RealClimate has an article on dominionist US Senator James Inhofe, who is whiling away his time waiting for the Rapture to take him off to heaven by trotting out paranoid science fiction writer Michael Crichton to explain his conspiracy theories about evil climate scientists trying to destroy western industry (not to mention the profits of oil and coal companies) to the US Senate. Perhaps he could get one of the more paranoid abiotic oil theorists to lecture the Senators on the promise of abiotic oil next ? But they probably don't produce enough footnotes on their works of fiction.

Today we witnessed a rather curious event in the US Senate. Possibly for the first time ever, a chair of a Senate committee, one Senator James Inhofe (R-Oklahoma), invited a science fiction writer to advise the committee (Environment and Public Works), on science facts - in this case, the facts behind climate change. The author in question? None other than our old friend, Michael Crichton whom we've had reason to mention before (see here and here). The committee's ranking member, Senator James Jeffords (I) of Vermont, was clearly not impressed. Joining Crichton on climate change issues was William Gray of hurricane forecasting fame, Richard Benedick (a negotiator on the Montreal Protocol on ozone-depleting chemicals), and David Sandalow (NCSE). As might be expected, we paid a fair bit of attention to the scientific (and not-so-scientific) points made.

Many of the 'usual suspects' of half-truths and red herrings were put forth variously by Crichton, Gray, and Inhofe over the course of the hearing:

* the claim that scientists were proclaiming an imminent ice age in the 1970s (no, they weren't),
* the claim that the 1940s to 1970s cooling in the northern hemisphere disproves global warming (no, it doesn't),
* the claim that important pieces of the science have not been independently reproduced (yes, they have),
* the claim that global climate models can't reproduce past climate change (yes, they can)
* the claim that climate can't be predicted because weather is chaotic (wrong...)

and so on.

...

Others panelists attempted to combat the onslaught of disinformation. Sandalow sensibly suggested that the National Academy of Sciences be used to inform the Senate on where the consensus of the science is, and Benedick made some excellent points about how legislation can be successful in the face of scientific controversy and uncertain predictions. However, none of that provided as good theater as the other witnesses.

A highlight of the session was Gray making one particular statement that he may be asked to defend (at least financially): "I'll take on any scientist in this field .... I predict that in 5 to 8 years the globe will begin to cool" (1:10:00 on the video). This would appear to be a direct call to those "global warmers" (see also here, here and here) who are trying to get contrarians to put their money where their mouths are (with very limited success). We eagerly await developments!

Inhofe ended the hearing by declaring his desire to 'sit back and look at [this] in a non-scientific way'. We think he already has.

Crikey today notes that the Murdoch press here is trying to run the same line here as the Inhofe / Crichton cabal is in Washington - clearly the mountain of evidence (in the form of melting polar ice caps, disappearing glaciers, ever more frequent droughts and increasing tropical storm intensity) is beginning to rattle the fossil fuel lobby so they are sending out the corporatist press to perform some delaying tactics.

The problem for those who want to deal with the problem rather than remaining deliberately (and profitably) mired in denial is that as media concentration increases, and becomes ever more aligned with the narrow interests of a group of very large corporations, it becomes ever more difficult to obtain the necessary concensus to take action.

Ex PM Paul Keating (they are coming out of the woodwork this week - while the aging Bodgie has been doing his PR work for the nuclear industry Malcolm Fraser has also popped up to work on getting some judicial oversight laws put in place to try and soften the impact of our harsh new detention without charge laws) has had an op-ed piece published in most of the major papers here warning of the danger to democracy of further restricing the number of media owners in the country. My view is to give them up as a dead loss and rely on the internet for your information - you might as well read an edition of Pravda from 1980 as the Murdoch press if you want something free of propaganda.

Crikey's comment on Keating's article:

Keating exposes the government's recipe for massive media concentration

Former prime minister Paul Keating lobbed an unsolicited op-ed piece in to The Australian, The Age and The Sydney Morning Herald late yesterday afternoon – and by this morning several hundred thousand Australians were finally alerted to the threat to democracy posed by the federal government's proposed changes to media regulation.

As Keating wrote in his story:

"The Government's apparent decision to close down any option for new free-to-air television outlets or multiple channels while removing the existing cross-media laws and foreign ownership restrictions is a recipe for massive media concentration and further abuses of power by the existing network owners."

"Such a change would see the potential for the greatest and most unseemly concentration of media in Australia's history. And if people think they have seen exercises in media power already, it will be as nothing like it may be should these two corporations have their way unfettered."

"The simple point is that John Howard does not have to do this. The pressure for this comes only from Publishing and Broadcasting, News Limited and the loitering Fairfax."

"Proposed policy changes of this kind are always sold on phoney arguments and an almighty sleight of hand. The phoney argument goes to how digital convergence is changing traditional media and communications and how in the technical determinism of it, as night follows day, traditional print and television companies ought be permitted to merge."

"Nobody should be seeking obscurantist curbs on the proliferation of communication channels and media whether of the Blackberry variety or more cable channels. But there is a cut and dried case with nought to do with convergence in respect of the big traditional print and TV outlets."

"What is proposed is a bit of dirty home-town play for the principal benefit of the major incumbents. In practice, were these changes to come about, ordinary bods would need the Packer and Murdoch organisations to stamp their passports for their free movement through Australian society. Not as dire as in the days of the Völkischer Beobachter but heading in that direction."

CRIKEY: Let the debate and the opposition begin – for the sake of Australian democracy.

I bring this up because the Murdoch press has been very active in denying global warming - Crikey outlines the tag team act of troglodyte columnists Andrew Bolt and Piers Akerman as they try to convince the public that all the scientific evidence (along with the water restrictions they face) is wrong.

One of the key results of proposed changes to cross media ownership laws will be the concentration of more political power in the hands of Rupert Murdoch and his duo of attack-dog columnists, Andrew Bolt in Melbourne's Herald Sun and Piers Akerman in The Daily Telegraph.

When the big issues break the Bolt-Akerman pincer movement can often be relied upon to run the same line for their combined 2,717,000 readers in their Sydney and Melbourne tabloids – arguments that, coincidentally no doubt, reflect Rupert Murdoch's own political views and empire-building objectives. Take a look a few recent examples of the Bolt/Ackerman pincer movement in action:

Kyoto Protocol
AKERMAN (17 February): “Only the Greens and the blinkered premier of NSW could have celebrated the enforcement of the meaningless Kyoto Protocol on gas emissions yesterday... The Greens and Mr Carr seem to take their information on climate change from Hollywood scripts and dubious modelling from committed environmentalist think-tanks rather than from the informed consensus.”

BOLT (18 February): “ …. Professor John Christy of the University of Alabama in Huntsville, asks “Will increases in carbon dioxide affect the climate significantly? Are significant changes occurring now? Climate models suggest the answer is yes. Real data suggests otherwise... This is why Lindzen calls the Kyoto accord, which demands expensive cuts to our emissions, ‘absurd'. But so much is absurd in the global warming hysteria, not least the media's willing surrender of its reason.”

Global Warming
BOLT (September 28): “How did Flannery come to write such stuff? Is it because he didn't care enough to check? Or because he – like so many now – thinks the truth isn't sacred when the world needs/saving from wicked humans? Whatever. We are in danger when myths rule men's minds. You should be scared when even a Flannery seems to lose his reason to our new green gods.”

AKERMAN (September 29): “Museum curator Tim 'Calamity' Flannery has been hitting the headlines hard with predictions of the end of civilisation as we know it as he promotes his new disaster tome The Weather Makers. However, with just as much certainty, a plethora of meteorologists have deluged the airwaves with their view that nothing out of the ordinary is taking place... The doomsday predictions are the mantra of the world's newest quasi-religion, environmentalism, and, like converts everywhere, those newly born into Gaia's flock aren't worried about the facts because they have the faith and conviction."

It's amazing just how bald-faced these pampered clowns are in their distortions of reality. Can any of these outrageous claims be backed up ? I think any reasonable person knows the answer - even the big investment banks (not to mention the Pentagon and the insurance industry) have been analysing what is going to happen as global warming gathers strength.

Moving on from the problem of the media (which can hopefully be cured by the surge in distributed news and entertainment content generation), the other problem is the political system. None of the major parties are remotely appealing these days (just ask anyone under the age of 30) - socialism is dead, liberalism is under siege (and doesn't have a party of its own) and conservatism has degenerated into a cesspool of fascism and religious fundamentalism.

One News Ltd journo was quoted in Crikey echoing the call for Malcolm Turnbull to set up a new centrist party, which I'll second - its time for a change. He also cheekily suggests ex Labor leader Mark Latham shoud be part of it after his recent bout of truth telling, which appeals to my sense of mischief making. I'd add Peter Garrett, John Hewson, Petro Georgiou, Natasha Stott-Despoja and even maverick Barnaby Joyce to the mix - anything to disrupt the current status quo.

And with a bit of luck we might even be able to get some action on the key issues of the day - peak oil (and pulling out of Iraq), global warming and turning away from the politics of fear.

