In my RSS conscious stream

In what feels like the middle of a multi-round heavyweight bout, the world financial markets continue to be buffeted tonight, following the recent trend of lower equities, stronger dollar (vs Euro, SF and Sterling), sinking energy and commodities prices and considerably less confidence in the overall system than in weeks prior. Theoildrum.com has historically focused on the biophysical aspects of a world economy based on energy (and occasionally the human aspects that impact energy demand). Most research here attempts to predict what world oil and gas production might look like in a future where depletion inexorably overtakes technology, and the costs of procuring large amounts of quality fuels continue to increase. However, the spiralling of recent events make it likely that, at least for a time, be it a week - or several years - oil and gas depletion might be more than offset by the reduction in demand due to the manifold implications of the reduction in global financial leverage and resulting credit contractions and dislocations in the real economy. The linkages between finance and energy are becoming more direct, but I'm quite certain there are many under the surface we are yet unaware of.

Below are a few article links followed by some open ended questions. Please deposit data, charts and links of relevance.
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From Nouriel Roubini's article in Forbes:

In a solvency and credit crisis that goes well beyond illiquidity, no one is lending to counter-parties as no one trusts any counter-party (even the safest ones), and everyone is hoarding the liquidity that is injected by central banks. And since this liquidity goes only to banks and major broker-dealers, the rest of the shadow banking system has no access to this liquidity as the credit transmission mechanisms are blocked.

From Bloomberg, on European Union Leaders Stop Short of Regional Plan on Bailouts:

Sarkozy said that ``all actors'' must be supervised, including rating firms and hedge funds. Executive-pay systems must also be reviewed, he said.

``We want a new world to come out of this,'' Sarkozy said. ``We want to set up the basis for a capitalism of entrepreneurs, not speculators.''

Anticipating increased spending, declining tax revenue, and government bank takeovers, they called for ``greater flexibility'' in the application of European Union competition and budget rules.

And in addition to an earlier announcement that Germany would guarantee all bank depositors (much like Ireland announced last week), HYPO did get a 50 billion Euro government led bailout. This on the heels of BNP Paribas buying out Fortis earlier today.

Tonight the Euro continues to weaken, and is now at levels not seen since late 2004. It is difficult to keep tabs on all that is happening, both globally, nationally, and locally. My personal view of our future continues to be a probabilistic distribution of many possible outcomes, the odds and timing of each, periodically adjusted based on the actions and feedbacks of important world actors. The 'public' is likely to become as important an actor as any.

The odds that peak oil is now behind us are now (in my opinion) nearly 100%. The odds of global economic expansion (and growth) now being over are also high (this has been oft-analyzed but here is a good overview of the reasoning). Whether we will have inflation or deflation of 'money' (as opposed to the four real capitals: natural, built, social and human), is still an open question and depends on what path world central banks choose. History suggest that the news has been so bad for so long that we are due some respite from concerted central bank intervention that props up confidence and the markets for a time. But history has been based on growing energy surplus, and ultimate confidence that one will get a return OF capital in addition to a return ON capital. Thus, the current financial/energy landscape may accelerate the popular modern timing of exchanging bank digits for real capital from the end of ones career, to somewhat earlier. Yes, this time it may be different.

Recent events are certainly stirring the pot of possibilities - here are a few questions for general discussion: (no right or wrong answers...;-)

- If/when the dollar rally ends will the oil sell-off end as well? Or do they have fundamentally different causes? (Here I would suggest that oil selloff is largely capital flow/hedge fund driven, and dollar rally has been largely flight to quality and repayment of debt denominated in dollars and leverage is mandatorily reduced.) (Note: Dollar rally vs Euro is 82% correlated with rise in 30 Yr Treasury prices

-What impact would a demise of the Euro have on the future for energy? (Note: tonights ECB call for 'greater flexibility' does not seem consistent with formal limits on borrowing and fiscal deficits by EU members under the Stabilization Pact)

-Will the fall out from the credit crisis cement peak 'energy'? (Presumably, we are headed for a depression and concomitant demand reduction - will the time gap brought about by credit crisis in creating/financing of new energy infrastructure now be overtaken by ongoing depletion in coal, nuclear, and oil industries?)

-Given what is happening, would a 'fast-crash' scenario be, in many respects, preferred to a long drawn out slow crash? (In the sense that a fast crash leaves more quality resources in the ground, and creates enough pain and recognition that our current 'ends' are not the best way to spend our remaining fossil energy surplus?)

-If Peak Oil means the end of growth (I think this likely but not certain), what do people do with IRA's/401ks that aren't due to be redeemed for 10-30 years?

-Would a concerted 100 basis point global ease this week do anything?

-What other Black Swans could make this situation better, or worse?

It seems (at least one) genie is out of the bottle. The time to ask comfortable questions and get comfortable answers may be passed. But uncomfortable answers probably still have a window.

Pffftttt …. just a few days till the Essen Security show and LockCon, and I am already wasted. Lots of things are going right. And we got more support in organizing this event then ever before, but unfortunately there are also some things that don’t go right:

The worst one that gives me a small headache: the privileges we used to have at the hostel are melting away. A new and more expensive building, and new management that does not know us make life a little difficult. But we will all do our best to make the best of it.

