent of eligible federal employees have approved telework agreements that allow them to work from home, according to an Office of Personnel Management (OPM) report from August 2009.

Young joins Murkowski in seeking study of deep-water Arctic port

U.S. Rep. Don Young has introduced a bill aimed at studying the potential for an Arctic deep water port. The measure is a companion bill to one introduced in December by U.S. Sen. Lisa Murkowski.

Hawaii charges ahead with electric vehicles

Starting this month, state and county agencies buying new vehicles are required to give priority to electric vehicles, alternative-fuel vehicles and hybrids. And by the end of next year, government and private parking lots open to the public must have at least one space for electric vehicles and a vehicle charger for every 100 parking spaces.

Oil weighed down by demand jitters

Oil sank below $72 a barrel today, after rising nearly 1% the day before, weighed down by nagging worries over an uncertain demand outlook and the fiscal health of some euro zone countries.

Petrobras steps up drilling at Reconcavo

Brazil's National Petroleum Agency (ANP) authorised Petrobras to start exploratory drilling ahead of schedule at Block REC-T- 168 in northern Brazil during a 2 February board meeting, the ANP said in a document on its website. Petrobras has found oil or natural gas at 11 exploration wells it has drilled in the basin since 2001, according to ANP data, Bloomberg reported.

Praxair Awarded ExxonMobil Contract for Enhanced Oil Recovery Project

Under the new contract, Praxair will install a new production facility to meet ExxonMobil's requirements for nitrogen. Operations from the new supply network are scheduled for start-up in the second half of 2011. Praxair will produce 85 million cubic feet per day of high-pressure nitrogen and additional quantities of liquid argon.

"We are pleased to be working with ExxonMobil on this exciting EOR project" said John Panikar, vice president, South Region, North American Industrial Gases.

ExxonMobil currently uses Praxair's nitrogen gas to increase the amount of oil recovered from its Hawkins plant. ExxonMobil will utilize additional nitrogen to help them recover more oil and natural gas reserves.

Husky Energy announces third significant gas discovery in South China Sea

An exploration well in the waters south of Hong Kong tested natural gas at an equipment restricted rate of 57 million cubic feet per day, with indications the Liuhua 29-1 well could produce more than 90 million cubic feet of gas per day in the future.

Husky chief executive John Lau says the discovery, and two others in the same block, support earlier estimates of up to six trillion cubic feet of natural gas initially in place for the area.

ENI, PPL start offshore oil, gas exploration

Although Pakistan has never been successful in exploring oil and gas reserves in offshore areas in the country, it is once again making all efforts to achieve the goal in the Arabian Sea.

The ENI Pakistan and Pakistan Petroleum Limited (PPL) have joined hands and started drilling Shark-1 offshore well on January 17. Total cost of the project is estimated at $44 million. The Minister for Petroleum and Natural Resources Syed Naveed Qamar said this at a press conference on Monday after returning from the drilling site.

Shark-1 is located in Indus M Block in the Arabian Sea, which is 87 kilometres southwest of Karachi. The block is a joint venture between ENI of Italy having a 70 per cent working interest and PPL with 30 per cent share.

REpower signs turbine towers deal with Welsh firm

REPOWER UK, the British division of the German renewable energy giant, has signed an agreement to buy most of its wind turbine towers from a domestic manufacturer. Edinburgh-headquartered REpower previously sourced the towers from its German parent company but yesterday revealed a deal with Welsh manufacturer Mabey Bridge.

India likely to face coal shock

India could face a ‘coal shock’ sooner than later if the power utilities do not wake up to the fuel security risks from stagnating domestic production and start planning long-term coal imports to meet the fuel shortage. Although big power producers like NTPC are already meeting domestic coal shortages with imports, they have not shown any urgency to get into long-term import contracts.

New Ukraine leader may still drive hard bargain on gas

Ukraine's likely new president has a more pro-Russian tinge but Kyiv's desperate public finances may mean he drives just as hard a bargain on gas issues as his confrontational, Western-leaning predecessor.

Aramco's Laser Invention is Used to Fingerprint Oil

Occasionally scientists develop an invention that turns out to have far more applications than originally thought. The Research and Development Center (R&DC) has built a truly unique instrument designed to identify oil by using a laser. The laser is used to excite the fluorescence spectra of oil within extremely short time frames — two to five nanoseconds. All the fluorescence data is coalesced, and two dimensional diagrams are produced, which serve as oil spectral fingerprints.

Oil Climbs Above $71 on Weather, Geopolitical Tensions

Reversing a steep sell off after three consecutive sessions on the downside, crude oil futures on the New York Mercantile Exchange saw an uptick in trading Monday as concerned investors abandoned the dollar's safe havens to bet on riskier markets.

Peak oil in Davos: Oh yes it is, oh no it isn’t.

The title above was borrowed from the Financial Times. Last week the World Economic Forum in Davos celebrated its 40th anniversary and one of the sessions addressed the world’s energy security. The chairperson for the session was Daniel Yergin, the founder of CERA (Cambridge Energy Research Associates). Before his departure to Davos the Wall Street Journal (WSJ) wrote: “All the world loves a bringer of good news, so energy guru Daniel Yergin should by all rights be guaranteed a warm welcome at Davos this week”. The news that he bore with him was that “the awful day of ‘peak oil’, when the world will have depleted its finite hydrocarbon resources to the point where it can never again increase production, is still a long way off”. If, in fact, it becomes apparent that oil production actually reaches a peak then Daniel Yergin has a cop-out, “The big determinants (to global energy supply) are the above-ground risks — politics, the quality of decision-making, and costs and so on”.

Delusions of Finance: Where We are Headed

Gail the Actuary — Mon, 08 Feb 2010 14:51:10 +0000

Back in October, I participated in the 2^nd International Biophysical Economics Conference at SUNY-ESF in Syracuse, New York. Charlie Hall had written to me, inviting me to come and give a talk. Specifically, he wanted me to go back to my post from January 2008 called Peak Oil and the Financial Markets: A Forecast for 2008 and explain why my forecasts had turned out pretty close to correct, while many others widely missed the mark. The title he suggested for the talk was Delusions of Finance.

My financial forecast really has implications for beyond 2008, so I added some more forecasting thoughts as well. In this post, I would like to share this presentation with you. A download of the presentation, plus an audio recording, are available at the Biophysical Economics Conference Proceedings website under Gail Tverberg.

I am a casualty actuary by training and spent many years doing forecasting and modeling as an insurance company employee and later as a consultant to insurance companies. Many of these companies were small medical malpractice insurance companies that provided insurance for a group of hospitals or physicians. Medical malpractice claims are notoriously slow to be reported and to be paid, so we had to forecast many years of reporting and payments, (and corresponding investment income). These models were used both for determining appropriate insurance rates and for determining balance sheet reserves for these companies. Quite often I was involved in putting together models for proposed new companies in order to estimate likely capital requirements. I was also prepared a lot of estimates of the likely impacts of medical malpractice reforms.

All of this didn't really give me any special training for making financial forecasts relating to peak oil, but it did give me a lot of practice with making forecasts and trying to think outside the box. I needed to figure out what was unique to each situation, and figure out a way to model it. I hadn't gone through the standard MBA training, but I had bumped up against a fair amount of it along the way.

My background goes back far enough that I had a chance to see how badly insurance companies fared back in the 1974 period, when oil shocks affected insurance companies. One of my former employers went bankrupt, and another one nearly did. I could see that if a similar situation happened now, other financial companies would likely be affected as well.

Quite a bit of the rest of this presentation is fairly self-explanatory, especially if you have seen some of my other presentations, so I won't provide too much in the way of comments.

Slide 3

This is a link to the full post. You may want to read it, if you haven't previously.

Slide 4

My later slides explain these points more fully.

Slide 5

Slide 6

Slide 7

If you stop to think about it, there a quite a few differences in the way the economy functions in a period of economic growth and in a period of economic decline. The assumption of continued economic growth by traditional economists (who don't consider resources and their limits) has been so strong that most have not even considered what the economy would look like in a period of long-term decline.

Slide 8

Many have observed that there would have been defaults, even without peak oil, because of the reckless lending that had been done. I would contend that at least part of the reason the lending had been done was to give the illusion of growth, when there really wasn't much apart from that generated from very loose lending standards. Furthermore, even if loose lending standards were part of the problem, the problems related to peak oil made it worse (and can be expected to cause more problems in the future).

Slide 9

When there isn't a problem like peak oil (or limits to growth in general), debt defaults are in fact pretty much independent. That is why the system for determining insurance charges to be included in the interest rates charged for loans worked pretty well until peak oil came along. In the absence of peak oil, a homeowner or businessman defaults because of some particular problems he or she has. Past history is likely to be predictive of the future, because while there are different individuals defaulting, the average number of defaults will tend to be pretty stable from year to year.

Slide 10

It is possible that there will be some loans in a declining economy, but their use will be much less widespread than we see today. Their cost will also tend to be higher.

Slide 11

When lending is increasing, businesses have more money to invest in new plants and equipment and homeowners find it easy to get loans of new homes or for home improvements.

Slide 12

As countries cut back their stimulus funds, the decline in credit available may be especially severe. I noticed this article this morning:

Lenders warn of mortgage shortages

Britain’s banks and building societies have warned that they will have to slash mortgage lending and raise rates on home loans if the government insists on prompt and full repayment of the £300bn they have received in state support since 2008.

Slide 13

Slide 14

In the US, homeowners used their homes as a piggy-banks when home values were rising. They could refinance their homes, remove the built-up equity, and buy new cars, furniture, and other things. When there are fewer home buyers (because of less loan availability), and continually declining values, the effect is reversed.

