Shrunk Cotton May Revive

Factors may conspire to give cotton farmers a nice price rally.

Obama tackles the liquid fuels problem

Today I’ll try to explain President Obama’s policy for decreasing oil consumption in the United States. Right now the administration has so many balls in the air that it is impossible to make a definite statement about what the effects of their initiatives will be, but a coherent policy is emerging if you gather all the pieces together.

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Review of RAND study, Imported Oil and US National Security (May, 2009)

RAND Corporation has brought its considerable expertise to bear on the national security implications of US oil import dependence…While this study examines this issue solely from an American perspective, many of its observations are applicable to other import-dependent nations. Although there is much of value in this report, I wish to challenge its central recommendation on how government should deal with price spikes and physical shortages.

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The Oil Drum BookCollage -# 3 of 3 - General Recommendation For the Library

Earlier this week we had two threads for listing book recommendations, Thread 1 on energy, ecology, systems, etc. and Thread 2 on practical knowledge. This 3rd thread is for general book recommendations from Oil Drum readers. We don’t always have to learn something from what we do or what we read - sometimes it can be just for fun or enjoyment.

I try to live my life using a barbell strategy. One one end I try to do things of meaning, importance and value. On the other end, I live with ‘wide boundary hedonism’, which basically means I laugh, love, sleep, eat, hike, read, play, consort with animals, spend time in nature, think, wonder, etc. (I try to cut most of the stuff between these two extremes -like typical social conformities, television, monotony etc. but I occasionally get pulled in like we all do.) In any case, reading has been a lifelong passion of mine. Whenever I was in a blue spot, perhaps from breaking up with a girlfriend, etc. I could lose myself in a good book for a few days and it would equilibrate my sense of self. In recent years (probably due to reading much on this site), I haven’t had as much time to read ‘for enjoyment’. But I intend to do that more in the future.

Here are a few selections that I enjoyed and have read more than once. I am a science fiction/fantasy nut so two of the three are from that genre.

Freddy and Fredericka Mark Halperin.

A well written book like many others by Halperin. I particularly liked the plot: a Prince on England was only able to become King if he could conquer America, with no money or no help - just being parachuted naked into New Jersey. As such it was inspirational that skills, integrity and leadership could rise to the top on their own merits rather than by birth, status or wealth. Cool idea.

The Foundation Trilogy Isaac Asimov

Oft mentioned in TOD threads was Asimovs theory of “pychohistory” which combined math, sociology and psychology and statistics to make predictions about large social groups. I have reread these books twice but it has been about 10+ years so I think I am due for a reread..;-)

Farseer Trilogy Robin Hobb

There are actually 9 books in this fantasy series. Hobb is my favorite fiction author - her character developments are so real that you are pulled into the story and forget about reality, which I imagine is good reason for reading fiction. This series is set in a kingdom where some people have the ability to mentally telepath/bond with animals, which I found to be a cool concept. Hobbs books also seem to not be candycoated. Many of main characters die, etc.

(Note: I have always wanted to write a sci/fi book. Perhaps a future earth traveler who visits many different areas of planet, which all pursued different peak oil social strategies - the traveler might engage with these future humans and via conversation provide insight/speculation as to the many complexities that the one big human tribe now faces..)

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Please add up to 3 choices for general reading enjoyment to the list. Who knows - books might be a great store of unexpected reward someday….

Blogger Conference Call with Robert Ryan, VP of Global Exploration, Chevron

This post is a summary of a conference call for bloggers hosted by the American Petroleum Institute (API) on Friday, May 15th, 2009, from 12 to 1 pm. The conference call was set up as a Q & A session where questions from numerous bloggers were fielded by Robert Ryan, the Vice President of Global Exploration at Chevron. Other participants that fielded some questions were Justin Higgs, News Media Advisor (Chevron), Mark Kibbe, Federal Relations Director (API), and John Felmy, Chief Economist (API). The following is an abridged version of the transcript, focusing on some of the more interesting questions and answers. A complete transcript of the conference call and recording of the call can be found here.

Bloggers who participated in the conference call are as follows: Alan Stewart Carl, Donklephant; Bob McCarty, Bob McCarty Writes; Brian Westenhaus, New Energy and Fuel; Bruce McQuain, The QandO Blog; Buster Cagney, The Oil Drum; Chris Nelder, GetRealList; David Murphy, The Oil Drum; Devil’s Advocate, Right Wing News; Geoff Styles, Energy Outlook; Jim Hoft, Gateway Pundit; Joy McCann, Little Miss Attila; Krystle, Bearing Drift and Crystal Clear Conservative; Tony Eriksen, The Oil Drum; Tim Hurst, Green Options; Stephen Rhodes, The Republican Temple

I have organized this summary by subject matter, which included the issues of: peak oil, oil prices, exploration costs, new leases for off-shore exploration, climate change policy, and Chevron’s new(er) projects. The first section, however, begins with excerpts from Mr. Ryan’s opening statements.

(note: all block quotes are responses from Mr. Ryan, unless otherwise noted)

We [Chevron] explore, we produce, we refine, we market. And that’s kind of the basic picture. Some companies do all, some do just pieces of it. My piece of that value chain is way up front. And it’s the exploration component. And it’s probably one of the least understood pieces of that. The public doesn’t usually see it; it’s not the corner service station. They don’t drive by a refinery; they don’t see a field, necessarily, producing off in the distance…

When it comes to the exploration world, people focus on first discovery to first production. And that’s typically a lot of industry benchmarks, measures, the stock market looks at us and how quick we are, et cetera. But I go back way before that. And to give you an example in Tahiti, we first started looking at the Tahiti play and transit around 1994.