Something else: St.John just mailed me about the Lab and Fee not in time for LockCon. He mailed: “The tools are now being made but unfortunately they won’t be ready for Sneek. I really tried my best but finding the right guys with the right machines took a bit of time. The tool we have designed is a pin and cam with changeable tips so that it can be used for quite a few different locks. Fingers crossed I will have a sample for Sneek (they are making the sample now and I have to ok it before the CNC production run), it should arrive any day this week. Finished items will likely arrive within the next 2-3 weeks. If you want I will send them out to the people who do the class as soon as I get them. This is the best I can do but if you think it is acceptable I think the people will be very happy as the design is very nice.”

Not to mention that for the last 5 hours orso, I have been trying to edit the video of the impression championships in Cologne. But somehow I run into black-magic voodoo bugs and can’t get the audio to be in sync. Very frustrating and I just made the decision to quit video-editing for now and just type this posting and share my feelings with you …

And about Lockcon: We will make the best of it, and I am convinced people will have a hell of a time! (as always …)

But personally I will be happy when it’s Sunday this time next week ;)

This is the post where I try and draw my own conclusions from the Conference. And not recognizing many of the papers in this does not mean that they weren’t important, but rather that from my own perspective that this is what I got most from.

The recurrent word that cropped up, again and again, was Scale. It was an attempt by the speakers to try and convey to their audience the size of the problem that is coming at us, increasingly rapidly. That one word encapsulates the difference between those who talk of the world energy problem in Quads (quadrillion Btu’s), as opposed to those that talk of the solution in terms of kilowatts and Megawatts. (The handy Dashboard on my Mac tells me that a Megawatt is 56,869 Btus/min. A Quad is 1,000,000,000,000,000 Btu.) The current shortages of gasoline are largely brought about by a transient closure of refineries that affects around 1 mbd of oil supply. The time is not far distant when such shortages will become more regular as we compete for supply in a more competitive global market.

The tipping point that seemed still a comfortable distance away three years ago when the American ASPO meetings began in Denver, is now just about here. And the solutions that have been discussed do not approach, as yet, the millions of barrels a day (mbd) of fuel replacement that we may need before long. At the same time, to return to the theme of my own paper, we do not have the educated human resource that we need. Data from my Dean of Enrollment shows that ACT report national high school student interest in engineering was at 14% in 1982. By 1992 it had dropped to 9%. By 2005 it was down to 5%, and has fallen below that since.
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(Ed note: In what follows I’m referencing presentations now, rather than folk, and the citations are pdf files.)

The net result is that we are heading into trouble. As Matt Simmons, I think, said “it will make what happened in the past week look like a picnic.” Glancing back through Richardson Gill’s The Great Maya Drought I found the section where he talks of the impact of famine, and how priorities switch from nation, to community, to family, to self. We’re still at the nation level, or even, some might say, still thinking globally, but one wonders how long that will last. Because the numbers are real, the decline in global production is coming, and it is going to be soon. And the decline curve will be greater than we anticipate.

In that regard I do have to tip my hat to the organizers for inviting Peter Wells to give what might be considered the cornucopian view. And he came and talked to a room full of cynics, so my hat is tipped again. But that being said, the CERA/IHS position and predictions have been proven wrong so consistently, that some of the value of the talk came from seeing how intelligent people can be led so far astray. Though to be fair, his predictions were less optimistic than those coming from CERA. And I appreciate his giving us the view “from the other side of the fence,” and the problems that the folk in the Middle East have in deciding what world demand will be so that they do not overproduce into a market in a way that will drive the price down.

Part of the problem comes from what is defined as a resource, rather than a reserve, recognizing that this changes with circumstance. For example the heavy oils that the Kingdom of Saudi Arabia, and Iran cannot produce and sell at the moment (e.g. Manifa) depend on the construction of new refineries, such as those at Yanbu and Jubail. The Jubail refinery is scheduled to come on line in in 2012, with a production of 400,000 bd. The Yanbu refinery that will take the other half of the Manifa production is scheduled to come on line in 2013. To count the Manifa oil as an immediate reserve, as KSA and Mr Wells apparently does, is thus, in my opinion, wrong. By the time that it comes into production that oil will be needed to match declines in production from the remaining fields in KSA, which by then will be in visible decline. The evidence for that was provided by Joules Burn.

Mr Wells predictions for exploration success are, I believe, likely to be found optimistic, and the chances of Saudi Aramco being able to achieve the levels of sustained production from Enhanced Oil Recovery techniques that he gave are very optimistic. As a result I don’t think that we will see a sustained KSA production that rises much above 11 mbd, if it reaches that high (he thinks more that 12 mbd and sustained). I also think that his projections for Iraq, at up to 7 mbd, are way above what is likely to be achieved, even if the political mess out there does get straightened out in the next ten years. But then, the nice/bad thing about making projections is that, after a while, you get to see whether they were true. And sadly, we will know soon enough, whether undue optimism was in fact warranted.

With crude oil supply in bad shape, finding that natural gas supplies were no better as Andy Weissman pointed out reinforced some opinions that I had already formed, and written about. But it leaves no other immediate choice, than a greater reliance on coal. It may not be popular, it may have lots of cost issues. (I cannot yet see a willingness to pay the power and financial costs for significant carbon capture and sequestration, nor the political will, when that cost is openly discussed) but there is little else.

On the liquid fuel alternatives, Robert Rapier was his usual excellent self in reviewing biodiesel. Though while I don’t completely disagree with his notion that “algal biodiesel” is still an R&D project, I do suspect that if the different parts of that complex puzzle are addressed simultaneously, rather than in order, then the impact can be sooner, and more promising, than he holds out (but then I’m biased). But that said, there is not yet enough promise in the biodiesel future to answer the need.