A News Ltd journalist writes:

As a political journalist, albeit one based in a regional centre, I wholeheartedly agree with Stephen Mayne's glowing review of The Latham Diaries. The bile and salacious gossip most newspapers ran with after its release betrayed the bigger picture of the book. Latham's insight into his former party, parliamentary life and the media were gobsmacking and invaluable to a relative newcomer to the game like myself. Crikey deserves credit for providing the most comprehensive critique of the book. As for Christian Kerr's challenge to Malcolm Turnbull to start his own party ... I say bring back the Boof (Latham) so he and Turnbull can spearhead a fresh and robust alternative in the political arena. I'd vote for a party like that.

Ken Deffeyes has delivered an unusual seminar to a small investment firm in Portland. One look at my portfolio this week shows that being long energy is a thoroughly rewarding move at the moment (and I believe most of the big boys here are upping their recommendations on the energy sector this week, hence today's large jumps in many oil and gas stocks).

Obviously if you listened to Deffeyes you'd be long the military-industrial complex as well (not well represented on the ASX unless you count Metal Storm), but I'm sure US investors could take a punt on the likes of Halliburton getting lots more no-bid contracts to partake in the "reconstruction" of future war-ravaged OPEC members and globally-warmed hurricane disaster zones. Assuming that all the corrupt crony-capitalists infesting Washington don't end up in jail where they belong of course.

War. Famine. Pestilence. Death. It's a mid-September Thursday night, and these calamities are projected in bold, black letters onto the wall of a basement conference room in the downtown Portland Marriott. Those are a few of the bleaker scenarios predicted once global oil production begins to dwindle, explains Dr. Kenneth Deffeyes, a Princeton geologist and author of Beyond Oil: The View From Hubbert's Peak. Published earlier this year, the book offers a less-than-optimistic view of the coming global energy crisis.

"I took those words from the four horsemen in the Bible," Deffeyes jokes at the podium. The audience of about 250, a bizarre mix of dreadlocked enviros and clean-cut financial types, laughs nervously. They're here for a seminar on energy investment hosted by MKG Financial, a local trends investment firm.

Deffeyes, the keynote speaker, is among the leaders in a growing faction of scientists, politicians, and activists-known as the Peak Oil movement-who are clamoring that the Age of Oil is about to end. Soon. In fact, Deffeyes predicts that global oil production will peak this Thanksgiving, thus beginning a long, painful slide to zero.

Judging from his own financial advice, Deffeyes is a strange choice to speak at an investment forum: Earlier in the day, he half-jokingly advised me to put my savings into 1/8th-ounce gold pieces. His argument: "They'll be easier to make change with" than larger pieces in a post-apocalyptic economy.

Bubba put together a Texas sized peak oil portfolio recently, which is something I've been meaning to do a post on all year. If I'd done it back in January I'd look like a genius now, although if I was honest about it any fool with some spare cash would make money on the ASX this year - I probably would have done better just buying Macquarie Bank shares. As it is I just gaze fondly at some of the green numbers on my screen from time to time - and I'll take the risk that we aren't on the verge of a global meltdown and give you my recommendations.

Please note that I'm not a financial adviser and only the truly unwise would go and buy shares (or take anything else I say overly seriously for that matter) based on the rantings of someone calling themself Big Gav and who pretends he is a crocodile.

Obviously there are a number of industries to avoid like the plague (or the bird flu) - the chemical industry for starters, along with airlines (never a good bet at the best of times), aircraft manufacturers, fertiliser companies, suppliers of car companies that aren't heavily hybrid orientated, aluminium smelters, car rental companies, toll roads etc - basically anything that is a heavy user of energy. And at this point anything that is exposed to consumer spending and outer suburban housing construction is probably a bad bet too.

So what is good ? Companies with big oil and gas reserves compared to their current production rate (ie. ones with long life reserves). Companies producing other forms of energy (especially renewables, but also coal, uranium etc - this isn't going to be an ethical portfolio I'm afraid). Oil services companies (anyone with drilling rigs or who provides services to the industry as it goes into an exploration frenzy). Recycling and waste processing companies. Manufacturing companies that compete locally in sectors with a large component of imported goods - as transport costs rise they will become more competitive. Companies producing renewable energy producing equipment.

Obviously most of these have already had huge runs, so you may be buying in at the top of the market - you won't make money if the US economy falls through a trap door (in which case gold may actually be a good bet, but I've never been a gold bug). In a lot of cases on the ASX it is hard to find pure-plays as well, so companies with exposure to the good may also be exposed to the bad.

With that in mind, here is my starting effort. I'll pretend I have $140k to spend, and keep $20k in the bank for now. Every month or two I'll see how its going and make a change or two. Note that most of these finished at record highs today - its not for value investors.

Company	Quantity	Price	Value
Oil Search (OSH)	2520	$3.97	$10,000
Woodside (WPL)	280	$35.96	$10,000
BHP (BHP)	445	$22.48	$10,000
Alinta (ALN)	865	$11.55	$10,000
Origin (ORG)	1355	$7.37	$10,000
Worley Parsons (WOR)	965	$10.35	$10,000
Centennial Coal (CEY)	1980	$5.05	$10,000
ROC Oil (ROC)	3570	$2.80	$10,000
GRD (GRD)	1755	$2.85	$5,000
TAP Oil (TAP)	1690	$2.96	$5,000
Paladin (PDN)	2200	$2.27	$5,000
Solco (SOO)	16,665	$0.30	$5,000
Aust Renewable Fuels (ARW)	3185	$1.57	$5,000
Karoon (KAR)	2560	$1.58	$5,000
Compass Resources (CMR)	3155	$1.58	$5,000
Downer EDI (DOW)	820	$6.08	$5,000
Cash	20,000		$20,000
Total	20,000		$140,000

Bill McKibben has a good summary of the current state of affairs regarding global warming and the failure of traditional environmentalism to counter the number one cause - carbon dioxide emissions.

The article is part of a special report on "The Environment: Death and Rebirth".

t’s hard to remember how popular the environmental idea was at the end of the 1980s. The movement had survived the crude efforts of the Reagan administration to kill it off. (Remember James Watt? Remember Treasury Secretary Don Regan advising that the best defense against a thinning ozone layer was a baseball cap and a pair of sunglasses?) A barge loaded with American garbage circled the world as one country after another refused to let it land. The beaches of Long Island and New Jersey were awash in medical waste. Time magazine’s “Man of the Year” in 1988 was actually a planet: our “Endangered Earth.” A serious environmentalist would soon become vice president of the United States.

So what happened? Carbon dioxide happened. If you want to understand the death of environmentalism, you need to understand the gas on which it choked. Carbon dioxide (CO2) was fatefully different from all the pollution that had come before it. Unlike carbon monoxide -- the key ingredient in nasty brown smog, the pollutant that helped kill Londoners breathing coal fumes -- carbon dioxide, ironically, is essentially nontoxic. But CO2 is the inevitable byproduct of fossil-fuel combustion. It’s not something going wrong; it’s what’s supposed to happen when you burn coal or oil or gas. But its molecular composition traps heat that would otherwise radiate back out to space, thus causing the phenomenon we now know as global warming -- a phenomenon that will produce temperatures by century’s end higher than at any time since before the beginning of primate evolution. And to solve it? There’s really only one way, which is to reduce the amount of CO2 we produce. That is, burn less coal and oil and gas.

Dave at Sydney Peak Oil seems to have been busy updating the world's encyclopedia (Wikipedia) with some peak oil vocabulary - peaknik and doomer.

LJ at Energy Bulletin notes:

Doomer is apparently being considered for deletion, follow the link to have a say.

As someone who has been called a doomer more than once, I don't believe a return to subsistence level conditions is inevitable, wonder what timescale the author means by the end of the cheap oil era, and doubt whether many doomers are involved in promoting public awareness.

Another interesting day out there. There is far too much relevant news these days to parse in an evening, but this is my best effort to sample whats out there (and please excuse my increasingly dodgy grammar and spelling - these things don't get proof-read and get assembled very rapidly).

Energy Bulletin has a link to a good little introduction to peak oil and Colin "Dr Doom" Campbell at "Signature". Not much new other than the notes on the "Fuelling the future" conference in Ireland, but I always get a bit of mordant amusement when I see a reference to Jay Hanson pop up in print.

If the SAIC report is correct, we need to spend at least a decade preparing for the end of cheap oil, in order to mitigate its effects; and these programs might take years to build up to full scale.

But if Campbell is correct, we have months, not years.

Campbell's studies, published through the Association for the Study of Peak Oil and Gas (ASPO) project global oil peak in 2007. Conventional oil, the most readily accessible oil, he believes has already peaked, in 2004. Other methods of analysis seem to support Campbell's projection of an imminent peak, most notably UK Petroleum Review editor Chris Skrebowski's Megafields Project, and investment banker Matthew Simmons' investigation into Saudi oil reserves.

It might be said, that by most conventional standards, we are simply fucked. One of the first websites devoted to Peak Oil was Jay Hanson’s DieOff.org and as the name suggests, it anticipates the collapse of industrial civilisation — taking much of the human population with it. Accepting the Peak Oil thesis can produce a kind of survivalist mindset, or a bleak acceptance. Colin Campbell, in his gentle and genial way, stresses that this isn't necessarily a doomsday scenario, but even he takes for granted that the world's population will likely drop dramatically.

So how then, can one explain a conference devoted to Peak Oil, where the mood was positive, and offered a sense of opportunity?