In ’96, they had improved the concepts enough where we started to bid and we started to bid aggressively. And by 2002, had a discovery and of course, first production a week ago. So you might say my measure – my teammates’ measures – it’s not first discovery – or say discovery to first oil. It’s first hunch to first oil. When is that geologic concept first being developed?

When I was first working in the Gulf of Mexico out of our New Orleans office, deep water was 600 feet. We now have – Chevron has a well we drilled a few years ago in just over 10,000 feet of water – unheard of. Early in my career, when we hit salt, we stopped drilling; we were done. That’s all Mother Nature provided in the sense of rocks to look for. Now, we drill through 10- to 15,000 feet of salt just to get to the prospect, which is an example, for instance, at Tahiti.

So things have changed fundamentally. Does it make a difference? You bet it does.

PEAK OIL

The Devil’s Advocate: “I was wondering if you could comment or respond to any of the people that claim that we are eventually going to reach peak oil.”

Well, sometimes I view that as an academic exercise, it’s difficult to get your arms around it, and let me give you an example. Years ago I did a Google search in the Gulf of Mexico, and you type in Dead Sea and you type in Gulf of Mexico and you’d find all kinds of stories about the Gulf of Mexico had reached its peak and it’s over. And, lo and behold, we got new geologic concepts; we’ve got the capability to drill deeper, we’ve got 3-D seismic, we’ve got the ability to look below salt, et cetera, et cetera, et cetera.

And the point is we’ve got plays there that we never dreamed of, for instance, the Wilcox – which, by the way, Chevron’s one of the top leaseholders there in that play. No one would have ever dreamed of an oil province like that in that water depth in the Gulf of Mexico. If you can apply some of that same thinking to some of the other hydrocarbon basins around the world – what have we not found yet? Where does it end?

To quote my colleague Paul Siegle we might start talking about peak oil when we’ve addressed peak technology or peak geologic concepts. It is a non-renewable resource? You bet. Is there a peak one day? You bet. But, at the moment, things just keep moving forward, and I don’t think we’ve tested everything we know.

Emailed question: “despite technological improvements, global oil discoveries have been declining. What do you make of that?”

Yeah, that’s a fair statement. I looked at – I plotted the discoveries for about the past decade from Wood Mackenzie, just to give you my source. And we looked at it, and you could – if your eyeball just went across the bar graph, you could see, well, the number of discoveries was – (audio break) – the size of discoveries – the number of discoveries greater than 500 million barrels, if I recall – I don’t have the chart in front of me – was dipping. You could say, well, is that a trend, that the big ones are getting fewer, or not? And yes, I mean, you do see that trend.

Now, in the case of Chevron, to just get kind of on a micro scale, we’ve averaged an add of over a billion (barrels) a year since we put in a new exploration strategy back in 2002 with the Chevron and Texaco merger. That’s more than we expected to find. It’s now over eight-and-a- half billion. We continue to have a very strong queue of exploration opportunities for what we called impact wells – we define that as greater than 100 million barrels, the prospect size. We continue to have a strong queue. Every time we think it’s going to dip and say okay, the queue is running out, we’re running fewer impact wells, impact prospects, it seems to continue to hold up.

And so that’s just a small, micro view in the sense of Chevron, we’re just one piece of this giant puzzle. I can’t speak for my colleagues but, you know, so far, so good. But I’d be naïve to not say that, over time, yes, I mean, things would probably get smaller. And you could look at different data sets and say some of them are getting smaller.

OIL PRICES

Mr. Nelder: “Given the incredibly high expense of doing these deep-water projects, I wonder what Chevron’s current target is for the price of oil for the next five years or so in making it’s business decisions to proceed.”

Well, I wouldn’t be able to share with you what our forecast of oil and gas prices would be, but I can tell you that we look at a myriad of price ranges and we also test all of our projects at a low end as well as a high end to look at their economic viability.

From an exploration sense, certainly I’d be naïve to say price isn’t important. So that’s kind of the wrong way to say it. But our piece is so long term that we try to just make sure that the projects are viable from both a technical and risk point of view as well as an economic test.

And we keep moving forward. For instance, when we bid on the Tahiti play in general in 1996 who would have ever dreamed of the prices we’ve seen on and off just even in the past year. So any assumptions we made on price would have been incorrect. But the project was viable at the price we tested it at then and we were willing to take that risk to drill the first well.

Emailed question: “the Chevron share price tracked crude oil prices pretty closely from 2002 through January of 2007. As the oil prices moved above the $100 per barrel range, Chevron’s share price stalled. Other major oil companies saw a similar situation. Do you think that the market was saying that Chevron would either be nationalized or suffer major windfall taxes if oil prices rallied above $100 a barrel on a sustained basis?”

Answered by Mr. Felmy: Remember, these companies are not just upstream producers. They also have refining operations. And for a substantial component of last year, when you saw these ramped-up prices of crude, refined products did not follow. And so that is – any kind of analyst will look at the combination of the operations in assessing what’s going on. So it’s probably more likely, just fundamentals.

EXPLORATION COSTS

Mr. Murphy: “I was wondering if you could give me a sense of how the expenditures in the exploration and development and production have changed through the lifespan of these projects in the last 30 years. For instance, has the amount of expenditures for exploration increased while production has remained relatively flat, or whatever the case may be?”

Yeah, we definitely – of course costs have gone up. And some of that is a fundamental of just cost increases as the economy heated up over the past few years. But on the other side of the coin, you look at it if we were drilling in the wells in the past in 100, 200, 300 feet of water, now we are drilling in the six- , seven-, 8,000 feet of water. You, of course, you can understand just fundamentally it’s going to be more costly because of the capabilities of the rig, et cetera.

