Tuesday, December 23, 2008

Ding Dong the Witch is Dead!

Ding, Dong, the Witch is DEAD!

Ding, Dong, the Wicked Witch is dead!!!

Hey all you Peak Freakers, time to celebrate! The wicked witch is dead!

Finally! Finally!! The SUV is dead.

Check out this article from the New York Times about the closing of the last of the plants making SUVs.

Obviously it is unfortunate when autoworkers lose their jobs.

But at least now the Peak Oil message is getting through.

It doesn't work to have a whole country full of soccer moms driving around in 6 or 7 thousand pound steel beasts.

I guess America is finally getting what it deserves. This is exactly the outcome that the US government carefully planned for the last 34 years!!!

Yeah! Aren't you impressed?

Remember a few years ago there was that tax rule that gave you a break if the vehicle weighed OVER 6 THOUSAND POUNDS!!!

That was about the stupidest thing the government could have done.

I remember all sorts of wanna-be's all of a sudden buying Hummers and huge crew cab trucks and anything else they didn't need that weighed over 6 thousand.

It was insane. That just helped the SUV to crash and burn.

People were stupid enough to drive a 6 thousand pound SUV three miles to the store and back and then they wondered why they were getting so fat and they spent so much money every month on gasoline.

Make no mistake. The death of the SUV is a direct result of Peak Oil.

If oil had not peaked in the USA in 1971, there would still be plenty of cheap fuel and the SUVs would be selling like hotcakes because obviously Americans prefer the increased visibility you get when driving a big, tall SUV and the convenience of bringing a whole truck full of junk along with them everyday, everywhere.

No more of that, huh?

I've had my share of SUVs just like most Americans.

Chevy Blazer. 700 horsepower. 8 miles per gallon.

Dodge Durango. 12 miles per gallon.

Dodge 1500. 12 miles per gallon.

Ford E350. 8,500 pounds. V10 engine. 15 miles per gallon.

Even though about 80 percent of the miles I drove on those vehicles since 1975 were work-related miles and much of the time I had the vehicle full of "tools," I still have no legitimate rationalization for the other 20% of the miles I drove in a big SUV.

I started driving an SUV in 1975.

Nobody. I mean nobody drove SUVs then.

My friends all drove Porsches. (remember the song? Janis Joplin?). They thought I was weird, or stupid for driving a big beast.

I remember being so amused when people started driving SUVs. It wasn't usually because they needed to carry a whole load of lumber or concrete finishing tools or motocross bikes. Lots of people just got tired of driving shitty sedans with crappy acceleration and no creature features.

I remember when chicks used to complain about SUVs because they were "hard to park."

Well, the girls got over that a long time ago.

The death of the SUV is going to be a big blow to lots of folks for lots of reasons.

I guess some of the Nannys that drive kids to private school in Newport Beach every morning are going to have to adapt. No more Cadillac Escalades and Chevy Yukons!

Good luck selling your SUV!!! I got rid of mine a couple of years ago.

By the way....Pop quiz. Do you know where the closest electrical outlet is to your workplace where you can plug in your new PHEV? Hmmm......

I wonder how Arnold is coming along with that "hydrogen highway" up and down California. ;-)

Enjoy the crash after the Peak!

Thursday, December 18, 2008


Speaking of multi-syllabic words.... how about, Papahanaumokuakea! Only nine syllables. Just rolls right off your tongue, don't it?

(pronounced: pop-ah-ha-now-mow-koo-ah-kay-ah)

Sorta reminds you of Humuhumunukunukuapua'a, eh?

Or my first, I learned when I was about 7 years old in private school, antidisestablishmentarianism. A convenient 12 syllables.

Well, all you Peak Freakers out in Peak Freak land, today I've got a new one for you. I've coined a new term for your own personal entertainment pleasure and to help develop our AWARENESS about the reality of Peak Oil and the inescapable nuances of the oil business.


(pronounced: blah-goy-yeh-vich-ick)

Allow me to illustrate the use of this term in polite conversation. 

Example: Two Saudi Princes are riding the ski lift on the chair in front of us at Aspen and we overhear them remarking, in their unmistakably British accents, that, "The situation with Iraqi oil exports has simply become Blagojevichic." (which of course refers to the black market sale of oil from Iraq that mysteriously seems to defy efforts at accounting and control by a whole host of governments including the United States, Iraq, Saudi Arabia, Italy, France, the UK, Russia and others, along with some of the biggest, most sophisticated oil companies in the world, that somehow can't seem to keep track of all the oil being illegally sold right in front of everybody that is supposed to be watching). 

In other words, another way to understand the true meaning of Blagojevichic is that "I've got something that's golden. I'm not going to give it away without me getting something for it." Kinda a Dick Cheney sort of philosophy, no?

Why should anybody sell oil on the open market and have to pay taxes or properly account for it? Isn't it interesting how Iraqi oil production seems to be officially stuck at about 2.5 million barrels per day? Gee, I wonder where all the other 2 million barrels a day are going?

"Corruption charges! Corruption? 

"Corruption is government intrusion into market efficiencies in the form of regulation. That's Milton Friedman. He got a god damn Nobel prize. 

"We have laws against it precisely so we CAN get away with it.

"Corruption is our protection!

"Corruption keeps us safe, and warm.

"Corruption is why you and I are prancin' around in here instead of fighting over scraps of meat out in the streets.

"Corruption, is why we WIN!" (Danny Dalton- from the 2006 film Syriana)

So, there you have it. Blagojevichic. Corruption. Greed.

Admittedly, Blagojevichic might be a little long-winded for a public with the attention span of a pteropod and it doesn't enjoy the bi-syllabic efficiency of other popular terms like "Ponzi" but still, I propose that it is wonderfully functional as a shorthand for an otherwise impolite subject.

(p.s.- Papahanoumokuakea is the correct name for what is otherwise known to those outside of the Ocean Tribe as the Northwest Hawaiian Islands Marine Sanctuary, which of course is the absolutely amazing legacy that George Bush gifted to the world in 2006 and represents the single greatest effort by anybody, ever, to preserve "the environment" and remains the United States' new "Grand Canyon of the Pacific" even though the Average-Joe American over at Starbucks doesn't have a clue it exists or why it is so important.

And, a "Humuhumunukunukuapuaa" is otherwise known to mainlanders as the "Reef Triggerfish," which are actually quite tasty to eat, even though they are now protected and not politically correct to dine upon.

WARNING: Just be careful not to teach any small children in your life how to say Humuhumunukunukuapua'a or they will run around in circles driving you crazy repeating it over and over and over again. Enjoy!)

Tuesday, December 16, 2008

The Grocery Fairy cometh?

Next time you are in the grocery store, take a look around. Ask yourself honestly if even one person is in that store thinking about where all those goodies come from?

The Grocery Fairy!

All the goodies in the grocery store must come from the Grocery Fairy, right?


All those groceries come from TRUCKERS. Plain and simple. Truckers are the "backbone" of America. Nothing gets to market without truckers.

Every time I have been to Russia, I have met someone who told me a story about the lines they had for meat and bread after the collapse of the Soviet Union. Things were pretty harsh, to say the least.

But these days it is easy to visit a grocery store in Russia that is packed full of goodies. Most of the Russian grocery stores look about the same as one in the US, or Mexico.

A few years ago, I had an eye-opening experience that increased my AWARENESS of the food situation in the US. One of the supply ships that goes back and forth to Hawaii from the mainland threw it's rudder and became disabled.

About three days later, I finished my work for the day and stopped by the grocery store on the way home. It was a panic.

All the Hawaiians were busy fighting each other while cleaning out everything off the shelves in the grocery store. It was sheer pandemonium. People were charging through the store with at least two shopping carts and just throwing stuff in. The word had gotten out that things were thinning out on the shelves and then everybody panicked. All the ATM machines ran out of cash too.

The amazing thing to me was when I watched one large Hawaiian "Island boy" bashing around with his two shopping carts and even though he rudely pushed right past me, he couldn't push his way past some even larger Hawaiian "girls" blocking the aisle. The guy happened to be standing next to the cake and frosting stuff and I watched him reach down and start loading up on multi-colored candy sprinkles and frosting, candles and cake decorations and so forth.

I asked him, "Excuse me, but, why are you buying cake-baking supplies when there is a food shortage?"

"Fo trade bruddah!" He replied.

Oh! For trade. To trade for food later. Ok. Whatever. Good luck with that strategy. I could just smell his sense of desperation. He was a big dude and obviously he needed some major calories every day to keep the fires burning. The thought of the local grocery store running out of food had him really scared!