However I would like to close with recognizing the talk that Randy Udall gave. If it takes a little courage to come as a cornucopian to a peak oil conference, it takes a lot more to get up and tell folks not only that Peak Oil is more important than Climate Change, but also that there is an arrogance in the IPCC community, intolerant of outside information. He shared a note from them:
“We are all extraordinary skeptical of the "peak oil" stuff. We know of no reliable information that suggests that we're going to be running significantly short of any fossil fuel in this century…It certainly won't happen with any significant price on carbon.

“We've done a few 300-year scenarios that have some shortages in them, but even that may not be realistic. This is especially so with coal!”

“The Chinese say they have enough coal for centuries…The idea that we're only going to reach 450 ppm is not defensible, especially when we're already around 385 ppm. Do we really think there is only another 60 years of fossil fuel left? I don't think so.”

With all the politicians now so earnestly lined up to parrot this opinion, it is going to take a significant shock to divert their, and the world’s attention.

Sadly I suspect we may see it, even before the next conference. (There were even those who wondered whether the situation would get bad enough in the next year that we might not have one.)

And so I came away a lot more apprehensive than on my arrival. Somehow having a lot of folk confirm my fears brought home that this is not a theoretical exercise in a way that, as an academic, I sometimes forget.

The talks were all information intensive, and I would highly recommend not only downloading the presentations, but also getting the DVD’s when they are issued. The Energy Challenge has already posted some information on where and when.

Before we leave the topic of the ASPO-USA Conference in Sacramento, I wanted to make sure a few things didn't get missed. The big one was that The Oil Drum was one of the recipients of the M. King Hubbert Award, for Excellence in Energy Education. The other recipient of the Hubbert award was Global Public Media.

In this post, I include Dr. Kyle Saunders' (Prof. Goose's) acceptance speech. I also show photos of TOD participants and give brief summaries and links to the presentations TOD folks gave.

Dr. Kyle Saunders, preparing to give acceptance speech for TOD's M. King Hubbert Award

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This is Kyle's acceptance speech:

This is quite an honor.

First, a round of applause to you Steve and the many folks at ASPO who have worked so hard to make this wonderful event happen.

We accept the M. King Hubbert Award for our contributors, our readers, and the peak oil community who continue to engage in the ongoing battle for the attention of the American, and world, public.

We accept this award for the peak oil community writ large, on behalf of ASPO-USA, Energy Bulletin, Global Public Media, peakoil.com, and the many other leaders of this movement who are with us at this esteemed meeting, all fighting the good fight in different ways, all thinking hard about the complicated uncertainties we will have to face in our energy future.

When we started The Oil Drum over three years ago, David Summers, the venerable Heading Out on TOD, and I wanted to learn more about that energy future. We had no idea on what kind of an adventure our research and learning would take us.

That journey has led us to explore myriad interrelationships between so many different topics and disciplines that the energy topic touches, it just boggles the mind when you take a step back; the journey and the problems we face continue to humble us to a point beyond anything we have ever encountered due to their daunting gravity and complexity.

The attitude we try to promote at TOD is clinical and empirical with a graceful amount of concern for humanity thrown in for flavor. It is academic, it is educated, it is critical. And it is certainly not for everyone.

We chose as our mode of discussion a website--though web-based, public, empirically-driven discussions and substantive, logical comments, and while not perfect--and not easy without the commitment of many good people--it has rewarded many with insight and the comfort of community while dealing with a topic that gives many fear, uncertainty, and doubt.

In that spirit, our mission remains simple: educate, educate, educate. We wanted to create a space that would help educate people about the many complicated narratives of energy, even as we learned some of them ourselves, with the idea that the more informed and diverse dialogues we could have about those problems--as well as the many proposed solutions to those problems, the better off we would be as a society.

Every single person we educate about our energy situation is another person who has the choice to a) learn more, b) prepare according to their own perceptions, and c) educate others.

Through that educational mission, we continue to search for and find courageous people to confront and discuss hard issues, do our best to raise the perpetually low level of national discourse, and promote action now, rather than when our normal steep-discount-rated lives would normally react. As Bob Hirsch has pointed out, and as the "black swan" unfolding on Wall Street is evidence of, time is a commodity we are also short of.

We have had the opportunity to work with some of the brightest, most wonderful people I have ever had the opportunity of meeting, and I would like to introduce them to you, please stand as I call you--I would ask that you please hold your applause until the end. David Summers, our co-founder, who I already introduced, Gail Tverberg, you know her as Gail the Actuary, has also stepped into a greater role in the site of late in addition to her strong analyses. Robert Rapier, with his incisive insights into ethanol, biofuels, and energy writ large, Jeff Vail with his educational discourses on the complex geopolitical lay of the land, Brian Maschhoff, his google-earth analyses of Saudi Arabia are quite wonderful, and our most recent addition Chuck Watson, whose models of hurricane damage have informed so many of late.

In addition, there are many others who could not be here, who play important roles in what we do, and they also deserve much laud. I hope you will give all of them a round of applause and appreciation.

To close, we think King Hubbert would know what we mean when we say that we accept this award in the spirit of research, in the spirit of education, in the spirit of community, and the spirit of brotherhood, all of which can give us courage to face the many uncertainties of our energy future. Thank you.