Within the past, say, eight years that I’ve been involved with Chevron’s exploration from a senior leadership role, both in my international position prior to this one and the global one, we’ve gone from about a billion dollars a year to approximately 2 billion (dollars) a year. So you could say we doubled it.

Now, did we double the number of wells, exploratory wells, we drilled in that? No. The good news is a lot of that funding increase was due to appraisal wells. We have had a lot of success, the success in wildcats, triggers, appraisal well — appraisal wells typically don’t add new resources but what they are doing is reducing the uncertainty with the discoveries. But that comes out of an exploration budget. And it’s good news.

Pre-development costs, where you start to get your ideas and concepts around what the field could be, that’s in an exploration budget. So with our success, those went up. So you might say a good piece of that increase is due to success. Another piece of that increase was of course due to costs going up for both wells and both seismic.

Our exploration budget this year in ’09 is about flat with ’08. And we’ve been hovering at say, just under 2 billion (dollars) for a couple of years now.

NEW LEASES FOR OFF SHORE DRILLING (i.e. East GOM and East Coast USA)

A good portion of the conversation was on the topic of new leases for offshore drilling and Mr. Ryan had some very insightful points on the subject. Here are some excerpts.

Will there be exploration allowed in the east Gulf of Mexico, the East Coast of the U.S. and the West Coast? That’s difficult to predict. But it would have potential, just like these other unexplored areas would.

And you’ve probably all about the MMS Outer Continental Shelf assessments of the potential there. Right now, those are just numbers done by studies with very old data. And until we get a better sense with more modern seismic we’ll never know, and in fact, until one day we ever put a well there, we’ll never know.

Mr Westenhaus: “There’s a lot of Gulf of Mexico besides just the western shore of the Gulf that’s explored now. I’m curious as to how much more the major independent oil companies are going to get access to. Things are changing in Mexico so I’m curious as to what your feel is as what might become an opportunity there.”

Well, I’d hate to speculate on the plans of the Mexican government and Mexican people. As you know, there’s no access to that for international companies as we speak. Do geologic trends stop at international boundaries? No, they don’t. And so when you look down at some of our discoveries and prospects down in the southernmost Gulf of Mexico – southern meaning closest to the U.S.-Mexican border – some of those trends do continue across. It’s a setting that, as you can imagine, it takes a significant technical capability to be able to drill in those water depths. And you might say that drilling is the easy part. If you make a discovery, you then have the challenge of developing it. And that’s a huge challenge, as evidenced by just you seeing our projects now: Tahiti and Blind Faith and others while the water gets even deeper as you head there.

Ms. McCann: “Just wondering what would be required to get modern, state-of- the-art seismics for some of the areas, particularly off of the U.S. coast? What would it take? And some of these other more promising arenas around the world, what would it take to do that?”

Well, we shoot seismic, of course, all over the world every day. And we don’t do it ourselves; we hire seismic vendors, different companies that actually do the work. But we typically would design the survey if it was one shot for us and work with that vendor to get it done.

If you were to go onto the East Coast, you’d have to get a permit to get this done, and the seismic companies would pursue that. And of course, the struggle would be, if you never had any chance at all of exploring, why would they go shoot it, and why would we buy it, or why would we work with them to acquire it?

Follow-up by Ms. McCann: “Does this imply a level of catch-22? I mean, if you can’t really get terrifically accurate surveys of what’s out there, then how do you convince people that it’s worth consenting to have this done?”

You’re right, it is sort of a catch-22 because people can – they see the big numbers, but you remember, those are big numbers from basically old data sets.

So I think a phased approach, where the country would really get to understand its resource base – and that’s what this all boils down to, you know, if you make the claim that it’s better for the economy, which I believe it is, and the experts, I believe, agree. If you believe it’s better for national security, then we should have a better handle on our resources. It’s an inventory; it’s no different than going back to understanding the inventory in a warehouse, and what you have, and what’s back there supporting your business.

This is the same thing; supporting your economy, supporting your national security, supporting jobs. Hey, let’s get an understanding of those numbers; let’s get an understanding of what the country’s resource base is. First step: Shoot the seismic, understand if the numbers are holding up. And then if they are move forward, and if they aren’t, we have an answer and we move on to the next thing.

Follow-up question by Mr. Styles: “I’ve heard people articulate the view that major oil companies would actually prefer to go into this totally blind and be able to capture the entire upside from resolving precisely those uncertainties, as opposed to having a national inventory done to actually assess what might be there so that by the time you bid, there’s a lot less uncertainty and presumably, the price is a lot higher. Could you comment on that?”

Well, yes, I think my words might have come across like I was looking for a national inventory, but when you think about it, it’s not. Back to the Gulf – seismic shot by – speculative seismic is shot by seismic companies all the time. And let’s go back 15 and 20 years ago, or even longer, when deep water was 1000 feet and things like that. Well, companies were shooting seismic in the deep water, then – 2-, 3-, 4000 feet. You might say they were taking an inventory. You might say they were going to understand what is there before we even want to bid.

Is that a national inventory? Well, you might say it is, because those are federal leases and the government does get the seismic. So in a sense, it is. But at the same time, it’s just a data set to allow companies to make good business decisions. And so maybe there are some companies that would just like to bid, you know, on a big swath of acreage without knowing anything about it, but prudent business decisions, we usually would prefer to know what we’re bidding on.

CLIMATE CHANGE POLICY

Mr. Hoft: “Congress next week is likely to vote on the cap-and-trade plan in the committee and Henry Waxman had announced that this week. I’m wondering if Chevron has any idea how this will affect their exploration or their industry as a whole?

Answered by Mr. Kibbe: Primarily what is being looked at in the Waxman-Markey climate bill are provisions that primarily will affect the downstream, the refining sector of the industry.

