May 24, 2004

Note: Building Up Oil Reserves

Is everybody about to build up a strategic petroleum reserve?

WSJ.com - Oil-Thirsty China Begins to Build Reserve Facilities:Beijing's industry czar said the country has started building tanks and other facilities for a strategic petroleum reserve but hasn't begun stockpiling fuel. The comments by Zhang Guobao, vice chairman of China's National Development and Reform Commission, to reporters on Sunday represented some of China's most detailed statements on its widely watched plans for a strategic oil reserve. China had said it planned to create a stockpile but offered few details. Oil traders have been eager to know whether such stockpiling is partly behind surging Chinese demand for oil, which has helped drive petroleum prices to their highest levels in two decades. The fact that China isn't stockpiling yet means China's economy is fueling the market demand -- and that once the reserve purchases begin, Chinese oil purchases could grow.

Mr. Zhang stressed that China will build its reserves slowly so as not to disrupt markets. He provided no indication regarding when oil purchases might begin. In the longer term, the reserve is likely to be a stabilizing influence on the world economy, by giving China's manufacturing sector a buffer in the event of sudden supply disruptions. Western policy makers have been urging Beijing to build a strategic storehouse, as the U.S., Japan and other economic powers have done. Meanwhile, with concerns mounting that oil prices may be spiraling out of control, Saudi Arabian oil officials said over the weekend that the kingdom has increased output to 9.1 million barrels a day, a rise of an estimated of 600,000 barrels a day, or 7%, from last month.... But even as the Saudis make every effort to rein in prices, they and others in the Organization of Petroleum Exporting Countries suggested at an oil-world summit here over the weekend that higher oil prices are here to stay. OPEC officials are increasingly talking of targeting a higher price range for a barrel of oil.

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Comments

Brilliant. A neo-mercantilist strategy of oil purchases being pursued bv the biggest oil user, and the fastest growing oil user.

Posted by: P O'Neill on May 24, 2004 04:44 PM

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Check out this site for evidence that we're actually at Hubbert's Peak:
http://www.princeton.edu/hubbert/current-events.html

It will be interesting to see at what point the government recognizes the (irreversible) decline in oil production and starts to take action. God knows that nothing will be done before that (things like pushing hybrid-car technology, putting big bucks into artificial photosynthesis (we're close), etc.).

Posted by: BayMike on May 24, 2004 04:56 PM

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Duh! This is a startling new development? One does not need the exotic math of economists to understand the numbers. Sixth Grade arithmetic (Brad, your children will immediately understand as will my grandchildren) is probably overkill.

The sixth graders will rapidly understand that Hubbert's Peak will soon be reached and the exact date is not very important. They will also understand that the families of their Chinese and Indian friends still in China and India are not dumb and will enjoy using energy as much as their relatives in the US.

Perhaps we should change our election rules and make eligible for office only those between 12 and 18 years of age.

We certainly don't have much to lose and might gain a perspective that our current leaders seem to lack.

(For reasons that defy explanation, I just read this post to the Grandmother in the house who is not yet willing to turn over voting to our grandchildren. I have learned that she often has very good insights.)

Sam

Posted by: Sam Taylor on May 24, 2004 07:25 PM

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We are so screwed.

Posted by: Matthew Saroff on May 24, 2004 08:59 PM

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You're right, the exact date doesn't matter.

Just think how angry and pissed off people are going to be. Here's a letter from the future:

http://www.museletter.com/archive/110.html

National Geographic has an article in the latest issue on the end of cheap oil. The Orwellians will probably fire the editor for running the story.

Posted by: phil on May 24, 2004 09:13 PM

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"We are so screwed."