Slide 15

Credit problems are really what are likely to spread the lack of oil to a much broader reduction in fuel use, essentially through growing recession. This recession may affect OECD to a greater extent than non-OECD, but there are such great links between the two that I expect eventually all will be affected. This reduction in fuel use is likely to be described in the press as "reduced demand"--which it is, but because of recession induced by credit contraction (ultimately going back to lack of growth in oil supply).

Slide 16

Slide 17

Slide 18

I am sure that some trade will continue, even if countries have financial problems. But it seems to me that a very large amount of trade is needed to keep up our system at the current level. High tech equipment would seem to be hardest to create with local materials alone. We can make simple things, like wheelbarrows and shovels with recycled steel, but it is not clear that precision parts for things like computers and other high tech equipment can be made without exactly the right imports from around the world, and factories set up with the right controls.

Slide 19

These changes could start very soon. It is hard to know precisely how things will play out.

Drumbeat: February 8, 2010

Gail the Actuary — Mon, 08 Feb 2010 14:33:19 +0000

Obama renews call for oil taxes in 2011 budget

"For our members—the small businessmen and women of our nation's oil and gas industry—this is a knockout blow," Somerlyn Cothran, executive director of the National Stripper Well Association in Tulsa, said on Feb. 2. "Implementation of this budget proposal would mean a significant loss of jobs and a dramatic loss of tax revenues for each of the 35 states where our members are productive, contributing businesses. Plus, the resulting decrease in oil production will serve only to make America even more dependent upon foreign oil."

Cothran noted that while a marginal, or stripper, well produces 15 b/d or less of oil, US stripper wells collectively produce 20% of the country's oil or 1.2 million b/d—as much as the US imports from Saudi Arabia.

"There is a shocking difference between the 'big oil' companies and the little guys, who are Rotary Club and PTA members in their respective hometowns," Cothran emphasized. "There should absolutely be a structural and financial difference in relation to tax subsidies between the large-scale, international oil companies and small, independent operators. This is the only way to ensure the survival of our industry's small businesses."

Characterizing the incalculable (Kurt Cobb)

A rule of thumb then might be that the more complex the system, the less likely it is we will be able to model its actions with precision. And, the greater the number of humans involved in affecting that system and the deeper that involvement, the more difficult it becomes to design precise models of the system. In general, the reliability of a model decreases as the complexity of the system it is modeling increases.

What are we left with then? Shall we simply give up and say that much of what we would like to model cannot be modeled? I would counsel against this view.

The Market Potential of CNG as a Transportation Fuel

CNG and battery-powered vehicles are often presented as competing alternatives for the future of transportation, and in some sense, that’s true. However, based on today’s economics, they have far different potentials and address quite different market needs and niches. For those who believe in peak oil, at least in the sense of a limit on the volume of affordable oil, CNG represents potential as a critical alternative fuel which can permit the global economy to grow again.

On the other hand, CNG is unlikely to reduce carbon dioxide emissions. . .

CNG and electric vehicles, therefore, should be understood to target different market segments and solve different social problems. Both are potentially important alternatives for society in the coming years.

Entropy revisited

You can't win, you can't break even, and you can't get out of the game. Those kernels are my favorite descriptors of the Three Laws of Thermodynamics. Respectively, the clauses mean (1) energy is conserved (First Law), (2) entropy never decreases, thus precluding perpetual motion machines (Second Law), and (3) it is impossible to cool a system to absolute zero (Third Law). The Second Law in particular puts insurmountable, irreversible constraints on everything we do. Without the Second Law, there would be no heat losses in energy systems, and electricity would be far too cheap to meter and commodify.

One way of looking at our current set of predicaments is that we've been on a binge, consuming energy considerably faster than it can be captured and stored by Earth's ecosystems. While fossil fuels once appeared limitless (and still do to deniers of peak oil), and though we're literally bathed in energy (in the form of sunlight), the disappearance of the fossil-fuel storehouse accumulated over millions of years isn't something that can be replaced with anything nearly as convenient as fossil fuels. Solar, wind, wave, geothermal, nuclear, and hydropower simply don't pack the same punch as fossil fuels, either singly or in combination. In short, we're falling off the net-energy cliff, and there's no lifeline to grab onto, no known technology to break the fall.

Permits Drag on U.S. Mining Projects

Obtaining the permits and approvals needed to build a mine in the U.S. takes an average of seven years, among the longest wait time in the world. So despite having vast underground stores of raw materials, the U.S. is one of the last places miners go to start a project.

At the proposed Kennecott Eagle nickel mine in Michigan's sparsely populated Upper Peninsula, the wait is at seven years and growing. Global miner Rio Tinto says the project would fill a raw-material gap in the U.S. economy, but the company has yet to produce an ounce of nickel there.

Survey Says Americans Support Carbon Tax More Than Cap-and-Trade - But Nobody Really Knows Much About Either...

One aspect of this survey which is backed up by others: Not too many people have even heard of either approach. 35% of people responded saying they had never even heard the term cap-and-trade before, with 26% saying they know only a very little about it. Carbon tax had 31% of people being entirely unaware of the term, with a further 26% knowing little about it.

The Biggest Thing is That Few Even Think About Pricing Carbon
More than espousing either cap-and-trade or a carbon tax by presenting this survey--and I admit that the results happen to correspond well with the US Climate Task Force's avowed mission of singing the praises of a carbon tax over cap-and-trade--I think the real take away from this is the average American really hasn't been made aware of either approach. (Still less cap-and-dividend...)

Shell Denies Plans to Sell Major Nigerian Assets

Royal Dutch Shell PLC has denied it plans to sell major Nigerian assets in the coming months, a Nigerian minister said Friday.

"Shell hasn't come to us and when I inquired they denied it, that they were selling major assets," Odein Ajumogobia, State Minister for Petroleum Resources, told Dow Jones Newswires.

Branson warns that oil crunch is coming within five years

Sir Richard Branson and fellow leading businessmen will warn ministers this week that the world is running out of oil and faces an oil crunch within five years.

The founder of the Virgin group, whose rail, airline and travel companies are sensitive to energy prices, will say that the coming crisis could be even more serious than the credit crunch.

"The next five years will see us face another crunch – the oil crunch. This time, we do have the chance to prepare. The challenge is to use that time well," Branson will say.

"Our message to government and businesses is clear: act," he says in a foreword to a new report on the crisis. "Don't let the oil crunch catch us out in the way that the credit crunch did."

UK gas traders not worried by cold weather forecasts

Freezing temperatures in the UK this week are expected to tighten the gas supply-demand balance but gas prices will be capped by partially replenished mid-range storage and demand ceilings of around 420 million cubic meters/day, UK gas trading sources said Monday.

The Rough storage facility is down to 40% of capacity, and short-term storage capacity is also below 50%. The comparative levels held in storage now are far below levels seen even four weeks ago following prolonged heavy draws as the country dealt with the last spell of severe winter weather.

So far the gas market has absorbed the impact of the relatively cold winter without any significant impact on the curve, with summer 10 gas trading roughly stable at 33 pence/therm and winter 10 gas at 45.5 p/therm.

UK prompt power edges up on cold-induced hike in gas prices

UK power for delivery on the next working day inched higher Monday on a cold-weather induced increase in the price for natural gas, the fuel for over two-fifths of the country's power generation, although gains were limited on expectations that healthy margins could soak up any demand increase, traders said.

Working day-ahead baseload power rose 15 pence to GBP36.40/MWh ($56.67/MWh, Eur41.52/MWh) by 12:00 GMT, while day-ahead peak was flat around GBP40.25/MWh. . .

"There's so much plant out there right now that you could double demand and power would still trade off fuels," one trader said.

"We really need to see a chunk of cheap plant to come offline to see some action," the trader added.

Roundtable discussion of the top oil stories of the week (Podcast)

Peter Zipf, Beth Evans and Jeff Mower discuss the three top oil news stories of the week, including earnings results and how this relates to market developments, the new renewable fuels standard and biofuels approach, and the fiscal 2011 US budget, which may include a repeal of tax breaks for the oil and gas industry.

At least 5 dead in Connecticut power plant blast

Fire officials said a natural gas leak caused the blast during testing at the Kleen Energy Systems LLC facility, which was 95 percent complete and due to come online this summer as the largest electricity generating plant in New England.

As many as 200 workers were at the site on any given day and the exact number of dead and injured would not be known until each contractor provided a list of employees, Middletown Mayor Sebastian Giuliano told a press conference.

Credit Suisse survey finds bearish sentiment on US gas prices

Energy investors surveyed by Credit Suisse are bearish on US natural gas prices in 2010, but bullish on natural gas stocks, Credit Suisse analyst Jonathan Wolf said Friday.

Financial and energy professionals believe gas prices will average between $5 and $5.50/MMBtu this year, slightly below pricing suggested by the NYMEX futures curve. Credit Suisse surveyed attendees at the bank's Energy Summit in Vail, Colorado earlier this week.

The reason for the gloominess? Liquified natural gas, respondents indicated.

Cape Wind fight goes on

Interior Secretary Ken Salazar journeyed out into Nantucket Sound on a Coast Guard vessel last week to signal the Obama administration's readiness to put some muscle behind wind energy. To do that, Salazar has to resolve a battle over building a wind farm on 25 square miles of open water that has driven a rift between environmentalists, infuriated local Native Americans and threatened one of the administration's cherished priorities.

Iran’s President Moves Ahead on Uranium Processing

Iran’s president ordered his atomic scientists on Sunday to begin enriching their stockpile of uranium in order to power a medical reactor, a move that accelerated Iran’s brinkmanship over its nuclear program by moving the country closer to producing weapons-grade fuel.

Earth, wind and wire: Going beyond solar panels

Not long ago, people who wanted to generate their own green energy at home had to content themselves with rooftop solar panels. But new technologies -- and hefty government subsidies -- are now allowing homeowners to tap the wind, the Earth and other renewable sources in their own backyards. Call it the green evolution.

