It's The Hydrocarbons, Stupid !  

The Sydney Morning Herald included Peter Maass' "Running On Empty" article from the New York Times a few weeks ago in this weekend's "Magazine" section (with no fanfare, even the cover of the magazine section didn't list it and it doesn't seem to be online). Elsewhere in the Herald there is a piece on a campaign to make residents of Sydney's wealthy eastern suburbs more aware of the impact of global warming. The Sun Herald has an article explaining the implications of oil price rises for many other goods that require oil in their manufacture. Over at sister paper The Age there is a piece on ethanol producer Manildra and their CEO (or "ethanol sheikh") Dick Honan.

Labor's resources spokesman Martin Ferguson agrees with the suggestion that Labor is again keen to promote ethanol as an alternative fuel...

With Australia notching a fuel trade deficit of $6.6 billion last year, compared with $1.3 billion in 1997-98, Mr Ferguson says alternative fuels, such as ethanol, liquefied petroleum gas and biodiesel, are valuable ways to reduce the reliance on imports. He said Mr Honan might be a short-term beneficiary from the use of ethanol, but there were more players ready to enter the market.

According to the Biofuels Taskforce, Mr Honan has a yearly ethanol production capacity of about 70 million litres (with the ability to expand to 100 million litres). Based on 80 cents a litre, it is worth about $55 million. Mr Honan's success in convincing Labor to end its campaign over his relationship with Mr Howard, and to help restore confidence in ethanol-blended petrol, has guaranteed his group a rosy future as a fuel supplier.

The Financial Review has a small article "PM wants debate on energy" that continues their steady campaign to revive nuclear energy (or at least increase uranium mining) here. For some reason a WA Liberal conference is being used to push the opening up of potential WA uranium mines (Yeelirrie, Manyingee, Kintyre, Lake Way and Mulga Rock) - as they aren't in government over there this doesn't seem to be a particularly effective tactic.

The Falls Church News Press has another article in their ongoing series on peak oil - this one looks at the recent conference held by US Congressman Roscoe Bartlett.

For those familiar with the tenets of peak oil, the message was familiar: It will start soon; it is already too late to mitigate the effects; and a global economic depression will only be one of the many hardships the world will face.

On a humorous note, Deffeyes revealed that calculations that oil production would peak on Thanksgiving Day 2005 really had some wriggle room so that the appointed day could come as much as three weeks before or after Thanksgiving. On a more somber note, Deffeyes said there is bound to be some sort of oil rationing.

Simmons characterized the present situation as the culmination of 50 years of energy planning mistakes. Only a few years ago, energy planners believed demand would peak, supply would grow, and oil would be cheap. But instead, demand grew, production costs doubled, there were few new discoveries, and reserves turned out to have been overstated.

All this led to a situation where by August 2005 spare capacity had dropped to the point that the world was effectively at 100 percent of production capacity. Then came the Hurricanes taking away more production capacity than was left to offset the damage. We do not yet know the full implications of this situation.

Simmons calls for the nation to go immediately onto an "energy war" footing, where productive capacity and the ingenuity of the country is mobilized to deal with the crisis.

Heinberg now believes peak oil may look more like a bumpy plateau with much volatility in prices and production with events such a hurricanes, wars, demand destruction, and political moves alternately cutting and stimulating additional production. As do the other panelists, he foresees major problems in the global economy, transportation, food production, and resource wars. He emphasized the impact on localities, as people struggle to get to work, feed themselves and heat their homes.

The next panel discussed ways to save energy in transportation, buildings and industry. The dominant theme was that our current machinery and practices are highly wasteful and that we have the existing technology to live on only a small fraction of our current consumption, such as 100-mpg cars and buildings that get by nicely on 20 percent of current energy consumption.

The key point made during the panel discussions was that the nation's goal has got to be movement towards 100 percent renewable energy: water, solar, wind, waves, biomass etc. As the US currently gets only seven percent of its energy from these sources, the idea of nearly all energy coming from renewables is often derided as an impossible dream. The point the panel made is that within a few decades, we will have no other choice.