I told this story to my buddy that works maintenance over at the Honolulu airport, and his cousin works down at the port of Honolulu, and he proceeded to "educate" me on the fact that Hawaii only has a few days of food supply at any given time. Everything is sort of "just in time inventory now in the new age of container ships. If the ships stop coming in..... people stop eating. I guess that figures. Hawaii obviously doesn't grow a whole bunch of food crops with the intention of self-sustainability, even though they could. Corruption prevents things like that that make sense. It is easy to observe that, for example, one WHOLE ISLAND, Lanai, is dedicated to enriching just one company, not providing a self-sustainable food supply for all the Hawaiian Islands. Hmmmm.....

Now, just to put this into perspective for you....I'm a pretty fortunate kid. My family was always very comfortable and having food to eat had never once been an issue. About the only time I have ever gone hungry was my own fault for deciding to go climb some mountains and getting stuck in the tent a few extra days because of the avalanches. I've never gone hungry.

But watching the melee going on in that supermarket in Hawaii really opened my eyes. In a different way than living in California. 

In California, any idiot understands that we have earthquakes every day. So anybody with any common sense keeps their running shoes in their car (to walk home 30 miles once the freeways are blocked after "the big one") and keeps a week's worth of canned goods and water sitting in the garage.

Peak Oil kind of raises the stakes to a whole different level.

What if the Grocery Fairy just quit coming? Not just for a week. But what about FOREVER?

That's what it is all about really.

Go into the market today and instead of looking at all the wonderful "products," take a look around at all the people. Ask yourself what any of them plan to do if the Grocery Fairy stopped bringing loads of goodies once a week?

No plan! That's the answer! They have NO PLAN. They don't have a plan because they are not AWARE. That is what this blog is all about. Awareness.

I hate to be the one to tell you but, most people really believe in the Grocery Fairy. I don't even know you but I can easily say with certainty that YOU probably believe in the Grocery Fairy!

Most folks living today didn't grow up on a farm. That was more than 100 years ago when most Americans lived on farms and had some mental awareness of the connection between the farm and the grocery store.

Filling your tank with gas at the local "filling station" is the same vibration. People don't sit and think about the oil well that was drilled and the pipeline that was laid and the refinery that cooked and the delivery truck that brought the magic go-go juice to the fillin' station. Everybody I observe is busy texting and squawking on their bluetooths (blueteeth?) and obviously think the GASOLINE FAIRY brought some cheap go-go juice for them.

Well, guess what you Peak Freakers? The party is over. TRUCKING IS SUCKING.

Diesel fuel was about $5.00 per gallon all through the summer of 2008 and thousands of truckers got permanently shoved out of the Fairy business.

Even though diesel has dropped in price, the economics of our system of long distance salads and the millions of dollars we waste shipping food all the way across the country just does not make sense.

It is not just that truckers are having a "hard time." Things are CATASTROPHIC.

A whole way of life is ending.

Remember that the interstate trucking business was "born" in the 1920's during the days of alcohol Prohibition. That's when all the big trucking companies got their start running moonshine. (That's right, it wasn't just those ho-dad NASCAR drivers and rum-runner Kennedys).

But now there is a fundamental shift. Trucking just doesn't make sense. The numbers don't add up. At lease not for shipping food in trucks. Maybe you can still make some money on high-end consumer electronics or drugs like cigarettes but shipping food just does not make economic sense any more.

Oil prices are going to be very volatile for the near future. Up and down. Probably way up and down. Deal with it. Get a clue. Become AWARE!

And don't forget to leave a quarter under your pillow tonight for the Grocery Fairy. ;-)


Friday, December 12, 2008

$200.00 a barrel? Jim Rogers agrees

Dobroe Utra! That means good morning.

All you Peak Freaks might want to brush up on your Russian now that Dmitry Anatolevich (Dmitry Anatolevich Medveydev: the President of Russia) has hinted that Russia may join OPEC.

And, did you notice that Jim Rogers, the co-founder of the Quantum Fund with George Soros, has stated that oil can go up to $200.00 a barrel? I agree. So does Matt Simmons.

Click here to check out Rogers' latest at Reuters.

Has Global Oil Production peaked? Nobody knows. But 85-87 Million barrels a day might be all we can get. We won't know for 10 or 20 years until we look back. It seems to be peaking RIGHT NOW.

The problem seems to be that oil prices are going to get a lot more volatile and could go into some big swings, maybe over $300.00 per barrel? Maybe $600.00?

All the "experts" have now been proven wrong. For example, how about all the wonder-boys who got ripped off by Bernie Madoff right in the middle of Wall Street. They couldn't even recognize a Ponzi when it was right in front of them for years. You might want to be a little more cautious about taking "advice" from the Wall Street machine. Including on Peak Oil.

Try to remember that the "economy," meaning all economies, in all countries are based on energy and the only energy we got is OIL.

Forget about the concept of "cycles." A cycle is like a nail in a tire and it clicks with each revolution. Oil prices, and supply and demand follow a much more complicated mathematics than just simplistic "business cycles" that don't exist in reality.

Oil prices follow the mathematics of non-linear dynamics. They're fractal. Natural. Beautiful.

The volatility being observed is caused by natural dynamics of a very complicated system and will continue and likely worsen.

Maybe the decline in production in most of the world's oilfields will influence a decline in volatility and price fluctuations. Maybe it won't. Good luck playing Nostradomus.

But all mathematics is the study of patterns. Natural patterns. And imperfect math leads to imperfect conclusions and "predictions." So expect more volatility.

And don't forget to compare your cup of coffee to a cup of oil (and remember to multiply by 667 cups per barrel of oil).


Wednesday, December 10, 2008

Listening? Or waiting to talk?

Buzz, buzz, buzz....buzz, buzz, buzz.....

This is the sound of your brain.....on yourself.

At least that's what I tell myself sometimes.

Have you ever been in one of those situations where you find yourself drifting in a conversation?

You want to be polite, of course, but your mind just starts to drift....

"Excuse me, what did you say again?"

Be honest. Sound familiar?

Been there, done that?

Were you really listening? Or just waiting to talk?

I notice this behavior sometimes when I talk to people about Peak Oil.

"Ever wonder where that go-go juice comes from," I casually remark while standing watching a fellow motorist pump their gas?

"Nope." At least that's what most people say.

"Well, have you ever heard about 'Peak Oil'....," and off I go, into "the schpeel," you know, about the Peak.

I always amuse myself by guesstimating how long it will be before somebody's eyes will glaze over in disinterest or whether they will suddenly interrupt with their own "real life drama" that lets me know they were WAITING TO TALK the whole time, and not really listening at all.

And there you have it.

So, one has to ask themself at some point, "Am I listening?" Or just waiting to talk.

That's the thing about AWARENESS. How can a person develop awareness when they spend most of the time just waiting to talk?

Hey, how about the propaganda they threw into last Sunday's "60 Minutes?" Poetic? Or what?

So, they are "bullish" on oil, huh? Hmmm. That's not the "bull-word" I was thinking of.....

Check it out...at CBS News

And then, when you get done smoking the Saudi Whacky Tobacky....check out the latest word from Matt Simmons....

I suggest you pay attention to the part where he talks about growing food locally!

Thursday, November 20, 2008

The Energy Revolution, and the consequences of not having one.

The World's energy system is at a crossroads. Current global trends in energy supply and consumption are patently unsustainable--environmentally, economically, socially. But that can- and must- be altered; there's still time to change the road we're on. It is not an exaggeration to claim that the future of human prosperity depends upon how successfully we tackle the two central energy challenges facing us today: 1) securing the supply of reliable and affordable energy; and 2) effecting a rapid transformation to a low-carbon, efficient and environmentally benign system of energy supply. What is needed is nothing short of an energy revolution.

So says the IEA's (International Energy Agency- for those of you who "don't habla" peak-oil-ese) just released report, World Energy Outlook 2008.

This is the big one. The report that all of us analysts have been waiting all through 2008 for.

The bottom line is that the world's energy situation is really, really bad.

The big news from this report is that for the first time the IEA included an analysis of the world's top 800 oilfield's DEPLETION RATES.

This is the first time the IEA has included such an analysis. This seems really strange to any sensible analyst. Why didn't they think to analyze the depletion rates before? Or did they?

The worst thing is that the IEA foolishly claims that "there is still time to change the road we're on." This is ridiculous, almost criminal, and certainly negligent.

There is no way we can change the road were on now. This isn't some fantasy world lost in the lyrics of a Led Zeppelin tune....this is the real world, not a drill.

The time to change the road we were on was back in 1974 when Hubbert CONFIRMED the Peak Oil problem was real. Or I guess you could say that the time to change the road we are on was back in 1962 when Hubbert reported to President Kennedy about the Peak Oil dragon that was sneaking up on us.

Here's the scary thing, the GLOBAL ECONOMIC CRISIS is not the big problem. Peak Oil is way bigger.

It is just hard for people to accept the reality that all the stock valuations of all companies are hugely overstated because no company has yet accounted for the cost of Peak Oil!

The IEA is right. We do need an energy revolution. Yesterday.

