My Daughter

My Daughter
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Monday, June 30, 2008

Weekly US Petroleum and NG Supply Reports

Unleaded Prediction 9-May
Beginning Inv mbbl 211.9
Imports Wk/Day 9.8 1.4
Production Wk/Day 61.6 8.8
Available 283.3
Balance Wk/Day 72.1 10.3
Ending Inv Mbbl 211.20
Prod Supplied 9.3
Predicted Change -0.7

Distillates Prediction 9-May
Beginning Inv mbbl 105.7
Imports Wk/Day 1.4 0.2
Production Wk/Day 29.4 4.2
Available 136.5
Balance Wk/Day 30.8 4.4
Ending Inv Mbbl 105.7
Prod Supplied 4.3
Predicted Change 0.0

Crude Oil Prediction 9-May
Beginning Inventory 325.6
Domestic Prod 35.679 5.097
Imports 72.8 10.4
Total Available 434.079
Provided to Refineries 104.3 14.9
Ending Inventory 329.779
Predicted Change 4.179
Ref Utilization 86

I am not smart enough to predict that this week will be any different from last week. The last couple of weeks we have seen a flood of imports in both crude oil and unleaded (not distillates) and lower than normal refinery utilization, because of the high crude oil prices and relatively low refinery margins.

The unleaded inventory will be especially interesting. We should be in the time of year when this inventory is built up to take care of summer demand, and the numbers themselves suggest that there is plenty of gas around, but even with fairly strong imports of 1.4 mbpd, the demand lately has been such that with the refinery system running the way it was last week, at about 85% capacity, we will still see a slight draw down in unleaded inventory. The longer this goes on, the more serious it is going to get.

In crude oil, I have assumed above the same low inputs to refineries, high imports (despite the pricing) and the same domestic production we always have, and the result is a pretty strong build.

In distillates, we saw a little bump in demand last week, with spring planting just underway, and very low net imports, and if that same thing happens this week, with typical production levels of 4.2 or so, we will see this inventory break just about even.
Closer to Reality

pup55 28
Analysts 26
Tie 0
Avg 0.518518519

Directional Correctness
pup55 36
analysts 41
ttest 0.028524

Sum of Weekly Predictions
pup55 Analysts Actual
Unleaded 12.187 -0.125 4.1
Distilla -19.537 -13.820 -21.5
Crude 34.839 32.660 36

Avg Difference from Reality
pup55 analysts t-prob
Unleaded -0.426 0.222 0.07
Distilla -0.103 -0.404 0.22
Crude 0.061 0.176 0.34

Deviation from Reality (Abs Value)
pup55 analysts t-prob
Unleaded 1.601 1.536 0.41
Distilla 1.168 1.180 0.48
Crude 3.844 3.021 0.02

pup55 Forecast Correctness
Avg Exact
Unleaded 0.019 4
Distilla -0.013 5
Crude 0.007 18

Avg Exact
Unleaded 0.025 5
Distilla 0.000 7
Crude 0.026 1

Avg Exact
Unleaded 0.104 2
Distilla 0.047 3
Crude -0.061 5

Here are the stats for the year-to-date. Despite being slightly ahead of the analysts on closeness to reality (over 50%, which as we all know was my long term goal) the pesky analysts are beating me on average deviation from reality in crude oil and unleaded, by a statistically significant margin.

The reason for this is that my little unleaded demand model underestimated demand consistently in Jan-March (it has been pretty close the last couple of weeks) and also, the lack of ability to predict crude oil and unleaded imports. Of the first roughly six months of the year, I have only managed to correctly predict crude oil imports once.

Other than that, pretty good. Now that I understand the seasonality a little bit better, it should be possible to refine this demand model some.

The crude oil imports are up to the Saudis, Mexicans, and weather conditions in the Gulf, so I do not feel too bad about that.

Thanks for your help as we continue to try to understand this important data a little better, to keep with the original goal of the thread, which is to use these reports as a potential indicator that the effects of PO are being felt in the US.