That depends on how fast the price goes up compared to how fast we can do something about it. The technology definitely already exists to turn the US into an oil exporter with a minimal hit to lifestyle. Hybrid electric, hybrid hydraulic, or plug in hybrid vehicles, and especially the diesel version of those could be widely adopted at minimal cost. Even full electric vehicles are beginning to appear feasible. Coal liquefaction is supposed to be competitive for under $40/barrel but we've been sitting around worrying that oil will drop back to $20 rather than take out insurance for $80. It will take a good 20 years to adjust if we started now.

Sam Taylor:

I pretty much agree with you. The exact date is not important, and it's a number I don't really have the ability to calculate myself so I don't know if I should trust Shell, Hubbert, or the DOE. What's easy to calculate is that India and China could easily find a use for 50 mbpd even at the current price.

Posted by: snsterling on May 24, 2004 09:29 PM

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phil:

The link you provide claims a negative energy balance for solar cells and nuclear energy. The data I see from credible sources indicates that the energy balance is extremely positive for nuclear and safely positive for certain types of solar cells (not all types, so the text is partially correct)

Posted by: snsterling on May 24, 2004 09:49 PM

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It’s not a matter of running out of oil; it’s a matter of running out of cheap oil. There are many alternate sources of oil such as the Tar Sands in Canada and oil shale in the US. The “we are screwed” mentality thinks that we will suddenly have no oil one day. As Yogi Beria says: “It’s deja vu all over again.” I heard all this crap before, circa 1979. At that time I read ridiculous government technical reports predicting $100 oil coming sometime in the 1980s. In the 1970s the Department of Energy (in its ERDA incarnation) funded economic modeling work on predicting energy consumption and the price of oil. Their predictions for the 1980s and 1990s were dead wrong. But curiously they initially got it right. In a candid conversation I had (circa 1993) with one of the (retired) authors of the model, he told me their first runs with the model predicted what actually happened, but his managers told him to “fix it” to get pessimistic predictions. I attended countless talks predicting gloom and doom. Only one guy from the Hudson Institute got it (approximately) right. In 1979 he said the price of oil would drop to under $20 in the early 1980s. Yogi also said: “The future ain’t what it used to be.”

Posted by: A. Zarkov on May 24, 2004 11:12 PM

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Zarkov is right. Oil can still be produced for $14/BBL, but like precious metals, speculators and cartels turn the commodity into bubble gum.
The Saudis want $28/BBL as their floor, nearly *twice* the actual cost of production, and only 66% of where oil futures are at the moment.

So we have oil produced at one cost, the cartel wanting twice the price, and the futures markets pushing that up to three times the actual cost.
Who's running the show here, anyways?

Saudis offer of more crude is pure snake oil. What they're offering is sour, fit only for heating oil and bunker fuel. But at $42/BBL, that's a huge killing for them in this market.
These Arab oil shieks aren't idiots. So why
do we pander to Prince Bandar? Run his ass off.

What's fueling the price of gasoline is the limited supply from US refineries running at 110%, and Bush refusing to stop refilling the Strategic Petroleum Reserve, even though a freshman economy student could discuss price- and cost-sensitivity to US demand cutbacks.
But that doesn't grease the wheels in Houston.

Faced with an oil cartel limiting oil supplies, increased demand for those oil supplies, faced with a gasoline cartel and a hard bottom upper limit on gasoline refining, with increased SUV
demand for that gas, and a corrupt Executive in bed with Big Oil, the only solution is for us to
carpool, ride the bus, work 4-10's, ride a bike, tele-commute, and bulk shop only once a week.
Then ban futures trading in oil on Wall Street, or better yet, institute a trading tax on it.

The *moment* that Americans adopt this "can-do" strategy, the price of oil would collapse, and I don't care how much oil China is buying, OPEC
would drop back to $15/BBL in a New York second.

Y'all a bunch of pussies deserve to be whipped!

Posted by: Tante Aime on May 25, 2004 12:04 AM

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"There are many alternate sources of oil such as the Tar Sands in Canada and oil shale in the US."

Several tar-sands projects have recently been abandoned because energy prices are too low for them to be profitable.