But the consequences are just hard to fathom. The biggest one is the certainty of the reversal of the "green revolution" as soon as Peak Oil prevents the production of the vast amounts of fertilizers and pesticides that we currently use to feed the world.

If this doesn't keep you up at night, you are either living in an illusion or smoking some good dope or both.

Americans are directly responsible for this problem. America uses 25% of the world's oil. The american lifestyle based on cheap oil for transportation is crashing to a halt and killing the rest of the people in the world.

Forget the financial crisis. The Peak Oil crisis is what is causing the financial crisis.

It is not patriotic to ignore reality and continue to live a life of wastefulness that is driving the world towards starvation. Americans need to get a clue and change the vibration.

But, make no mistake about it, it is too late to change the road we're on. There is no chance of changing the american infrastructure enough to become sustainable. That is what the Invasion and Occupation of Iraq is all about.

President Obama needs your help. If you are powerful enough to get some face time with the guy, do us all a favor and help him to understand the the SPR (Strategic Petroleum Reserve) is supposed to be saved for a real EMERGENCY, which by design means something like the closure of the Strait of Hormuz or a Saudi Terrorist event crippling Saudi production capacity.

And Mr. Barack needs to know that bailing out the dinosaur automakers is the wrong plan. GM should be taken out back and shot and left to die. All those autoworkers should be re-aligned to make vehicles that get 50-60 or 100 miles per gallon, not just meet the ridiculous CAFE standards that the corrupt auto industry lobby sold to the congress.

We need an new, New Deal. There is plenty of work for everyone. How about fixing all the thousands of bridges that are completely corroded and unsafe?

How about a New, New Deal that promotes communities to grow food locally, to avoid the oil expense it takes to truck food all across the country? These things are so basic, we just have to open our AWARENESS, of Peak Oil.

Otherwise, get ready for the consequences....

Tuesday, November 11, 2008

Hold your breath, or not

So, crude oil is down to $58.00 USD or thereabouts.

Interesting, isn't it?

What do you think? Do people really think oil, and therefore gasoline prices are going back down to stay?

It was all just "speculators," wasn't it? Yeah, that probably explains it.

Notice how the author bashed Matt Simmons by calling him a "gadfly." Hmmm.

It seems that Twilight in the Desert really pissed off the Saudis.

I don't doubt it. Kind of a "Syriana" moment, huh?

Well, you might not want to hold your breath just yet.

After all, there is such a thing as the "intrinsic value" to any asset. And oil is the most valuable type of asset we got.

I find it hard to believe that anybody could fail to understand the simple logic of merely comparing one liquid to another. Such as, perhaps, a cup of coffee to a cup of oil?


How tough could it be?

Which would you rather have? A cup of oil, or a cup of coffee?

Well, try pouring some Starbucks into your Cadillac Escalade and see how far you get.

If you really think that oil is only worth $58.00 a barrel, you have got a lot of 'splainin' to do!

I wouldn't start holding your breath that oil is going to stay this low, or go down to $3.00 USD a barrel like it was before the 1973 oil crisis!

And, if you really believe that the Saudis are going to "prove up" their reserves from 263B to 450B, billion barrels, that is, then I've got some property on the bottom of the ocean I'd like to sell you!

At this point, I have to admit, my "prediction" of $200.00 USD per barrel by December 2008 is not likely to happen. The best that I can guess right now is that the world got a "get out of jail" card that will give us about 3 to 5 years more to prepare for the Peak Oil disaster.

In other words, the hump at the top of the Peak Oil mountain is getting flattened out by the Global Economic Crisis.

But, make no mistake about it, Peak Oil is sneaking up on you right now......

Breathe, while you still can

Monday, August 4, 2008

Asleep at the Wheel

Peak Oil, Peak, Peak Oil! The times-are-a-changin' !!!

Hey, did you catch the buzz on Wall Street today, since oil dropped back below $120.00 per barrel?

All those analyst boys are backslappin' each other for being such geniuses that they told everybody it was all just speculation, all just a bubble!


Sometimes it is just hard to believe how blind people can be.

Just to set the record straight.....THERE IS NO OIL BUBBLE!!!


Okay? Got it? Great. Please, let's get back to reality, even if it is an election year.

Obama showed he was nothing but a politician today. He seems to think that an "energy plan" means using a screwdriver for a hammer. Riding a donkey in the Preakness. Driving a Yugo in a Formula One race. Paddling out at Todos on a foamie longboard!!!

OOps! Sorry for the obscure BigWave Surfing reference....

How about we try an "Olympic" analogy, just to try to put Obama's "Big Idea" into perspective?

Think Rodney Dangerfield against Michael Phelps in the 100 meter freestyle!!!

That makes about as much sense as Obama's plan to drawdown the US Strategic Petroleum Reserve just to help gasoline prices.

No way! Not a chance! 70 million barrels of oil is only 3.33 days of US consumption(@ 21 Mbpd)

The only problem is that even if the SPR was cranked up to it's full ESTIMATED drawdown capacity of 4.4 M bpd, that would only be 15.91 days of price relief!!!

16 days of lower gasoline prices??? Does that make any sense to anybody except a politician during an election year???

And Obama thinks he has what it takes to make decisions as Commander in Chief?

I wonder what he plans to do when Iran is provoked into firing it's Silkworm missiles at oil tankers in the Strait of Hormuz? That is what the SPR was designed for. We have been saving up since 1974 and spent more than 40 Billion taxpayer dollars stashing away oil for an emergency, and now Obama wants to squander our emergency supply just because the oil markets are starting to reflect the reality of Peak Oil???

Oh, and by the way. What about our commitment to save our Strategic Reserve in case one of our fellow signatory nations has an emergency? Like a REAL emergency. Like what if Japan has a massive earthquake that affects their oil infrastructure? What about a storm or terrorist event that might affect one of our "friends" that we have agreed to save our oil to help in a real emergency? I don't hear too much buzz in the media about saving our emergency supply to help our friends in an emergency. I guess maybe the USA just expected everybody else to send us their oil if WE had an emergency, but we don't have to save OUR OIL for any of our friends, even though we promised to.

Didn't Nancy Pelosi just say the same thing a couple of weeks ago? Drawdown the SPR?

It makes me wonder if the congressional staffers are really that bad and they don't bother to brief their principals on the realities of things like the SPR, or the lack of an Oil Bubble, or lack of speculation or just plain Peak Oil, Peak, Peak Oil.

Peak Oil, Peak, Peak Oil. The times they are a changin' ! It really is a Bob Dylan kind of vibration isn't it?

"Bama in the basement, mixin' up the medicine, Johnny McCain on the Pavement, thinkin' bout the government...."

Hey, look. McCain doesn't have an Energy Plan either. Ron Paul did, does, whatever.

McCain thinks "Drill, Drill, Drill" will float him into those black tie inauguration balls......Hmmmm.

Look. It's simple. Peak Oil is so bad, so obtuse, that it is going to make a monkey out of all of us. It already is.

Almost everything I think is wrong. All our "American values" that we cherish so much are all based on the fallacy of unlimited cheap energy from oil.


That is what this blog is all about.


Understanding reality. Even if it is painful.

Try to remember, oil prices are really, really low. Even at $140.00 per barrel like just a little while ago.

If anything, you have to give a lot of credit to the Powers That Be and the massive American Media Spin Machine for massaging the Peak Oil issue into near obscurity during this election year.

What looked like sure $200.00 per barrel by Christmas, now looks a little different, doesn't it?

The real problem is time. We don't have much before the Peak Oil Crash gets really "In Your Face."

Too bad our leaders are Asleep At The Wheel!!!!

Saturday, July 26, 2008

Top List- Economic Collapse

Welcome back campers! :-)

How is your summer going! The oil biz has been really busy.

For today's entertainment, we will explore my Top List of reasons the collapse is already here.

1) Trucking is Sucking. The US economy is 2/3rds dependent upon consumer spending. Consumer spending is totally dependent upon the trucking business to get goodies to the store to buy. Trucking in the USA is completely collapsing. Independent truckers are walking away from their leases and just leaving the keys to their trucks at the truck stop and getting a ride back home with Billy Bob. This is already having a huge impact upon the US economy. It is really bad. Way worse than you think. As soon as the big companies (Yellow, England, Knight, Swift, Stevens, J.B. Hunt, Central, etc.) have to park their trucks....game over!!!

2) The US Government is using Fantasy Accounting tactics to hide the true economy. Many accredited economists have explained that the US does not follow sound accounting practices and that the so-called "shadow statistics" show that a) the economy has been in a recession for 3 quarters; b) inflation is actually about 8-9%; c) Medicare, Medicaid and Social Security are treated as "off balance sheet" items. This is ridiculously insane and not even close to sound economic policy. Send Greenspan a Christmas card

3) The Saudi Ghawar oilfield is toast! Saudi is trying desperately to raise daily oil production from Khursumaniya but Ghawar is spitting up a high water cut and making it impossible to keep the production so high. Injecting 7 Million barrels of seawater a day to keep reservoir pressures up only seems like a good thing, it will soon cause a catastrophic collapse in Ghawar production.