Top 20 Oil Consuming Countries in the World (2007).

Country Consumption (MBD)

1. USA- 20,698,000

2. China- 7,855,000

3. Japan- 5,041,000

4. India- 2,748,000

5. Russia- 2,699,000

6. Germany- 2,393,000

7. South Korea- 2,371,000

8. Canada- 2,303,000

9. Brazil- 2,192,000

10. Saudi Arabia- 2,154,000

11. Mexico- 2,024,000

12. France- 1,919,000

13. Italy- 1,745,000

14. UK- 1,696,000

15. Iran- 1,621,000

16. Spain- 1,615,000

17. Indonesia- 1,157,000

18. Taiwan- 1,123,000

19. Netherlands- 1,044,000

20. Australia- 935,000

Source: BP Statistical Review of World Energy 2007.

Why Technology Will Solve Peak Oil in the End

Over human history Every boost in sustainable population levels has been achieved by a new energy technology.

Neolithic people relied on human muscles for energy/food production.

Early agriculture used animals for hunting/plowing/milling/pumping.

Later agriculture used wind and rivers (for pumping/grinding/shipping)

Even later it used steam for mining/shipping/rail

Modern society is based on liquid fossil fuels.

Our next technology is biotech and this will save us. It will save
us because it will harness the greatest source of energy within
reach- life itself. Indirectly, life is powered by the sun and nothing, not even all the petrochemicals on earth can compare to it.

Think Manhattan Project- 6 years to build a nuclear weapon.

Think microbes that will break down ANY plant cell wall (the real problem in ethanol production is we can't just use any plant matter to produce it. Hence we stupidly use food crops).

They are already looking for the needed microbes in termite guts.

Think genetic manipulation and who-gives-a-damn about the possible environmental consequences of the bugs they produce. (I mean this is civilisation at stake rght?)

Think of all the weed infested waterways, junk land, byproducts of agriculture (stubble, chaff and waste), household waste and simple algae ponds that could be converted to ethanol?

Think of microbes that will turn tar sands into usable fuel instead
'of using clumsy chemical/mechanical processes that pollute and use far too much energy?

Think water weeds manipulated to grow like bamboo (some species grow 1 metre (3 feet) in a day) as feedstock for ethanol.

Think plants engineered to produce high energy hydrocarbons (i mean crush a eucalypt leaf and smell that oil) and which are engineered to release it only in the presence of a new engineered organism.

Plants that grow in salty, dry soil faster than asparagus.

Unbelievable? The gene that protects some crops from the herbicide called roundup is actually from a fish.

Human genes are now in the DNA of lab cows and pigs so they can produce human antibodies for us.

Rest assured, if civilisation is under threat the people with money
and power will spare nothing to solve the technological issues that underlie it. Not because they love we poor and powerless scum but because it offers them the potential to become even richer and more powerful.

We aren't there yet because it was easier for them to play the same old game and win. But if the game is about to change, they will make the rules for the new game as they always have.

Whether we like it or not, life on earth will be engineered and exploited to suit our needs. It always has been whether thru domestication, breeding, overfishing, extinction or whatever.

We don't give up easy which is why we're still here and dinosaurs

Do people really think that all the brilliant minds in the world haven't
had a passing thougt to all of this and that a civilisation that can put men on the moon, extract energy from fission, calculate the first moments of the big bang, and NOW!!! has created the first hand made genome from scratch (yes never before in nature) will
just slap its forehead and say "well, this energy thing sure beats me".

No way. I'm not saying society/government is very forward thinking (why would it be when short term approaches make so much money anyway) but when threatened as a species we have tyically had the gonads to find a way out.

We have the embryonic tools to solve this and soon we will have the money, focus and priority to make it happen.

Former crashed civililsations had nowhere near the intellectual understanding or sheer resources to rescue themselves to rescue themselves, but we sure as hell do.