The two main issues are, what they’re looking at, the allocations: basically the allowances or permission to release greenhouse gases going forward and how those are allocated among industries. And our message has, again, just been, look, we’re going to rely on all of these energy resources going into the future so let’s treat everybody on an equitable basis.

Some of our concerns there is the Waxman-Markey bill starts with a 2005 baseline. And, as we look into the future, more and more of the fuel that refineries are going to have to use will come from heavier crudes, Canadian oil sands, for instance, and things along those lines, which will be more difficult to refine and could very well have a larger carbon content.

So if you’re starting from the 2005 baseline and go down from there, it’s going to be very difficult to satisfy energy needs with respect to transportation and still meet your carbon- reduction commitments.

CHEVRON’S NEW(ER) PROJECTS

Mr. Eriksen: “Could you please just give a bit of background of how the feed process in Jack and St. Malo was going and so if any more appraisal wells are going to be drilled on those structures?”

I mean, we’re in that feed phase as we move it into the first quarter of ’09. It’s looking like it’s something we could work to produce both fields or both discoveries together through one common facility.

We’re excited about it. I mentioned the Wilcox earlier. If you don’t mind, I’ll just touch on that. I mean, it’s a 300-mile-long play, plus. It’s got, you know, you’ve seen ranges of, say, three- to 15 billion barrels of potential and, of course, when you see a wide range like that, that tells you that it’s early in its exploratory phase as an industry, not just Chevron’s.

So far the industry and Chevron have had good success rates. They are quite good success rates. The oil that’s been – we found a good bit of oil so far and numerous discoveries both Chevron and our competitors. The key is, you know, getting that oil out of the ground. In fact, you may recall that press release we had a few years ago on the flow tech with Jack. That was very, very good news because, at those depths, with those reservoir conditions, to get that flow rate we did, I think some 6,000 barrels a day, we were quite excited about that.

Mr. McQuain: “Speaking of all those capital projects, how many does Chevron have ongoing right now, or under development right now around the world?”

Yeah, that’s something, as a shareholder, I’m quite proud of, to tell you the truth. We’ve got forty, plus or minus, over a billion dollars our share. So that’s quite a queue, and I guess what puts a smile on my face is the fact that those things come from – well, not all of them, of course, from recent exploration – but in general, where does a new field come from? It comes from exploration. So it’s really nice to look at that list and check off how many have come from success that we’ve had in exploration in the past eight years, since we revamped our approach to exploration. And so that forty is – keeps us busy.

More thoughts from Pedro Prieto on NINJA Financial Issues and Energy

A few days ago, Pedro Prieto wrote a popular guest post called Financial Collapse and Energy - Something Other than a NINJA Problem. In it, he provides an analogy to the current financial situation.

Afterwords, some of us in a follow-up post raised questions whether the parameters (shown as 8.5% and 3% in the model) could be refined a bit.

Pedro has put together a response, which I think shows great insight. It shows that there is more than one way of looking at this question, and perhaps the way we are looking at things is too steeped in our current perspective. Pedro’s response is found below the fold.

Sometimes, I am afraid that I may have been wrong in including GDP in Purchasing Power Parity (PPP’s) in Graphs 3 and 4 of my earlier document. To refresh your memory, this is Graph 3 from my earlier post:

Graph 3. World GDP and Dow Jones Index for the period 1970-2007.

This is like giving credit to the concept that helps economists to manoeuvre and disguise physical reality. In fact, the creation of goods and services by humankind should be given in absolute, measurable amounts. This is something I could do with oil and primary energy, since even capitalist entities or corporations like the IEA or BP offer data using measurements like tons of oil. One ton of oil (or coal of cubic feet of gas) is physically the same if extracted in 1970 or if extracted in 2008. No adjustment is required.

However, I was forced to enter GDP because it was the only available tool to measure goods produced and services rendered. If the measurement tool performs well, there should be no need to adjust the amounts by any economic parameter to balance them through time. GDP is not an accurate tool-I knew it and I mentioned it. But I was forced to give an indication of the total amount of goods and services, and I cannot do this, except as some sort of financial amount. I know that a kg of produced steel is the same in 1970 as it is in 2008, as is the service rendered to care for an elderly person, but I needed some mechanism for measuring the combined amount.

And the PPP’s in the GDP are supposed to adjust the value (effort and energy at least, in my opinion) for the same goods or services at different periods of time. In my opinion, however, in reality they are masking the devaluation of the system used for mediating exchanges (whatever that is-now generally paper money rather than gold or another medium). This mediation mechanism is therefore being distorted as it tries to match the unchanged real physical world.

If I take the consumption of primary energy and compare it with GDP, what I observe is almost a one to one relationship (almost a straight line):

But, in fact, if we could remove the economic adjustments, the artful economic devices, and the continuous manipulations, money would have been destined for its original use. If this were done, the slope of the derivative would have been 45 degrees. That is, one physical unit produced or measurable service rendered would be equal to one monetary unit. The fact that there has been a change in the measuring system over time is probably the reason why there is now a difference between the growth of primary energy sources and the growth in GDP (Graphs 3 and 4 of my paper), and that this difference is increasing over time.

If today it is not like this, it is not the fault of the physical world and the “devalued” production of goods or services through time, but rather is a result of the perverted use of money and financial values and assets.

If we look at the interesting work of Chris Martenson, titled “Inflation”, at http://www.chrismartenson.com/crashcourse/chapter-10-inflation, and we look into Chapter 10, there is something related to my analogy, as named by Gail in her last post, titled “ A Few More Thoughts Related to Pedro Prieto’s “NINJA” Post”:

In 1665, the basic cost of living [in the US] was set to a value of “5”. What is most striking about this chart to me is that from 1665 to 1776, there was absolutely no inflation. For 111 years, a dollar saved was, well, a dollar saved. Can you imagine what it would be like to live in a world where you could earn a thousand dollars, put it in a coffee can in the backyard, and your great- great grandchildren could dig it up and enjoy the same benefits from that thousand dollars as you would have had 111 years previously?