The cost of heating and cooling with fossil fuels has nowhere to go but up, thanks to rising global demand and increased regulation of carbon emissions. Turning one's home into a clean mini-power plant is getting cheaper and easier all the time.

CTA's Doomsday service faces its first rush hour

Predictable as it was that the threat of previous CTA service cuts would not be carried out, it was even more obvious there was no stopping them this time.  The questions now are:  What will it take to forge successful negotiations between CTA management and the transit agency's labor unions (since neither the city of Chicago nor the state of Illinois is willing to put skin in the game)?  How long will it take? Is Henry Kissinger or Al Sharpton available to help move things along?  How soon could full service be restored?

Canal expansion may spur switch to shipping

Chinese toys and sneakers headed to Wal-Mart Stores Inc. and Target Corp. on the U.S. East Coast may bypass Warren Buffett's $33.8 billion railway as the expansion of the Panama Canal slashes the cost of shipping them by sea. The deeper, wider canal will allow A.P. Moeller-Maersk A/S, China Ocean Shipping Group Co. and other lines to ship more cargo directly to New York and Boston instead of unloading it on the West Coast for trains and trucks to finish the journey east. That could save exporters 30 percent, the canal operator said.

Wind industry picks up, but jobs decline

America's wind energy industry enjoyed a banner year in 2009, thanks largely to tax credits and other incentives packed into the $787 billion economic stimulus bill. But even though a record 10,000 megawatts of new generating capacity was created, few jobs were created overall and wind power manufacturing employment fell — a setback for President Obama's pledge to create millions of new "green jobs." Obama has long pitched green jobs, especially in the energy, transportation and manufacturing fields, as a prescription for long-term, stable employment and a prosperous middle class.
But those jobs have been slow to materialize, especially skilled, good-paying blue-collar jobs such as assembling wind turbines, retrofitting homes to use less energy and working on solar panels in the desert.

Gas price slump stings BG

UK-based integrated gas giant BG Group saw profits from continuing operations slip 15% year on year to £592 million in the fourth quarter of 2009 amid a sharp decline in natural gas prices.

Blizzard bumps oil prices

Oil prices reversed some of last week's losses today and rose from a seven-week low to near $72 a barrel, spurred by bargain hunting and hopes that a blizzard in the US mid-Atlantic region would boost fuel demand.

Santos unveils reserves bonanza

Australian independent Santos said it had boosted total proved and probable reserve at the end of last year by 42%, or 427 million barrels of oil equivalent, year-on-year to a total 1.44 million boe.

The company said reserves were plumped by a 60% year-on-year increase in proved and probable coalbed methane reserves to 3748 petajoules (about 100 billion cubic metres), which included its first booked reserves after entering the Gunnedah basin in 2007.

EPA lowers cellulosic ethanol standard for 2010

The US Environmental Protection Agency published guidance for the second phase of the renewable fuels standard (RFS2) Feb. 3, directing refiners to ensure that the gasoline pool contains 8.25% ethanol.   The Energy Independence and Security Act of 2007 (EISA) required sales of 12.95 billion gal of renewable fuel in 2010. EISA created a second, expanded version of the RFS, known as RFS2.   The RFS2 rules from EPA originally were scheduled for release Jan. 1, 2009, but EPA delayed the release until this year.   For the first time, EPA announced volume standards for specific categories of renewable fuels. The 2010 cellulosic ethanol standard is 6.5 million gal, down from the 100 million gal that Congress established in 2007.

Cellulosic shortfalls of two companies led to RFS target cut: EPA

Two companies expected to produce the bulk of the earlier estimate, Cello Energy and Range Fuels, "have delayed or reduced their production plans for 2010," according to the EPA documents.

Cello and Range could not be reached for comment on Friday. . .

Uncertainties about Cello surfaced during a trial last summer where evidence was submitted that showed production from Cello's biodiesel plant did not contain any bio-based carbon. The company claimed it could turn cellulosic material, used tires and plastics into fuel, according to court documents.

US renewable, efficiency standard could save $113 billion: UCS

A federal renewable energy standard of 25% by 2025 combined with an energy efficiency standard of 10% by 2020 could save US electricity consumers $113 billion by 2030, the Union of Concerned Scientists said Friday in a new analysis.

The two standards also would boost renewable energy generation by 23%, the group said.

While job numbers proliferate, is 196,000 a good one?

The consulting firm Navigant said Thursday that by its estimates there are 196,000 people in the US currently employed in the renewable electricity industry.

Job numbers are often carelessly tossed around. Nonetheless, Navigant said in its study that if there is a 12% national RES established for 2014, there could be 67,000 more jobs in the sector by then. A 20% RES target in 2020 would add 191,000 jobs, and a 25% RES target for 2025 would add 274,000 jobs.

For 2025, with a 25% national RES, Navigant broke down the new jobs this way: 116,000 in the wind industry, 60,000 in biomass-related jobs, 50,000 in the solar sector, 34,000 in the hydro sector and 15,000 in the waste-to-energy area.

IADC/SPE: Project is devising autopilot drilling standards

A Research Council of Norway joint industrial project, AutoConRig, aims to develop standard communications for the drilling process, build a framework for autonomous machine control, and create and maintain explicit specifications of shared concepts among drilling centers, reservoir and production centers, operations and maintenance centers, environment centers, and field operations.   AutoConRig, started in 2008, is part of a larger project, Integrated Operations in the High North, that plans to develop an advanced infrastructural framework of integrated operations off Norway.

Intervention boosts Beatrice field oil flow

he Ensco 80 jack up has moved off the field, which is in the Inner Moray Firth area, after refurbishing and restarting three wells tied into the Beatrice Bravo platform. Ithaca, operator of Beatrice field under a lease from Talisman Energy Inc., had expected the production boost to be about 500 b/d.   The company attributed about 1,000 b/d of the incremental production to the B11 well, in which intervention included perforation across a previously untapped section of the Middle Jurassic Beatrice reservoir to access an undrained part of the field.

French refining industry situation 'critical'

The French refining industry faces a “critical” situation as part of a European system in which “between 10 to 15% of the 114 refineries should be shut down to restore a demand-supply balance,” says the leader of a trade group.   Jean-Louis Schilansky, president of Union Francaise des Industries Petrolieres (UFIP), gave that assessment at a press conference Feb. 4 in Paris.   In an industry outlook, Schilansky noted that demand for oil products in France last year dropped by 2.8% in a change he called “structural.”   Refinery runs for all of last year fell to 72 million tonnes from 84 million tonnes in 2008 as margins diminished.

Valero buys Wisconsin ethanol plant

Valero Renewable Fuels Co. LLC has completed the purchase of a 110 million gal/year ethanol plant near Jefferson, Wis., from privately held Renew Energy.   The purchase price is $72 million. Renew Energy filed for bankruptcy early last year after 6 years of operation.

Gas pipeline blown up in Quetta

Unknown miscreants have blown up a gas pipeline with explosives located on western bypass here in Quetta on Sunday, Geo news reported. According to police sources, the gas pipeline was under construction when unidentified men blew it up with explosives, but however, the explosion did not result in suspension of gas supply to area.

Nigerian militants say disabled Shell oil pipeline

A Nigerian militant group said on Sunday it had attacked a Royal Dutch Shell oil pipeline in the Niger Delta but the Anglo-Dutch company said it had no reports of any such sabotage.
The Joint Revolutionary Council (JRC), a coalition of ex-militants and community leaders, said in a statement it had disabled a trunk line in the Obunoma area of Rivers state connecting several flow stations to the Bonny export terminal.

Production in Dubai’s new oil field to begin in a year

The Media Office of the Dubai Government said today that the commercial production of oil from the newly discovered ‘Al-Jalilah’ oilfield will start in an year.

Research and initial exploration in the new deposit off the coast of Dubai located east of the existing Rashid oil field predicted the possibility of full scale commercial production within an year, said a statement from the Media office. Once operational the Jalilah Oilfield will be the fifth producing fields in the emirate since the oil was discovered in the sixties of the last century.

Fuel Subsidy: Governors Threaten Legal Action

Some state governments are preparing a legal action against the Federal Government for fuel subsidy deductions from the Federation Account which they claim are illegal and unconstitutional.

The past administration of President Olusegun Obasanjo had initiated the Petroleum Support Fund bill in 2006 to legitimise the deductions to fund the huge subsidy bill, but it is yet to be passed by the National Assembly.  Also, because of the deregulation programme of the government, the bill is not likely to be pursued any longer as government will no longer be involved in the pricing of petroleum products.

The 36 states of the federation, 774 local councils and the Federal Capital Territory contributed over N1.3 trillion to the subsidy fund between 2006 and last year, although only Lagos, Rivers and Abuja enjoyed the benefit of paying N65 per litre of petrol before the current fuel crisis crept in.

Addressing the food versus fuel debate in Ghana

The lines between energy and agriculture are becoming more blurred. As science advances, the use of biofuels in most parts of the world has continued to increase. One thing that has gradually come to stay and is in recently times attracting significant foreign investment in Ghana is energy crops. The last four years has seen Norwegian, Brazilian, Dutch, Swedish, German and British firms all competing for farmland to grow energy crops in different parts of the country.

The Iraqi oil conundrum

Speculation that Iraq's production could - in the not too distant future - exceed that of Saudi Arabia may still represent Washington's main strategy for postponing future severe global energy shortages.

Shareholder group calls on BP to rethink oil sands project

OIL giant BP is facing calls by a shareholder group to review its plans to invest in major oil sands projects in Canada. FairPensions, which lobbies for companies to adopt "responsible investment practices", has filed a resolution it hopes will be voted on at BP's general meeting in April.