One interesting note came during the questioning, when a member of the audience asked Congressman Bartlett about his meeting on peak oil with President Bush. Did the President understand?

Bartlett responded "Yes, the President understands" but it is the age-old problem of the urgent vs. the important. Apparently, the President believed that as of this summer he had more pressing issues to deal with than the possibility the world's oil supply would one day start to decline.

On Monday, however, the President issued a call for Americans to conserve gas by driving less and directed all federal agencies to cut gasoline consumption. This is a major change in the administration's position for many years has emphasizing production of additional oil over conservation and alternative energy.

It is beginning to sound as if the President knows the hurricane damage to offshore production is far more serious than has been generally reported, and that it may be a while before all the Gulf refineries are back in production. If this is indeed the case, higher prices and gas lines (rationing by inconvenience) are not far ahead.

The rising cost of fuel has pushed the non-existent savings rate of American consumers into the red - on average people are spending their savings or going further into debt (mostly on their credit cards) just in order to make ends meet. Good thing (for the credit card companies) those new bankruptcy laws are in place.

Of course, with economists having been going on for years about the US economy being the "engine of world growth" and the US consumer (and his or her willingness to keep borrowing ever larger amounts of money) being the hamster in this economic treadmill, ooops, I mean engine, you do have to wonder what happens to the world economy when the hamster runs out of puff.

The American Bankers Association reported Wednesday that the percentage of credit card accounts 30 or more days past due climbed to an all-time high of 4.81 percent in the April-to-June period. It could grow in the months ahead, experts said. The previous high of 4.76 percent came during the first three months of the year, in keeping with a generally steady rise over the past several years.

"The last two quarters have not been pretty," said Jim Chessen, the association's chief economist. Chessen and other analysts mostly blamed high prices for gasoline and other energy products, but said that low savings and higher borrowing costs also played a role. "The rise in gas prices is really stretching budgets to the breaking point for some people," Chessen said. "Gas prices are taking huge chunks out of wallets, leaving some individuals with little left to meet their financial obligations."

Pump prices were high before hurricanes Katrina and Rita hit the Gulf Coast. After Katrina, prices jumped past $3 a gallon. Prices have moderated since but remain high.

The personal savings rate dipped to a record low of negative 0.6 percent in July. The negative percentage means that people did not have enough left over after paying their taxes to cover all of their spending in July. As a result, they dipped into savings to cover the shortfall. When people have less money available money to pay for energy costs or emergencies such as a big car repair, many resort to credit. That option is getting more expensive, too. The Federal Reserve has been tightening credit since June 2004.

TOD has an interesting discussion on rig damage in the Gulf of Mexico and the various issues involved in designing rigs to withstand storm conditions. My guess is insurance companies will be making the premiums for the satndard rig design that can only handle category 3 hurricanes a lot more expensive. There is a price to be paid for global warming and everyone will pay in the long run - the insurance industry will guarantee it (and that's not a jibe at the insurers).

The picture below is reported to be of the Typhoon platform (which BHP has a major share in). I think if this report is correct then you could say the damage is quite serious.



The Oil Drum has also reprinted a post on George Ure's "Urban Survival" (a site for those who believe we're about to hit the second great depression) on rig damage in the gulf which is alarming, to say the least.

Let me sum up: Hurricane Ivan destroyed 7 platforms and 100 piplines and 0 rigs.

Katrina & Rita destroyed (so far) 90 platforms and (who knows) pipelines and 100? rigs.

There are typically around 130 rigs working in the Gulf. Today, there are 23.

There will be virtually no new exploration in the Gulf for the next year or so, assuming everything stays the way it is right now. Plus, with the rigs left in operation, there are several countries bidding to have them work in their waters. Guess who wins? Highest bidder.

Now given the source of the information, this is to be expected, but I haven't yet seen a good summary anywhere else of the actual damage. Rigzone's running tally of the damage is still incomplete and doesn't give me a good feel for the real situation (although it doesn't seem quite as bad as Urban Survival's unless they are showing all 23 surviving rigs in their dispatches). They are still reporting 99% of oil production is shut in.