Now most half-awake people are aware of peak oil, Saudi Arabia's oil minister, Ali al-Naimi, has announced a magical doubling of the country's proven reserve base, adding 200 billion barrels to the current estimate of 264 billion (via TOD). Strangely enough this was foreshadowed back around Xmas, although I saw little comment on it at the time, on the same day I saw an article quoting BP's Lord Browne saying we're not running out of oil. You do have to wonder where all this oil suddenly came from and why they only have nasty sour stuff to try and smooth price spikes with. If it were to be true of course, it would mean they probably have more oil than Iraq does.



The shut oil flowstations in Nigeria have reopened (but haven't started pumping again yet) after the government sent more forces to the area.

The Guardian has an article on the IMF pointing out the fragile state of the US economy, which echoes the point Crooked Timber made a few days ago about the German economy being an example to the rest of us - energy efficiency is good.

Two hurricanes in a month, petrol prices at $3 a gallon, a current account deficit of enormous proportions, a housing market that defies gravity: little wonder that the mood in the United States is a little edgy.

The International Monetary Fund made it clear last week that it saw the world's largest economy as an accident waiting to happen. The US could not continue to live beyond its means indefinitely, and there were only two ways to deal with the unsustainable imbalances in the global economy: the nice way or the nasty way.

...

Underlying the policy recommendations of just about every global analyst is the belief that the rest of the world needs to emulate the economic model of the US. The calls for structural reform in Japan and Europe stem from the belief that the Americans and the other "Anglo-Saxon" economies have the sort of flexibility that breeds success. Yet that hardly squares with the IMF's notion that the US economy could be going down the pan at any moment. As Mark Weisbrot of the Centre for Economic and Policy Research, a Washington-based thinktank, points out, nor does it square with the long-term needs of sustainability. Europe's energy consumption per head is half that of the US: Weisbrot says the idea that the Europeans should work longer so that they can buy more things is dangerous and he's right.

Perhaps the Germans were a lot smarter than they've been given credit for in their scepticism about the need for neo-liberal structural reform.

PeakOil.com has an interesting article on "Oil Currency Geopolitics" that looks at the possible rise of the petroeuro (and fall of the petrodollar).

Contemporary warfare has traditionally involved underlying conflicts regarding economics and resources. Today these intertwined conflicts involve not only control over oil supplies, but also international currencies. Current events appear to be revolving around the complex nexus of the imminent peak in global oil production, and the erosion of the U.S. dollar as the World’s International Reserve currency. International fissures between the U.S. and the European Union., Russia, and China became visible during 2002-2003, resulting in the failure of the Bush administration to gain U.N. authorization for the impending invasion of Iraq.

Indeed, current geopolitical tensions between the United States and Iran extend beyond the publicly stated concerns regarding Iran’s nuclear intentions, and likely include a proposed Iranian “petroeuro” system for oil trade. Similar to the Iraq war, prospective military operations against Iran relate to the macroeconomics of ‘petrodollar recycling’ and the unpublicized but real challenge to U.S. dollar supremacy from the euro as an alternative oil transaction currency.

Understanding these underlying issues of global oil production and oil transaction currency is critical if one wishes to understand recent events in Iraq — and current U.S. antagonism towards Iran. Although completely censored by the five U.S. media conglomerates, in mid-2003 Iran broke from traditional and began accepting euros as payment for it oil exports from its E.U. and Asian customers.

Once the petrodollar recycling system begins to erode via the emergence of a broad-based petroeuro transaction exchange, the Federal Reserve will no longer be able to effortlessly expand its debt-financing via issuance of Treasury bills, and the dollar’s international demand/liquidity value will begin to fall. This will ultimately force the U.S. to significantly change its current tax, debt, trade, and energy policies, all of which are severely unbalanced.

Saddam Hussein attempted a similar bold step back in 2000, and it remains a quasi-state secret within American society that the major U.S. petroleum conglomerates continued to purchase about 65% of Iraqi’s oil exports from 2001 to early 2003 – but with euros – not dollars. As I hypothesized in 2002, this was unacceptable, and Saddam’s decision was ultimately met with a devastating reaction from the U.S. government via a “shock and awe” campaign. Upon toppling Iraq, the Bush administration immediately dismantled the Oil-For-Food program and quietly re-converted Iraq’s oil transaction currency back to the U.S. dollar – which had the rather adverse effect of wiping out 13% of Iraq’s oil export profits due to the euro’s higher valuation to the dollar in mid-2003. While Iraq was given no choice about using U.S. dollars for its oil sales, Iran is about to commit a far greater “offense” than Iraq’s switch to euros.

There is a report on Rigzone saying that long time peak oil finance commentator Jim Puplava has turned a bit bearish on oil prices.

A long-term energy bull with an excellent record has turned cautious.

On 9-17-05, on the Financial Sense News Hour, during Dr. Duarte's weekly interview, host Jim Puplava, a long term bull on the oil market and a proponent of the Peak Oil theory, who has been right on the money for the entire energy bull market, told me, on the air, that he was starting to have concerns about the state of affairs in the energy sector, and that he was considering starting to lighten up on his energy holdings.

Aside from the technical divergences that are clearly visible, where crude prices are slipping, while oil, oil service, and natural gas stocks are all making new highs, Jim has been hearing lots of happy talk from hedge fund managers, and has noticed, based on what they're telling him, that huge amounts of "hot money" is working its way into the oil markets.

...

Traditional technical analysis suggests that the price action in commodity stocks, such as those that make up the XOI, are usually a predictor of what's coming in the commodity itself. If that's true, then we could be in for a very dramatic rise in oil prices.

There is another side to the story, though, the economy itself, and the increasing evidence that high oil prices have finally made a dent in consumer spending habits, as gasoline prices rose above $3 per gallon.

Recent consumer confidence numbers, as well as regional reports from Federal Reserve banks have showed a mixed set of data of late, while the housing market, long the engine of the U.S. economy is also starting signs of weakness.

Around the world, the rise in oil prices has also taken its toll. The Indonesian economy is in deep trouble, due to a rapid rise in interest rates as the government defends it currency, the rupiah, from capital flight due to rising budget deficits which in turn have resulted from government subsidies of high oil prices.

In South America, high oil prices are starting to bite, with daily protests, and social disorder now the norm, rather than the exception, in countries such as Bolivia, and Honduras, where high poverty rates have been magnified by rising energy costs.

The ALP seems to have firmly buried the Hawke / Abbott proposal to turn Australia into the world's nuclear waste dump.

"That does not represent Labor Party policy," was the curt response of the Opposition Leader, Kim Beazley. The party's environment spokesman, Anthony Albanese, said: "It's an absurd proposition going nowhere."

Some rare political support for the idea came from the Federal Health Minister, Tony Abbott, who described it as "visionary" and said Mr Hawke should go to work on persuading Labor.

The Herald's excellent finance writer Ross Gittins has a good article on why the industrialisation of China and India will keep pushing energy prices higher. He doesn't even address peak oil directly but points out that even if we could keep producing at current levels over the next couple of decades, the amount of energy available to the average western consumer is going to shrink (oil depletion obviously makes this far more problematic).

If you're upset by the high petrol prices of recent days, you ain't seen nothin' yet. Prices are set to stay high and go a lot higher in the coming years - with regular spikes as hurricanes and other supply disruptions come and go. Just how high prices will rise is anyone's guess.

Petrol prices are just a symptom of something much bigger: the arrival of the industrial revolution - the same one that began in Europe in the early 1800s - in Asia. When countries go down the path of rapid industrialisation, they chew up huge quantities of natural resources and energy. At first this is about building transport, power and other infrastructure, factories and offices. Before long it's also about supplying the appliances, cars and better housing demanded by increasingly affluent consumers.

Our own federal Treasury has been making projections on the assumption that China's industrialisation will continue to the point where its population's material standard of living has reached 70 per cent of developed-country living standards by 2050.

Do you see what this means? The world's rich countries - accounting for just 15 per cent of global population - have long been consuming a vastly disproportionate share of the world's energy and other natural resources. But now about 40 per cent of the world's population is in the process of changing their status from poor to rich and, in the process, hugely increasing their per-head consumption of energy and resources.

When you think about all the use of non-renewable resources, all the pollution, all the waste matter, all the greenhouse gas emissions this will entail, you have to wonder how the globe's natural environment will stand the strain.

Is it physically possible for 55 per cent of the world's population to enjoy the present Western standard of living ? But before you get your brain around that mind-boggler, you're faced by a more prosaic realisation: we - the rich people of the world - are going to have to share the world's limited resources with a higher proportion of the world's population.

It's worth noting that, unlike most rich countries, Australia stands to be a beneficiary from this process. Sure, our motorists and road transport industry will suffer along with those in other countries. But Australia happens to be a major exporter of minerals and energy. We may be a net importer of oil, but we're a big and growing exporter of natural gas and a huge exporter of coal.

Remember that the reason the Federal Government's coffers are overflowing at present isn't a windfall gain from the various taxes on petrol - that's largely a delusion - but the huge company tax collections from our booming mining companies.

Even so, the future looks far from golden for our motorists. What should we be doing to ease the pain of rising petrol prices? Well, this is where the economic rationalists have it right: we should let the market price of petrol (including the taxes built into it) go where it will.

If only more Australians had a better grasp on the laws of supply and demand, they'd understand the paradox that the rising price of petrol (and, of course, oil) offers the best prospect of preventing, delaying or limiting further price rises.