American economists need to adjust their ideas about how to properly calculate an energy tax. The model being used by the EU is much more adequate, though it may not be strictly Pigouvian - which is a matter of definition.

Whether oil extraction from tar sands turns out to be economically viable is beside the point, though. The cheapest source of energy are always going to be energy savings, and the only mechanism to induce savings are taxes on energy usage. Decisions about taxes are the most important economic lever government has in a market economy, and arguably no other large country has got them as wrong as the U.S. has. Subsidising corn-to-ethanol conversion - a negative-energy-balance process -, means that the U.S. engages in outright waste not only on the level of final energy consumption, but also in the process of energy production. (Some studies contend that corn-to-ethanol conversion has a negligibly positive energy balance, but it should be noted that their authors admit to using calculations that leave out important cost factors).

Posted by: Joerg Wenck on May 25, 2004 02:08 AM

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Disclosure note : I'm a promoter in the E+P end of the oil business in Australia, so I have a vested interest in high oil prices. Roll on $50/bbl.

Tante Amelia,

While it is true that the Saudi release in the short term is medium-to heavy crudes (*), in the longer term, if they do put their strategic reserve fields on line, it'll be the same Saudi crudes we know and love.

Trading taxes on oil futures ... sure. A 2% Tobin Tax wouldnt have stopped my mate Tino (a subjunior oil exec) from hedging his 2004-5 production to lock in high prices (he hedged at about US$30), but it may stop speculators making bets with the intent of onselling that bet later.

And as for cutting demand ... yeah, for sure. It's an essential part of the future. Some zillionaire could do much worse than buy the patent on high-efficiency lightglobes, and allow it to be used royalty-free.

Joerg,

Yeah, oil shale and tar sands suck. There are serious questions as to whether they will ever be energy-positive.

(*) Think of oil as wine ; you have a bunch of different sorts, ranging from light and sweet to heavy and sour. If you're really unlucky (like Cuba) the oil you have is "corked" and sulpherous. Just because you have lots of one sort doesnt mean you have what you need - the story in the US is as much a "shortage of gasoline refining" story as it is a "shortage of crude" story. And dont get me started on the US natural gas ... guys. I have six words for you "National grid plus multiple degass plants". Trinadad and Tobago would *love* to sell you natural gas at $4/mcf, you just cant import it. Ditto Australia selling to California ... I'll sell you as much Australian natural gas as you want at $3/mcf, as long as you pick it up and get it to market.

Posted by: Ian Whitchurch on May 25, 2004 04:43 AM

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Sounds exactly like the type of crowd behavior you get at the peak of a bubble when everyone knows that recents trends will go to infinity and there is no possibility that the trned will reverse.

We were having a discussion recently among professional investors and none of us remembers any time in our careers when there was such a complete consensus that rates were going to rise significantly over the next year.

The old investment bromide to always bet against the cover of Busines Week seems to apply here.

Posted by: spencer on May 25, 2004 05:09 AM

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Yeah, there was a guy who said oil resources were finite in 1979, but it's been 25 years and we haven't run out yet, so resources obviously are infinite.

Paging Bjorn Lomborg! Paging Julian Simon!

See, resources are conceptual, like points on a line. Just as there are an infinite number of points on a line, resources are infinite. It's all very simple.

Also, people who talk about limited energy resources are racists who do not want black Americans to have a good life. And puritans too, who are offended when they see other people being happy.

Posted by: Zizka on May 25, 2004 06:03 AM

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Any country that can afford to store petroleum in a reserve ought to be doing so, especially as long as Republicans and business interests control the US.

The US 'empire' is built on cheap oil, and as the supply falls, the US will have to do more to get its cut of it, even if that means sending the army to secure the oilfields. Which is what we've done in Iraq.