Most of the talks we gave were on Sunday afternoon. The 1:30 pm session was moderated by Heading Out. The talks were as follows:

Gail Tverberg, also known as Gail the Actuary, gave a talk entitled Peak Oil and the Economy. In my talk, I said that while we can start with a worldwide model of the expected impact of peak oil on GDP, this is not the whole story. Different countries are in different positions (US vs. Saudi Arabia vs China). Also, the current debt situation is likely to affect the outcome. I gave several implications, including that we may see a debt implosion and a falling standard of living.

Chuck Watson gave a talk entitled Forecasting Natural Hazard Risks to Oil and Gas Infrasturcture. He talked about the modeling techniques he uses. He also mentioned that the National Hurricane Center never wants to be too low in its forecasts, because it is concerned that people may not evacuate if they fell the risk is not great enough. His forecasts tend to be more realistic. He mentioned that there is strong evidence that climate is changing. He believes we are already past the tipping point, and the likely outcome is global cooling.

Dr. David Summers, also known as Heading Out, gave a talk entitled The Other Resource Lack: Time and Technology. He mentioned that historical oil depletion rates of about 4% a year were based on vertical wells and the proportion of oil contact that was lost each year as the water level rose. With horizontal wells, there is no reason to expect the depletion rate will be similar. Horizontal wells are placed so as to minimize water contact until it gets to the very top. When the water does meet the horizontal well, production drops very quickly. Thus, he feels that depletion rates can be expected to increase significantly, when water levels start reaching some of the horizontal wells.

The 3:30pm session was moderated by Dr. Kyle Saunders, also known as Prof. Goose. Kyle didn't give a talk himself, but participated in answering audience questions.

There were three talks at 3:30pm:

Jeff Vail gave a talk entitled The Geopolitics of Energy: A System's Thinking Approach in 10 Slides. Jeff talked about some of the issues he has already talked about on TOD, as well as some issues we are likely to hear more about in the future. He included such items as "Market Driven Conservation and Efficiency Increase Inelasticity" and "'Solving Symptoms' leads to alternative negative outcomes". This is the whack-a-mole problem.

Robert Rapier gave a talk entitled The Energy Information Providers: EIA, IEA, and CERA. In it, he talked about the strengths and weaknesses of the information provided by each of these organizations. For each of these organizations, the big weakness has been in the area of forecasts of future supply. One concern is that governments and businesses make decisions using these poor forecasts.

Brian Maschhoff, known on TOD as "Joules Burn", gave a talk entitled Saudi Aramco and the Art of Oil Field Maintenance. He talked about the fact that we hear a lot about what Saudi Arabia is doing with respect to developing new sources of production, but we hear virtually nothing about what they are doing to keep exiting fields, like Ghawar, producing. He showed Google Images indicating that Saudi Arabia is running out of new places to add infill wells in some locations, such as North Ghawar. This will eventually mean a decline in production.

The only one of us from TOD to give a talk at the plenary session was Robert Rapier. (Nate Hagens was scheduled to give a talk as well, but was unable to come because of health issues.) Robert's talk was entitled Biofuels: Facts and Fallacies.

Robert talked about many of the biofuel issues that he has mentioned on TOD. He talked about where politicians fail (misleading the public; changing energy policy every year; and picking winners) and why they fail (lack of knowledge; fear of being voted out of office; and conviction that they are right). My favorite slide in Robert's presentation was the one which showed what kind of bridge fuel corn ethanol is.

Tough times may force saner lifestyle choices Well, here we are at the beginning of the Not-So-Great Depression. After years of living beyond our means and having too much on our plates, now we will have just enough - if we're lucky.

Whether the current economic downturn lasts five years or 20, it will radically alter our lifestyles. Our material culture will be significantly dematerialized.

Meanwhile, the global environmental crisis is building toward a crescendo. Like a gigantic version of the 1930s dustbowls, it is beginning to settle and choke the very basis of our lives and livelihood. Critical resources are rapidly disappearing, and environmental devastation is draining the global economy. The economic and ecological crises are deeply intertwined, and we are about to experience their combined impact.

How can we survive this unique global transition? What will our lives look like if and when we manage to develop a sustainable economy that balances resources and consumption? What steps can we take to achieve happiness and well-being, knowing that most Americans will have fewer material possessions? [break]

Peak oil and retirement Stockmarkets are plunging worldwide and retired people everywhere are watching with great discomfort as the value of their investments decline. Declining retirement incomes and inflating food and fuel prices are placing great stress on the elderly. The current dramatic volatility in the oil price is symptomatic of the tight supply (amplified by speculation and the current financial chaos) and is what one expects as the world peak of oil production is approached.

For many of us in the middle of our working careers the state of the stockmarket may not be as immediately worrying. However, the Australia of 2020 and beyond into which we will “retire” will be a very, very different place from 2008.

36 Opportunities for the Beginning of the Bull Fundamental arguments that are being made today are completely opposite to those made by the same people just two or three weeks ago. Take the peak oil theory, for instance. Analysts who pushed that particular story are now saying the world has too much oil for the present state of the economy.

Battle for business begins as military hostilities in Iraq take peaceful turn A fall in the number of attacks across Iraq has emboldened a growing list of companies, including ArcelorMittal, Royal Dutch Shell and Cairn Energy, to explore opportunities in the resources-rich country for the first time since the invasion.