Unless we orient ourselves to a new way of living, in which we learn to make the mediation device a very constant parameter, which is always very directly related to the physical world of products created and services rendered, we will never find any solution to the inevitable collapse. And this will mean not a cosmetic change in world economics, but a Copernican change in economics, much closer to the biophysical Economics that Charles Hall is teaching everywhere.

As I see it, my fault was not so much to “forget” to adjust the Dow Jones Index throughout time (to what parameter, physical?). Instead, it was a matter of being forced to use a single economic parameter, already contaminated by neoclassical economics.

Fractional reserves, compound interest, French system of repayment (very common in Spain, in which the borrower starts paying mainly the interests and almost no principal, until the very end of the term, just in case the lender decides to totally or partially cancel his/her credit before the given period), PPP’s, rates of interest, futures, intraday operations, stock options, etc.- The modern economic world has invented one million economic litanies and forces its citizens to sing them every day, like the Church did in the past with the Latin Litanies in the traditional religious services; believers praying with unintelligible words.

We pray in many cases more than five times every day, oriented to Wall Street especially at the opening and closing of the daily sessions; we carefully read and enunciate the litanies or mantras in our economic sepia missals. We follow the values of thousands of different stocks on television, permanently scrolling in the lower part of the screens, as we have breakfast, lunch or dinner, exactly as if we could understand what is happening out there.

We have been “monetized” and made to believe that the economy measures everything, but really, we are not measuring anything in a minimally rational form. We have been “suspended” from nowhere and pretend that we know where we are.

In this sense, I basically agree with Charles Hall’s and Bill Tamblyn’s comments on lemmings behaviour in the stock exchange plus some grams of salt of physical reality (see here). In this sense, I think of inflation (or any of the thousand invented words for this situation) as one of the ways or mechanisms that economists have to adjust for the sins of printing paper money without any relationship to the physical world it is supposed to represent-to return it, as much as is possible, to the real world.

I have received many letters from people who believe that bank interest is a “logical” consequence of lending money. Others cannot even imagine a world where people would lend something, obviously a resource they already had, and only pretend to be paid back by exactly the same amount, over a period of years. They are so embedded in the present culture that they cannot imagine that a human being would be willing to lift a finger to lend something if the reward would not be more than what was lent (without interest!).

Let me give an example. A farmer grows food in his fields and harvests (accumulates) resources for the needs of his family and his animals for one whole year, with some surplus, just in case. There might be a drought the next year, or something unexpected might happen (a fire, thieves, etc.). Also (and always in preindustrial societies), some extra would be produced, just in case some neighbour or relative falls sick or has an accident and cannot produce himself. This is a rational accumulation of goods and services which is based not on greed, but on mutual aid, as humans can only survive as a social species, not as lonely wolves on the steppe.

And it would be considered very bad practice in this context to lend somebody something and then ask them to pay it back with interest. That, in my understanding, was the original idea of the original religions of the Book. The original intent has been greatly perverted, and is now followed by very few.

However, what we see today in accumulated wealth has nothing to do with the way of accumulating wealth of the farmers in my story, nothing to do with security (even if they try to convince us that this is in our “national interest”). The quantity and rapid speed of amassing wealth, transforming nature, and exploiting of natural capital has no precedent in the history of mankind and has nothing to do with “security” for the future. The new system, once the payment of interest became legal, permitted and encouraged the accumulation of wealth. It accelerated the process of accumulating wealth in a very insane (and strictly unnecessary) form, and in a quantity never known in the past, especially after industrialization.

DrumBeat: May 30, 2023

New presentation by Matt Simmons: Two Energy Oxymorons: 1. Energy Independence 2. Energy Security (PDF)

Review of RAND study, Imported Oil and US National Security (May, 2009)

RAND Corporation has brought its considerable expertise to bear on the national security implications of US oil import dependence. The study, “Imported Oil and US National Security” (127 pgs), was conducted by a team of analysts within RAND’s Infrastructure, Safety & Environment (ISE) department, led by Keith Crane. While this study examines this issue solely from an American perspective, many of its observations are applicable to other import-dependent nations. Although there is much of value in this report, I wish to challenge its central recommendation on how government should deal with price spikes and physical shortages.

Gas price surge may stall recovery

NEW YORK (CNNMoney.com) — The rising price of gasoline is putting pressure on cash-strapped motorists and throwing barricades into the path of a speedy economic recovery.

Oil nationalism

Latin America is a study in contrast of how countries manage their oil. In Mexico and Venezuela, state and oil industry live in a symbiosis flaunted as resource nationalism – but their state oil companies are looking increasingly like wounded giants. Brazil’s Petrobras, managed with a more open attitude, now overshadows its sisters to the north. This shows that pragmatism, not xenophobia, is a better safeguard of national interests.

Brazil leans toward oil production sharing-minister

RIO DE JANEIRO (Reuters) - Advisors to the government “strongly support” a production sharing model to develop Brazil’s massive subsalt oil reserves, as Latin America’s largest economy considers changes to its Oil Law to fund social welfare programs, Energy Minister Edison Lobao said on Friday.

Venezuela Oil Minister Seeks Cash, Partners in Japan

(Bloomberg) — Venezuela’s Oil and Energy Minister Rafael Ramirez met with Japan’s Prime Minister Taro Aso today in Tokyo as the South American country seeks financing for energy projects.