Abandoning Cargoism & Embracing Our Options

As humans, we tend to be very shortsighted; driven by short-term gains. We live for today and assume tomorrow will take care of itself. The first thing we must learn to do as humans and custodians of the future is to consider the impact of our present actions on that future and modify those actions accordingly. If we cannot do that, the time will come - and soon - when the future will definitely be worse than the present.

We are largely a Cargo Cult, and we suffer from Cargoism: the belief that carrying capacity can "always" be raised anew by further technological breakthroughs. We blindly copy something, without understanding it, to get some positive effect that we’ve observed.

As Catton observed in his book Overshoot: “People continue to advocate further technological breakthroughs as the supposedly sure cure for carrying capacity deficits. The very idea that technology caused overshoot, and that it made us too colossal to endure, remains alien to too many minds for"de-colossalization" to be a really feasible alternative to literal die-off. There is a persistent drive to apply remedies that aggravate the problem.”

Bottom line: There is no techno-fix. But we are obsessed with the notion that one exists.

As James Kunstler points out: " It only made me more nervous, because this longing for "solutions," strikes me as a free-floating wish for magical rescue remedies, for techno-fixes that will allow us to make a hassle-free switch from fossil hydrocarbon power to something less likely to destroy the Earth's ecosystems (and human civilization with it). And I think such a wish is, in itself, at the root of our problem -- certainly at the bottom of our incapacity to think clearly about these things.”

As Sharon Astyk writes: “That is, we're betting our kids lives on the hope that at some point renewables will become self-perpetuating, even though we have no idea how that will happen, that would require major, multiple large scale technical breakthroughs in many cases that might or might not happen, AND, we're not willing to do it now, when we have energy to burn, lots of money and no crisis - instead, we're going to bet the farm (and lives) on the fact that we'll be able to do this 20 or 30 years into a depletion crisis with much less money, much less oil, much less availability in a society that we simply don't know the shape of. That is, we're going to stick the next generation with the problem, and hope it isn't too serious. But if we can't do it now, when we have lots of energy and lots of money and all the time in the world, the chances are excellent we won't be able to do it.”

The Planning Forum has been discussing our options for years, so we know what they are. It’s time to start embracing those options and learn to cope and adapt to the coming changes.

Trying to dodge the die-off bullet is not an achievement to pursue; it is a detour to the same destination.

Friday, June 27, 2008

Our Money System and Oil Depletion; Are they Compatible?

Our Money System and Oil Depletion; Are they Compatible? "Houston, we have a problem." The world's present industrial civilization is saddled with a dilemma: how can a debt-based monetary system based upon infinite growth in a finite world deal with resource depletion? Quote me and answer that question with your reply. On another thread, nero wrote: "The belief that the current monetary system is incompatible with a declining energy resource is not an essential component of the peak oil thesis." It's not? I care to differ. It's part and parcel. The steady state economy into which we are being inexorably forced by oil and other fossil fuel depletion means the end of the current money system. The following is a quote from a summary of a seminar taught at MIT by M. King Hubbert in 1981:
"The world's present industrial civilization is handicapped by the coexistence of two universal, overlapping, and incompatible intellectual systems: the accumulated knowledge of the last four centuries of the properties and interrelationships of matter and energy; and the associated monetary culture which has evolved from folkways of prehistoric origin. The first of these two systems has been responsible for the spectacular rise, principally during the last two centuries, of the present industrial system and is essential for its continuance. The second, an inheritance from the prescientific past, operates by rules of its own having little in common with those of the matter-energy system. Nevertheless, the monetary system, by means of a loose coupling, exercises a general control over the matter-energy system upon which it is superimposed. Despite their inherent incompatibilities, these two systems during the last two centuries have had one fundamental characteristic in common, namely exponential growth, which has made a reasonably stable coexistence possible. But, for various reasons, it is impossible for the matter-energy system to sustain exponential growth for more than a few tens of doublings, and this phase is by now almost over. The monetary system has no such constraints, and, according to one of its most fundamental rules, it must continue to grow by compound interest. "Hubbert's Prescription for Survival, A Steady State Economy Richard Heinberg, in The Party's Over, wrote: "Hubbert thus believed that society, if it is to avoid chaos during the energy decline, must give up its antiquated, debt-and-interest-based monetary system and adopt a system of accounts based on matter-energy--an inherently ecological system that would acknowledge the finite nature of essential resources." Our system of fractional reserve banking suffers from an inherent instability that increases over time; because at the base, fractional reserve banking is a kind of Ponzi or pyramid scheme. As long as there is economic growth the pyramid stands, but if not, it collapses like a house of cards. Under our current economic system, Hubbert wrote that the maintenance of a constant price level in a non-growing industrial system implies either an interest rate of zero or continuous inflation. However you spin it, there is no price component for resource depletion. What if the supply of oil cannot increase forever, but the demand for more oil continues to grow? The conclusion is simple: The house of cards comes down. Who is going to loan money at zero interest?