Southern Iraq, where British forces have been based since 2003, is an area of particular interest, sitting on one of the world’s biggest oil and gas reserves. It also has a strong industrial and agricultural base and the country’s only port.

Crude shipments from Georgian port plunge Tbilisi: Georgia's Black Sea port of Batumi shipped less oil in August and September with damage to a railway line carrying oil in fighting with Russia being a factor in the drop, a source at the terminal has said.

Fewer luxury cars, whiskey-fueled parties in future for Venezuela's state employees CARACAS, Venezuela (AP) _ Bureaucrats in oil-rich Venezuela can look forward to fewer expensive SUVs, top-of-the-line mobile telephones and whiskey-fueled parties next year.

Finance Minister Ali Rodriguez said Sunday that Venezuela's 2009 budget "will have significant restrictions" compared to this year's US$63.9 billion plan as President Hugo Chavez's government keeps a close watch on slumping international oil prices.

Reactor shortage to sour India's nuclear dream In the 1980s, there were about 400 nuclear suppliers and 900 nuclear-certified companies in the US. These have shrunk to fewer than 80 suppliers and 200 certifications.

The euphoria of the nuclear deal will soon die down and it will be time to deliver on the promise to supply electricity. The crucial problem of supply of uranium is said to have been resolved, but little has been said about the shortage of critical components for building new nuclear reactors worldwide. The problem starts with the heart itself — the reactor.

Receding Horizons for Alternative Energy Supplies When energy optimists tout the huge supply of oil that is still available to us in the form of tar sands and oil shale, they forget to mention that costs are rising so quickly for producing that oil that these alternative sources may prove to be of limited value. The same cost problems are occurring in the renewable energy field as well. What is behind this phenomenon sometimes referred to as the problem of receding horizons?

Those who claim that we will have plenty of energy and perhaps enough oil for a hundred years or more have so far failed to understand why the rising price of oil is making it more difficult both to extract new sources of oil and to deploy renewable energy from wind and solar.

BP Solar Nixes Factory Expansion: Proof of Industry Oversupply? BP Solar (a subsidiary of energy giant BP) has canceled a $97 million plan to expand manufacturing in Maryland, citing an increasingly intense competition in the global market.

Algerian minister rules out Algeria to be affected by current financial crisis ALGIERS (KUNA) -- Algerian Minister of Energy and Mines and current Chairman of the Organization of Petroleum Exporting Countries (OPEC) Chakib Khalil ruled out on Sunday that the cartel would be affected by the current global financial crisis, at least in the short term.

Boomtown of Dubai Feels Effects of Global Crisis But as recession looms in the West, cracks are appearing in the oil-fueled boom that has made Dubai, with its futuristic skyscrapers on the turquoise waters of the Persian Gulf, a global byword for unfettered growth.

Banks are reining in lending, casting a pall over corporate finance and building plans. Oil prices have been dropping. Stock markets across the region have been falling since June. After insisting for days that the oil-rich Persian Gulf region was fully “insulated” from financial troubles abroad, the Emirates’ Central Bank made about $13.6 billion available on Sept. 22 to ease credit problems, in an echo of bailout measures in the United States. Already, some bankers are saying it is not enough.

Pentagon Hands Iraq Oil Deal to Shell The fact that the U.S. government secretly facilitated dealings between Shell and the Iraqi Oil Ministry for no-bid contracts; that the U.S. military — the primary occupation force in Iraq — regularly pays Shell billions of dollars each year; that on the heals of a contract worth hundred of millions of dollars with the U.S. military, Shell just inked a deal with the with occupied Iraq and set up an office in the U.S. military’s secure “Green Zone” should raise myriad questions about the tangled relationship between the major players in Iraq. These complex issues go ignored because they are viewed as so routine as not to be worth mentioning, but in any other context the confluence of guns, oil and billions of dollars would certainly raise eyebrows.

Nigerian oil rebels release 19 hostages LAGOS (AFP) - Militants behind a recent "oil war" in Nigeria's Delta region on Sunday freed 19 local hostages but said they were detaining two Britons and a Ukrainian "for security reasons".

"The Nigerian hostages rescued from pirates by the Movement for the Emancipation of the Niger Delta have been released in Rivers state," MEND said in an email statement to the media on Sunday.

ConocoPhillips, Abu Dhabi win Kazakh oil rights DUBAI, United Arab Emirates: Abu Dhabi's Mubadala and U.S. oil giant ConocoPhillips say they have signed a deal with Kazakhstan's national oil company to drill in a potentially lucrative oil and gas region in the Caspian Sea.

Q&A: Why gasoline supplies went south The frustration of finding and queuing up for gasoline left metro Atlantans with a lot of questions in the past few weeks. Here are some answers.

AP Investigation: Ike's environmental damage apparent as storm hit pipelines, oil platforms WASHINGTON (AP) _ Hurricane Ike's winds and massive waves destroyed oil platforms, tossed storage tanks and punctured pipelines. The environmental damage only now is becoming apparent: At least a half million gallons of crude oil spilled into the Gulf of Mexico and the marshes, bayous and bays of Louisiana and Texas, according to an analysis of federal data by The Associated Press.

In the days before and after the deadly storm, companies and residents reported at least 448 releases of oil, gasoline and dozens of other substances into the air and water and onto the ground in Louisiana and Texas. The hardest hit places were industrial centers near Houston and Port Arthur, Texas, as well as oil production facilities off Louisiana's coast, according to the AP's analysis.