U.S. natural gas rig count slips to 6-1/2-yr low

NEW YORK (Reuters) - The number of rigs drilling for natural gas in the United States fell by 8 this week to 703, the lowest level in 6-1/2 years, according to a report issued Friday by oil services firm Baker Hughes in Houston.

National Grid takes £30m fight to Court of Appeal

National Grid, the energy networks operator, is to take its fight against a £30 million fine from Ofgem, the industry regulator, to the Court of Appeal, the company said yesterday.

In February 2008, National Grid was fined £41.6 million for restricting competition in the domestic gas metering market, the highest fine to have been imposed in Britain’s energy industry.

GM plans to make small car in USA

NEW YORK (CNNMoney.com) — General Motors, with bankruptcy looming, pledged Friday to build a small car in the United States in an idled car plant that will be revamped.

What you don’t know …

Some China analysts are crying foul: If IVA growth figures are being cooked, surely that means China’s recent GDP data have been overstated too. China’s statisticians use IVA output to estimate what accounts for nearly half of China’s GDP.

China’s association of electricity generators has a solution: it’s stopped publishing consumption data.

Court orders Curacao oil refinery to cut pollution

A court has ordered a Curacao refinery run by Venezuela’s state-owned oil company to cut pollution or face heavy fines, a victory for activists who have complained for years about the thick haze of smoke that often blankets the capital in the Dutch Caribbean island.

Collateral Damage And Response To The Food Crisis: It Wasn’t Supposed To Be This Way

But lest we forget, let’s remind ourselves that it wasn’t supposed to be this way. Trade liberalization and the reduction of government involvement in food markets were supposed to make food supplies more reliable. Instead, FAO documents interventions by 102 countries to ensure stable food supplies while IFPRI documents 54 projects in which food-importing countries are positioning themselves so they are not at the mercy of the market when food supplies are short.

ADB calls for low-carbon transport systems

The Asian Development Bank Saturday called on its Asian government borrowers to design mass transport systems in a way that would slow the rapid growth of their greenhouse gas emissions.

Why our ‘amazing’ science fiction future fizzled

Corn says Americans’ faith in the power of technology to reshape the future is due in part to their history. Americans have never accepted a radical political transformation that would change their future. They prefer technology, not radical politics, to propel social change.

“Technology has been seen by many Americans as a way to get a better tomorrow without having to deal with revolutionary change,” Corn says.

Gulf Arabs look east after EU trade deal hits wall

MUSCAT (Reuters) - Gulf Arab oil producers are expected to sign trade pacts with China, South Korea, Australia and New Zealand starting this year after talks with the European Union for a similar deal hit a wall, an Omani official said.

The Gulf Cooperation Council (GCC) — an economic and political bloc of six nations — suspended talks with the EU late in 2008 after a disagreement on human rights and democracy derailed two decades of negotiations.

The alliance that includes world top oil exporter Saudi Arabia, the largest Arab economy and a member of the G20, is now looking at EU’s rivals in the east, Abdulmalik al-Hinai, undersecretary for economic affairs at Oman’s Ministry of National Economy, told Reuters in an interview late on Friday.

EU cool on Russian appeal to help Ukraine on gas

BRUSSELS (Reuters) - The European Union is unlikely to meet a Russian request to help Ukraine with payments for billions of dollars worth of Russian gas, European Commission President Jose Manuel Barroso said on Friday.

Barely four months after a pricing dispute between the two ex-Soviet states in January that disrupted supplies to Europe, Russia last week rejected a Ukrainian proposal to defer payment on up to $5 billion in gas storage fees. Moscow, backed by Italy, has urged the EU to help Ukraine.

Clouds gather over energy prices as storm season starts

NEW YORK (MarketWatch) — Fewer hurricanes are likely to gather over the Atlantic during the tropical storm season that starts Monday, but it would only take one or two aimed at key facilities to fan already rising oil and gas prices, analysts say.

The National Oceanic and Atmospheric Administration is expecting 14 storms compared to 16 last year, and fewer major hurricanes.

Still, this hurricane season again threatens to halt energy production and swamp key agricultural regions, raising the cost of natural gas, gasoline and even some food, and possibly waylaying a U.S. economy recovery.

Venezuela’s economy

The price of Venezuelan crude oil rose above US$50/b in mid-May for the first time in eight months. Yet this level is still too low to alleviate financing pressures on the government. Officials outlined a modest fiscal adjustment in March, along with plans to meet government financing needs with new debt issuance, but this may no be sufficient to close the budget gap.

Oman to up oil output to 830,000 bpd by end-2009

DEHRADUN, India (Reuters) - Oman will raise its crude oil production to up to 830,000 barrels per day by the end of this year, oil minister Mohammed bin Hamad Al-Rumhy said on Saturday.

Petro-Canada’s grand delusion

Petro-Canada, the former state oil company, is — shareholders and Competition Bureau willing — about to disappear into a merger with Suncor. Although it has, in theory, been “just another oil company” since the early 1990s, for the first half of its existence it was a major factor in Canadian politics. It was rarely a benign one.

India aims to end fuel subsidies

India’s government said it may eliminate diesel and gasoline subsidies as soon as July, quicker than expected, ending a policy that had crushed state refiners’ profits, strained government finances and inflated oil demand.

U.S. Says ‘Significant’ Gas Resource Found in Gulf

(Bloomberg) — Drillers discovered “significant” possible energy resources in gas hydrate in the Gulf of Mexico, the U.S. Geological Survey said today.

The gulf “contains very thick and concentrated gas- hydrate-bearing reservoir rocks, which have the potential to produce gas using current technology,” USGS said in a statement. Gas hydrate is comprised of natural gas and water.