Canada's Globe and Mail has a good article on the situation in the gulf called "State of U.S. oil supply exposed by unforgiving Mother Nature".

Maybe the oil and gas industry is finally realizing why the Mayans never built major cities on the Gulf of Mexico's coastline. After all, the term hurricane itself is derived from the Mayan creator god Hurakan, who created dry land by blowing across the water.

Through only what is the half-way point of the hurricane season, America's oil and gas industry has already had to weather two Category 5 hurricanes that have sent millions of Americans fleeing the Gulf Coast and wreaking havoc on Gulf platforms and oil and gas industry service towns along the way. With Gulf of Mexico temperatures averaging a balmy one to three degrees above normal for this time of year, there is more than ample fuel in those waters to heat up another one or two monster storms before the season is done.

While many in the oil and gas industry will argue that both Katrina and Rita were freak events, there is increasing evidence that they are not. A study by Massachusetts Institute of Technology's Kerry Emanuel in the August issue of Nature found that the noticeable increase in storm activity in recent years is in fact part of an emerging trend over the past 25 years of not only greater frequency of storms but of an increasing destructive capacity of tropical cyclones. As water temperatures continue to rise in the Gulf, so too will the incidence and severity of hurricanes, rendering the region's oil and gas reserves increasingly problematic.

Ironically, the United States, a holdout on signing the Kyoto Protocol on CO{-2} emissions, may soon find that its densely populated and energy-rich Gulf region has become the world's early warning system on global warming.

The Oil Drum also has an interesting interview with Richard Heinberg, who is speaking at the Commonwealth Club in San Francisco on Tuesday.

Another report (this time in Rigzone rather than a "news forecast") that production is about to begin at Sakhalin Island.

On Saturday, three decades after vast pools of oil and gas were discovered off lonely shores of this former prison colony, a consortium led by Exxon Mobil is to start pumping as much as 250,000 barrels of oil a day, its first oil and gas from seven wells drilled deep in the Sea of Okhotsk.

That will be the start of major production from Sakhalin's offshore reserves, a rich energy province that some geologists call, with a bit of swagger, this decade's Alaska North Slope. Noting the string of ministers flying here from Moscow in September to inspect the newest riches in oil, Galina Pavlova, Sakhalin's top energy official, boasted, "They believe Sakhalin is the second Kuwait."

Mapped since the 1970s, the recoverable offshore reserves of Russia's easternmost major island now total 14 billion barrels of oil or just over 1 percent of global reserves and 96 trillion cubic feet, or 2.7 trillion cubic meters, of gas, 28 times the amount that the United States imported last year.

After decades of debate, this long, spindly island eight time zones from Moscow is getting the largest inflow of foreign investment in Russian history. Analysts hope the Sakhalin projects will help increase Russia's output and bring badly needed oil and gas supplies to world markets in the coming decades.

The recent slowdown in Russian output and the Kremlin's tighter grip on its energy sector have raised concerns over the investment climate in Russia. But with much of the Middle East shut off to foreign oil companies, Russia still offers some of the best prospects for growth in oil supplies.

Russia has bought Chelsea owner and Yeltsin era oligarch Roman Abramovich's Sibneft oil company. WHT thinks this is likely to be a scam, with Russian taxpayers (presuming there are such things) getting fleeced by a sharp operator. I have a different, yet equally cynical view - this is just part of the ongoing effort by the Russian government to renationalise their energy assets (which I suspect will become increasingly common as we pass the peak), and Abramovich prefers to take a reasonably large windfall profit and avoid joining Mikhail Khodorkovsky in jail by defying Putin.

Nigeria has announced plans to increase local refining of oil.

India and Japan (weirdly enough, 2 countries with very little energy reserves of their own) have signed a "Energy Cooperation Pact". Japan and China are now holding talks over exploration in the east china sea.

Protests in Indonesia have begun about cuts to fuel subsidies. If oil prices keep rising the third world is on the slide into chaos.

There is a Chinese report linking this weekend's bombings in Bali to anger about rising fuel prices.

JAKARTA, Oct. 1 (Xinhuanet) -- Saturday night's bomb blasts in Bali could have link with fuel oil price hikes which were felt by the people as a very heavy burden, the official news agency Antara quoted a political observer as saying.