4) The US fleet of cars and light trucks cannot be changed fast enough to make a significant difference in the amount of fuel consumed for transportation. 

I have been waiting to find an authoritative source to help people to understand that buying a Prius and having automakers start producing PHEVs (Plug-in Hybrid Electric Vehicles) will NO WAY SOLVE THE TRANSPORTATION FUELS PROBLEM!!!!

Check out this newsbit from a Silicon Valley industry event this last week......

Dr. Andy Frank, a professor of mechanical and aeronautical engineering at UC Davis who is credited as being the "father of the Plug-In Hybrid, broke the numbers down in his keynote address....

"We have 200 million cars on the road today (it actually is 230 million cars and light trucks-jbs), but we only make 15 million new cars each year. So at best, if the country's entire auto manufacturing capacity were to build nothing but PHEVs, in 10 years we could only replace about 5% of the fleet." (those are actually old numbers now that car sales are down 30% according to my friends in the SoCal Car Biz, the new rate of replacement is way lower than 5% in 10 years-jbs)

THIS IS REALLY BAD. BASICALLY IT MEANS THAT WE BLEW IT!!! We needed to start making these changes 30 years ago after the 1971 Peak in US oil production.

Sometimes my fellow americans get pissed when I explain to them that the US is far more corrupt than Russia. They seem to misunderstand this as a non-patriotic statement. It is not. I am a great patriot and I have spent my whole life helping my country by being a model citizen and global ambassador when I travel. Russia is corrupt in a different in-your-face kind of way that your average american will never understand, especially because they have never been to Russia like I have. The Russian "thieves world" culture is different but strangely similar to the system of 35,000 corporate lobbyists that run the US of A.

The transportation "fleet failure"  is not some catastrophic event off in the future. IT IS HERE! Obviously the entire USA is built wrong. Muscle cars and SUVs and 18 wheelers that get 5 mpg are killing the USA!

5) The US has no energy plan!!! (if you want to read about the only real plan that the USA has you need to read the position papers at the PNAC (Project for the New American Century)

Remember that for most of the history of the USA, we didn't even have a Department of Energy in the government. That just goes to show how out of touch with reality the people running the country were. The big illusion was that money was everything. Business. The economy. They never understood the simple fact that money is an abstract that is derived from the concrete reality that energy feeds commerce and allows an economy to be built.

6) The US corporate propaganda machine has blinded people and will continue to blind people to prevent our collaboration on any real effective solutions (for example, just yesterday, the USGS announced that there are "billions of barrels of oil" in the arctic. As if that would somehow solve our dysfunctional energy system. Remember the USGS were the same people who told us there was no Peak in US oil production in 1971 and now created this huge bullshit about the Bakken Formation holding 500 Billion barrels of oil when maybe 3 billion will be recovered)

Matt Simmons has already made it clear that the US needs a "Manhattan Project" for energy. Good luck with that. There is none of the "political will" that Al Gore dreams about to bring any real leadership into play.

7) The Sub-Prime Meltdown has crippled the US and world economy just at the time we need $ to invest in sustainable energy

 (one algae biofuels company I am working with has developed a solution to sequester carbon dioxide from smokestack emissions at powerplants and feed the CO2 to algae and create algae oil that can be transesterified into algae biodiesel and the leftover algae residue can be dried, gassified and converted to syngas to be burned to create electricity and more CO2 to feed more algae. Want to know the joke? It makes more economic sense to ship the algae biodiesel to Europe and sell it there than it does to sell it here in the USA!!! If our government does not wise up, the biofuels we need will just get shipped somewhere else.)

8) Global Peak Oil Production has not yet affected oil markets (and therefore, all other markets that use petroleum(fertilizer, pesticides, plastics, petrochemicals, medicines, etc. etc.)) As soon as the news gets out that the world's oil supply has Peaked in production, oil will rise to what it is really worth- my latest calculations show $987.00 per barrel!!!

9) The USA has permanently lost it's prominence and the US Dollar is lost now too. (this means if you are a US citizen you need to get a lifeboat outside the US and some minimum "nestegg" in a foreign currency. These are the type of international strategies I develop for my clients)

10) An attack against Iran seems imminent. Any attack against Iran, whether by the USA or Israel or some bullshit "coalition" will cause an immediate, in 3 days, collapse in the global economy. Iran has many, many Chinese made Silkworm missiles in emplacements around the margin of the Strait of Hormuz that they have promised to fire at oil tanker traffic in the Persian Gulf. 17 Million barrels per day, one FIFTH of the world's oil passes through the Strait of Hormuz each day. The US SPR (Strategic Petroleum Reserve) is only ESTIMATED to be able to supply 30 days of oil if the Strait is closed. Just one tanker hit will cause all the insurance companies to pull their coverage or increase their fees. A mere military escort by US or Canadian or British warships will not be enough to continue a significant supply of oil through the strait. We need to help Iran and make them our friends. They already are. We have over 900,000 Iranians that live just in California and I know many Iranians very well and they are certainly not the religious monsters many ignorant redneck americans seem to think they are.

Iran needs our help. We should give them as much nuclear ELECTRICAL POWER capacity as they can handle. It is totally achievable to put international monitoring in place to prevent Iran from further enriching nuclear materials to weapons grade. Unfortunately the USA is an nation living under almost absolute propaganda manipulation and the average American is scientifically illiterate and can't understand nuclear physics and the issues involved. I don't know how many times I have suffered through an ignorant american making jokes about President Carter without even realizing that he had a degree in Nuclear Physics and they don't. Sad.

11) Recent statements about the SPR proves that all US politicians are functionally illiterate and do not understand the SPR or the oil business. They are leading the USA into the abyss. It does not matte which political party you are talking about. They all failed to understand the SPR and how it should be used. Have you heard even one talking head explain that the USA has a signed obligation to provide OUR OIL to other nations in case of THEIR emergencies? Yes, it's true. We have an obligation through the IEA. How come no politicians are explaining that the SPR is supposed to be saved for an emergency, even our friends' emergency???

So, there you have it. The collapse is already here. We have been in a slow motion wreck since at least 1971 when the US oil production peaked. That is the price of corruption. The lobbyists were just too successful and none of the politicians care enough to stand up and do the right thing because they are constantly worrying about getting re-elected.

What to look for? Well, when you turn on the TV and Bobby the Talking Head tells you the big trucking companies just shut down, watch out. There isn't gonna be some "Bear-Stearns-Bailout" for the trucking biz. There just won't be much to choose from at the store or market. My friends in Russia have told me some rather vivid stories of waiting in line for bread or meat.  Get ready America! (The remaining malls will crash and burn too.)

And, run for the hills when Susie NewsAnchor tells you that Saudi finally admitted that the Ghawar field is toast. That will mean that we have hit Global Peak Oil!!!

Solution you ask? Get your ass to the top of your own pyramid ASAP (start a medical clinic and a sustainable farm).

What's that smell? Rome is burning!

Thursday, June 12, 2008

Walk the Earth, 2030


Plato: "Hey man, you got anything to eat?"

Aristotle: "No way dude. I scarfed down the last of those MRE's we found in that cave in Colorado, you know, the place they named "Not-Rad!"

Plato: "No-Rad you dimbus, No-Rad. It was called No-Rad"

Aristotle: "Yeah whatever dude."

Plato: "I guess those guys couldn't skate man. Get it? No-Rad. Ha ha ha. I still think it was sad the General refused to share the food stash with the gangs and they barbequed the whole place! It was amazing they didn't go Hannibal the Cannibal like all those senators and congressmen did in that salt mine in Missouri! I guess putting their own names on "The List" after the PeakCrash didn't work out so swift for them, eh?"

Aristotle: "Yeah man. I tried forever to get one of those black stickers on my smart car before the crash. I was getting so tired of sitting in those gas rationing lines. But you know, once they privatized the Gas Rationing Administration, it just was a lot harder to pay somebody off! It was all porno queens that got the privileges. Man, I would have given anything to get one of the VIP passes they gave out to all the celebrities and politicians! Well, at least it would have been cool before the mobs started workin' over all those "beautiful people" when they tried to cut in line with their little passes. You know, I never really understood that SuperPatriot Act that they passed."


Aristotle: "So, what's the call man? Do ya wanna watch the Mad Max video again or should we go back to that lot with the 50,000 abandoned Prius' and see if we can siphon another gallon like we did when we rode the mopeds from LA to Vegas last winter?"

Plato: "Nah man, that's beat. Those things don't even have fumes in 'em. We probably won't get much and we'll have to pedal all the way back here. How 'bout if we pretend that some hot chicks are texting us?"