Tuesday, June 24, 2008

According to the most recent EIA chart below, Saudi net oil exports have fallen more than 1 million bpd average, from 9,095,559 bpd average in 2005 to 7,925,464 bpd average in 2007:

And so far, it appears that Saudi total oil production had peaked at 11,095,559 bpd average in 2005. Was down to 10,236,101 bpd production average for 2007: At the same time, Saudi domestic oil consumption continues to increase at a steady pace: And so does total Saudi domestic energy consumption:
Source: EIA This probably isn't 'news' to anyone here. Still, interesting to see their exports dropping at a time when the world needs more oil than ever before. Saudi domestic oil consumption appears to be increasing about 275,000 bpd per year the last few years. Even if they increase oil production some, will it get sucked up domestically instead of being exported?

Friday, June 20, 2008

Why I'm Here

Why are you here?

What is it that moves you to spend your valuable time reading (or writing) on the Internet about our energy future?

For some, it's simple boredom... others may feel a social responsibility to inform ( & be informed). Maybe you feel confused, and are looking for some bit of truth to latch on to, or perhaps your job has thrust you into this environment, without even asking. I imagine countless thousands looking at the price when they fill up, coming home, and Goggling like crazy trying to discern what's causing the crazy-high gas prices.

Maybe you feel threatened... vulnerable & exposed, & are looking for some hope to carry you through.

For each of us, there remains some launching point for the journey of discovery, which lead us to this place. Every person reading these words has some original purpose... intending to fill some need they harbor. All of us share this feeling... this idea of need.

I'm not any different than you.

As is so often the case... I'm here for a girl.

...of course.

My wife Marnie passed in Sept. of 1999 from suicide... hanging.

Needless to say, I was devastated by the senseless tragedy, ( & in many ways still am), and retreated into my own little world; which was basically raising my son David, and trying not to cry all day. It didn't work... I cried all day... every day.

I took as much time as I needed mourning this tragedy... more than 2 years. Ever cried daily for years? It's ... ummmm.... ...unpleasant. Eventually you get sick of almost any repeated pattern of course, (I say almost because I never will get used to the screaming dreams... Can you imagine your young child standing at the foot of your bed scared & weeping 'cause you're screaming in your dreams? either, but then, I don't have to); eventually I grew out of my selfish wallowing in misery and an emerging consensus of thought tightened it's grip on my fragile mind.

You can't imagine the irrational feeling of guilt that comes with this most intimate event. How could I still be here when she's gone? It is so unfair it borders on insanity... lunacy even. But I promise you it's where all of us suicide survivors end up... guilt.

I have remarked many times, (& will continue I'm certain), that 'it's a funny 'ole world. I left my highly paid (6 figure) job in 2002, and began searching for some meaningful place for me to reside; Some way to sooth my terrible feelings... a task which mere alcohol was powerless to confront or abide. And as is often the case, the answer to my dilemma came from the most unlikely of places.