"We are dealing with a multitude of different types of pollution here ... everything from diesel in the water to gasoline to things like household chemicals," said Larry Chambers, a petty officer with the U.S. Coast Guard Command Center in Pasadena, Texas.

Fuming over gas questions Gulf Coast damage from hurricanes nearly a month ago has subsided, but consumers almost a thousand miles away in Knoxville are still reeling from fluctuating gasoline prices and short supply. As the costs they're counting grow, their frustration does, too, and many are demanding explanations.

Prices have dropped to below-hurricane levels but intermittent outages at reliable retailers around the area continue to spook motorists, who increasingly are driving to more than one location to find gas. Businesses that depend on gas or diesel for delivering products and services also are tallying the expense.

Skyrocketing gas station complaints mean Flint-area grocery stores not getting inspected as much by the state Only one inspector from the state Department of Agriculture is now assigned to check price scanners, package weights and deli counter scales at hundreds of full-service groceries around the state, a department program manager told The Flint Journal.

The drop of more than 90 percent in that enforcement area -- from a staff of 12 just seven years ago -- is an unintended consequence of of sharply rising customer complaints about gas stations.

Food is short, lines are longer Those who feed the hungry have been watching the numbers grow for months – the lines for assistance stretching longer and pantry and warehouse inventories shrinking smaller. For those at the bottom of the economic heap, it’s long past the point of urgency.

“This is probably one of the most generous communities anywhere, but there is a desperate need right now,” said Jane Avery, executive director of Community Harvest Food Bank, “I’ve never used words like ‘desperate’ and ‘crisis,’ but I’m using them now. … For the first time in my 12 years here, I’m scared.”

Fire officials sound alert on heating season In the late 1970s and early 1980s, oil prices soared amid an energy crisis. Predictably, there was a surge in the number of people turning to alternative means - such as electric space heaters and wood stoves - to warm their homes.

And, predictably, there was a surge in house fires and deaths.

Fast forward a quarter of a century to a time of soaring oil prices amid an energy crisis. With good reason, fire officials worry that history is about to repeat itself.

Can South Africa Afford to Bailout Zimbabwe? "These guys are busy arguing over cabinet positions while Rome is burning. I don't think they realise how big their problem is. Unless the big financiers come to the party, SA is not in a position to afford the financial aid needed by Zimbabwe. At this stage there are very few countries that can help," said Abedian.

Abedian believes that Zimbabwe requires at least a seven-year multi-billion-dollar balance of payments support package underwritten by the world's richest economies. The money could help it bolster its depleted foreign currency reserves that have contributed to the meltdown of the Zimbabwean economy.

Without the foreign exchange the country cannot import fuel, food supplies, seed crop, fertilisers, capital equipment and spare parts for its industrial sector.

Proposed development would promote local foods A Toronto developer is proposing a unique agricultural community for East Zorra-Tavistock that would promote Ontario's buy local, buy fresh project.

"The whole idea ... is the development of a community based on agriculture opposed to residential," said Uri Salmona, a partner at Salmona Tregunno Development Consultants. "The thrust is to keep it agriculture, but in a different form."

Speaking to council Wednesday, Salmona said the development would include an equestrian, aquatic and orchard community to support various organic crops year round.

The community would also have its own farmers market, education centre and trail system.

Russia's bid to control Caspian energy RUSSIA'S INVASION of Georgia in August inflicted a potentially severe blow to global energy security by threatening export routes for Caspian energy. Russian President Medvedev's declaration on Aug. 31 that Moscow has "privileged interests" - read, a sphere of influence - in bordering countries underscores that Moscow's aims stretch beyond Georgia. Among the targets are the major producers of Caspian energy - Azerbaijan, Kazakhstan, and Turkmenistan.

Russia seeks a de facto veto over Caspian energy. This is important because the Caspian Basin holds some of the largest reserves of conventional oil and gas in the world after the Persian Gulf and Siberia. Moreover, Georgia is a pivot of the "new Silk Road," a vital link to world export markets avoiding Russia's control.

US not vying with Russia over Central Asia - Rice ASTANA (Reuters) - The United States is not trying to poach Russia's allies in Central Asia, Secretary of State Condoleezza Rice said on Sunday during a visit to oil-rich Kazakhstan.

Moscow is sensitive to visits by top U.S. officials to its neighbours in the region, and has in the past accused Western nations of trying to lure away its allies.

Marrying energy demand and supply "We have moved into a new energy world. The volatility of the global oil price has had a major impact on the world economy at the same time as we are obliged to make major cuts in CO2. It no longer makes sense to have one department responsible for energy demand and another for energy supply."

This is how a senior UK government insider explained the widely praised decision on Friday to create a new Department for Energy and Climate.

OPEC chief says will seek to balance market - paper ALGIERS (Reuters) - Supply and demand alone will set oil prices in coming months and OPEC will seek to balance the market at its December meeting after recent declines, OPEC President Chakib Khelil said in remarks published on Sunday.

Prices had recently fallen from levels created by "perverse" speculative practices, Algerian government newspaper El Moudjahid quoted him as saying.

UAE firms start pumping Kurdish gas over Iraq objections DUBAI (AFP) - United Arab Emirates-based firms Dana Gas PJSC and Crescent Petroleum announced on Saturday that they had begun producing gas under a deal with Iraq's autonomous Kurdish region over Baghdad's objections.