The resolution calls for the risk and audit committees at Europe's second largest oil explorer to review factors such as future carbon prices, potential regulation of greenhouse gas emissions and possible risks to its reputation it might face from investing in oil sands projects.

China's economy set to grow 10%

AN OFFICIAL Chinese economic think tank has predicted the country's economy will grow by around 10 per cent this year. The Centre for Forecasting Science predicted that first quarter growth equivalent to 11 per cent in the first three months of the year would slow slightly during the rest of 2010.

Falklands oil prospects stir Anglo-Argentinian tensions

It does not look like much: a jumble of pipes, containers and drilling equipment sitting on a windswept jetty at Port Stanley. The hardware, however, signals an imminent search for oil and gas that could turn the Falkland Islanders into south Atlantic oil barons, a prospect that has already triggered a dispute between Britain and Argentina.

Is diesel dead?

Diesel. Nasty oily stuff or thrifty saviour? Until fairly recently, you might have said that UK buyers were coming around to the second view.

In Europe, diesel's share of the new passenger car market has grown from 25 per cent to more than 50 per cent during the past decade, but in Britain, from a lower base, growth has been even faster during the same period (from 15 per cent to 43 and a bit). In recent months, though, Britain's love affair with diesel has lost its ardour.

China approves Gansu coal mining plan

Ningzheng mining region is located in eastern Gansu, covering an area of 1,100 square kilometers. The mining region was designed to produce 20 million tons of coal annually after construction, which will become one of the largest energy bases in Northwest China.

$60b Aussie coal deal inked

Australian coal and iron ore company Resourcehouse said over the weekend it had signed a record $60 billion coal supply deal with Chinese power stations, a move analysts said underscored Chinese companies' growing demand for energy to fuel the country's economic development.

Resourcehouse will supply 30 million tons of coal annually over 20 years to China Power International Development Ltd, a unit of major power producer China Power Investment Corp (CPI), Clive Palmer, chairman of the Australian company, said on Saturday.

China's railways send 5m passengers by Feb 6

China's railway network has transported 5.03 million passengers as of February 6, the eighth day of the country's annual Spring Festival transport peak lasting from January 30 to March 10 this year, said the Ministry of Railways (MOR) Sunday. The figure was 105,000 more than that in the same time last year, up 2.1 percent year on year, according to the MOR.

Coal exporters face low prices costly transport

Coal exporters face a tough year without the cushion of forward selling at higher prices that helped get them through 2009, and with their familiar problem of high rail transport costs persisting. Exporters may have to cut production as they did in 2008-09 if prices slump and they cannot shift coal to Asia.

Russia, one of the world's top five coal exporters to Europe and Asia, will ship about 8 percent more thermal coal in 2010 than last year but will battle for more than a slim profit margin, analysts and exporters said.

The Role of Oil in the Iraq War

In truth, the oil production level in Iraq has deteriorated during that period compared to its levels under the former regime. Also, Iraq’s recent openness to the international oil companies in 2009 was not matched by a noticeable openness to American companies. It was the Asian state-owned companies (especially from Malaysia and China) that had the lion’s share, and only two American companies, ExxonMobil and Occidental Petroleum, were awarded contracts. More importantly, the American companies did not broadly participate in two other Iraqi tenders. Their refrainment from competing with other companies was thus notable and remarkable, especially Chevron which withdrew in the last minute.

Government's switched on energy move

ALL Australian homes will soon have to undergo a mandatory energy-efficiency assessment costing up to $1500 per property. The assessment has to be done before any property can be sold or rented under new laws to tackle carbon emissions.

The THAI process for bitumen and heavy oil

Heading Out — Sun, 07 Feb 2010 13:14:12 +0000

For a while, when I was a student, I had an attic bedroom that was heated by a small coal fire, with a relatively short chimney up to the roof. I learned, fairly early on, that in starting the fire you needed a fairly high velocity air flow across the coals, and underlying firewood strips. And to get this I would rest a shovel over the front of the fireplace, and try and seal off the sides. I kept a small bellows beside the fire to help when this wasn’t particularly successful. When you are starting a fire underground the provision of air is critical, but when you are trying to burn the residual coke that is left, after the heat has cracked the rest of the oil and caused it to flow away, keeping that air flowing at a high enough rate to sustain the high-temperature burn becomes somewhat critical to most efficient operation, particularly if the air has to get through a sand layer to reach the fire.

This is the post on THAI – Toe to Heel Air Injection for the recovery of heavy oils, which is part of the ongoing technical post (tech talk) series that I write on Sundays. It is a subject that has been described several times in the past at The Oil Drum. I first mentioned it back in 2006 when the first underground test was underway at White Sands.

I used this illustration at the time.

It is an artist’s impression of a side view of the site, with the blue dotted horizontal line representing the recovery well and air being fed in from a higher well into the formation. The test at White Sands in Alberta has been followed by a test at Lloydminster in Saskatchewan which got underway in a more conventional heavy oil last October.

The Kerrobert project followed much on the procedures from the earlier test, and the currently planned full scale production at May River (Large pdf file)

Petrobank, which is partnered with Baytex Energy Trust on the 50/50 joint venture, recently sunk two vertical air-injection wells and two horizontal production wells into the extensive Mannville conventional oil reservoir near Kerrobert.

Compressed air was added last week after a temporary steaming of the ground to mobilize the oil around the injector site. With the addition of the air, spontaneous underground combustion has begun.

"I think we will see some oil as early as today," Bloomer said.

Don and Gail described the THAI process in 2007 and have given some history on its use, THAI having been patented by Petrobank who have a 12 minute video on the process and the first trial and preparation for full scale production. It is well worth watching.

Dave Murphy had an update on the EROI costs in March of last year.

While watching the video is the best way to understand the process, it can also be illustrated with a picture from the plan for May River and I will lift some parts of that document to describe what is planned for that site.

Illustration of the key parts of the process.

The horizontal wells are drilled (a suite of eighteen wells, each with a 2,000 ft horizontal section, spaced 410 ft apart) some 7 ft above the bottom of the formation (or the water table if that becomes an issue). Above these the air injection wells are drilled directionally and offset from the toe of the well. (By using directional drilling air injection can be better controlled than with the original vertical wells).

Layout of the air injection (upper) and production wells.

Once the wells are in position steam will be injected and circulated for a period of 3 months to bring the sand and bitumen up to around 100 deg C, then air will be injected to start combustion. The part of the bitumen that burns as the process develops is the residual asphaltene that is left after the lighter fractions are either evaporated, flow away at reduced viscocity or are cracked by the high temperature (> 400 deg C). The residual material, apparently about 10% of the OOIP, provides the fuel, driving some 90% of the fuel into the production well.

To sustain production after ignition and flame front stabilization has occurred, the wells will carry some 4.4 million cf/day into the formation, and about the same amount of a mix of carbon monoxide, carbon dioxide, and hydrocarbon gas will be released. As the video notes that gas will be used on site to generate electricity to run the air compressors, and to provide site power. Based on the earlier tests the site is anticipated to generate some 10,000 bd of cracked bitumen, and about twice that in water production. The flame front will move forward at between 5 and 10 inches a day. The oil is projected to be a significant upgrade of the original bitumen. The water has the potential for being sold to other operators in the area for use in SAGD production.

Comparison of bitumen with THAI produced oil.

The energy efficiency of the site is anticipated to be 85.7%. It should be noted that the document I have taken this information from also contains a conservation and reclamation plan. (But at 653 pages long for the whole document I have only noted key passages for the theme of the post).

In response to my SAGD post both Rockman and RockyMtnGuy commented about using underground combustion to help with getting the bitumen from the oil sand.

One of the things that they were concerned about, as was I, is the control of the flame front which becomes more difficult as the height of the production zone is around 70 ft. However at May River they plan on burning from the outside in, so this may control the extent to which the fire overburns. In addition, as I noted at the beginning of the post, it is rather difficult sometimes to sustain the right temperatures without a high flow of air, and that may provide a further control.

The conditions are somewhat different at Kerrobert where the oil is less viscous and the formation is around 100 ft thick. This has caused some problems since the well flows exceeded what had been anticipated:

the original plan was to use temporary hydraulic pumps on each well to create a drawdown pressure across the horizontal well and, as combustion gas production increased, pumping would cease and wells would flow by produced gas lift.

Initial fluid production volumes were tested at 180 to 300 barrels per day per well, with oil cuts ranging from zero to 40%. However, during the transition phase to gas lift it was learned that liquid inflow to the production wells exceeded the pump's capacity, which limited the ability to draw down the wells and caused frequent pump failures. On Dec. 21, the pump in KP1 was re-configured to improve its pumping capacity. Now KP2 is being re-configured and is expected to be producing at similar rates to KP1 within the next few days.

Since the re-configuration, fluid production rates from KP1 have ranged between 250 and 420 bbls per day with oil cuts averaging 36% and reaching as high as 65%. Also, the air injection rate was increased to 50,000 cubic metres per day and the produced gas rate has increased to 8,000 cubic metres per day.

Looks as though things are going quite well.

Oh, and the disadvantage of having a small coal fire in a garret flat is that during the night it went out, and in the morning I would occasionally wake up with snow in the grate.

Medical Dark Matter

Nate Hagens — Sun, 07 Feb 2010 13:10:08 +0000

Below the fold is a guest essay from a friend of mine who is an internal medicine M.D. practicing in East-central Minnesota. (He posts on The Oil Drum as 'Rock climber'). The post is a shortened version of a longer essay on the interrelationships between health care, human health, human happiness and resource use. As the healthcare sector makes up fully 17% of the GDP of the USA and therefore represents a significant fraction of our resource throughput, this is a very important topic in discussions of more sustainable systems. If medical care is as inefficient as Rock climber thinks, healthcare policies focusing on basics might save considerable energy and other resources.