Who is next? Remember why Dillinger robbed banks? (Because that's where the money is.) This line of thinking means Saudi Arabia, or maybe Venezuela? is next. Watch the "secure the oilfields" strategy play itself out, small and big scale, strategy and tactics, especially when the Republicans and business interests control things in the US.

tjallen

Posted by: tjallen on May 25, 2004 07:30 AM

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Oil traders have been eager to know whether such stockpiling is partly behind surging Chinese demand for oil, which has helped drive petroleum prices to their highest levels in two decades. The fact that China isn't stockpiling yet...

No need to investigate facts, the word of the Chinese government is enough?

Posted by: Oberon on May 25, 2004 07:46 AM

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A strategic oil reserve is quite sensible from the POV of any regional power bloc that wants to challenge the United States' sole superpower status. One of the advantages the U.S. has over any would-be rivals is its military control over access to Persian Gulf oil, and the resulting capability of shutting down the economies of nations dependent on it. It is well on the way toward similar control of the Caspian basin.

Posted by: Kevin Carson on May 25, 2004 08:28 AM

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“Remember why Dillinger robbed banks? (Because that's where the money is.)”

Actually it wasn’t Dillinger who was supposed to have said that, it was Willie Sutton. But Sutton didn’t say it either. A newspaper reporter made up the quote and ascribed it Sutton. Even the name “Willie” was made up by the police, he used the name “Bill.” http://www.banking.com/aba/profile_0397.htm

“See, resources are conceptual, like points on a line. Just as there are an infinite number of points on a line, resources are infinite. It's all very simple.”

Actually if you had read Simon’s original book, “The Ultimate Resource,” he never said any particular commodity exists in infinite supply. He simply said that when something increases in price as the supply depletes, a substitute comes along to replace it. So far this seems to be true. For example, we had a copper shortage circa 1973, but that went away by the 1980s. Fiber optics replaces a lot of copper. At one time most of the assets of the AT&T were in the copper wire it owned. Why should oil be any different? We have alternatives, it’s just nothing can match the past and present ridiculously cheap price of oil. Tar sands and oil shale have always been too expensive compared to oil wells, both foreign and domestic. Then there are the advocates of the theory of “abiotic petroleum.” generation. http://www.gasresources.net/energy_resources.htm . I personally don’t subscribe to this theory, which seems a little kooky. But not being an expert in petroleum chemistry, I can’t critique specific points of their theory.

Posted by: A. Zarkov on May 25, 2004 09:31 AM

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Simon did, however, actually use the analogy of the infinite number of points on a line, which sufficed for me to conclude that he was a terminal loony who probably used amphetamine to rnhance his reasoning skills.

Air, fresh water, and topsoil are not substitutable in agricultural quantities, unless you have a virtually infinite supply of low-polluting energy.

Posted by: Zizka on May 25, 2004 11:07 AM

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"Tar sands and oil shale have always been too expensive compared to oil wells, both foreign and domestic"

I believe Suncor produces at about $10/barrel. The Hubbert types don't think much of the tar sands though because of poor energy balance (consumes natural gas to produce). Environmentalists hate the stuff too. Fear of having to pay for carbon dioxide emissions or having to pay to prevent them is a factor in making investment decisions here.

Posted by: snsterling on May 25, 2004 11:16 AM

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tj allen:
these nuckleheads aren't smart enough to figure out that Venezuela is the logical choice. It takes apporximately a week, at most, to get crude from Venezuela to the US. From Saudia Arabia: 4 to 8 weeks. Under the current circumstances in Iraq, I'd say it will take about 4 to 5yrs. till we see any significant amount of crude in the marketplace, and that's being optimistic.

I think the larger part of the problem, here in the US, is refinery based. I'm not sure if this is a "manufactured" problem, a capacity problem, or perhaps a bit of both.

Posted by: nanute on May 25, 2004 11:28 AM

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China/US are connected at the hip. They are building their reserves and so are we. Why? Because we have them on board to destabilize the Mideast, and both countries need an oil reserve to get it done. I would suspect that the USSR, England and India are with the program. The current inside thinking seems to indicate that those with the oil are stupid and do not use it wisely, like most consumptive societies.