"I think groups who are unsatisfied with the fuel oil price hike have been behind the explosions, not those who want to shift attention on fuel oil issues," Professor Budiatna, a political observer at the University of Indonesia, said here on Saturday night.

A series of near-simultanous bomb blasts ripped through popular tourist spots on the Indonesian island of Bali, killing at least 30 people including several foreign tourists.

According to Budiatna, the unsatisfied groups thought protests in the form of demonstrations were no longer effective because the government paid no attention to it. The government increased fuel oil price hike by an average of 126 percent on Saturday.

"They pressured (the government) by resorting to terrors. Their message is to lower the fuel oil price or else the terror acts will continue," the observer added.

Is this a reasonable view to take ? (obviously its not a angle that we are likely to see in Oceania's press). While I tend to regard the threat of terrorism as greatly over-exagerated I don't dismiss the existance of terrorists entirely either - but who knows what is in the minds of these people. Whichever interpretation of the underlying reasons is true I think its fair to say that its a futile strategy - bombing tourist hangouts won't lower fuel prices and nor will it alter western policy.

South American leaders are looking at creating a continental "energy ring" (not to mention a continental central bank).

South American presidents committed themselves Friday to establishing a continental free trade zone. The eight president signed a document that also encouraged plans to set up an "energy ring" that would supply natural gas from Bolivia and Peru to Brazil, Chile, Argentina and Uruguay.

Venezuelan President Hugo Chavez used the one-day gathering to announce plans to move his country's foreign reserves out of U.S. banks, and he proposed the creation of a South American central bank that would hold the foreign reserves of the 12-nation continent.

Britain is looking at selling off its nuclear power industry (which reminds me of the TV series "Edge of Darkness").

Operations at Sellafield and other major nuclear plants such as Sizewell and Dungeness are to be sold off to the private sector for more than £10bn under plans drawn up yesterday by the board of British Nuclear Fuels Ltd (BNFL).

American companies such as Halliburton and Fluor are seen as likely contenders in any race to take over British Nuclear Group, which is the main operating arm of the government-owned BNFL, handling nuclear generation, reprocessing and clean-up businesses. The transfer of key operations out of state hands at a time when Britain is facing an energy shortfall will generate surprise, particularly with North Sea oil and gas running down and the government edging towards a decision to proceed with a new generation of nuclear reactors. But a sell-off is likely to be approved by the government when Gordon Brown is struggling to fund his spending commitments.

Grist has a post up on the need for people to speak up to convince policy makers that real efforts to mitigate global warming are needed urgently.

"Given the urgency and magnitude of the escalating pace of climate change, the only hope lies in a rapid and unprecedented mobilization of humanity around this issue ... that some spark might ignite a massive uprising of popular will around a unifying movement for social survival and the promise it holds for a more prosperous, more equitable, and more peaceful world." -- Ross Gelbspan, Boiling Point

Last weekend, hundreds of thousands of people marched in Washington, D.C., and around the country to protest the war in Iraq. On Saturday in D.C., widespread feelings of outrage and determination were palpable. Over the following two days, activists lobbied on Capitol Hill and engaged in nonviolent civil disobedience at the White House. It was a powerful combination of events. It was also a powerful example of exactly what we need to fight global warming: a massive, multipronged social and political movement.

Such a movement is growing as you read this, and will hit the streets in December -- not a moment too soon. There is no cause, no issue, no crisis more significant and more immediate than global warming. We could well see, within our lifetimes, a vast disruption of human society -- above and beyond the widespread injustice and poverty that already exist -- via floods and storms, rising sea levels, large-scale refugee movements, droughts, deforestation, and a major decline in food production. This possibility was brought home to many people in the U.S. by the devastating effects of the recent hurricanes.

While clean energy, conservation, and efficiency provide a clear solution to our global problem, little action has been taken in the U.S. beyond the individual, local, and occasionally state levels. The hard truth of the matter is this: the battle to stabilize our climate will not be won solely on the basis of rational arguments, individual lifestyle changes, and relatively modest clean-energy efforts. Given the alarming increase in the pace of global warming and the resistance to change by big coal and big oil, we need a movement the likes of which this country and world have never seen.