Abstract
I’ve been working on problems completely removed from Peak Oil, but the ignorance of big problems and the solutions turned out much the same. “Medical Dark Matter” is my metaphor for ignoring the causes of our relatively poor health.

Astronomers looked right past most of reality (96% invisible “dark matter”) until recently. Doctors looked only inside the body and thereby missed about 85% of what really makes people sick or healthy.

Although doctors can save some sick people, they have no power to make most people live longer. Despite over $2 trillion a year of modern medical care, US life expectancy has dropped to 50^th in the world (CIA 2009) behind all of Europe and behind some very poor countries. It seems to me that societal factors account for about 85% of differences in life expectancy, with genetics and individual health care accounting for the remainder.

Social factors- differences in our artificially created everyday living conditions- are the real keys to human health. Health is improved by money, social status, healthy early childhood, education and a good job. Poverty and lack of control hurt health. Chronic stress boosts hormones that may harm health. Health choices (diet, exercise, and smoking) are shaped by the neighborhoods we live in, which are influenced by powerful business interests. Income equality is an interesting and controversial factor influencing health. The health of the wealthy may depend in part on the well being of the rest of society.

Money buys health for individual rich Americans, but has failed to make average Americans healthier. What we decide about healthcare reform will have no effect on US life expectancy, since doctors have so little influence on health.

Our American lifestyle takes years off our lives and cannot be sustained indefinitely by available energy resources.

IMPORTANT DISCLAIMER: POPULATION HEALTH IS not individual health I practice conventional medicine; you should keep seeing your doctor.

Introduction: Biology doesn’t determine health

I am an internal medicine doctor and on really good days I save someone’s life. But in the past 20 years I discovered two facts:

1. On the whole medical care has little effect on average lifespan.

2. Social factors can produce 5 year differences in life expectancy.

At first I thought this had nothing to do with Peak Oil. But I realize the different questions have much the same answers. Unless we realign our lives toward healthy sustainability we’ll continue to wreck both our health and the planet. Individuals and societies are largely blind to both our unhealthy lives and our dangerous oil dependence for much the same reasons. We think the status quo is fine and industry “experts” are happy to tell us to keep giving medical and oil corporations trillions of dollars. Like everything else in our artificial modern world, healthcare and energy problems are really economic and social policy issues.

Science is the most powerful way to look at the world. But science once missed the biggest part of reality. In grade school we learned everything in the universe is made of atoms. But in the 20^th century astronomers discovered invisible, exotic ‘dark matter’ and ‘dark energy’ actually make up 96% of the universe. (At least science corrects itself; “experts” may not.)

American medicine might be the best in the world. We buy more drugs and spend far more money than anyone else. Then why is our life expectancy (according to CIA statistics) 50^th in the world, behind every other industrialized country and some poor ones?

My paper is about life expectancy and population health. Lifespan is more accurate to measure than how well you feel, and usually correlates well with general health. Population studies allow us to figure out average effects (but “your mileage may vary”).

Population statistics explain how I save lives at the hospital, and yet doctors can’t do much for our national health. There are big differences between your individual health and national population health. Consider smoking as an example. If you are really lucky you can smoke cigarettes and still live to be 101. If you get unlucky you might drop dead from a heart attack at age 50. When we look at a large group of smokers, we find smoking takes 5 years (60 months) of life away from the average individual pack a day smoker. Consider a country where 10% of people smoke a pack a day. The national average effect of smoking would be 6 months (10% of 5 years). All these numbers describe smoking risks.

Our very best drugs reduce the fatal heart attack risk in very sick patients from about 6% to 4% over 5 years. That’s a relative 33% less (4/6) or 2% absolutely less (6-4), or a 1 in 50 (100/2% = 50 = number needed to treat to save one) chance of being saved in 5 years, or up to 2 months average life extension. All these different numbers are accepted estimates for our best cholesterol drugs.

Luckily, having a truly life threatening problem is very rare. Most people see doctors for aches or colds, or a chronic problem like cholesterol. Over half my 3000 HMO patients never saw me for years. (Most healthcare is received by “frequent fliers”). Since most people seldom see doctors, the number of lives saved by modern medicine turns out to be far lower than I (and everyone else) once assumed. (Population health is not individual health! If you die it’s tragic, but just a 1 in 300 million statistical fluke).

Medical journals since the 1980’s show that social factors are the real keys to human health. The Whitehall study of British civil servants reported doormen at the bottom died an average 7 ½ years earlier than the bosses at the top. 60% of that gap persists when adjusted for “medical factors”: smoking, obesity, exercise, and blood pressure. More studies followed with similar results.

Social factors produce big differences in life expectancy:
-50 plus year gaps between some poor and rich nations
-4 years gaps between US counties, 6 years between US states
-7 ½ years span from the janitor to the top boss
-6 year gap between high school dropouts and college educated
-5 or 6 year differences between different developed nations
-5 year gap from black race in US, or from male gender
-5 years individual smoking status; few months population average

Medical factors produce very small differences in lifespan:
-Up to 3 month average individual effect of our very best drugs
-few days or no average effect of common preventive healthcare
-I estimate less than 2 months average from all health care effects
The basic circumstances of daily life are the main causes of health and disease.

Is it so surprising people living in tin shack ghettos have different health than inhabitants of Hollywood mansions? Anthropologists know undisturbed hunter gatherers (now extinct) had lifespans in the 70’s. We are genetically identical to our hunter gatherer ancestors, but our cultures (the sum of all beliefs and material goods) are very different. Our genes confirm we are all the same inside but live very differently. Social factors make up our everyday lives: food, shelter and the computer I sit at tonight (and the open sewers of Monrovia’s ghettos).

No research is published about how much total medical care affects our lives. I estimate the effect is probably less than 2 months average. If we had no advanced medical care we might live to an average of 78 years instead of 78.1. I estimate 45% social factors (money, education, work and geography), 40% neighborhood shaped choices (exercise, diet and smoking), 12% ‘fixed’ biology (gender and genetics), and no more than 3% healthcare determine average health in rich countries. Society, not biology, underlies 85% of human health. Healthcare may make a 2 month difference, while social factors make 5 year differences in lifespan.

Doctors looked only inside our bodies, when they could have looked outside. “Medical dark matter” points out our blindness:

Only 4% of the universe is made of visible atoms- DARK MATTER is 96% of total reality

Healthcare determines about 3% of longevity in rich countries- Social Factors (MEDICAL DARK MATTER) are 85%

This is dark material. Some doctors have trouble believing what we do is as powerless as I believe. Medical journals present convincing evidence that our profession ignores. It’s hard to admit what we do does so little good. But our tests and medicines might be undone if the patient is poor, stressed out at work, and has no chance to get fresh fruit or walk in fresh air. After hard questioning, I have come to believe the scientific data presented here.

Dark Matter in the Universe: 96% invisible, 4% atoms NASA

Medical Dark Matter: 85% social, 12% biology, 3% healthcare (Author estimate)

Healthcare’s 2 months is 3 % of the 5 year lifespan gaps from social causes in rich nations.

DISCLAIMER: This paper is not about the overall relative merits of American medicine or of American society. Health is shaped mostly by other factors, irrespective of the inherent quality of medical care. Social factors likely excuse our poor outcomes. America leads the world in individual freedom and prosperity, which may trump years of lost life expectancy.

II. Social Determinants of Health

1. Social Status: Money, Education, Work

-Money (Poverty)

Simple income is the biggest determinant of average life expectancy. Differences between poor and rich countries can be over 50 years and show the importance of basic living conditions to human health.

Health vs. Money is a ‘Preston Curve’. In 2009 there is a 52 year gap between Swaziland (31.9 years) and Macau (84.4 years).

Poverty inside rich countries also harms health. Average people in the worst US county (a South Dakota Indian reservation) die 16 years before those in the longest living county. These maps show poor counties (top) are usually unhealthier (bottom):

-Education

Graduating from college doubles income (to $56,118) and adds 5.9 years to life compared to high school dropouts. Educated people tend to have and make better choices in life. School dropouts are prone to smoking, dead end jobs, and poor health.

Globally, educating girls may save the human race. In the developing world, literate women choose to have far fewer children (the demographic transition). This should continue to slow down the growth of the human population so it doesn’t ruin all planetary resources and wipe out our species in 40 years.

-Work

Workers at the bottom have less control and face more hazards, then get a smaller check, fewer benefits and die 7 years sooner.

Occupational Class differences in Life Expectancy, England and Wales 1997-1999. Whitehall results.

2. Socially Influenced Choices: Smoking, Exercise, Diet

-Recreational Drugs

Smoking is the number one easily preventable cause of death. The poor, uneducated and mentally ill smoke and abuse drugs more. (Rich people drink more alcohol, but more poor people become alcoholic). Doctors’ advice has not been proven to help. Powerful, politically connected businesses heavily promote the use of recreational chemicals, legal and otherwise.

Preventable causes of death in US. Data from McGinnis 1993

People with rich, fulfilling lives are probably less likely to abuse drugs, analogous to Alexander’s 1970’s animal experiments. A caged rat will repeatedly press a lever for a narcotic high until it starves to death. But if you put a bunch of rats in a big room with interesting toys, they’ll ignore an open bowl of sugar flavored morphine. The #1 prescribed drug in America is now the narcotic pain killer hydrocodone (written 121 million times in 2008).

Opiates are now the opiate of the masses. Are our lives now like lone caged rats?

-Exercise, Diet, Obesity

76% of Americans are overweight or obese. Obesity is painful (arthritis) and shortens life (heart attacks, cancer, diabetes). Obesity cost the US $147 billion in 2008, and diabetes cost $174 billion. As bad as it is, obesity is not the biggest cause of Americans dying too early. Whitehall found job status was more important than obesity and other “medical” factors. Greeks are the second most obese people, but eat healthy food (the Mediterranean diet) and live long lives.