The signal to buyers is: at this price, petrol is hugely expensive, so find ways to economise in its use and search for cheaper substitutes. Already we're seeing signs that motorists are responding to this "price signal". Sales of new small cars are up, while sales of gas-guzzling four-wheel-drives are down. Passenger numbers on Sydney buses are up. Sales of petrol are down.

Once governments accept that the upward pressure on petrol prices is long-term, there's much they could be doing to switch from building more expressways to improving public transport, and to shift long-distance freight from road to rail by straightening rail tracks and charging trucks the true cost of the road damage they do.

Elsewhere in the Herald there is a report on damage to rigs in the gulf belonging to Australian companies (BHP's ironically named "Typhoon" being the major casualty - the Houston Chronicle has an article on the industry standards that rigs comply to - apparently the "hundred year Category 5" hurricane that they are meant to withstand is more like a strong "Category 2"), a piece on the corruption involved in handing out post-Katrina reconstruction contracts, a report that our esteemed and venerated Prime Rodent is "encouraging" oil companies to include ethanol in fuel, an article by Alan Kohler on the possible impact of oil prices on the already weak (but grossly overpriced) Sydney housing market, and lastly there is a report that protests are about to start in Indonesia to oppose reductions in fuel subsidies.

The FT is reporting that Rita has caused a record amount of damage to rigs, so BHP isn't suffering alone.

Hurricane Rita has caused more damage to oil rigs than any other storm in history and will force companies to delay drilling for oil in the US and as far away as the Middle East, initial damage assessments show.

ODS-Petrodata, which provides market intelligence to the offshore oil and natural gas industry, said it expected a shortage of rigs in the US Gulf this year. “Based on what we have right now, it appears that drilling contractors and rig owners took a big hit from Rita,” said Tom Marsh of ODS-Petrodata. “The path Katrina took was through the mature areas of the US Gulf where there are mainly oil [production] platforms. Rita came to the west where there is a lot of [exploratory] rig activity.”

Ken Sill of Credit Suisse First Boston said: “Early reports indicate numerous rigs are missing, destroyed or have suffered serious damage and several companies have yet to report. Rita may set an all-time record.”

Earlier in the day, Ali Naimi, Saudi Arabia's oil minister, said the market had not taken up the 2m barrels a day of spare capacity the Organisation of the Petroleum Exporting Countries offered last week. Speaking in Johannesburg, he blamed high oil prices on a lack of industry infrastructure, including rigs and refineries, rather than oil reserves. Rigs, which are movable and are used for exploration and development, were in short supply before hurricanes Katrina and Rita blew through the US Gulf in late August and September.

High oil prices and the desperate search for new oil supplies needed to meet rampant demand from the US and China have made rigs difficult to find and expensive to hire. Rigs cost $90m-$550m to construct, depending on how sophisticated the structure and how deep the water in which it will drill. A rig ordered today is unlikely to be ready before 2008 or 2009, analysts said.

On a related note, Tech Review has an interview with the NOAA's Sandy MacDonald on predicting the paths of hurricanes. Paranoid readers will be disappointed that there is no mention of keeping an eye on HAARP usage (I only throw this in as an aside so I can note that the "weather wars" branch of the conspiracy theory world has been rather excitable lately, with one TV weather forecaster even throwing in his job last week to make his hobby of exposing the "Japanese Yakuza manipulation of US weather" a full time occupation. The report I read said that the TV station, and his family, wished him the best in his new endeavour).

Moving onto a subject that once was the domain of Alex Jones' own unique branch of conspiracy theorising (I think people could be excused for wondering if what 5 years ago was simply entertainment for the extremely paranoid may be regarded as a documentary in a few years time) but now has unfortunately become part of everyday news, the SMH has a scathing piece on the new detention without charge laws.



There is a good article in The Guardian that shows what is likely to become commonplace - an innocent person arrested in London for looking like a computer geek (via Bruce Schneier)

Letter writers to the SMH continue to be displeased with our brave new world (and they aren't too happy with the nuclear debate either).

Has anyone noticed that this crazy bidding war over anti-terrorism laws ("PM resists use-by date on terrorism powers", Herald, September 27) is more and more resembling a Monty Python sketch? It starts relatively normal and sane and then gets progressively more absurd.

Is the terrorism threat so dire that we need to sign away our civil rights this way? Are the laws really going to help much anyway? There is far more danger to everyone from traffic accidents or heart disease or cancer. In the meantime, real and large-scale threats, such as global warming and bird flu, hardly raise a ripple.

Robert Howard Vaucluse

---

Most people agree, albeit reluctantly, that the police need more powers than normal to combat terrorism. However, it is necessary more than ever that these powers be given only to the police, not the faceless fools in the secret service or intelligence agencies. And people detained must be presented to a court of law, even if they have yet to be charged.

There is much reference to slippery slopes these days and the position presented to us in the name of safety is surely at the edge of the steepest, most slippery slope of all. May we tread wisely and carefully.

E.E. Cook Ainslie (ACT)

---

When Robert Menzies attempted to ban the Communist Party, Labor, under the flawed Doc Evatt, stood up to be counted. Instead of meekly following, Evatt launched a principled campaign, and in the subsequent referendum, Australians supported democratic freedom over scaremongering.

The sight of Labor premiers trooping to Canberra to inevitably support John Howard's continued dismantling of our fundamental tenets of democracy is pitiful. Howard has Labor spooked in a way that even Menzies could only dream about.

Mark Latham is right on one thing: Labor stands for nothing.

Greg Loder Springwood

---

New laws? Proof positive the terrorists have won.

Paul Hopmeier Lane Cove

WorldChanging has an interesting post up on carbon dioxide sequestration. I think its fair to say these schemes are not going to be a solution to global warming.

"Carbon Sequestration" is sometimes suggested as a parallel process alongside a significant shift away from carbon-producing technologies. The logic is straightforward: carbon dioxide is still produced, but rather than remaining concentrated in the atmosphere for a century, it is extracted. This extraction can take place at the point of production (so-called "carbon capture") or more generally, using CO2-loving plants. Although some may hope to use carbon sequestration as an excuse to delay or ignore a move towards non-carbon-emitting technologies, the reality is that the planet is close enough now to a potential climate tipping point that we should not rule out any effort that might help us forestall disaster. Moreover, as much as we would like to see all manner of CO2-producing industries (such as power production or cement manufacturing) move to cleaner technologies, even in the best likely scenario it's going to take decades for the transition to be complete. In principle, if CO2 output can be reduced from those industries during the transition, we're all better off.

But the IPCC (Intergovernmental Panel on Climate Change) wondered just what kind of effort would be required to make a real difference in CO2 output. The IPCC commissioned a study, and the preliminary results are now in. Read on for a discussion of our sequestration options.

The summary report runs a brief 25 pages, and it makes for sobering reading. Under best case scenarios, carbon capture and storage wouldn't make a significant difference in CO2 levels until the mid-point of this century; in addition, the current available sequestration options all pose significant challenges, including the possibility of actually exacerbating the global environmental situation rather than ameliorating it. That said, under some scenarios the addition of carbon capture and storage to the overall mitigation mix could reduce the overall costs of reducing greenhouse emissions by as much as 30%.

It's notable, however, that the greatest reduction of CO2 output from fossil-fuel-based power plants comes from new systems built with scrubbing and capture technologies built-in, perhaps as much as a 80-90% reduction in emissions. Bolt-on retrofits provide "significantly reduced overall efficiencies" of CO2 reduction. How the costs of new CCS-equipped power plants compare to the costs of carbon-free renewable systems appears to be outside the scope of this document, but stands as a key research question; moreover, it will be important to project the degree to which those costs will decline over time.

The other big question is just where the captured and compressed CO2 will be stored. Several options are presented in the report: deep storage in saline formations and depleted oil and gas fields (with deep injection in order to increase oil production or coal bed methane recovery as a variant); deep water "dissolution" and sea floor dispersal; and locked up in metal oxides (such as serpentine). Leaving aside the irony of using industrial CO2 output as a means of increasing carbon-based fuel production, each of these options has serious drawbacks...

Jim at The Energy Blog also has a couple of excellent posts up on "clean coal", carbon sequestration and IGCC (Integrated gasification combined cycle) power plants. I remain very skeptical about sequestration schemes in particular, but I would concede that building new IGCC plants is better than building new convential coal fired plants (but nowhere near as good as putting a lot more investment into wind, solar and tidal distributed generation) - especially if they are replacing existing coal fired stations.

The following are the characteristics of an IGCC plant:

* SOx, NOx and particulate emissions are much lower in IGCC plants than from a modern coal plant. Its VOC emissions and mercury emissions are comparable.
* IGCC plants emit approximately 20% less CO2 emissions than a modern coal plant.
* IGCC plants use 20-40% less water than a modern coal plant.
* IGCC plants operate at higher efficiencies than conventional coal fired power plants thus requiring less fuel and producing less emissions. Current efficiency is 42% with efficiencies as high as 60% expected in the very near future using a high efficiency turbines and some other process improvements.
* Costs for electricity, without CO2 capture, is about 20% higher than in a modern coal plant. Electricity costs are 40% lower than from a natural gas IGCC plant with natural gas at $6.50 per MMbtu.
* CO2 can be captured from an IGCC plant much more easily that from a conventional coal plant at an an additional cost increase of 25-30% for capture and sequestration, without transportation charges.
* IGCC offers the possibility to capture the hydrogen that is part of the syngas stream, in an economic manner.