Aristotle: "What are you kidding man? What are you, some dinosaur? Texting was ages ago, back in 2015 or whatever when the cell networks crashed! Like, I can't even remember what it was like to send a text. My blackberry callouses wore off years ago dude!"

Plato: "Yeah, You're right. Texting is burnt. I just miss the Chicas now that they evacuated the ones that survived the crash to Costa Rica after that virus got out of control. The good ol' US of Boys Club just doesn't seem the same without 'em. The government probably should have allocated more fuel to the Department of Virology instead of burning it all to protect that Green Zone in Iraq that they lost anyway, huh? Oh, well. At least there's no more government to bug us about growing our own dope!"

Plato: "Oh, oh! I got it man! What say you, we cruise down to that camp in Crawford, in what used to be Texas? Remember where the "bluebloods" and all those agency dudes starved to death after the PeakCrash because they refused to believe that raising beef used too much water? I bet we could find a few pairs of jungle boots for next winter!"

Aristotle: "Hey, that sounds not half-bad Einstein! Maybe on the way we could stop by that PeakFreak compound and do the 'participate-in-the-community-workforce-to-get-a-meal' thing again for a couple days! Maybe they have another batch of those solar spirulina biscuits done up by now. Do you have your PeakFreak-Sustainable-Living-Labor Certification Card where you can find it so we don't have to do that course they make all the newbies do?"

Plato: "Irie mon! I bet we'll run into some more of those Chinese metal scavengers and we can barter them that map of all the oil pipelines. They'll be stoked to find some more rust generating material to hack up and ship home on their little sailboats. I wonder if they have any more of those cases of McDonald's Fries they confiscated after Wall Street crashed and they didn't get paid? Those fries will keep for 20 years! Great road trip rations. Can you believe that people used to spend so much valuable fuel to refrigerate perishables when all they had to do was switch to fries?"

Aristotle: "Hey, don't forget to bring the Ham radio this time, I wanna listen to Hanoi Jane's voice at night when we camp. And remember, it's your turn to work the crank on the dynamo this trip."

Plato: "Sure man. Are you gonna trade some more homebrew to those Indian dudes from the casino before we go? It would be cool to have some travelin' wampum. But make sure to get Roubles this time and not those shitty Euros! At least Sergey and those crazy Gazprom jokers will trade Roubles for some of that biofuel they're cooking. It's too hard to find collectors that want those Euros. Thank God Vladimir Vladimirovich was able to keep the Rouble from crashing when everything else went down the toilet! You gotta admit he made the right call buying up so much gold and diamonds with his oil revenue while everyone else was workin' those worthless derivatives."

Aristotle: " Ok, ok. Roubles. Hey, remember when Sergey tarred and feathered those fools that used to work for the old Currency Authentication Administration? Can you believe that they tried to pass those worthless old US Dollars off on him to pay for what they owed him on those water filters? What a bunch of boneheads!"

Plato: "Oh Lord, won't you buy me, a Mercedes Benz. My friends all drive Porsches.....well, at least they ride Porsches. Hey, you remember when all those trophy wives used to drive the huge Cayenne SUVs before the crash? I bet they wish they had some tanks of gas saved now for their Porsche mopeds down in Costa Rica, huh?"

Aristotle: "Yeah. Maybe we'll get lucky and find one of those babies this trip and we can cut the leather seats out and make us up some badass road-jeans! I bet if we check at one of the abandoned truck stops we'll find a sweet Cayenne that got stalled looking for a last tank. You know those chicks always had a Juanes CD in the stack while they were lead-footing it around town to get their nails done. I think you could trade a Juanes to one of the Indians at the casino for a coyote trap or something else useful."

Plato: "Yeah Buddy! I bet we do find a Cayenne. I'm hoping for a nice light tan interior to give me a new set of rags that won't get so hot in the desert. We should bring the stainless crucibles in case there are any 18 wheelers rolled off the highway and we can poach the tires and cook up some rubber-juice to mix with the biofuel!"

Aristotle: "Do you mind if I borrow your Donald Trump autobiography? I always like daydreaming 'bout how much fuel that dude used to burn flying around in his coche-in-the-sky. Man, wouldn't you like to have just like one flight's worth of  jet-fuel now to run a roto-tiller for about 20 years instead of hacking away with that shitty hand powered hoe we traded from Pedro?"

Plato: "Yeah, the roto-tiller would be sweet, but just imagine what it used to be like with an actual combine to harvest a field, instead of that pathetic scythe we have to use now! I hate that thing. My shoulders get tired after a few days of swinging that thing back and forth all day. It seems like so Stalinistic or something. Retro-Soviet it is!"

Aristotle: "Dude! Instead of Trump we should bring that book on roadkill. I bet I can hit a squirrel again like I did riding those S-curves along the Arkansas river last year!"

Plato: "No way Jackson! That was like an act of God. You ain't gonna hit another one like that. Roadkill is dead man. That would be like winning the lottery three times in a row. There's no more roadkill in the entire world now that everybody is on mopeds!"


Please subscribe to this blog and don't be afraid to read the "older posts" to explore other entertaining Peak Issues of late

Wednesday, June 11, 2008

No more "Drive until you qualify"

Did you feel that? No? Were you paying attention? The US just crossed another invisible line along the path leading to economic collapse. In the real estate biz we have called it "drive until you qualify." 

The idea was simple enough. Many people could not afford housing near urban areas where they worked, so the solution was to drive out of the city far enough for the housing prices to drop to a level where their income from their city job would qualify them for a mortgage. But now fuel prices have risen too high to make the drive until you qualify solution work anymore. The distance you have to go out from the city to get the mortgage low enough to qualify now costs too much for fuel!

Affordable housing has been a problem for longer than I have been alive. A few years ago when I was embroiled in some drama related to the abusive business practices of the airline against our union pilot group I had occasion to re-read the Upton Sinclair classic "The Jungle" about the Chicago meatpacking industry. It is an illuminating description of various abusive practices including some of the stunts the "powers that be" used to pull on the poor laborers. My favorite was the one where they sell the same little shack over and over again. The issue of affordable housing is nothing new. But Peak Oil is causing a more fundamental shift than just mere difficulties with finding affordable housing.

Check out this Bloomberg article titled "Wealth Evaporates as Gas Prices Clobber McMansions  http://www/bloomberg.com/apps/news?pid=20601072&refer=energy&sid=a4kOXcpl3dQg

This is a fundamental shift in the economics of suburban america.

We have just crossed over the invisible line formed by the boundary between cheap energy and overpriced-energy-inefficient-poorly-designed-housing.

The core concept to understand here is that most of the US is built wrong! Let me say that again because this idea is so radical that many people I talk to about this don't get it or don't believe it. 


Suburbia does not work! The reason is because all the light rail mass transportation was bought up and intentionally excluded from land use planning of all our suburban communities. You can read up on "The Great Streetcar Scandal" on Wikipedia to get a better picture of part of the problem but the inadequacy of the design of american suburbia is deeper still. We have built out the entire country based on the design of suburban living where people move about individually in personal automobiles running on cheap energy from oil. Period. That's it. And that is the problem. The government and land use planners didn't make the slightest effort to build towards sustainable living and transportation based on renewable energy sources. Even after the 1971 Peak in US oil production! Developers of suburban housing tracts were never required to design efficient transportation into the core of the country. Every aspect of the development of suburbia was driven by the short-term profit of the wealthy and their corporations instead of long term sustainability.

And now, things have gone too far. And there is no solution. It is too late to change the entire country full of suburban designed city layouts. For one thing, it takes vast amounts of energy to change the layouts of cities and suburbia. More than the energy we spent to build it. We definitely do not have the energy to re-build the majority of the country and redesign mass transportation into the core of communities. Not to mention the eminent domain issues. We don't have the capital either especially with the global shadow economy and the black iceberg in the form of trillions of dollars of derivatives.

The big illusion that is currently prevailing is that some magical mumbo jumbo "technology" is going to come to the rescue and americans will be permitted to perpetuate the energy impossible lifestyle of suburbia. People think that "they" are working on it. WAKE UP! The only THEY out there is WE, you and me. Perpetuating suburbia is not possible. Stop fooling yourself. 

Dreaming about a bunch of hybrids or plug-in vehicles isn't going to change reality. None of those technologies can be SCALED up big enough to provide a solution. I actually meet people who believe that we are just going to keep buzzing around in 230 million private vehicles while some inventor wizard drops a new hydrogen engine into their SUV over the weekend! What a joke. But the joke is on us.

I have clients who have physically left the US just because of the so-called "Patriot Act." Some have ex-patriated. I have others who just moved to protect their assets. Those are important but fundamentally different issues. But many people are now discussing the long term viability of a country where the fundamental design of the majority of the living and working space is totally unviable.