These maps show how much fatter we’ve become state by state in 24 years:

I worked in Africa with people who all wanted to be fat. It looks “rich and comfortable,” but they can’t afford enough food. When I explained that most Americans are fat but wish to be skinny, they asked if Americans have a lack of willpower. It’s not quite that simple. Obesity is a social problem, and especially affects poor and minority people inside rich countries. Powerful government subsidized industries including agribusiness (cheap sugar) and petroleum (cheap gas, compared to elsewhere) influence how easily people can find healthy food or walk in their neighborhoods. See HJ Kunstler’s ‘Big and Blue in the USA’ to laugh and cry.

3. Social/Gene Interaction: Racism, Gender

Gender and race are social definitions. Gender is unique in the oppressed outliving the oppressor (rarely biology trumps society).

Racism is one of our oldest and most emotional social problems. 200 years ago we brought one fifth of our ancestors here as slaves in chains. We put them to work on a continent that was already inhabited. African Americans and Native Americans still don’t get their full shares of the American dream. Race rarely affects health, but racism, poverty and living conditions do.

4. Place, Environment

Our neighborhoods combine other social factors with soil, air and water that might be clean or polluted. 10,000 years ago humans were hunter gatherers living in pristine woods. Then we invented agriculture, towns and cities. Modern poor places have far more physical (lead, cockroaches) and social cigarette billboards) hazards. “Choosing” a healthy life is hard if you live in a city of a million people with bad schools, no jobs (auto industry imploded), and not a single chain supermarket in town since 2007 (Detroit) and all but impossible during two decades of civil war (Liberia, where I worked in 2004).

The diplomatic neighborhood in Monrovia, Liberia. photo by author 2004

Consider how differently some peoples live, and how it affects health:

(click for larger image)

III. Income Inequality

“As I’ve often said, this (increasing income inequality) is not the type of thing which a democratic society- a capitalist democratic society- can really accept without addressing”

What flaming liberal is so worried about income inequality?

-Fed Chairman Alan Greenspan, testifying before congress June 2005.

Countries (like Sweden) and US states (like Minnesota) that more evenly divvy up the money tend to be much healthier. Income inequality causes or correlates with many social evils:

Shorter life expectancy, high infant mortality, obesity, teen pregnancy, mental illness, imprisonment, crime, low educational scores and less social mobility are correlations noted in The Spirit Level published 2009 by Wilkinson and Pickett.

I note apparent correlations with military spending, pharmaceutical advertising and spending, rampant consumerism, corporate power, television watching, low voter turnout, absence of labor unions, automobile use, gun ownership, fast food, sedentary indoor lives, living alone, younger and more mixed populations, and non-denominational religion. A mix of factors including inequality may make some populations dysfunctional. Some societies will decide costs of inequality are worth the gains for those on top.

US inequality worsened in the past 30 years. In 2008 the top 10% of the US population got 48.5% of total income, the top 1% got 23%, and just the top 1/100 of 1% (14,988 families) took 6% of it all.

The authors of the following chart are liberal social scientists, but they might be right about income inequality. I’m uncertain.

Correlation does not equal causation, but there are plausible theories how position in social hierarchy could harm health. The 1.4 billion people living on less than $1.25 daily have trouble getting water, food and shelter. The poor in rich countries are “only” relatively poor. Still the poor, minorities and low level workers have more stress and shorter lives. Stress and feeling lack of control boost neuroendocrine hormones that could shorten life. Sapolsky found wild baboons have graded social stress too. Stress hormones (epinephrine and cortisol) levels fall and lifespans increase step wise up the social ladder to the alpha male, the CEO of baboons. He’s cool as a cucumber, bosses every one else around, and outlives everyone else by years.

Sapolsky found baboon neuroendocrine stress hormone levels vary dramatically with rank in the social hierarchy

IV. The American Paradox: we spend so much for so little

The United States tries to have the best medical care in the world. Yet, in 2009 American life expectancy dropped again to 50^th in the world (CIA). We were just surpassed by Wallis and Fatuna (a terribly poor South Pacific territory).

This happened before:

A fable of total 2006 healthcare spending (public plus private):

-Cubans spent $363 per person average (7.1% of GDP); life expectancy was 76 years men and 80 years women.

-Americans spent $6714 per person (15.3% of GDP back then); life expectancy was 75 years men and 80 years women.

-statistics from the World Health Organization 2009.

American healthcare costs $2.1 trillion and one year did not quite match the results of a tiny country that spent only 5% as much per person. This outdated fact is totally anecdotal and totally true.

Almost all other industrialized nations and some poor ones now outlive us. Since rich populations generally do better, this is particularly puzzling. Our lifespan has slowly increased to 78.1 years, but is about 3 or 4 years behind Sweden, Australia and Japan.

The social factors we’ve been discussing plus the fact medical care does not prolong life much on average explains our relatively poor health outcomes. It’s not the fault of doctors. American medical care saves some sick people’s lives, but is just overwhelmed by the negative bigger effects of social problems. The US is very rich, but near the bad end of many other social determinants including income inequality, education (ours kids have lower scores), and jobs (our workers work longer for less benefits). American lifestyle takes years off our lives (and cannot be indefinitely sustained by available energy resources).

V. Conclusion: Healthcare average effects are minimal

Medical Dark Matter is summarized in an outlandish true claim:

Only 4% of the universe is atoms, and healthcare causes only about 3% of health variation- a 2 month difference

Money helps individual rich Americans live longer, but it has not helped our relatively poor national health. We spend $7000 a year per person on healthcare and live no longer for it. Our annual $2.1 trillion dollars is misdirected by believing health is determined inside our bodies. Without modern doctors Americans would probably live to an average 78 years instead of 78.1. How long we live is instead determined by real living conditions: our schools, workplaces, neighborhoods and other social factors.

Disclaimer: My remarks apply only to populations, not to individual health. I share my findings only to help you think about choices our society will make about health and social policy (with or without you).

VI. Consequences

Healthcare’s impotence has consequences for doctors, society and individuals.

The bad health of Americans isn’t doctors' fault. It would be nice to focus on what works best, but retired major journal editors confirm published research has often been skewed by profit interests. Basics like vaccines, sick care and trauma surgery might save more lives than giving more pills to diabetics, but who knows. Good schools and workplaces, and neighborhoods that assist good choices will improve health far more than medical care. It would be cheaper and more effective to treat many diseases as the social problems they really are. Good societal living conditions are the ultimate preventive medicines. Teach girls to read, thus saving the world.

Americans pay to cling to life (average medicare cost $46,412 in the last six months), but we don’t buy anything that might really make us live longer. Why? The medical industry is 17% of GDP and rising. Doctors fail to do basic healthcare analysis and industry supported “experts” gladly fill the gap. Turning over medical care over to corporate interests had the expected results. Deciding whether we want longer lives or bigger profits could be a good start. Unfortunately healthcare reform may happen without any examination of whether medical care works and what it costs.

As a privileged American, I enjoy freedom (I can write this paper) and money. I think everyone should get affordable access to basic healthcare and we should also improve peoples living conditions. Some reasonable people will decide we should continue to maximize individual freedom and material prosperity over other values. The doctor has informed you of benefits and risks. You can decide whether what we get (more money overall) is worth the price (shorter average lives) of American lifestyle and healthcare.

Whatever we decide about healthcare is not very important for lifespan, which is determined by socially created living conditions. Don’t worry (stress is unhealthy). Healthcare reform is an important political and economic issue, but it can’t much affect the health of Americans.

For individuals, the biggest health factor is luck. In the ER I sometimes see a 95 year old man who hasn’t seen any doctor in 30 years, still rides a horse and is healthier than all my other patients. There are no guarantees, but living right (good choices and good neighbors) can improve your odds. Being born to wealth and privilege helps. Working hard for money and an elusive CEO job may be counterproductive. Downsizing your life can be quite satisfying, healthy, and good for the planet. Whether your neighborhood is favorable or not, make yourself exercise a lot (outside if possible) and eat healthy (vegetables, grains, whole foods, not to excess). Working and playing outside with friends deeply satisfies my own hunter gatherer genome.

Please don’t just buy a bunch of guns and hole up. I’m planning on some of you smart TOD people to realign our world financial system so I’ll still have a 401K account in 20 years (and so all the people in Asia don’t live just like us and kill the planet).

Optimists take heart: the global human lifespan probably grew 35 years last century. US life expectancy is also growing slowly, and in 20 years may be where Sweden’s is today (they hit 78 years in 1989). Healthcare does little, but global human living conditions (outside Africa) are improving rapidly, and world population growth is slowing. I believe humans overall will do just fine.

Liberians lived on less than a dollar a day, but were happier than most Americans. Some things could be more important than health or money.

Final Disclaimer: Population Health is not Individual Health. Doctors save the lives of many people every day. I practice conventional medicine; keep seeing your doctor! You can decide if America’s social policies are worth the costs.

Appendix

Ranked Life Expectancy in years, at birth (total both sexes)

Source: 2009 CIA World Fact Book

You can start your own research here. Selected nations; comments mine. Higher gini means more unequal income distribution.

*depends on if you count from Doe (top) killing Tolbert (bottom) in 1980.

Selected Bibliography (over 300 references available)

Adler, N; Stewart, J; et al. Reaching for a healthier life: Facts on socioeconomic status and health in the US. The John D and Catherine T MacArthur Foundation, online at http://www.macses.ucsf.edu/News/Reaching%20for%20a%20Healthier%20Life.pdf

Central Intelligence Agency of the United States Government, CIA World Factbook 2009 data for 224 countries, online at cia.gov/library/publications/the-world-factbook/

Kunstler, James Howard, Big and Blue in the USA. Orion Magazine 2003.online at http://newcities.org/files/iic/BigAndBlue.pdf

Lynch JW, Smith GD, Kaplan, GA, House, JS. Income inequality and mortality: importance to health of individual income, psychosocial environment, or material conditions. BMJ 2000; 320:1200-1204 (24 April)

Marmot, Michael, Social determinants of health inequalities. Lancet 2005; 365: 1099–104.