Elsewhere on WorldChanging they have an item on a new design for capturing tidal energy - the "Manchester Bobber".

Power generation based on the "motion of the ocean" offers significant long-term value, and arguably could eventually displace solar and wind generation for large-scale renewable energy projects. Hydrokinetic power (encompassing wave, current and tidal power) doesn't have the "intermittency" problems facing solar and wind, nor are there as many issues about ruined views and overrun landscape. Costs remain high, however. There are numerous ocean power projects in testing, and while most show promise, I don't believe we've yet seen the real breakout project putting ocean power at the front of the renewable energy race. The latest contender is the "Manchester Bobber," an ocean power platform design from the University of Manchester.

Some other gems on WorldChanging today is Alan Atkisson's touching story about a woodpecker and the cold war tale of Stanislav Petrov.

The SMH has an editorial on global warming, which then segues on to the need for a debate on nuclear power. I really wish people would stop saying that nuclear power is carbon free (ignoring all the carbon emitted to mine, transport and enrich the ore, along with the construction of the plant) - it produces less carbon than coal would be the accurate statement.

Those who dismiss the idea of a link between climate change and rising greenhouse gases increasingly resemble the sceptics who scoff at the link between smoking and cancer. In complex phenomena no one can say that this particular piece of behaviour caused that particular effect, but patterns can be observed and probabilities calculated. Global warming is now too clear and widespread a pattern to deny. It looks more and more likely that human activity contributes to it. Despite their epic scale, hurricanes are only one small effect of climate change. Melting glaciers, shrinking ice caps and the thawing of vast areas of Siberian permafrost all point to warmer weather. Dr Tim Flannery's book The Weather Makers, extracts of which the Herald has been publishing, argues that as weather patterns change, every aspect of life is affected - species die out, crops fail, diseases spread. Such change, uncontrolled and vast, threatens the way we live. It has the power to blight human existence on the planet.

Under the Howard Government, Australia has been reluctant to address the problem of greenhouse gas emissions, fearing the Kyoto Protocol, which sets mandatory limits for developed countries, will inhibit its lucrative exports of coal and other hydrocarbons. It would also undermine the local electricity industry, which relies on coal. As a result, Australians remain the world's largest emitters of greenhouse gases per head. The interests of the mining industry have dictated another policy move - the Federal Government's takeover last month of uranium mining in the Northern Territory, where the Territory Government was reluctant to open new mines. An export deal with China is in the offing, and Canberra wanted to declare the Territory open for business.

There are good reasons to think uranium and nuclear power, which produce no greenhouse gases at all, hold one key to reducing global warming. There is division among conservationists: some see the greenhouse effect as a threat so overwhelming that even nuclear power's well-known dangers are an acceptable risk to counter it. Others disagree. It is an important debate. Australia must take the nuclear option seriously as it chooses new sources of power for the next century. The decision must not be left to the mining industry to make by default.

The Silver Bodgie (ex PM Bob Hawke) has come out with a plan to make Australia the world's nuclear waste dump. Peter Garrett says we might be better off considering other options (I'm glad to see some small amount of sense coming out of the Labor party this week).

The federal Labor MP Peter Garrett agreed it was a false debate to pit coal against nuclear energy in the context of climate change.

Mr Garrett said Australia needed a much wider energy policy that included renewable energy and energy efficiency

There are dire predictions of the east coast of Australia being tormented by cyclones when (or if) the current (very long) El Nino period ends. There are a few jarring remarks in this piece, so I'm not sure how credible I'd regard it.

There is more on global warming at Tech Review and WorldChanging.

There is a "news forecast" (a weird but quite cool idea) from October 1 that Exxon's development off Sakhalin island is about to commence pumping.

Russia's eastern offshore Sakhalin-1 project, led by the United States company ExxonMobil, begins oil production, but may not have any impact on prices until its output reaches the international marketplace in 2006. Prices reached a record US $65.30 a barrel in New York on Aug 11 because of US refinery disruptions and concern about political stability in the Middle East. Hurricane Katrina in September in the United States has added to the pressure on prices.

At peak the US $12 billion Sakhalin-1 project is expected to add 250,000 barrels per day to the supply.

The filed has reserves estimated at over 2.3 billion barrels and 485 billion cubic meters of gas. Oil from its offshore platform northeast of Sakhalin will travel 226 kilometers across the island and the Tatar Strait to the mainland De-Kastri port, where an export terminal is being built.

Energy Bulletin's roundup of energy news today had a number of interesting pieces. In the US, a combined energy group plans to build 2 new nuclear plants in Gulf of Mexico states. A Texas paper is reporting that the main problem post the latest hurricane isn't so much oil supply interruptions as it is natural gas supply disruptions - I'm still foreseeing a massive rush to build LNG plants - probably starting at the end of the northern winter if things go bad as many people fear. The Oil Drum also has a lot of comments on the predictions by Dr Economides about gas prices going to $20/McF and oil prices hitting $100/bbl by the end of the year (although that comment thread does go a bit haywire for quite a while). Some analysts are rather boldy predicting that oil prices have peaked and won't reach this level again for "5 years" - but this seems to be the minority view.

Having seen his prediction that crude oil prices would reach $65 a barrel become reality, Dr. Michael Economides is making equally bold predictions about natural gas. Natural gas prices, he said Wednesday while visiting Midland to address the Permian Basin section, Society of Petroleum Engineers, will reach $20 per thousand cubic feet (Mcf) around Christmas.

Business Week has an article on China's rush to build more nuclear reactors, while Planet Ark looks at six new hydro plants and food security worries limiting biofuels production. France doesn't appear to have the same worries, with boom in ethanol production from grain and beets predicted.

High oil prices are already starting to hit US wheat growers. I haven't seen any similar stories here, and while I suspect our fertiliser prices haven't changed much, fuel costs definitely have.

Nobody's called it a ``perfect storm,' yet.

But between rocketing costs for fuel and fertilizer, low prices for their crop, increased shipping surcharges and worries over whether this will be another dry winter, local wheat farmers say the future is looking pretty grim these days.

``I'm not sure anyone is aware of it, but energy prices are quickly making the continuation of wheat farming questionable unless something begins to change soon,' said Walla Walla County farmer Nat Webb.

Over a relatively short period of time, fuel prices have tripled and the cost of fertilizer has doubled, Webb and others said.

At the same time, the price for soft white wheat, the type which accounts for 88 percent of the wheat grown in Washington state, is hovering slightly above $3 a bushel, ``a 20-year low,' said Harold Cochran, former national legislative chairman for the Washington Association of Wheat Growers.

The bottom line, as Washington State University farm management specialist Herb Hinman said, is the rising prices are ``cutting into (farmers') profit margins, and a lot of these guys are operating on a pretty thin profit.'

Fuel and fertilizer are two constants all farmers have to deal with year in and year out, Cochran said, and lately ``our core costs of production have gone up dramatically.

The Koreans are talking about buying into oil companies as a (imperfect) hedge against rising oil prices.

The new JODI world oil database is due to be made public by the end of the year. I'm sure these numbers will cause quite a stir when they are released.

Billmon notes that George Bush has begun channelling Jimmy Carter and started calling for energy conservation measures. He also has a rather horrifying post on why the time to withdraw from Iraq is now (go and read this one).

Rigzone has a report quoting an ex-Iraqi official saying that the outlook for Iraqi oil production is bleak.

Big oil companies have no concrete plans to develop the oil industry in Iraq, meaning that it will be several years before the country can hope to return to its 1979 peak in production and probably a decade before Iraq can pump the 5.5 million to 6 million barrels a day suggested by its reserves, according to a former Iraqi oil minister.

The Bush administration and other supporters of the 2003 invasion
of Iraq pointed to the prospect of increasing the country's oil production to improve the lives of its people.

But much equipment was looted from pipelines, pumping stations and other facilities in the immediate aftermath of the invasion, and continuing extreme insecurity has kept foreign oil companies away.

In addition, there has been a lack of clear institutions and laws to manage the oil industry.

The former official, Issam al-Chalabi, who led the Iraqi Oil Ministry in the late 1980s, told a conference here on Wednesday, "There is no plan to develop the Iraqi oil industry."

Looking at current production, he said Iraq would be "lucky" to maintain its daily level of about 1.5 million barrels. In what he called the medium term, Chalabi said he doubted that Iraq could return to its 1979 record daily production levels of 3.5 million barrels until 2009.

For long-term production, which would involve opening new fields that could raise Iraqi production to 5.5 million or even 6 million barrels a day, Chalabi said, "we can only pray." Chalabi said he guessed that this could not occur before 2013 or 2014.

Rigzone also has a report on offshore oil rig damage, which seems pretty substantial, in spite of the upbeat press reports on the less-than-expected damage caused by Rita onshore. The Deepwater Nautilus went walkabout yet again.

BOP News has a look at the possible impact of Rita and Katrina on heating oil supplies (via Mobjectvist).

The Australian has an article about a survey that shows that "4WD drivers are 'fat, homophobic'". It doesn't mention if they are now broke as well.

The BBC has a piece on a weird application of solar technology - the solar handbag.