The dysfunctional impossibility of suburbia is one of the most critical impacts of Peak Oil. No more drive until you qualify my friends.

Tuesday, June 10, 2008

What happens in Grand Rapids, Stays

Yawn! Scratch, scratch, scratch.

So, did you catch the International Conference on Peak Oil and Climate Change? No?

Yeah, I didn't think so. Well, I guess what happens in Grand Rapids, stays in Grand Rapids.

Seems like the Peak Oilers need to get some sex, you know, like, sex sells! Obviously the conference should have been held in Vegas. Then maybe they would have gotten some decent media coverage.

Check out this video "promoting" the conference. Wow. Even the people sitting there look like they are falling asleep.

I think maybe it is time to bring in Bruce Willis. Imagine a Peak Oil disaster flick! Bigger than King Kong! Forget about "Die Hard," Peak Oil is going to be way bigger!

In the last week I've seen the "shock jocks" of wall street throwing some gang signs too.

$150.00 per barrel by July is the talk of the town.

I already explained $800.00 per barrel in a previous post "667 reasons Oil is worth $800.00"

I am getting a lot of callbacks from my analysis showing $200.00 per barrel and $6.29 per gallon of gasoline by the end of 2008.

Now I am "upgrading" my BUY signal based on SUPPORT from a young lady I met the other night that works at Starbucks. Are you ready for this? My new number for the value of a barrel of oil is, $987.00.

Yep, that's right. I'm going to show you the math for $987.00 per barrel in a post later this week. Amazing.

I assume you probably aren't ready to hear the analysis for $12,168.00 per barrel today? I didn't think so. Enough reality for one day.

The Oracle has spoken

We used to have a joke in the real estate biz. I'm sure you've heard some version of it. You know, the one that goes, "And if you believe that...I've got some great parcels on the bottom of the ocean that you would be interested in!"

Of course that was only ridiculous BEFORE the invention of offshore drilling and the sale of blocks for millions of dollars. Suddenly that property on the bottom of the ocean had a decent value! Makes you wanna rethink a few things doesn't it?

So, now, in 2008, the Oracle has spoken. And the question pops up again. If you believe that, I've got some parcels on the bottom of the sea for you!

The Oracle in this case is none other than Allen Greenspan himself. AKA- "The Pied Piper." Actually, I've never met the man or heard him speak and do not claim to be any kind of expert on Mr. G. himself. I have great respect for "successful" persons of all flavors and he certainly deserves some high level of respect for his life accomplishments. However....

"The Age of Turbulence," Greenspan's new release, is fascinating to say the least. And there are a myriad of interesting topics and statements made in the book that could be the subjects of many a blog post. But the interesting one I chose to discuss today is found on page 442.

"None of the tight balance between supply and demand is due to any shortage of oil in the ground." So there you have it. The Oracle has spoken.

Now, if you believe that....

This may be the biggest misunderstanding related to geology that I have ever encountered. What planet has this guy been living on? The oil companies have been killing themselves for years trying to find some more boomer fields with easy to get, high grade, go-go juice. And it hasn't happened. Overall, exploration has been pretty disappointing. The whole idea of Peak Oil is that there IS a shortage of oil in the ground. That shortage is a natural result of the geology of Planet Ocean and the natural processes that created, deposited and preserved the oil we have become so dependent on. If there wasn't a shortage, we would still have $3.00 per barrel oil like we used to! Soon, it will be $300.00!

Did you notice that Mr. Bush went to Saudi twice recently? Mr. Hillary even scoffed at him and complained that Dubya shouldn't be "begging" the Saudis. Hmmm. Why not? We are in big trouble. Maybe we should have sent them a better fruitcake in that Christmas gift basket, uh, I mean that Ramadan Gift basket.

I wasn't able to do a complete concordance on The Age of Turbulence, but I fanned the pages pretty good a few times in the bookstore and I am fairly certain that the term "Peak Oil" does not appear in the book at all. It does not show up in the index anyway. If you find it, please send me a comment with the page number.

Isn't that odd? Peak Oil is considered a fairly serious issue. It may be the defining issue of the 21st century. Yet the entire concept is prominently absent from the most recent work of one of the "architects" of the current global economy. Hmmm. What's that smell?

Sunday, June 8, 2008

"Why are we so blind," you ask?

"Why are we so blind," you ask?

Well, what are you spending your mental attention on? Britney? Kobe? Tiger?

I don't own a TV. I grew up as a kid watching Star Trek and I Love Lucy so I have spent the rest of my life un-brainwashing myself. Me and Da Boyz used to watch Kung Fu to get the "right vibration" going before the afternoon surf session. I thought that was a good use of TV, although I admit it squandered the educational potential of the medium itself. But that was when I was a kid, you know, the period when the parents make most of the big decisions. But I found that once I got unleashed, TV just didn't have the same allure as night surfing or riding a dirt bike across the moonlit desert, or whatever.

I sometimes catch some boob tube when I am staying at a hotel, but in general, I hardly ever choose to "zone out." There just is no substitute for reality.

Peak Oil begs the question. Why? Why are we so blind? How could we possibly be using 25% of the daily oil in the world? And what for? What are we accomplishing? A consumer economy? Consumerism is our de facto religion in the USA. Why don't we "see" more of the real world?

Have you been paying attention to the statistics that show that the high school or college graduates don't know their world geography? Don't be shocked. I see it in the business world every day. 

Do you know the capital of Tajikistan? What are the countries that border the Caspian Sea? What about the Persian Gulf? People often spout off their political "opinions" but in the next breath I discover that they don't even know their geography. Is that a valuable opinion then, the one pulled out of a "dittohead" philosophy or fashion mag? What kind of "worldview" is it without a good grasp of geography, much less history and culture? Seems like a cloudy day. Hmmm......maybe that is where the "view" in worldview comes from?

Check out the video below. I like the way Alisa Miller attempts to explain "Why we know less than ever about the world." I think this goes a long way to explaining why Peak Oil Awareness is so low in the USA. And make sure to give yourself a round of applause for having the courage to turn off the tube and explore some cyber news.

Please subscribe to this blog. Until we meet again....

Crossword Puzzle answers: (Dushanbe- Capital of Tajikistan; Kazahkstan, Turkmenistan, Iran, Azerbaijan, Russia- countries bordering the Caspian; Iran, Oman, UAE, Saudi Arabia, Qatar, Bahrain, Kuwait, Iraq- countries bordering the Persian Gulf)

Extra Credit: OPEC members? Newest OPEC member? Which country is rumored to be considering dropping out of OPEC?

Sniffing for the Peak

My dog used to be able to smell the ocean from one hundred miles away. She would sleep in the back of the truck in relative boredom while we did the ski expedition to Colorado or Utah from California.

But as soon as we started down the Cajon Pass and that salt air from the Pacific was blowing against the mountains of the LA basin, that dog would pop up and start whining and barking like crazy. She knew we were going back to the beach.

That crazy dog used to follow me when I surfed Rincon. I would catch a wave on the outside point and ride it all the way into the bay and she would run along barking and howling the whole way. I don't know how she could tell which surfer was me, but she could.

Just like I still don't understand how that dog could sniff the slightest little bit of salt air and tell that the beach was not far away. She just could.

Lots of people are sniffing for the Peak in oil production right now. The game is on. And it's an interesting question. What pieces of data will be the definitive sign that world production has peaked and entered irreversible decline? Nobody knows.

During my almost daily discussions of Peak Oil with clients, they often ask how they will be able to tell we have reached the Peak? The usual answer is to paint a picture of the graph of world oil production. Go back 150 years to Drake and move forward to 87 million barrels per day in June 2008. Maybe 1.3 Trillion barrels total produced over the last 150 years, maybe about the same left. Plotted on a graph with one year tick marks makes it pretty tough to tell that global production is dropping off at all. As Simmons has pointed out, the numbers are pretty coarse and most are highly political. As a matter of national security, what country is going to release info that reveals a Peak? Nobody!

Hubbert said that it took about 3 years to definitively reveal the Peak in US production back in January 1971. And the global production curve is bigger and therefore by definition more coarse. And everybody knows that statistics are routinely manipulated to support various politics and policies. Maybe a "1987 Black Monday" can be readily identified on a chart but the Peak of global oil production is not expected to be anything so dramatic. That's the problem.

So, we wait. And wonder. Sniffing the air for the first scent.

How about this? When you turn on the evening news, meaning mainstream American propaganda at it's finest, and the talking heads are babbling about a Saudi Aramco executive who has just admitted that production in the Ghawar oilfield has Peaked, then you will know that global production has peaked. Simple. As Saudi goes... so goes the world. Do I expect that to ever happen? No, of course not. There would be a panic.