I am tired of the "the replacement argument” Bullshit, there is no replacement for oil that will allow us to continue the current American Capitalist model. When energy goes up, regional production is important. The spread of the Walmart world destroys regional production and regional talent. In addition the population has moved to places in the south and the west where it will require more energy to survive not less. Nuclear could replace some of the energy, but it does not appear that America or the Market Economy is forward looking enough to avert the crisis without someone paying a high price. White/Asian will pay at the pump and Muslims, Nigerians and Indigenous Indians will pay in blood.

Am I my brother’s keeper?

Mr. Zarkov - the copper argument appears pretty lame, as fiber optic was both more energy efficient and faster as a replacement product. When you come up with a replacement for oil that satisfies both of those criteria, please contact me. I am buying.


Posted by: Greg Hunter on May 25, 2004 12:07 PM

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Greg Hunter said: "the US has China on board to help destabilze the Mideast...
Are you saying that the administration is lying when the president and his advisers tell us that freedom, democracy and a stable Middle East is the policy objective? I'm shocked. P.S. Don't let Israel in on the secret.

Posted by: nanute on May 25, 2004 01:26 PM

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Greg Hunter - Internal combustion engines are a specific type of Carnot Heat Engine. You're very lucky if you can get 30% efficiency out of a Carnot Engine of any type including ICE. Hydrogen Fuel Cells can practically hit 70%-80% efficiency. Their costs are dropping and products are already hitting market as fuel cells compete with both batteries and with ICE as generators of electrical power.

GM, not known as a crazy enviro-firm, is due to decide in 2006 what will be its next V6 engine platform. Such platforms are picked about ever 20 years and then refined and improved. One of the candidates for the platform is a fuel cell and GM is seriously considering deployment (which would start mass production around 2009).

We may be as soon as 5 years away from the end of the age of oil as hydrogen fuel cells are multifuel systems. They run on hydrocarbon products as well as a large number of other sources of hydrogen.

Posted by: TM Lutas on May 25, 2004 02:05 PM

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Quick TM Lutas, 5 points if you can tell us the energy conversion ratio of hydrocarbon to hydrogen! Hydrogen is not an energy source, it is only a carrier. You still need alot of oil to actually make the hydrogen, it's not like we can go out and mine the stuff...and if you even say the word solar, i WILL get the wet noodle and flog you about the head and neck with it.

Besides, a passenger vehicle takes as much hydrocarbon based energy to build as it will use over its first 100,000 miles. You can do the math on how much hydrocarbon will be required to convert all vehicles over to the hydrogen solution. That goes ditto for hybrids and biodiesels and every other "conversion" solution....

The real solution is that standard of living must be reduced dramatically and must be accompanied by severe population thinning....or maybe you would prefer the phrase "population optimization"...

Posted by: sampo on May 25, 2004 02:28 PM

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Sampo,

Funnily enough, the company I work for is having some thoughts about hydrogen.

We own a coal- and hot rock-rich chunk of Central Australian desert.

Theoretically, you can run hot steam over coal to produce hydrogen.

So if we can find hot rocks near coal (and thats the story in much of Queensland as well), then it should be theoretically doable.

As far as being profitable, that depends on so many factors it isnt funny.

Posted by: Ian Whitchurch on May 25, 2004 03:21 PM

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Sampo,

Funnily enough, the company I work for is having some thoughts about hydrogen.

We own a coal- and hot rock-rich chunk of Central Australian desert.

Theoretically, you can run hot steam over coal to produce hydrogen.

So if we can find hot rocks near coal (and thats the story in much of Queensland as well), then it should be theoretically doable.

As far as being profitable, that depends on so many factors it isnt funny.