Finally, the average letter writer to the Herald appears just as dismayed about our appalling new detention without charge laws as I am - 400 hundred years of western progress rolled back in a day. Beazley's pathetic behaviour seems to have earned at least as much ire as Howard and Ruddock have - no wonder his poll numbers are plummeting. Given that Labor is incapable of being an effective opposition it's not surprising that Crikey is canvassing the possibility of Malcolm Turnbull creating a new centrist party - at least us small "l" Liberal voters would have somewhere to go then.

George Monbiot has a new article out on peak oil (which doesn't focus on any particular company, no doubt much to the relief of Shell and its shareholders, and also fails to mention the post-peak period, which is a shame, as it would be a good excuse to trot out the "fighting like cats in a sack" quote again). He largely concentrates on the Hirsch report, and also debunks some of Bjorn Lomborg's fatuous claims by quoting The Economist (ah, sweet irony).

Monbiot also mentions Chris Vernon's analysis that production of light sweet crude has peaked, along with the ever annoying quote that "current high oil prices are the result of a shortage of refineries". I really wish people would stop saying this - you could perhaps say there is a shortage of refineries that can process the heavy crude that is all we have left to boost production with (which would increase the price of the limited supplies of light sweet crude and depress the price of heavier grades), but in general a refinery bottleneck offset against an excess supply of crude would result in lower crude prices, not higher ones.

Jeff Vail did a post on this topic a few days ago (he also has an interesting paper up on what he calls the "New Map" which expands on his idea of Rhizome and the future of the nation-state).

In 1985 Kuwait announced that it possessed 50% more oil than it had previously declared. Had it just discovered a new field? Had it developed a new technology that could extract more oil from the old fields? No. Opec, the price-fixing cartel to which it belongs, had decided to allocate production quotas to its members based on the size of their reserves. The bigger your stated reserve, the more you were allowed to produce. The other states soon followed Kuwait, adding a total of 300bn barrels to their reserves: enough, if it existed, to supply the world for 10 years. And their magic oil never runs out. Though extraction has long outstripped discovery, Kuwait posts the same reserves today as it claimed in 1985.

So we turn to the US Geological Survey for an answer, and find that its estimates of global oil supply are as reliable as the Pentagon's assessments of Iraqi weapons of mass destruction. In 1981 it said we possessed 1,719bn barrels of oil. In 2000, 2,659. Yet the discovery of major oilfields peaked in 1964. Where has it come from?

It is true to say that oil reserves are not fixed. As technology improves or the price increases, oil that was formerly too expensive to extract becomes available. But the oil geologist Jean Laherrère points out that the survey's estimate "implies a five-fold increase in discovery rate and reserve addition, for which no evidence is presented. Such an improvement in performance is in fact utterly implausible, given the great technological achievements of the industry over the past 20 years, the worldwide search, and the deliberate effort to find the largest remaining prospects."

The current high oil prices are the result of a shortage of refineries - exacerbated by the hurricanes in the Gulf of Mexico - rather than a global shortage of crude. But behind that problem lurks another. Last week Chris Vernon of the organisation PowerSwitch published figures showing that while total global oil production has risen since 2000, the production of light sweet crude - the kind that is easiest to refine into motor fuels - has fallen, by 2m barrels a day. This grade, he claims, has already peaked. The refinery crisis results partly from this constraint: there aren't enough plants capable of processing the heavier grades.

And next in the queue? Who knows? All I can say is that George Bush himself does not appear to share the US Geological Survey's optimism. "In terms of world supply," he said in March, "I think if you look at all the statistics, demand is outracing supply, and supplies are getting tight." What has he seen that we haven't?

If the figures have been fudged, we're stuffed. That might sound extreme, but it is not my conclusion. It is that of the consultants hired by the US department of energy. In February this year the department released a report called Peaking of World Oil Production: Impacts, Mitigation and Risk Management. I say "released", for it was never properly published. For several months the only publicly available copy was lodged on the website of the Hilltop high school in Chula Vista, California.

The department's consultants, led by the energy analyst Robert L Hirsch, concluded that "without timely mitigation, the economic, social and political costs will be unprecedented". It is possible to reduce demand and to start developing alternatives, but this would take "10-20 years" and "trillions of dollars". "Waiting until world oil production peaks before taking crash programme action leaves the world with a significant liquid fuel deficit for more than two decades", which would cause problems "unlike any yet faced by modern industrial society".

Of course, we have been here before. Oil analysts and environmentalists have warned of disappearing reserves ever since drilling began, and they have always been proved wrong. According to people such as the Danish statistician Bjorn Lomborg, this is because the industry is self-regulating. "High real prices deter consumption and encourage the development of other sources of oil and non-oil energy supplies," he says. "Since searching costs money, new searches will not be initiated too far in advance of production. Consequently, new oilfields will be continuously added as demand rises ... we will stop using oil when other energy technologies provide superior benefits."

It is beginning to look as if he is wrong on all counts. As the Economist magazine pointed out on September 10, "demand for petrol is pretty inelastic in the short term", because people still have to go to work, however much it costs. According to the analyst it cites, "it would take a doubling of petrol prices to reduce American petrol consumption by just 5%".

The problem with that final bit is the demand destruction due to high prices must happen eventually - in this case the release valve probably comes in the form of people not going to work, either by losing their jobs due to a recession, or simply not being able to afford to pay the bills (a responsive government would adapt by providing efficient public transport, but unfortunately the lead time for can be quite substantial) - which is the situation already facing people in the third world.

The series of excerpt's from Tim Flannery's new book continued today in the Herald with a look at nuclear power. While the initial section was a but shallow (and repeated some myths like nuclear power being "carbon free") I thought the concluding section was good.

What role might nuclear power play in averting the climate change disaster? China and India are likely to pursue the nuclear option with vigour, for there is currently no inexpensive, large-scale alternative available to them. Both nations already have nuclear weapons programs, so the relative risk of proliferation is not great. In the developed world, though, any major expansion of nuclear power will depend upon the viability of new, safer reactor types.

Humanity is at a great crossroads. Trillions of dollars will need to be invested to make the transition to the carbon-free economy and, once a certain path of investment is embarked upon, it will gather such momentum, it will be difficult to change direction.

So what might life be like if we choose one over the other? In the hydrogen and nuclear economies the production of power is likely to be centralised, which would mean the survival of the big power corporations. Pursuing wind and solar technologies, on the other hand, means that people could generate most of their own power, transport fuel and even water (by condensing it from the air).

If we follow this second path, we will have opened a door to a world the likes of which have not been seen since the days of James Watt, when a single fuel powered transport, and industrial and domestic needs, with the big difference being that the fuel will be generated not by large corporations, but by every one of us.

This piece was twinned with one on Hot Dry Rock geothermal power. The company trying to commercialise this - GeoDynamics - hasn't been in the news much lately though their share price is doing quite well.

On the nuclear power front, Malaysia is now looking at building a nuclear power plant, and France is urging other countries to expand their nulear power capability.

French Finance Minister Thierry Breton urged the U.S. and other leading oil-consuming nations to invest in nuclear and other alternative energies, and criticized countries that subsidize oil consumption or don't tax it enough.

``We must reduce oil subsidies where they exist, encourage through taxation a development model which is more respectful of fossil resources,'' Breton said today in a speech before the International Monetary and Financial Committee of the International Monetary Fund in Washington. ``Developing alternative energies, nuclear energy in particular,'' is essential to prepare for ``post-oil'' times, he said.

Now - you might be thinking what this has to do with that favourite topic of conspiracy theorists from both the right and left fringes (along with some peak oil circles), the fabled "New World Order".

I have seen a number of references to this in the real (non-conspiracy theory) world this year - from a (far fetched) episode of "Frasier" where Niles falls in with some gun nuts, and only realises they are militia when they invite him to move to their compound in Idaho so that they can resist the coming New World Order takeover, to the lyrics of Eminem's "Lose Yourself" and even a clip in one of the news reports on the union demonstrations against the government's industrial relations changes a few months ago that showed a protestor holding a placard that said "Howard is a puppet of the New World Order" (probably the most famous NWO quote is George HW Bush's "welcome to the new world order" speech after the collapse of the Soviet Union).

Moving back to peak oil (and leaving aside the more conspiracy focussed discussion groups) the most noticeable intersection of the NWO meme with the peak oil meme is the work of William Engdahl, in particular his book "A Century of War - Anglo-American Oil Politics and the New World Order".

Engdahl had an interview (Real Media) with Financial Sense's Jim Puplava a few days ago which makes interesting listening (be warned - its over an hour long). He discusses the history of oil and how this has been intertwined with geopolitics for a century, and then goes on to talk about peak oil in some depth - which is at the gloomy end of the spectrum when talking about likely future developments.

Some of his other writing has included columns on the purpose of the "war on tyranny" (or whatever its called this week) and on pipelineistan and the BTC pipeline.

Now - I don't have an opinion on the conspiracy theories about the NWO (who knows - maybe they are true but I always get an uneasy feeling when people start making accusations about cabals of "International bankers" and the like, even if they seem to be tangential to some of the traditional misuses of this meme) - but one section of Engdahl's book does look at nuclear power, which is the tie in to the first half of this post (I haven't read the whole thing, just some parts of the 2 chapters that are posted on the net) - in particular the phrase "Taking the bloom off the "nuclear rose"".