The follow up question to "How do I tell that oil has Peaked" is, "Will there be an economic crash?" Well, think it through for yourself. Consider the Strategic Petroleum Reserve in the US. Why is there such a thing? Well, the August 2006 US GAO report on the SPR clearly states that "even small disruptions in supply can cause large increases in [oil] price." What the GAO report does not discuss is a permanent "disruption in supply." Like from Peak Oil. The SPR was designed to guard the economy from disruptions like a Hurricane or a closure of the Strait of Hormuz. It cannot possibly guard the economy against a permanent decline in global production! 

Will that lead to an economic collapse? Well, it depends. Do you believe that governments or corporations can implement a scaled-up replacement energy supply in an extremely short time? If you do, then I would have to ask you why we are waiting? Why would any government or corporation take even a slight risk of something as serious as a large scale, perhaps global economic collapse? This is a real life disaster flick that we all are going to having a starring role!

Meanwhile, back at the ranch, some of us are sniffing for the Peak. Is that barking that I hear?

Wednesday, June 4, 2008

News Flash: Malaysia to Remove Price Controls


Malaysia is planning to remove price controls on oil in August 2008.

Question is, will Iran remove price controls sometime soon?

Monday, June 2, 2008

What is Peak Oil anyway?

"Peak Oil" refers to the developing global crisis caused by the "peak" in the world's oil production. Credible evidence from professional experts suggests that world oil production may have peaked and may now be entering a permanent decline. Many countries already had a peak in their oil production many years ago. The USA peaked in 1971! That is why the US has had to import more and more oil.

Peak Oil does not mean we are "running out." It also does not mean that big bad oil companies are playing mean games. It means we are half-way through the fixed amount of oil in the world and less oil will be available for all countries to share in the future.

This is a huge problem. Demand is expected to exceed available supply.

Unfortunately Peak Oil is happening right at the time in history when countries like China and India are expanding their economies and demanding more oil.

Not only will demand exceed supply, but there are no other sources of energy that can be substituted quickly enough or on a large enough scale to make a significant difference.

Two of the biggest potential dangers from the impact of Peak Oil are scary.

First, Peak Oil may cause a global economic collapse. May. It depends on how fast the world can adapt to the gap between demand and supply.

Second, Peak Oil may cause a "dieoff" of thousands, millions or billions of people. May. It depends on how fast the world can adapt to the shortfall in pesticides and fertilizers made from oil that help feed most of the world. Global food production is directly dependent upon oil.

There are lots of other interesting consequences of Peak Oil.

For example. What happens when transportation costs skyrocket in the near future? If diesel fuel rises to say, $25.00 per gallon, if you can get it at all. How would that impact the business model of say an online bookseller that depends on impulse buying supported by cheap delivery costs? Would people still buy very many books if the cost to ship one book was maybe, $100.00? I don't know. That's what makes it interesting.

What about the "travel" industry or "travel economies"? How many people could continue to afford to fly somewhere for a vacation if the costs were 5 or 10 or 20 times higher? For example, the economies in the Caribbean are 90% dependent upon tourism. What effect will Peak Oil have on them? Will it really work in the long run for Dubai to be dependent upon tourism once their oil runs out?

What about air travel itself? The question is already being asked in academic circles, "Will my grandchildren ever fly on an airplane?" 

One of the key questions that has received little, if any, consideration is the question of the future of the World Wide Web itself. Many people think of the web as merely cyberspace. A virtual world only. But the web has hardware and software and peopleware that make it alive. All that infrastructure is dependent upon cheap energy from oil. Somebody has to lay the fiberoptic cables and maintain the servers and repair the transoceanic cables. How long could the web keep going if a maintenance worker can't earn enough to support his family's energy budget or the company he works for can't afford the fuel costs to power his maintenance van? Who will support the web then?

One of the most critical questions about Peak Oil is how rapid will the decline be? Nobody knows. It might be only about a 3% per year decline. But Mexico has already had a decline of 14 or 15 percent per year in the Cantarell Oilfield. Could that happen to the world. No, not really.
Global supply is too diversified to be effected by the decline of just one  field. 

But what if the world's largest oilfield, The Saudi Ghawar field suddenly enters decline and drops 15% or 20% per year? They are already injecting about 7 million barrels of water a day into Ghawar to keep the reservoir pressure up. And the water cut in Ghawar may be 30% or more in most wells.

What if several of the world's largest oilfields enter decline in a short period? Not only would increasing world demand go unmet but supply would drop even further and more rapidly. Time is the key factor. Nobody knows how much time we have. The EIA is currently conducting a revision of their analysis of the world's 400 largest oilfields' production and reserves. Maybe by November 2008 some better numbers will be available. But don't hold your breath. The world's production statistics and reserves are politically manipulated for many reasons.

We probably won't know that global oil production has peaked until several years afterward. Definitive evidence might not be available for 10 years or so. It took about 3 years to confirm the US peak.

Peak Oil is already affecting everybody. Awareness of Peak Oil is the first step to creating a solution.

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Sunday, June 1, 2008

Missing the Big Picture

The cool thing about Peak Oil is that it makes you think. It makes you ask questions. What am I doing, and why? How do I fit in? What is my "footprint," and I don't mean just carbon.

But we live in a world where many things are compartmentalized, specialized. People tend to focus in on one little part and miss the big picture. As an example, I was recently teaching an 11 year old the "lift equation." The formula that explains the relationship of the factors that make things fly. 

Flight is one of man's greatest achievements and it still amazes me every time I execute a takeoff, or landing. In the course of the discussion about the "four forces," you know, gravity, lift, thrust and drag, we used substitution to explore the magic of one of the natural effects that God hardwired into the universe, lift. The key thing to understand about the lift equation is that lift varies with the square of the velocity. This is an incredible thing, somewhat similar to the power of compound interest.

If you double the velocity (airspeed) from 50 knots to 100 knots you don't just get double the lift. The lift increases from 2500 units to 10,000 units! I think this is very impressive and demonstrates a real world example of the power of an exponent that you just don't get by cranking through your algebra homework and getting an "A" on a typical math exam.

The interesting part was when the 11 year old asked me, "Is this math or science?"

"What a great question," I answered. "What do you think?"

I then realized that the education system this 11 year old was participating in had taught him that things are separate. You take one class for math and another for science. He hadn't really seen the connection between the two before.

Check out this video of Mark Bittman talking about food. He makes an interesting exploration of the US system of "industrialized" food production. And he presents some impressive numbers and even gets you thinking about global warming by proposing that cows (and the associated problems with industrialized food production) are affecting humanity in a similar way to how the threat of nuclear war affected humanity(and still does).

But he doesn't seem to make the connection between food production and Peak Oil. Or food production and sustainability.

This is very typical. Many otherwise intelligent people just aren't making the connection. The awareness of the Peak Oil problem just isn't mainstream. The new media darling is global warming. Not Peak Oil.

Mr. Bittman proposes that "the current health crisis *** is a little more the work of the Evil Empire." This is a veiled comment about the endemic corruption in the US and the system of corporate lobbyists influencing government policies.

The good news, he points out, is that animal products and junk food are not necessary for health. Bravo! And he explains that "marketing has created an unnatural demand(for animal products and junk food)."

Bittman goes on to explain the history of food in the US and effectively reminds us that in 1900 all people ate locally produced food. Interesting. Especially since that is what Peak Oil experts are suggesting will be part of the solution. Producing food locally.

I liked this presentation but it is a good example of the danger of compartmentalization and specialized study causing intelligent people to miss the big picture.

Bittman is right. Global warming could have catastrophic impacts on humans (IF global warming is happening, IF it is caused by men. We don't even know if there is such a thing as a climate!). But he misses the big picture concept that we can't fix global warming if we don't have any ENERGY!!! It is going to take huge amounts of energy to change the systems we use that caused the global warming in the first place. That is why Peak Oil is so important.

This is not a case of picking one football team over the other. Peak Oil and Global Warming are infinitely more complicated. But that is the challenge that America faces. American culture is permeated with a value system that places great emphasis on football, or NBA basketball and intentionally ignores real world things like the asteroid of Peak Oil.

So check out the video of Mr. Bittman. But remember to fill in what is missing. The fact that Peak Oil is the gorilla that is going to overpower other issues like eating "too much" animal products and junk food.

As a matter of fact, Peak Oil will "solve" the problem of eating too many animal products simply because the crash after the Peak will prevent the business as usual continuation of industrialized food production. There will still be some animal food production, probably through channels like Permaculture. But depending on how rapid and severe the oil crash becomes, industrialized food production will change radically and eventually will be forced to sustainability. That will be good in the long run, maybe on the 50 to 100 year scale. The problem is in the medium term with the Peak Oil crash.


Sunday, May 25, 2008

Oil History Village? Not!

Here's one for all you "investors" out there in PeakOilLand. Just in case you aren't getting those stellar returns you were promised in your latest pre-IPO scam, ponzi, pyramid or multi-level nutritional supplement company "business opportunity."