Posted by: Ian Whitchurch on May 25, 2004 03:21 PM

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Hallelujah! It's time to get back in the oil bidnes here in Texas. Harkin didn't fail because Bush couldn't find oil in Texas. It just wasn't worth it. I wonder if he owns the mineral rights under his ranch in Crawford?

Posted by: femanazi on May 25, 2004 03:55 PM

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so mister witchurch...your company is having some thoughts about a chunk of desert which has some untested theoretical potential to produce hydrogen by exploiting a process which sounds extremely expensive and unprofitable, so unprofitable in fact that you arent even able to laugh at the variable list....surely this is the panacea to rescue our future!

Try to extract what happiness is left in the world while you still can and be thankful you were born in america. party is almost over.

Posted by: sampo on May 25, 2004 04:54 PM

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“Simon did, however, actually use the analogy of the infinite number of points on a line, which sufficed for me to conclude that he was a terminal loony who probably used amphetamine to rnhance (sic) his reasoning skills.”

In his revised edition of “The Ultimate Resource” Simon explains his metaphor further. Indeed he does not contend that any natural resource is physically infinite. He says we are unable to count the number of ways people will find to apply resources. He also says he is not using “infinite” in any mathematical sense and admits he used a poor metaphor. You can go to Amazon and do a “look inside” at the revised edition. I think it’s a footnote on page 62.

I’m puzzled as to why Simon provokes such invective from some people. It seems to me that at worst he is over optimistic. The historical evidence seems to support Simon over his nemesis Paul Ehrlich.

Posted by: A. Zarkov on May 25, 2004 07:52 PM

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snsterling: “I believe Suncor produces at about $10/barrel. The Hubbert types don't think much of the tar sands though because of poor energy balance (consumes natural gas to produce).”

That’s a good figure. Canada’s National Energy Board estimates operating costs for in-situ production to range from about US$6 to US$12 per barrel, depending on production process and the quality of the reserve (quoting from Suncor VP). Does this include the external energy input?

I don’t know the worldwide average in-situ production costs for oil wells, but it must be around $4 per barrel. So OPEC can put tar sands out of business. Nevertheless there is worldwide reserve of about 3 trillion barrels of tar sand oil. So it’s a matter of price not supply.

Posted by: A. Zarkov on May 25, 2004 08:33 PM

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"So OPEC can put tar sands out of business"

OPEC can put nearly everyone out of business if they really wanted to!!!

This is one of the main problems, and possibly has even been part of OPEC's strategy. Oil in the Mid East costs under $5, but the harder to reach stuff everywhere else costs much much more. According to some recent news article (which I probably read on Bloomberg or MSN or whatever) the price ceiling for a new project was recently raised from $15 or so to $20 by the oil majors. Remember it was not so many years ago that oil had that dropoff to $10 and the scars definitely remain. So the situation is the price goes up and everyone is afraid to invest until it becomes obvious it ain't going back to $10 (I'd say we've reached that point).

Anyway, that makes $10 for tar sands relatively cheap. Here's a link to a negative opinion on tar sands which discusses the nat gas input

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

Posted by: snsterling on May 25, 2004 09:05 PM

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“Anyway, that makes $10 for tar sands relatively cheap. Here's a link to a negative opinion on tar sands which discusses the nat gas input”


I remember an article in Science Magazine circa 1975 analyzing a proposal on converting agricultural products to automobile fuel. According to the analysis, the process was a net consumer of petroleum. You were putting more energy in than out. In those days farmers got a petroleum allocation to grow food, and in effect they would be selling their allocation. So the economics was an illusion. The Feasta article seems to be saying something similar. In effect, most of the energy comes from the gas. It’s hard to beat an oil well! Using Canadian tar sands has been talked about for many decades, probably at least 50 years. Thanks for the link.

Posted by: A. Zarkov on May 25, 2004 11:07 PM

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Sampo,

I said we're thinking about it.

Not that we're sinking company funds into it.