Marmot, Michael; Wilkinson, Richard; Social determinates of health: the solid facts. 2003 World Health Organization. Regional Office for Europe, WHO Healthy Cities Project, WHO International Centre for Health and Society, online at http://www.euro.who.int/DOCUMENT/E81384.PDF

McGinnis JM, Foege WH. Actual causes of death in the United States. JAMA. 1993;270:2207-2212.

Sapolsky, Robert M, Review: The Influence of Social Hierarchy on Primate Health. Science29 April 2005:Vol. 308. no. 5722, pp. 648 - 652DOI: 10.1126/science.1106477.

Wilkinson, Richard; Pickett, Kate. The Spirit Level: Why Greater Equality Makes Societies Stronger. American version in press, Bloomsbury Press (December 22, 2009)

World Health Organization, Commission on the Social Determinants of Health- final report Closing the gap in a generation: Health equity through action on the social determinants of health 2008 executive summary online at http://whqlibdoc.who.int/hq/2008/WHO_IER_CSDH_08.1_eng.pdf

Drumbeat: February 7, 2010

Gail the Actuary — Sun, 07 Feb 2010 13:09:09 +0000

Racking up miles? Maybe not.

Within a few years, a driver who pulls up to the gas pump may pay two bills with a single swipe of the credit card: one for the gas and the other for each mile driven since the last fill-up. That may be the result of what many transportation experts see as an inevitable revolution in the way Americans pay for their highways.

The flow of the gas tax pipeline that has poured cash into one of the world's premier highway systems has slowed as some people drive less and others choose more fuel-efficient vehicles. Maintaining that aging network and tackling the rush-hour congestion afflicting most cities will require billions of dollars.

Gas drilling in Appalachia produces a foul byproduct

A drilling technique that is beginning to unlock staggering quantities of natural gas underneath Appalachia also yields a troubling byproduct: powerfully briny wastewater that can kill fish and give tap water a foul taste and odor.

With fortunes, water quality and cheap energy hanging in the balance, exploration companies, scientists and entrepreneurs are scrambling for an economical way to recycle the wastewater.

Wastewater from drilling has not threatened plans to develop the nation's other gas reserves. Brine is injected into deep underground wells in places such as Louisiana, Texas and Oklahoma, or left in evaporation ponds in arid states such as Colorado and Wyoming.

However, many doubt the hard Appalachian geology is porous enough to absorb all the wastewater, and the climate is too humid for evaporating ponds. That leaves recycling as the most obvious option.

A fracking quandary for EPA

IF THE United States is going to curb its greenhouse gas emissions, it desperately needs a replacement for the high-carbon coal that fuels almost half the nation’s electricity. Unfortunately, there are downsides to all the alternatives, from nuclear power, which carries a high cost and emits toxic waste with no place to store it, to wind turbines, which also have a high cost and require extensive transmission lines to link windy areas with cities.

Now new deposits of natural gas previously locked in shale formations are making that fuel look like a possible transition to a low-carbon future. Federal and state regulators have to ensure, however, that the rush to exploit this new source of gas does not cause severe environmental damage. The US Environmental Protection Agency could have been an effective referee over this process. Yet the gas industry managed to slip into the 2005 energy bill an exemption from EPA review of the special drilling that shale formations require. Congress should repeal that provision.

US GAS: Futures End Higher On Cold Weather Expectations

Natural gas futures ended higher Friday on forecasts for cold weather that is expected to drive demand for the fuel.

Natural gas for March delivery on the New York Mercantile Exchange settled 9.9 cents, or 1.83%, higher at $5.515 a million British thermal units. The front-month contract climbed as high as $5.598/MMBtu in earlier trading.

Meteorologists were predicting cold winter weather that can stoke demand for gas to heat homes and businesses. The National Weather Service is forecasting below-normal temperatures across the Midwest, Southeast and Mid-Atlantic Feb. 12-18.

Turkey requests Iran, Russia to revise ‘take-or-pay’ conditions

Searching for ways to increase sales amid a contraction in natural gas demand, Turkey has asked Russia and Iran, two of the country’s biggest natural gas suppliers, to revise their “take-or-pay” conditions.

Turkey’s natural gas consumption has dropped noticeably in the past few months. This contraction followed hikes in gas prices during 2009. The government, therefore, does not take kindly to paying money for unused gas.

Iran discovers new oil, gas fields

Iranian Oil Minister Masoud Mirkazemi announced two oil and gas fields have been discovered respectively in western Kermanshah and southern Fars provinces.

Soumar oilfield with 475 million barrels of in-situ crude oil reserve, 70 million barrels recoverable, and Halgan gas field with the daily production capacity of 50 million cubic meters of gas have been recently discovered, the Mehr news agency reported.

Peak Oil Exploration Stocks

In the absence of takeovers, exploration group valuations are starting to look stretched at current oil prices. Tullow's stock is trading at a 2% premium to net asset value while the rest of the sector is trading at a modest 12% discount, based on an oil price of $79 a barrel, according to UBS research.

In such a shifting competitive landscape, further share price rises will depend not only on the independents' ability to maintain recent exploration success rates and control costs, but also much higher oil prices

Crude Oil Leads A Broad Selloff

"A lot of people piled in [the oil market] at the beginning of the year, and at the beginning of this week," when investors held a more-optimistic economic outlook, said Andy Lebow, senior vice president for energy with MF Global in New York. "There's a sense of uneasiness about … how robust the recovery's going to be."

The main concern this week was that tentative signs of economic growth will evaporate if governments begin to dial back stimulus measures. In Europe, investors fear Greece, Spain and Portugal will need deep spending cuts and other punishing fiscal measures to bring debts under control. The U.S. is grappling with its own deficits, making a repeat of last year's stimulus spending unlikely, while China began restricting lending last month to prevent high inflation.

Nature inadvertently produces its own oil spills

Then where do oil and gas in U.S. waters come from? A report from the National Academy of Sciences published in The Economist found that petroleum exploration and extraction causes 1 percent of the total, while spillage from ships accounts for three percent.

Thirty-one percent comes from land runoff including leakage from our vehicles, boats and power lawnmowers. Where does the rest originate?

A whopping 61 percent comes from "natural seepage." Just like the La Brea tar pits in California, oil and gas arises from petroleum deposits below the seabed. Ironically, offshore drilling reduces pressure and actually decreases levels of natural pollution in the ocean.

Iraq plans to become OPEC's top oil producer

Iraqi Oil Minister Hussein Al Shahristani said his country would steadily increase oil production over the next seven years.

Al Shahristani said this would make Iraq the world's top oil producer over the next six to seven years.

Arctic climate changing faster than expected

"(Climate change) is happening much faster than our most pessimistic models expected," said David Barber, a professor at the University of Manitoba and the study's lead investigator, at a news conference in Winnipeg.

Models predicted only a few years ago that the Arctic would be ice-free in summer by the year 2100, but the increasing pace of climate change now suggests it could happen between 2013 and 2030, Barber said

Black Carbon a Significant Factor in Melting of Himalayan Glaciers

The fact that glaciers in the Himalayan mountains are thinning is not disputed. However, few researchers have attempted to rigorously examine and quantify the causes. Lawrence Berkeley National Laboratory scientist Surabi Menon set out to isolate the impacts of the most commonly blamed culprit -- greenhouse gases, such as carbon dioxide -- from other particles in the air that may be causing the melting. Menon and her collaborators found that airborne black carbon aerosols, or soot, from India is a major contributor to the decline in snow and ice cover on the glaciers.

"Our simulations showed greenhouse gases alone are not nearly enough to be responsible for the snow melt," says Menon, a physicist and staff scientist in Berkeley Lab's Environmental Energy Technologies Division. "Most of the change in snow and ice cover -- about 90 percent -- is from aerosols. Black carbon alone contributes at least 30 percent of this sum."

New errors in IPCC climate change report

The United Nations panel on climate change is facing fresh criticism today as The Sunday Telegraph reveals new factual errors and poor sources of evidence in its influential report to government leaders.

Climate change research bungle

The research institute run by the head of the UN’s climate body has handed out a series of environmental awards to companies that have given it financial support, The Sunday Telegraph can disclose.

Arizona Renewable Energy Standard Under Attack From Right

Arizona was one of the healthy energy states, with a requirement for 15% renewable energy by 2025. But now a Republican state representative in the Arizona state legislature is challenging the right of the Arizona Corporation Commission to set a requirement that utilities add more renewable energy, with a bill that would strip them of the responsibility.

China's edge in renewable energy

In the United States, power companies often face the choice of buying renewable energy equipment or continuing to operate fossil-fuel-fired power plants that have already been built and paid for. In China, power companies have to buy new equipment anyway, and alternative energy, particularly wind and nuclear, is increasingly priced competitively. Interest rates as low as 2 percent on bank loans — the result of a savings rate of 40 percent and a government policy of steering loans to renewable energy — have also made a difference.

As in many other industries, China's low labor costs are an advantage in energy. Although wages have risen sharply in the past five years, Vestas still pays Chinese assembly line workers only $4,100 a year.

Irish OceanEnergy and US Dresser Rand start partnership on innovative wave energy technology

Under the agreement, Dresser-Rand will develop and supply the turbines needed to transform wave energy into electricity using the OceanEnergy Buoy (OE Buoy). A scaled version of the OE Buoy has been tested in Atlantic Ocean waters during two years at a government test site on Galway Bay. The concept is the result of 7 years of research and development. An important characteristic of the device is that it only has one moving part: the turbine.