How about us all investing in an "Oil History Village." Yeah!!!

This would be big fun. Or like my neighbor in Hawaii used to say, "Beeg fun Brudda!"

We can have old drillbits, hardhats, buckets of pipedope and other tools of the trade on display. Maybe a little shower to douse tourists with real drilling mud so they can get a taste of roughnecking. A splash of diesel in the face would be really authentic.

The foodpark can feature manifold burritos (burritos heated on top of the exhaust manifold of a diesel generator) and lunchboxes with weekold sandwiches just like the ones flown out to wildcat rigs by helicopter.

Just add a cup of "roughneck coffee" (4 cans of Folger's per gallon), a can of Skoal, swearing lessons, and a nosepicking manicure to give folks the real feeling of the oilpatch.

Or maybe a cool interactive simulated drilling floor funstation where civilians can attempt to throw the spinning chain and try to keep their fingers from getting chopped off. You could come up with a points system with points added for making hole and points subtracted for twisting off the bit and going fishing! Imagine the thrill of drilling into a high pressure gas zone without any blowout preventers and running to jump 80 feet into the cold ocean or sliding down the angel line into a patch of cactus in order to escape being burned alive! We're talking Survivor on steroids.

How about an authentic drilling mud "reserve pit" swimming adventure? You could let the park guests test their survival skills by attempting to negotiate their way across 200 feet of old drilling mud, raw sewage, abandoned sacks and drums full of caustic chemicals, 4 months of accumulated trash from a real drilling rig and varying concentrations of hazardous waste while swimming in oil soaked coveralls, boots, gloves and a hardhat. Do you think we should issue complimentary safety glasses and install eyewash stations at each end?

Maybe an "oil futures pit" where amateur traders could try to beat a Gordon-Gekko-like artificial intelligence opponent and experience the satisfaction of crashing the economy of a whole country or the buzz of getting arrested for insider trading?

You could get the park visitors some decent exercise by sending them out driving on the "back four thousand acres" of desert scrubland in Hummers purposely low on fuel and letting them enjoy a stimulating "reality show experience" by making them huff it back to town in the hot sun and then trying to carry a full gas can back to save their families!

What about the psychological drama you could create by letting ignorant tourists handle live samples of various well logging radioactive materials? A little Cobalt 60 anyone? What a fantastic way to help people bond with former oilfield services employees who were exposed to excessive doses of radiation. Nothing like a nice exposure to some thermal neutrons to give you something to keep you up at night wondering about cancer treatments.

Imagine the great entertainment value people would get from the boardgame, not to mention the 3D videogame. Why would anybody want to keep playing GrandTheftAuto when instead they could create an avatar, assassinate innocent indians and destroy the rainforest building drilling pads and pipeline easements? They could enjoy the administrative side of the oil biz with a "LandMan" avatar that goes out and gets unsuspecting landholders drunk enough to sign over their mineral rights! Whoopee! Or, best of all, an "Oil Company CEO" avatar that comes equipped with a country club membership, stock options, excort service expense account, corporate jet and congressional investigation subpoena.

I know, I know. It's a brilliant plan. But I have to admit I stole the concept. I read a May 22, 2008 New York Times article titled "As Oil Prices Rise, Nations Revive Coal Mining" and learned about a town in Japan, Yubari, that created their own funpark, "Coal History Village" which, unfortunately, "failed to attract tourists."

Hey, no problem. These guys were just ahead of their time. Never mind that the town went BANKRUPT due to the failure of this obviously ingenious plan. Maybe a little updated market analysis and recast Pro Forma Financials could whip their numbers into shape. No matter. They just picked the wrong commodity. Coal isn't nearly as fun as oil.

We could design a really awesome roller coaster and name it, are you ready for this, "The Plummet after the Peak." Just bend the track around to follow the Hubbert curve or maybe you could have different sections memorializing various countries' oil production history curves to give people that great nostalgic feeling of the age of oil. I bet the most popular part of the track would be the Russian history with it's two prominent humps.

Hmmm...What's that feeling? I think I'm turning Japanese! I guess I better get busy buying up the domain names and drafting the Private Placement Memorandum huh?

DISCLAIMER: the above information does not represent an offer to sell securities. Investors should seek independent counsel prior to investment. Past performance is no guarantee of future results.

Saturday, May 24, 2008

Richard Heinberg

Hey all you Peak Freaks out in Peak-land!

I just escaped from the Church of the Bakken Formation and I thought we could drink some Kool-Aid together and watch some old Peak Freak videos.

Check out this classic Richard Heinberg clip. Sorta like watchin' an ol John Wayne movie ain't it? This is only one year old and it already seems ancient considering the turbo spike in oil prices in 2008.

This is plenty of stuff to think about for one daily post. Tune in again soon and please subscribe.

Friday, May 23, 2008

Bakken Be Thy Name

I used to have a Merrill Lynch broker that would call me every week. He was just itching to sell me some goodies.

It didn't faze him for me to explain that my duty as a fiduciary prevented me from taking any risk with the funds under my care. It wasn't his problem if I got sued for Breach.

I could have told him to buzz off and just send me the monthly statements but I humored him and found it intriguing listening to his "hot tips."

He was a "stock picker." You know the type. Always hyped up on something.

I used to meet a lot of stock pickers when I was jumpseating around the world. You might be surprised how many pilots claim to have the latest dope and the hot tip of the century. Or the business dudes waiting for their flights. Kinda like getting tips from a New York City cab driver. Maybe George Soros' chauffeur would be a reasonable source but never yesterday's news from some amateur. How about getting a tip from some big talker in the locker room at the gym? Too funny. It's good entertainment but doesn't constitute an investment strategy.

I like technical investing just fine. Reading the charts. Memorizing the patterns. The new software packages give the individual investor some good tools.

I like fundamental investing just fine also. Ordering the annual reports. Doing the Free Edgar thing. Picking apart the financials and insider trades. I dig the Bill O'Neill momentum investing and enjoy reading IBD. It's all lovely. I get to hear about all the latest wall street stuff when "investors" come to the world of real estate and we help them out with a strategy.

It's been a real hoot the last couple of months with all the activity happening on the Bakken formation. I get lots of newsletters. Some are authoritative. Some are whacky, just for perspective. It has been real amusing hearing all the media hype about the "billions of barrels."

Been there, done that. That applies to the Williston Basin and the Dakotas for me. I punched some holes up there way back in the day. And I'm as happy as any oilhand that there is a mini boom going on up there again. Great. Every lil bit helps. Too bad we didn't pay more attention to US stripper wells over the last ten years...but that is a subject for another post.

Bakken is the new God. Bakken be thy name. Bakken this, Bakken that. It reminds me of that Merrill trader squawking at me with his hot tips. Did they sacrifice any virgins yet?

I got one newsletter that had this real simple graphic that showed the 260 Billion barrels in Saudi and the 20 Billion in the USA and then they just magically tagged on another 200 Billion barrels.

200 billion barrels! Do they have any idea how much magic go-go juice that would make?

It just shows how totally off base their thinking is.

I got another newsletter that claimed 500 Billion Bakken Barrels and suggested that the US could completely eliminate oil imports! This seemed really amazing to me until I thought about the snake oil salesmen that have been ripping people off throughout the centuries. My great grandmother told me some stories that have helped keep me out of trouble over the years.

If I remember right the USGS report discussed 3 billion. I guess it's all relative right? Nope, that's not even what Mr. Einstein said, it was space and time. But hey, 3 billion, 200 billion, what's a few billion here and there when it comes to rebalancing a portfolio?

It is sad really that all the stock tipper boys have to resort to such ridiculous tactics to squeeze some more fees out of their shrinking clientbase.

The sheer scale of the fraud is one thing but then there is the "new technology" fantasy angle as well. The idea that some "new" technology like horizontal drilling and frac-ing will come to the rescue and magically suck blood out of the stone. Unbelievable. Sort of a modified pump and dump scheme, huh?

I guess that goes with the times. Last month I had two new real estate clients get caught up in the drama just before they got to me. One got into a pyramid and the other into a ponzi. Unfortunately they were successful business people who never happened to get any education on those basic scams and couldn't recognize them. At least they didn't get taken by the stock pickers yet.

So there you go. The Church of the Bakken Formation. Hallelujah! Bakken be thy name. God bless all of them. I think it is neat that some of those ranchers who inherited grandad's spread are going to get some nice royalty checks. I always enjoy getting those things in the mail.

Maybe there is water or methane on the moon and Bill Stone will pull it out of there, maybe not. Maybe Mr. Putin will snag the Arctic, maybe he won't. But inventing a new Saudi Arabia just to avoid dealing with the Peak is pretty weak, even for wall street.

But I hope the parishioners of the Church of Bakken will think carefully before tithing too much of their net worth to the holy men.