How the American Oil Industry Can Save Your Retirement

According to new analysis by the American Institute for Economic Research, federal tax revenue fell $138 billion last month compared to just one year ago. News headlines will likely focus on how the drop could severely hinder Washington’s ability to pay down the projected $1.7 trillion budget deficit. That’s missing a major point — how the drop will impact American workers’ outlook for prosperity and retirement.

Pundits will also certainly ignore the role our oil industry could play in easing these problems. Let’s look at both issues.

Web Video of the Week: Understanding Peak Oil

The whole discussion of oil supply and demand can be slippery and complicated. How long will it last, and when can we expect to see serious impacts on our everyday lives? If you’re looking for an entertaining and captivating overview of this issue, we’ve found it. Watch this feature length documentary online now to learn about the history, present and future of global oil production and consumption. It could change the way you plan your tomorrows.

New industrial revolution on way, says HSBC

BRITAIN is set for a second industrial revolution as the traditional industries of manufacturing and farming are replaced by robotics, gaming and wind farms, a major new report predicted today.

22nd Century Darwinians Challenge the Church in “Julian Comstock”

Peak oil has left the world a churchy, early-industrial shambles in Robert Charles Wilson’s new novel Julian Comstock. An engaging cross between post-apocalyptic series Jericho and Susanna Clarke’s Jonathan Strange & Mr. Norrell, it may be the best science fiction novel of the year so far.

Top six tips for surviving post-peak oil gas-archy

When we have to get all Thunderdome-y to get gas, what are V-8 loving horsepower junkies like ourselves supposed to do? Doing anything with batteries other than using one to start the car is like putting a steak in the microwave, and even thinking about it is cause to be backhanded. (I’m lookin’ at you Neil Young.) The solution has to be loud, go fast, burn something and preferably retain the internal combustion engine. I have come up with the top six totally unscientific and completely non-reality based solutions to get us through dryer times.

Liftoff for the New Apollo Energy Project

AS the space-shuttle program ends, some people question whether America still has the guts for bold new projects, in space or elsewhere. The House Energy and Commerce Committee answered that question affirmatively last week, when we launched an adventurous new national project to build a clean-energy economy for the United States and the world.

Flood of anger

Worried about drought, Washington State is planning to dam the Similkameen River. Opponents say the project would trigger destructive floods in B.C.

Enron’s other secret

We all know that the financial stakes are enormous in the global warming debate — many oil, coal and power companies are at risk should carbon dioxide and other greenhouse gases get regulated in a manner that harms their bottom line. The potential losses of an Exxon or a Shell are chump change, however, compared to the fortunes to be made from those very same regulations.

Risk too high for non-state carbon capture -Statoil

MONGSTAD, Norway (Reuters) - Industry refuses to invest in carbon capture and storage (CCS) projects without strong state support because of a lack of clarity on future emissions rules, Norway’s StatoilHydro (STL.OL) said on Friday.

The man who could change the world

America has been slow to respond to climate change, but its new Secretary of Energy, Nobel prizewinner Steven Chu, is determined to make up for lost time. He calls on fellow scientists to step up to the plate.

Atlanta Roofer Blasts Obama Energy Adviser on Proposal to Paint Roofs White to Slow Global Warming

KTM also points out an additional dilemma around materials used. Specifically asphalt roofs, which is the roofing material used to cover about 80% of all residential homes in the United States cannot be sufficiently painted to last for extended periods of time. Essentially the choice color of your asphalt shingle roof is limited to whatever color shingle you pick out during installation.

Paint has a difficult time sticking to an asphalt roof. In addition, painting an asphalt roof will cause the paint to bubble and blister as a result of moisture getting trapped. This is magnified if freezing conditions occur, which can cause cracks in the shingles. Finally, KTM has confirmed with CertainTeed, a leading manufacturer of asphalt roofing shingles that painting an asphalt shingle roof will void the manufacturer’s warranty.

On CH4, Poverty and CO2

At a meeting on population and resources early this year at the University of California in Berkeley, one session focused on global energy trends. Richard Nehring, a consultant tracking fossil fuels, noted that Africa (below and above the Sahara) has vast deposits of natural gas (CH4), many of which are suitable for extracting butane and propane, valuable household fuels. This leads to a glaring question.

We know there are orphan drugs — potential treatments for diseases in poor places that don’t get pursued because there’s scant profit. But is natural gas in Africa essentially an “orphan fuel”?

Republicans say Democrats’ proposal will do little to ease climate change, only raise costs

WASHINGTON - Republicans on Saturday attacked the climate change proposal crafted by congressional Democrats and endorsed by President Barrack Obama as doing little to reduce global warming while saddling Americans with high energy costs.

The browning of America

In politics, the urgent but not necessarily terribly important always trumps the important but not palpably urgent. In the US today, getting out of the economic downturn is urgent, but not a matter of life and death. Moving towards sustainable energy use and cutting back on man-made contributions to global warming is a matter of life and death, but not immediately so in the US. When there is a conflict between a speedy exit from the recession and saving the environment, the environment therefore loses.

May’s gains make it three in a row

London shares recorded their third successive month of gains as May ended on an upbeat note today.

Despite rising job losses and plenty of grim corporate data, many investors believe the worst of the financial crisis is over and believe they can see the fabled green shoots of recovery.

The FTSE 100 index of leading shares was up 174 points over the course of May, a 4.1% rise that followed increases of 2.5% in March and 8.1% in April.

At the end of May’s final trading session the index reached 4417.94, having added 30.40 points today, with sentiment boosted in part by a surprise rise in house prices.

Miners figured prominently among the day’s top gainers, as they benefited from strengthening metals prices.

Platinum specialist Lonmin, up 111p to £14.28, led the way, while Eurasian Natural Resources Corporation added 35.5p to 649p and Xstrata was 34.5p better at 684p.