Saudis extend Jazan refinery deadline to 2015 Riyadh: The Jazan refinery in Saudi Arabia is expected to come online in the first quarter of 2015, the Petroleum and Mining Ministry said on Friday, after reports of fresh delays hitting the planned export-oriented refinery.

Correa warns Petrobras over Ecuador oil field QUITO, Ecuador (AP) - Ecuador's president is threatening to nationalize an Amazon oil field if Brazil's state oil company doesn't hand it over quickly.

President Rafael Correa says Petroleo Brasileiro SA has not followed through on a two-week-old deal giving Ecuador's state oil company control of the field.

Tories 'sold to the oil men,' Duceppe charges MONTREAL — Bloc Québécois leader Gilles Duceppe launched his most aggressive attack to date against the Conservatives and Stephen Harper, saying today that they have been "sold" to the oil industry.

Duceppe said it was worse to have a Conservative majority in the House of Commons than a minority government that is inherently unstable, even in a time of economic crisis.

Economic storm fuels homeowners' worries Rising oil costs, dependence on foreign countries for petroleum, an economy in disarray, and the bitter bite of the encroaching winter may make warmth harder to come by than ever before.

Mina, executive director of Massachusetts 211, a nonprofit headquartered in Framingham, fears the dire potential of escalating heating costs this year.

Feds should boost support for CDTA and other bus services A couple of announcements by the Capital District Transportation Authority in the last week — that it plans to raise fares, and delay a planned expansion of service in Saratoga County — are troubling to anyone who believes in public transit. At a time when ridership is rising dramatically, the last thing you want to do is take actions that will discourage use. Unfortunately, thanks to the run-up in fuel prices (the same factor that has driven the increase in ridership), the authority is facing a $9 million budget gap, which it needs the fare hike to plug. It wants to go from the current $1 to $1.50 in May, and $2 in 2010.

This situation isn’t unique to CDTA; it’s occurring all over the country. Which makes it a national problem — as well as an opportunity.

Financial crisis darkens outlook for climate Wall Street's sickness and its contagiousness for the world economy are bad news for the already faltering effort to craft a new pact to tackle climate change.

Tighter budgets, shrinking corporate profits and worries about jobs could crimp manoeuvring room at upcoming UN talks on toughening curbs on greenhouse-gas emissions, sources say.

Gordon Brown urged to pay millions to stop oil firms destroying Amazon rainforest Rainforest campaigners will this week urge the Government to pay out millions of pounds to stop oil reserves under the Amazon being exploited.

Sinking Tuvalu wants our help as ocean levels rise THE first nation likely to be overwhelmed by climate change wants Australia to accept its entire population if sea levels continue to rise.

Tuvalu, in the South Pacific, is one of the world's lowest-lying nations and faces inundation within a generation by rising tides linked to mankind's impact on the climate.

Climate change threatens to raise the stakes for Iowa farms If the Earth heats up as climate forecasts suggest, agricultural production is likely to fall in many parts of the world, especially in poor countries near the equator and in Australia, a key producer of grain.

But parts of the United States, including Texas and states in the Southeast, also could see smaller harvests because of declines in rainfall. One study estimates that Texas' productive acreage could drop by 20 percent, even with development of more drought-tolerant crops. Advertisement

Economists say that means Iowa and other Midwest states will be more important than ever to global food production.

This is a guest post by Roger Brown, known as Roger K, whose graduate work was in physics. In reading about net energy and EROEI, he realized that energy balance alone is insufficient for characterizing the economics of energy production. In this post, he develops a multi-variable approach to account for the cost of other production resources. This post is the first publication of his innovative ideas. A summary is available at the end of the post.

Labor Cost of Energy

In order to produce an economic output, you have to invest production resources. At a minimum some amount of human labor must be invested. There is no such thing as a labor-free production process. Even if you lived in a sparsely inhabited tropical paradise filled with streams jumping with large tasty fish and heavily laden fruit trees growing profusely in the natural forests, you would still have to spend some amount of time gathering fruit and fish.

If you could gather all the food you needed for a single day in a half hour of work, then your food would be very cheap. If you lived in a less productive natural environment and had to spend eight hours a day gathering all of the food you needed, then your food would be very expensive.

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Notice that a natural scale for labor costs exists due to the fact that, on average, the labor of one human being supports one human being. The smaller the percentage of total time that is spent gathering food, the lower the cost.

This natural scale may be inapplicable to a subset of individuals within a society if income inequality exists. To take an extreme case, suppose that an absolute monarch is served by an army of slaves. The slaves support themselves at a subsistence level by means of their work, and the king appropriates all of their excess productivity. The king's wealth depends upon the sum of all the excess output that he appropriates from his slaves.

If the army of slaves is large enough, the king could still be rich even if the excess wealth provided by each slave is small. That is the king could be wealthy even if the labor cost of production was high in the sense described above. However, for society as a whole the natural scale of labor cost still applies. Insofar as economic production depends primarily on labor, average income is high or low depending on the labor cost of producing economic output.

Of course other inputs besides labor may be important, but in many cases the cost of these inputs can be reduced to labor costs. Continuing the relatively simple example of a hunter-gatherer society, if wood is used for cooking, then the cost of that wood is the labor required to gather it. If wood is abundant in the locations where you are doing your hunting and gathering, then the labor cost will be low. If wood is relatively scarce then the labor costs will be high. If clay pots are used for cooking and eating, then the cost of production can be reduced to the labor cost of gathering clay, forming pots, and firing them. And so forth.