Thom Hartmann hasn't done anything on peak oil for a while but he does have an interesting piece up on electoral fraud. A few other interesting things I came across - Steve at Deconsumption is continuing his chronicle of the Bush kleptocracy, the always fringey Online Journal has an alarmist post called "Facing Up to the Energy Crisis" and Energy Bulletin has a great little article viewing our peak oil world through the prism of "Lord of the Rings" from Alex Macsporan in Brisbane, who advises us to choose the way of Sam, not Saruman.

Billmon has a post up on the possibly imminent premiere of the "Film Festival Of The Damned". For some reason this article on how countries slide into fascism seems appropriate to link to at this point. Billmon also has a look at the upcoming vote on the proposed constitution in Iraq. You really have to wonder how history is going to judge us over this first installment of the peak oil wars.

Who would have guessed that two-and-a-half years into this war, U.S. troops would be playing the role of street muscle for a bunch of Iranian-backed fundamentalist parties trying to rig an election. Even Joseph Heller couldn't top that.

Of course, the US isn't alone sliding down the slope - Britain is slowly following along too, as this little episode of a German Jew getting ejected from a Labour Party conference shows (presumably they weren't picking on him because he was Jewish, simply because he showed signs of dissent), and judging by this little piece in the sports section of the weekend's newspaper we aren't going too well either (the author of the column is an ex-Wallaby forward - our national rugby team - and isn't exactly your stereotypical pinko commie - but he too, demonstrated signs of dissent, so some closet freeper just had to express his outrage that someone refuses to spend their days frothing with hate and fear).

English ray of hope

Weird, how things work. We have all heard this week how David Hicks, the Australian being held in Kafkaesque isolation at Guantanamo Bay, saw a ray of light in the otherwise impenetrable blackness this week, when his lawyer realised that instead of continuing to rot there or elsewhere as an Australian, it might be possible to secure him British citizenship, in which case he would be able to call upon the services of a government that actually gave a stuff about him.

It all came about because Hicks's US military defence lawyer - Major Michael Mori, an old-fashioned bloke who continues to cling to the absurdly old-fashioned notion that a man is innocent until proven guilty in a proper court of law - takes an interest in cricket. See, just after England won the Ashes, Mori was having a lighter chat with Hicks and asked him how he felt about Australia's defeat.

"He told me he'd never felt very partisan about the Ashes," Mori told London's Observer newspaper, "and wouldn't much mind if England took the series - because his mum had never claimed Aussie nationality and still carried a UK passport. My jaw hit the floor. I asked him, 'Do you realise that may mean you're legally a Brit?'. We both knew that the implications of that could be stunning [as] Australia is the only EU or Commonwealth government not to have protested about Guantanamo."

and a no-hoper

Let me save you the trouble …

Dear TFF,

You stinking leftie, Commie, Muslim-loving terrorist-appeasing suck-hole excuse for a pathetic "journalist". I will thank you to keep your pathetic leftie views in the item about David Hicks (above) out of our sports pages, and I have got a good mind to contact your editor.

Yours,

Outraged. Telopea.

To conclude this weekend's rant I'd like to point out one thing - everything discussed above is occurring as a result of our addiction to hydrocarbons. As individuals we are largely dependent on the flow of oil to maintain our current lifestyles, and our large corporations are as, or more, dependent than we are to maintain their current earnings.

Instead of moving to cut our dependence on this source of energy, we find ourselves ever more reliant on a dwindling resource, and ever more intent on controlling our access to the major remaining supplies of it in the middle east. The solution to peak oil is the same as the solution to global warming is the same as the solution to the problem of islamic terrorism - move away from dependence on fossil fuels in general and oil in particular.

Geology will make us do it anyway, so why not start now and save a lot of bloodshed and environmental damage in the process (and stuff the perceived economics of it - we're rich enough to afford it and the new industries we'll create will probably make us richer in any case rather than poorer as the fossil fuel lobby would like us to believe).