Energy groups also prospered as the oil price continued to rise, with BG gaining 49p to £11.28.

Housebuilders were lifted by the latest property market survey from Nationwide that showed house prices rose 1.2% in May.

Taylor Wimpey was the FTSE 250′s biggest gainer, up more than 9% or 2.75p at 32p.

Fellow midcaps Persimmon, Redrow and Bellway also recorded increases: Persimmon was up 18.5p to 364p, Redrow gained 5.75p to 195.75p, while Bellway was 9.5p better at 645.5p.

However, Barratt Developments dropped 4p to 158.5p and Bovis was down 1p to 389p.

Panmure analysts Rachael Waring and Mark Hughes – who have Redrow, Bellway and Barratt on sell ratings – sounded a warning note.

“In our view, in the face of little positive economic data, prices are likely to return to a downward trend over the coming months,” they wrote in a note.

“We therefore maintain our belief that conditions will deteriorate over the summer months for all UK housebuilders.

“Our sector stance remains Negative.”

Travel group Thomas Cook fell 7.5p to 221.75p, as hopes receded that its troubled German parent company Arcandor would receive state aid.

German ministers indicated earlier in the week that the government would consider guaranteeing €650m in loans to Arcandor but reports today suggested that the group would not meet requirements for state aid.

Analysts believe the uncertainty around Arcandor and the possibility that it might be forced to sell its 52.8% stake in Thomas Cook have depressed the latter’s share price.

ITV continued its positive run on hopes that its advertising regime will become more favourable.

The Office of Fair Trading has advised the Competition Commission to consider updating the contract rights renewal system that pegs the broadcaster’s advertising rates to viewing figures.

With ratings in decline, the regime has been a significant drag on ITV in the five years since it came into effect.

Shares closed up 1.75p to 38.75p, a 38% rise over the past three days.

However, Investec analyst Steve Liechti urged investors to “be careful” despite the recent positive trend in the share price and maintained a sell rating.

“Investors can make up their own minds on recovery - we are cautiously optimistic but probably more cautious than optimistic currently,” he wrote in a note.

BSkyB, which has a 17.9% stake in ITV, slipped 10.5p to 442p amid reports that it has bid as much as £160m for Virgin Media’s television channels.

The Suffolk-based brewer Greene King slipped 22p to 438p as it revealed that 93% of shareholders had agreed to participate in a rights issue at 270p a share.

May’s gains make it three in a row

London shares recorded their third successive month of gains as May ended on an upbeat note today.

Despite rising job losses and plenty of grim corporate data, many investors believe the worst of the financial crisis is over and believe they can see the fabled green shoots of recovery.

The FTSE 100 index of leading shares was up 174 points over the course of May, a 4.1% rise that followed increases of 2.5% in March and 8.1% in April.

At the end of May’s final trading session the index reached 4417.94, having added 30.40 points today, with sentiment boosted in part by a surprise rise in house prices.

Miners figured prominently among the day’s top gainers, as they benefited from strengthening metals prices.

Platinum specialist Lonmin, up 111p to £14.28, led the way, while Eurasian Natural Resources Corporation added 35.5p to 649p and Xstrata was 34.5p better at 684p.

Energy groups also prospered as the oil price continued to rise, with BG gaining 49p to £11.28.

Housebuilders were lifted by the latest property market survey from Nationwide that showed house prices rose 1.2% in May.

Taylor Wimpey was the FTSE 250′s biggest gainer, up more than 9% or 2.75p at 32p.

Fellow midcaps Persimmon, Redrow and Bellway also recorded increases: Persimmon was up 18.5p to 364p, Redrow gained 5.75p to 195.75p, while Bellway was 9.5p better at 645.5p.

However, Barratt Developments dropped 4p to 158.5p and Bovis was down 1p to 389p.

Panmure analysts Rachael Waring and Mark Hughes – who have Redrow, Bellway and Barratt on sell ratings – sounded a warning note.

“In our view, in the face of little positive economic data, prices are likely to return to a downward trend over the coming months,” they wrote in a note.

“We therefore maintain our belief that conditions will deteriorate over the summer months for all UK housebuilders.

“Our sector stance remains Negative.”

Travel group Thomas Cook fell 7.5p to 221.75p, as hopes receded that its troubled German parent company Arcandor would receive state aid.

German ministers indicated earlier in the week that the government would consider guaranteeing €650m in loans to Arcandor but reports today suggested that the group would not meet requirements for state aid.

Analysts believe the uncertainty around Arcandor and the possibility that it might be forced to sell its 52.8% stake in Thomas Cook have depressed the latter’s share price.

ITV continued its positive run on hopes that its advertising regime will become more favourable.

The Office of Fair Trading has advised the Competition Commission to consider updating the contract rights renewal system that pegs the broadcaster’s advertising rates to viewing figures.

With ratings in decline, the regime has been a significant drag on ITV in the five years since it came into effect.

Shares closed up 1.75p to 38.75p, a 38% rise over the past three days.

However, Investec analyst Steve Liechti urged investors to “be careful” despite the recent positive trend in the share price and maintained a sell rating.

“Investors can make up their own minds on recovery - we are cautiously optimistic but probably more cautious than optimistic currently,” he wrote in a note.

BSkyB, which has a 17.9% stake in ITV, slipped 10.5p to 442p amid reports that it has bid as much as £160m for Virgin Media’s television channels.

The Suffolk-based brewer Greene King slipped 22p to 438p as it revealed that 93% of shareholders had agreed to participate in a rights issue at 270p a share.

Week ahead: Economy in spotlight

Wall Street will return for the first trading day of a new month Monday with the economic outlook still unclear and the bankruptcy of a major American business icon looming large.

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