We have the mineral rights to the area because we think it has several hundred million barrels of oil underneath it. The coal and hot rocks are, well, a bonus.

Ian Whitchurch

Posted by: Ian Whitchurch on May 26, 2004 06:03 AM

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Zarkov -- Simon won an argument with Ehrlich on several specific questions twenty years ago or more. If Ehrlich were Simon's only adversary, cornucopians would be triumphant.

Ehrlich, like Caldicott, used short-term alarmism to sell his program. Big mistake, obviously, but motivated by the American media's crisis-and-disaster bias. I read a story once about an interdisciplinary environmental conference which broke down when the ecologists, for whom 100 years is the near future, found out that for economists 20 years is the distant future. In the life of one individual watching TV, 30 years is an enormous stretch of time hearing the same thing being said over and over until you get tired of it, but in ecological time it is the snap of a finger. (In media time, of course, next month is the far future, and last month is the ancient past).

I'm not a bit surprised that Simon stepped back from his unbelievably loony metaphor. I still think that it was bad enough that nothing he says can be taken seriously without a very careful examination. It was in the tinfoil hat / perpetual-motion are -- regardless of how ingenious his restatement was. But his true believers use him as an authority.

The bottom line for Simon and Lomborg, as far as I've been able to tell, is this: "If these things that climatologists and geographers and geologists are saying are true, then our futurological development utopia cannot be achieved. But that's impossible; climatology, geography, and geology after all are hard sciences, whereas futurology is a rigorous science."

I'm not saying that the earth sciences are unanimous on global warming, resource availability, etc. I'm just saying that these questions should be answered by people who have studied these specific questions, rather than by utopian futurologists who need a certain answer very badly.

A very common response to environmentalists is "I've heard stuff like this before, and it turned out not to be true, so nothing that sounds like this will ever be true." This is a textbook error of induction, called by Feynman the Russian Roulette Fallacy: "I've won this game five times already!" (Yes, this is hyperbole; it's not like we're using a pistol known to have only six chambers and one bullet).

Posted by: Zizka on May 26, 2004 10:10 AM

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A.Zarkov says =>
"...historical evidence seems to support Simon over his nemesis Paul Ehrlich."

(Zarkov, the name sounds familiar. Did you play an arch-villain in a James Bond movie?)

So the historical evidence was losing an idiotic sucker bet?

Posted by: Webster Hubble Telescope on May 27, 2004 11:19 PM

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Hubble:

Well Ehrlich thought Simon was the sucker and jumped at bet. When he lost he called it a “fluke.” Yet he still declined Simon’s offer for a new bet. The historic evidence is the general decline in commodity prices over the last 30 years. Declining prices seems to contradict the notion that resources are being rapidly depleted.

I don’t think there was any James Bond character named “Zarkov.” Perhaps you are thinking of Dr. Zarkov from “Flash Gordon.”

Posted by: A. Zarkov on May 28, 2004 02:53 PM

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The decline in commodity prices applied equally well to betting. By today's prices, the bet was the equivalent of to a nickle slot machine. Dollar Bill Bennett would probably have joined in the pool.

Posted by: Webster Hubble Telescope on May 28, 2004 08:09 PM

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In the short run, betting on commodity prices would indeed be tantamount to a playing a slot machine. However the bet was long term (10 years). And at least according to Simon, commodity prices having been drifting downward for at least a century. The gloom and doom crowd doesn’t say: “perhaps resources are being depleted.” No, they say it’s certain. Well if it’s so certain then they should be willing to make easy money, and bet on their predictions. They should be willing to put their money where their mouths are. But they’re not because they know their track record is miserable.

Posted by: A. Zarkov on May 29, 2004 09:52 AM

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funny that iserael never got oil all its neightburs bath in oil while israel bathes in blood why cause they pised god off and made him to a cow soo all all you people off moses out there belive in god now or you will bee sorry

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