This is an original, simple and radical change when compared with other wave energy generators that usually have multiple parts in motion. The OE Buoy is hollow. It has a chamber inside. The bottom is open to allow the flow of ocean water inside in one direction: up or down. It is also open on top where the turbine is placed. It transforms the energy from the waves moving vertically inside the buoy which displaces the air within the chamber. The displaced air is used to move the turbine to generate electricity. Here is where Dresser-Rand turbines are used, the only moving element of the OE Buoy.

Ireland hopes to generate 600MW of electricity with these OE Buoys deployed on its coast. This will be enough energy for almost half a million homes.

Nuclear renaissance could stall, Canada group says

Expectations of a sharp rise in nuclear generating capacity over the next two decades are likely overblown, a Canadian think tank said on Thursday, disputing conventional wisdom that a nuclear renaissance is in full swing.

Standing in the way of new construction are costs that can run up to $10 billion per new reactor, competition from other, cheaper, energy sources, the problem of safely disposing of nuclear waste, and concern about the spread of nuclear weapons, the report said.

"On balance, a significant expansion of nuclear energy worldwide to 2030 faces constraints that, while not insurmountable, are likely to outweigh the drivers of nuclear energy," it said.

In D.C. area, outages, snow plowing conspire against normal week ahead

"We think it will be Tuesday or Wednesday before people can think about getting to work," said Sean T. Connaughton, Virginia's secretary of transportation.

It might be almost as long before power is restored to thousands of homes and businesses after the heavy snow and high winds conspired to topple trees across power lines throughout the region. Streets impassable even for utility companies' massive vehicles amplified the challenge.

Riding the Rails, Until the Weather Caught Up

When the powerful Mid-Atlantic winter storm grounded all flights and shut down highways in the Mid-Atlantic region, Amtrak’s Capitol Limited, bound for Chicago from Washington, seemed to offer 115 passengers the perfect cozy alternative as it sped through the snow-swept countryside on Friday night.

But around 2:45 a.m. on Saturday, the train made an unscheduled stop just outside the former coal-mining town of Connellsville, Pa., 57 miles southeast of Pittsburgh. There, downed trees and power lines blocked the Capitol Limited, stranding and infuriating passengers who said they were not updated about the situation.

Electric Motors, Made to Order

Tailoring electric motors for duty in vehicles has necessitated the development of new materials, sophisticated electronic controls and some clever design variations, said Heath Hofmann, an associate professor of electrical engineering and computer science at the University of Michigan in Ann Arbor.

Zoom Replaces Missing Vroom

As more hybrid and battery-electric vehicles enter the marketplace, though, the maxim is being transformed. Returning to a role in propelling vehicles that largely disappeared decades ago, electric motors are attracting attention from automakers, who see the need for hybrids and E.V.’s to have personality and character that parallels their brand’s image.

Toyota tells dealers it'll send them plans for fixing Prius brakes

Toyota sent a message to its beleaguered dealers Friday night saying they would be getting details of a plan this week to deal with brake-system problems on the 2010 Prius. But there was no word on what that plan might be, or whether there would be a recall.

Centralia, Pa., coal fire is one of hundreds that burn in the U.S

Approximately 200 underground coal fires burn in about 20 states, according to Glenn Stracher, a researcher at East Georgia College in Swainsboro, Ga., A separate tally shows 112 fire sites in 21 states, according to Office of Surface Mining data analyzed by Dr. Stracher and fellow researcher Ann Kim.

Centralia, Pa.: How an underground coal fire erased a town

There's not much left of the northeastern Pennsylvania coal town these days. Even in the early 1980s, some two decades after the underground fires began, more than a thousand people called Centralia home. But as the poisonous gases continued to seep from fissures in the ground, and as the sudden sinkholes threatened to cast people into the smoldering depths, the town emptied out.

Low-flow toilets have improved

I’ve become immersed the history and recent technological advances of the toilet. (For instance, did you know the derivation of the word? It’s from the word toile: “French for ‘cloth’ draped over a lady or gentleman's shoulders whilst their hair was being dressed, and then … by extension … the whole complex of operations of hairdressing and body care that centered at a dressing table.”

That helped me understand something that has puzzled me since childhood: the difference between eau de toilette and perfume

Green firewood: A chimney sweep's view of danger

A Fairbanks chimney cleaner has given the News-Miner photos of some of the most creosote-clogged chimneys he's recently seen in hopes of preventing death by chimney fire. It's a problem Charlie Whitaker says is getting worse as dry firewood gets harder to come by in the city. Besides clogging chimneys, wet firewood has been blamed for a good part of Fairbanks' intractable winter air pollution problem.

Rebate on solar water heater cut to $750

(Honolulu) The rebate available to homeowners for installing solar water heaters has been cut to $750 from $1,000 because high demand is depleting the amount in the ratepayer-funded program, officials said yesterday.

Electricity rates going up

February residential electricity rates will rise for customers of Hawaiian Electric Co. and its sister subsidiaries because of higher fuel costs. Hawaiian Electric Co. said the typical 600-kilowatt-hour bill for O'ahu residential customers will rise to $148.23 from $145 in January. The effective rate for electricity in Honolulu is 23.60 cents per kilowatt hour, up from 22.66 cents last month.

All-electric car appears as city gets charged up

Nissan's new all-electric vehicle, the Leaf, made a quiet appearance on Friday, showing off its nearly silent motor as it rolled about the Reliant Stadium parking lot and signaling what the city hopes may be the start of an electric movement on Houston's streets.

“With ongoing research and development of wind, solar and electric fuel sources, we are on the cusp of becoming the alternative energy capital of the world,” Parker said. “It is fitting that the city be a leader in increasing public awareness of environmentally friendly transportation alternatives like the Leaf.”

Shtokman postponed 3 years

A press release from the company confirms that a final investment decision in the project's pipeline part will be taken in March 2011, while the decision on the LNG part will be taken before the end of 2011, newspaper Vedomosti reports.

Pindiites face low gas pressure

The low pressure of Sui gas again hit many parts of the Rawalpindi City making it difficult for the residents even to cook their meals.

They urged the concerned authorities to address the problem as dealers of liquefied petroleum gas (LPG) selling the gas in black and charging from Rs150 to 170 per kilogram while many using firewood and kerosene oil as alternatives.

Tajiks Buy Into State Power Plant Initiative

With the Tajik government desperately seeking funds to finish a pet project of national importance, the people appear to be buying into the country's dream of being an energy exporter.

Government officials, religious figures, and citizens have been lining up behind the presidentially inspired effort to generate enough cash to complete the long-unfinished Roghun power plant by issuing shares in the state company directly to individuals and organizations.

Find the best energy deal as price war looms

About 8 million households will benefit from a surprise decision by British Gas to cut prices by an average of 7pc last week – but it still makes sense to check that your fuel bills are as low as possible.

Green light for show homes to sell eco-town project

One hundred "eco-show homes" are to be built to allow people to "test drive" green living as ministers try to convince the public that controversial eco-towns can work.

This week the Housing minister, John Healey, will announce the start of building work on the properties in towns near to the four sites earmarked for Britain's first zero-carbon developments. Work will start next year on a further 10,000 eco-homes that will be for sale in the areas.

Decision on Shtockman postponed

The development of the giant Russian offshore gas field Shtockman in the Barents Sea has been postponed. The Board of the Shtockman Development has voted to delay investment decisions until next year.

Zhengzhou-Xi'an high-speed rail starts operation

XI'AN: A high-speed railway linking central China city Zhengzhou and northwestern city Xi'an, went into operation Saturday. The 505-km Zhengzhou-Xi'an high-speed railway, the first of its kind in central and western China, cut the travel time between the two cities from former more than six hours to less than two hours, said local railway authorities Saturday. The train traveled at 350 kilometers per hour, said Long. A total of 14 trains would be traveling between Zhengzhou and Xi'an every day, said Long.

Minivans drive up auto sales growth

China's automobile market continued its robust growth in January, with sales surging 84 percent from a year earlier, heavily boosted by minivans, China Passenger Car Association said on Friday.

Rao Da, the association's secretary-general, said a total of 1,218,722 cars, sport-utility vehicles, multi-purpose vehicles and minivans were sold last month, an increase of 84.2 percent year-on-year and 5.1 percent from December.

Shandong's efforts to clean up clogged waterways prove futile

The Eastern Route of the South-to-North Water Diversion Project, one of the world's largest water projects, has been delayed by about five years due to problems associated with water pollution, officials in east China's Shandong province said on Friday. Construction of the Eastern Route of the project, which aims to divert water from China's rainy south to its dry north, is now expected to be completed in 2013.

Ukraine to Buy 8.5 Billion Cubic Meters of Gas in 1Q

Ukraine will import 8.5 billion cubic meters of natural gas from Russia this quarter because of freezing temperatures, said Ihor Didenko, first deputy chief executive officer at NAK Naftogaz Ukrainy.The country will keep its plan to import 27 billion cubic meters from Russia in all of 2010,

Iran's Azadegan Oil Field Output at 40,000 bpd

Daily output at Iran's Azadegan oil field has reached 40,000 barrels per day (bpd) and will soon hit 50,000 bpd, Deputy Oil Minister Seifollah Jashnsaz was quoted.

"The daily output of the Azadegan oil field reached 40,000 barrels following an increase of 13,000 barrels after the completion of seven new wells," Jashnsaz, who also heads the state National Iranian Oil Company (NIOC), told the semi-official Mehr News Agency.

Power Import From India To Start Thru' Kushtia Border

Ramkrishnapur under Bheramara upazila in Kushtia has been primarily selected for setting up of 250KV power sub-station aiming electricity import from India.