I'll quote this section below for readers to consider - obviously this thinking doesn't match my view on the subject, but he is reasonably convincing on the subject of oil and geopolitics at least, so I'd be interested in any reader opinions on this other tack that he takes on nuclear power and green groups being some sort of manifestation of a conspiracy by the New World Order to prevent the uptake of it. I have occasionally read people saying similar things about the Club of Rome also being some sort of NWO conspiracy, but I've never quite understood the supposed motive of this - this is one part of the meme pool where the politics are so murky and the motives are so obscure that it is tempting to just to write it all off as madness - except that these ideas clearly seem to have influenced a lot of players over the years.

One principal concern of the authors of the 400% oil price increase was how to ensure that their drastic action would not drive the world to accelerate an already strong trend towards construction of a far more efficient and ultimately less expensive alternative energy source -- nuclear electricity generation.

Kissinger's former dean at Harvard University, and his boss when Kissinger briefly served as a consultant to John Kennedy's National Security Council, was McGeorge Bundy. Bundy left the White House in 1966 in order to play a crucial role in shaping the domestic policy of the United States as president of the largest private foundation, the Ford Foundation. By December 1971, Bundy had established a major new project for the foundation, the Energy Policy Project under the direction of S. David Freeman, with an impressive $4 million checkbook and a three year time limit. Bundy's Ford Foundation study, titled, "A Time to Choose: America�s Energy Future," was released precisely in the midst of debate during the 1974 oil shock. It was to shape the public debate in the critical time of the oil crisis.

For the first time in American establishment circles, the fraudulent thesis was proclaimed that, "Energy growth and economic growth can be uncoupled; they are not Siamese twins." Freeman's study advocated bizarre and demonstrably inefficient "alternative" energy sources such as windpower, solar reflectors and burning recycled waste. The Ford Foundation report made a scurrilous attack on nuclear energy, arguing that the technologies involved could theoretically be used to make nuclear bombs. "The fuel itself or one of the byproducts, plutonium, can be used directly or processed into the material for nuclear bombs or explosive devices," they asserted.

The Ford Foundation study correctly noted that the principal competitor to the hegemony of petroleum in the future was nuclear energy, warning against the "very rapidity with which nuclear power is spreading in all parts of the world and by development of new nuclear technologies, most notably the fast breeder reactors and the centrifuge method of enriching uranium." The framework of the US financial establishment's anti-nuclear "green" assault was defined by Bundy's project.

By the early 1970s, nuclear technology had clearly established itself as the preferred future choice for efficient electric generation, vastly more efficient (and environmentally friendly) than either oil or coal. At the time of the oil shock, the European Community was already well into a major nuclear development program. As of 1975, the plans of member governments called for completion of between 160 and 200 new nuclear plants across Continental Europe by 1985.

The Schmidt government in Germany, reacting rationally to the implications of the 1974 oil shock, passed a program in 1975 which called for an added 42 gigawatts of German nuclear plant capacity, for a total of approximately 45% of the total German electricity requirement by 1985, a program exceeded in the EC only by France, which projected 45 gigawatts of new nuclear capacity by 1985. In the fall of 1975, Italy's Industry Minister, Carlo Donat Cattin, instructed to Italy's nuclear companies, ENEL and CNEN, to draw up plans for construction of some 20 nuclear plants for completion by the early 1980s. Even Spain, just then emerging from four decades of Franco's rule, had a program calling for construction of 20 nuclear plants by 1983. A typical 1 gigawatt nuclear facility is generally sufficient to supply all electricity requirements for a modern industrial city of one million people.

For the first time, the rapidly growing nuclear industries of Europe, especially France and Germany, were beginning to emerge as competent rivals to American domination of the nuclear export market by the time of the 1974 oil shock. France has secured a Letter of Intent from the Shah of Iran, as had Germany's KWU, to build a total of four nuclear reactors in Iran, while France had signed with Pakistan's Bhutto government to create a modern nuclear infrastructure in that country. Negotiations between the German government in Brazil also reached a successful conclusion in February 1976, for cooperation in the peaceful uses of nuclear energy, which included German construction of eight nuclear reactors as well as facilities for reprocessing and enrichment of uranium reactor fuel. With full support of their governments, German and French nuclear companies entered into negotiations with select developing sector countries, very much in the spirit of Eisenhower's 1953 Atoms for Peace declaration.

Clearly, the Anglo-American energy grip, based on their tight control of the world's major energy source, petroleum, was threatened if these quite feasible programs went ahead.

In the postwar period, nuclear energy was the equivalent improvement of technology which oil had represented over coal when Lord Fisher and Winston Churchill argued that Britain's navy had to convert to oil from coal at the end of the last century. The major difference in the 1970s was that Britain and her cousins in the United States held the grip on world oil supplies. World's nuclear technology threatened to open relatively unlimited energy possibilities, especially if plans for commercial nuclear fast breeders were realized, as well as thermonuclear fusion.

Two nuclear-industry organizations were established in the immediate aftermath of the 1974 oil shock, both based in London. In early 1975, an informal and semi-secret group was established, the Nuclear Suppliers Group, or "London Club" as it was known. This group included Britain, the US, Canada, France, Germany, Japan, and the USSR. It was an initial Anglo-American effort to impose self-restraint on nuclear export. It was complemented in May 1975 by formation of another secretive organization, which grouped the world's major suppliers of nuclear uranium fuel, the London "Uranium Institute," dominated by traditional British regions including Canada, Australia, South Africa in the UK. These "insider" organizations were necessary but by no means sufficient for the Anglo-American interests to contain the nuclear "threat" in the early 1970s.

As one prominent anti-nuclear American from the Aspen Institute expressed their problem, "We must take the bloom of the 'nuclear rose.'" And they did.

Business Week has a reasonably good special report on energy out. WorldChanging has some comments on how this shows that viridian thinking is beginning to become part of mainstream business thinking.

One of the catalysts for making the Bright Green Future possible is for the mainstream vision of the future -- what I sometimes call the "baseline scenario" -- to take on characteristics that make the WorldChanging vision no longer seem quite so radical. If smart grids, hybrid vehicles, and green buildings are part of the default image of tomorrow, then energy-producing materials, sustainable urban design, and biomimetic architecture will appear as exciting possibilities, and entirely within reach. One good way to checking out the state of the zeitgeist is to look at business magazines, especially the old-school, pre-dotcom journals.

BusinessWeek looks to be a bit ahead of some of its competitors in terms of checking out how the world is changing. We've linked to their articles a few times, and while they will by no means provide shocking new insights for even casual WorldChanging readers, they do give a good sense of how Bright Green ideas are being translated for a conventional wisdom audience. Last week's BusinessWeek (cover date Sept 20) is no exception: the technology special report, "A Low-Cost Energy Future," shows both how close the mainstream world is to the Bright Green vision, and how far it has yet to go.

I haven't noted any visitors for a while, and I had thought I was unlikely to be surprised by anything in the server logs again, but I did manage a hearty laugh tonight when I came across a visitor from the Rodent's office (well, Rodent and Cabinet office, to be precise) in today's listings.

I presume the man himself has better things to do than read my idle ramblings, but I am glad that "lese majesty" isn't a crime any more (well, I hope it isn't) given my less-than-respectful attitude towards the little tinpot in recent years.

Anyway - should this mysterious visitor ever reappear and read this, please leave a comment to say what caught your interest. And if you'd like to have a chat about strategies for peak oil mitigation I'd be happy to oblige.

Only a very brief effort his weekend, as I haven't had time to scan many sites as I've been in Melbourne for most of the weekend at the AFL Grand Final (our equivalent of the Super Bowl or FA Cup Final for those of you in northern mirror worlds).

From the local papers I've noticed :

Beijing looks to biodiesel

Rising prices at the bowser leave Howard high and dry

Ill winds that whisper the collapse of civilisation and "Civilisation's darkest hour" - More grim news about global warming and an extract from Tim Flannery's new book "The Weather Makers: The History and Future Impact of Climate Change"

Britain planning Iraq exit: report - this story flip-flops on a regular basis. I don't really believe the British will withdraw unless the US decides to bail out - and I don't see that happening unless there is some unfathomable change of direction from both major parties in Washington.

Anti-war protesters march on Washington

Beazley backs deportation, wants tougher terror laws - Labor Leader "Bomber" Beazley wants to restrict our liberties even further than Howard and Ruddock do. Wonderful. While I occasionally think that fear based politics (as described in "The Power of Nightmares") is rapidly spiralling towards the inevitable unpleasant conclusion, I do still wonder if the theory that all this totalitarian legal infrastructure is being put in place in preparation for either a nasty post-peak crunch or a major war (or the second occurring as a result of the first) is true.

Murdoch's execrable "Daily Telegraph" today had a piece by talking head Terry McCrann (his column is titled "In The Know" in a classic piece of doublespeak) on the need to cut fuel excise (thereby dampening the market signal that it is past time to start lessening our fossil fuel dependence). His reasoning is remarkably stupid, ending with the following gem (which would be funny except for the fact that a lot of well-intentioned people end up taking this nonsense seriously):

The big difference is that we are a huge energy producer.

We don't have to discourage people from energy use because we don't have it.

I haven't seen any detailed reports on the damage from Hurricane Rita (although I am glad to see Houston was spared, although parts of New Orleans appear to have flooded again), but The Oil Drum has been following the news closely - HO has an interesting post on fuel shortages which makes me uncomfortable - the result of considering too much parahistory over an extended period of time is that you have unpleasant flashes of pattern recognition when certain events occur. This can make you prone to declarations like Mike Ruppert's post last week, so I won't go as far as predicting any form of collapse, but I certainly think there is cause for worry about the US economy at the very least (with numerous knock on effects everywhere else, particularly as the US tries to buy as much refined oil products as it can from elsewhere).