My son David & I bonded in many ways, and still do. When he was younger, it was music, the outdoors, art... and computer gaming. I have been participating in computer gaming for many years (decades?), and so it was a natural place for us to meet as cross-generational partners. We eventually joined a gaming clan ( competitive league gaming on the Internet), and made many friends and had great adventures. And so it was, that peak oil came into my vision.

A member of our gaming clan posted a link to Matt Savinar's website on our clan forum, and my casual click of the mouse led me into the world I inhabit today.

I was already acquainted with resource depletion topics for many years. That's why Matt's website hit me so hard. His eloquent description of Colin's "Peak Oil" gripped me immediately, and has not let go since. It took me a month to read all the links on and I knew what my place was without doubt.

And that ladies & gentlemen... is why I'm here.

And it's more than a little cathartic to write this.

Thanks... much.

Thursday, June 19, 2008

Lifting the Ban on Off-shore Drilling:The Facts

“The U.S. has huge amounts of untapped oil, but pesky politicians and environmentalists won't let us get it.” That’s the indignant cry we hear over morning coffee these days.

So, George Bush proposes we roll-back the ban on off-shore drilling to ease oil prices.

Ease oil prices? When? Not today and not tomorrow…maybe never.

The U.S. Energy Information Administration (EIA) recently did a detailed study of the likely outcome of offshore drilling for their Annual Energy Outlook 2007, “Impacts of Increased Access to Oil and Natural Gas Resources in the Lower 48 Federal Outer Continental Shelf (OCS).”

The conclusion:

“The projections in the OCS access case indicate that access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030. Leasing would begin no sooner than 2012, and production would not be expected to start before 2017….Because oil prices are determined on the international market, however, any impact on average wellhead prices is expected to be insignificant.”

According to the Energy Information Administration, lifting the bans might boost the nation's oil production by 1 or 2 million barrels a day by sometime next decade. Places like the Atlantic coast, thought to be rich in natural gas, lack drilling platforms, pipelines, terminals, storage facilities, and other energy infrastructure.

“Although a significant volume of undiscovered, technically recoverable oil and natural gas resources is added in the OCS access case, conversion of those resources to production would require both time and money. In addition, the average field size in the Pacific and Atlantic regions tends to be smaller than the average in the Gulf of Mexico, implying that a significant portion of the additional resource would not be economically attractive to develop at the reference case prices.”

What about ANWR? (Arctic National Wildlife Refuge) How much oil is there?

 95% Probability 5.7 billion bbls = .5 mbpd
 Mean (Expected)10.3 billion bbls = .9 mbpd
 5% Probability 16.0 billion bbls = 1.9 mbpd

 Seven to 12 years are estimated to be required from the time of approval to explore and develop ANWR to the first production of oil.

 From first production to peak will take 3 to 4 more years where the production rate peaks at .9 million barrels per day.

 EIA estimates that if Alaska's Arctic National Wildlife Refuge were opened for drilling tomorrow, oil wouldn't flow at full tilt at .9 mbpd until 2025.

By 2030, the US is projected to consume 22.8 mbpd. Today, we consume 21 mbpd.
22.8 mbpd divided by 24 hours = .95 mbph

 .9 mbpd is 95% of one daily hour US demand

 Conclusion: ANWR would power the US for 57 minutes/day, the rest would have to be imported.
 EIA, best case scenario would reduce oil prices by $.30 to $.50 per barrel

 Reduce oil imports from 68% to 65%. Today, we import 60% of our oil.

Not to mention, 2 million barrels a day would need to be balanced against steep production declines expected in many non-OPEC areas like Russia, Mexico and the North Sea over the next several years.

US oil production has been in terminal decline since 1971 from a height of 9.6 mbpd to barely 5 mbpd in 2008. Even the discovery of oil in Alaska in the 1980’s was unable to reverse this decline.

We cannot drill our way out of this oil crisis. Since 2000, oil companies working in the U.S. have doubled the number of wells drilled per year.

Although increased drilling has added new oil to the nation's supply, it has not done so fast enough to offset the terminal decline of existing fields.

We are going to have to import more of our oil. Period.