One post I noticed somwhere talked about parts of the SPR in Louisiana being submerged by the latest flooding - I'm not sure if its true - but this would make the problem even more difficult to deal with in the short term. There are also rumours that he Henry Hub is damaged, but again, I'm not sure if these are true.

There were significant concerns about being able to repair the Katrina damage, since it was worse than that imposed by Ivan, last year. But to pretend, as some of the MSM are already doing, that we are home free for the rest of the year, is more than irresponsible. The fact that Georgia is closing schools for a couple of days to recognize the short term fuel problem is to minimize the concerns that should be going up as red flags all over the Eastern half of the country.

Right now the production from the Gulf is completely shut down. It is going to be that way for a while, as companies go back and bring the platforms back to life, and test the pipelines that will bring the oil to shore. Even with little damage the experience from Katrina suggests that this is going to take at least a month. In the interim the pipelines supplied by the Texas and Louisiana refineries may begin to see a supply problem. Luckily they are near the major storage of the SPR, though even that has a limit to the amount that can be easily made available. Remember also that we are in a world where the foundation ground is disappearing due to flooding and storm activity. The response of the MSM so far is still a "we dodged a bullet" but unfortunately we haven't taken our shirt off yet.

But then, on the other hand, maybe global warming will make this a really mild winter. If you live in somewhere such as Maine, perhaps you'd better start hoping that that will be the case,

The Herald had a good article on our "oil addiction" today, even quoting Michael Klare.

Petrol is unique as a consumer item. Nothing else, not even house prices, attracts as much angst, and no other consumer product is as politically sensitive. This is not just an Australian phenomenon.

President Soeharto's announcement on May 4, 1998, that Indonesia's petrol prices were rising by up to 70 per cent was critical in turning political unrest into a full-blown revolution. Soeharto was forced out of power 17 days later. Even now, seven years later, the government subsidises petrol so heavily that Indonesians pay only about 30 cents a litre.

And oil, petrol's progenitor, is unique as an economic resource and a strategic commodity. In 1980, as the world struggled to overcome the oil price shock of the late 1970s, Jimmy Carter declared what would become known as the Carter Doctrine, declaring Persian Gulf oil to be a "vital interest" of the United States. He told Congress that Washington would use "any means necessary, including military force," to keep the oil flowing.

Oil has been central to each of the three major military interventions the US has made in the Middle East since. The American resources expert Michael Klare writes in his book Blood and Oil that armed US intervention "will be repeated again and again until the last barrel of oil is extracted from the Gulf's prolific but highly vulnerable reservoirs".

While the US has done its best to make sure the oil keeps flowing, even the superpower cannot hold the price of oil in check. In the years since the Carter Doctrine, the price of oil has averaged a remarkably tame $US22 ($28) a barrel. In the past two years it has climbed inexorably. Last year the world average price was $US38 a barrel. It advanced steadily to $US50, then to $US60 and then, under the power of Hurricane Katrina, which hit the Gulf of Mexico and temporarily took out of commission 13 per cent of the oil refining capacity of the US, it reached $US70 a barrel. Yesterday it was still close to this peak, trading around $US67.

What next? Can oil go higher still? Will it become even more expensive to fill your petrol tank?

There is a short-term answer and a long-term answer. And then there is what happened at the so-called "petrol summit" that the NRMA convened in Sydney yesterday.

The Rodent's murmurings at the summit of greater support for biofuels to adapt to higher oil prices is making farmers happy. But the truckers aren't, so they've started a blockade over fuel prices (via Energy Bulletin). LJ notes "This is a new development for Australia, one possibly precipitated by yesterday's ineffectual 'Petrol Summit' that oil companies didn't even bother to attend. The federal government has smelt the smoke though, see their sudden backflip on ethanol labelling and PM Howards earth-shattering plan to meet with oil co. executives to encourage biofuel production."

Petrol consumption here has fallen for the third week in a row as "record prices prompt motorists to rein in spending".

Oil Search's venture into Yemen seems to be a success thus far, and CEO Peter Botten is hinting that there may be more good news to come.

Oil Search's move into Yemen in 2000 will turn a profit by the year's end and will be a significant earner in years to come. Chief executive Peter Botten said Oil Search had spent about $US10 million ($13 million) exploring in Yemen and $US20 to $US25 million more in developing the Qishn oil deposit, which has just gone into production.

On current estimates Qishn will yield 50 to 70 million barrels of oil. Further proving work is under way, however, and Mr Botton said he expected this to reveal a "substantial upside" in reserves, probably by the end of March next year.

The experiment in Yemen arose from Oil Search's desire to spread its risks and balance its exposures in Papua New Guinea. The company, 17.6 per cent-owned by the PNG Government, controls the country's total oil output, which was 11 million barrels last year, and has proven and probable reserves in the country of 245 million barrels as well as 4.9 trillion cubic feet of gas.

So the Yemeni reserves Oil Search has exposure to already amount to 28 per cent of its PNG resource base. By the first quarter of next year, when further proving work is completed, Yemeni reserves are likely to climb significantly. Exploring in the Middle East is cheaper than in the PNG Highlands, where at times even heavy equipment has to be flown in. As a result, drilling a well in Yemen costs $US3 to $US4 million compared to $US10-$US15 million in PNG, Mr Botten said.

The Chinese are looking to invest up to $10b in Australian mines in order to secure their long term supplies of commodities.

As competition for minerals increases, steel makers and traders including Beijing Shougang and Sinosteel Corp are going to the source to ensure they have enough iron ore and coal.

Overseas investment "is a necessary and natural step for Chinese metal producers because the country is short of natural resources," said Lin Hai of Guotai Asset Management. "With these investments they can lower costs and take pre-emptive rights on the raw materials." Mr Wang said half of the proposed Chinese investments were in iron ore, 30 per cent in coal and the rest in natural gas and other metals. Australia, the world's biggest coal and iron ore supplier, had garnered $1.6 billion of investment from China by the end of 2004, Mr Wang said.

"We definitely need to invest in overseas iron ore projects so we can secure a steady raw material supply for our plants," Liu Anshan, a spokeswoman at Shougang Group's mining resources unit, said in Beijing. Chinese companies are also "very interested in getting involved in the mining of uranium", Mr Wang said. These include "state-owned enterprises involved in nuclear power generation", he said, declining to identify them.

China National Nuclear, the country's largest builder of uranium-fuelled power plants, said in June the country planned to invest 400 billion yuan ($64 billion) in nuclear power from 2005 to 2020. Australia, which has the world's biggest uranium reserves, last month started talks to export the fuel to China. China plans to boost nuclear energy fourfold by 2020.

Robert Zoellick gave a speech recently about the rise of China which looks to my cynical eye like a rather classic case of the pot calling the kettle black. Have a look through his list of concerns and see how many you think apply to the US as well.

· China should openly explain its defense spending, intentions, doctrine and military exercises to ease concerns about its rapid military buildup.

· China shows "increasing signs of mercantilism," seeking to direct markets rather than open them, and such actions must ease before its policies undercut U.S. domestic support for open markets. Zoellick said China's efforts to "lock up" energy supplies are "not a sensible path to achieving energy security."

· China should end its tolerance of "rampant theft of intellectual property and counterfeiting" if it is to be considered a "responsible major global player." China must also do "much more" to allow its currency to adjust to market rates.

· China should adjust its foreign policy to focus less on national interest and more on sustaining peaceful prosperity, including ensuring North Korea's compliance with an agreement to end its nuclear programs, supporting efforts to end Iran's nuclear programs, and pledging more money to Afghanistan and Iraq. China's dealings with Sudan, Burma and other "troublesome states indicates at best a blindness to consequences and at worst something more ominous," Zoellick said.

· China should not attempt to "maneuver toward a predominance of power" in Asia by building separate alliances in Southeast Asia and other areas.

The Swedish government announced this week that the country will seek to end its dependency upon fossil fuels by 2020.

The Prime Minister Goran Persson announced this as part of a package of boosted support for alternative energy research and development. Persson explicitly connected the plan to the advent of global warming. "We are frightened by climate change today. The mean temperature of the earth is rising, and it is rising most nearest to the poles."

The Herald also has a report on a British scientist "slamming US climate 'loonies'". That would be President Loonie he is referring to I guess.

The growing ferocity of hurricanes hitting the United States is probably caused by global warming, a leading British scientist said. Sir John Lawton, chairman of the Royal Commission on Environmental Pollution, which advises the British government, criticised what he termed US climate loonies over the issue.

"The increased intensity of these kinds of extreme storms is very likely to be due to global warming," Lawton told the newspaper in an interview. "If this makes the climate loonies in the States realise we've got a problem, some good will come out of a truly awful situation," said Lawton.

It isn't just oil rig insurance premiums that are rising in the wake of the hurricanes - general insurance rates are predicted to jump as well.

Following the arrest of their leader, the Asari are now on the warpath, with one group seizing a Chevron facility in the Niger Delta. I suspect a lot of third-world groups are going to come to understand how much money is at stake when oil supplies are interrupted in future.