Special considerations arise when the input to the production process is the same as the output of the process. Consider gathering food. You have to burn calories in the process of obtaining calories. If the amount of calories burned exceeds some background rate of energy consumption, then the excess calories reduce the net benefit of the food gathering process.

To take a specific example suppose that, on average, one particular food gathering technique produces 1000 calories and burns 200 excess calories in an hours worth of effort. Then the net energy production per hour is 800 calories. Now suppose that a second food gathering process exists which burns only 100 calories per hour and produces 500 calories. In this case the net energy production per hour is only 400 calories. In spite of the fact that the second food gathering process has the same ratio of output energy to input energy as the first process it is more labor intensive, and therefore economically inferior to the first if labor is a limiting factor of production.

Of course energy balance plays a role in determining the labor efficiency of energy production. In order to quantitatively analyze this labor efficiency I introduce the following notation:

O = Output energy
P = Energy input to the production process
N = O - P = Net output energy
R = Non energy resource input to the energy production process (in this case labor hours)

The labor efficiency of energy production is the net energy produced divided by the labor hours expended:

Labor Efficiency = N/R.

This equation can be rewritten as:

[1] Labor Efficiency = (N/O)/(R/O) = µ/r

Where µ = N/O and r = R/O. The variable µ is the fraction of the output energy which is left over after the input energy has been subtracted out. I call this number the energy utilization rate. It is the fraction of the output energy which is available to produce goods and services other than energy. The rest of the output energy must be diverted to producing a new batch of energy or the economy will come crashing down into ruins.

The variable r is the resource intensity (or resource cost) of gross energy production. It is the amount of resource (in the case given above, labor hours) that has to be expended to produce 1 unit of output energy. In the example given above both food gathering processes have µ=0.8 but have different values of r (0.001 hours/calorie and 0.0005 hours/calorie respectively).

So far I have been talking about the case where labor is a limiting factor of production. If labor were not a limiting factor of production, might it not be true that energy balance is the only relevant factor in energy production? The answer to this question is no. Some non-energy resource is always relevant to the economics of energy production. Of course it is possible for other non-energy related factors of production such as supplies of fresh water or of arable land to be limiting factors of production, but the only case in which some non-energy related factor of production is not relevant to the economic quality of energy production is the case of energy production by magic.

For example, to return to the case of a sparsely populated tropical paradise, suppose than when you wake up in paradise each morning, manna from heaven sufficient for your day's nutritional needs has appeared on the ground beside you. This is truly free energy production and, as such, negates the need for economic analysis. If all that you need is provided without effort, then economics, defined as the practice of apportioning the use of scarce resources, does not exist. Even if you had to clap your hands once before the manna appeared, the difference between this process and absolutely free energy is too small of be of any practical importance.

If, on the other hand, every time you clap your hands a small amount of energy appears, and you need to clap your hands for several hours a day to produce a useful amount of energy, then economic analysis can be applied to this process. The net energy produced per hour of labor is an important parameter in analyzing the economics of this process. Yes, the energy balance matters. If clapping your hands burns up a significant amount of excess energy, then this energy must be accounted for in determining the productivity of this process, and it is accounted for by the factor µ in the above expression for the labor efficiency of energy production.

Energy and Labor Optimization of Economic Output

Now I wish to discuss the optimization of the apportionment of a scarce resource in economic production, and in particular, the apportionment of labor. Therefore I will consider an economic system in which the only limiting factor of production apart from energy is labor. One might object that this is not a realistic case since raw materials are always required in addition to energy and labor. However, labor is always limited since, on average, the labor of one human being supports one human being, whereas the supply of raw materials could be effectively infinite.

Even if you had an endless copper mine, the amount of time it takes to extract and smelt a given amount of ore limits how much copper you can produce in a given period of time. So my assumption is that raw materials are available in large abundance relative to any short to intermediate term use we might have for them and the amount we produce is limited by how much labor we choose to expend in extracting them.

I will also assume that energy production is only limited by the amount of labor dedicated to the energy extraction process. If we dedicate a larger fraction of our labor hours to extracting energy our net energy increases, but the number of labor hours available for utilizing this energy in the manufacture of useful products and services decreases. In some sense labor is the only real cost in this system. We do not give economic output to coal deposits or to deposits of metal ore. We give economic output to people who extract useful outputs from these deposits.

Of course in the real world we do give economic output to the 'owners' of natural resources in the form of economic rent, and we give money to the providers of capital in the form of interest. Such costs are not labor costs. However, I would argue that rent and interest are political costs and not real physical costs. That is to say that no physical reason exists why rent and interest have to be paid in order produce economic output. Of course, I have been assured over and over again by a variety of people that any attempt to eliminate rent and interest will inevitably result in the creation of a monstrous, inefficient, socialist bureaucracy. This claim may or may not be correct, but at present I am inquiring into the physical basis of wealth so that I will ignore these non-physical costs of producing wealth.

To be concrete suppose that you are alone on an island and are therefore producing all of your own economic output. In this case no one exists to receive payments of rent and interest. A fuel source is available that provides µ/r units of energy per hour of labor with no limit on how much energy can be obtained other than the number of hours worked. The question which I wish to enquire into is what fraction of total labor time should be dedicated to producing energy and what fraction should be dedicated to using that energy to produce useful goods and services.

In order to answer this question we must consider the use of technology in the process of economic production. The primary function of technology is to improve the productivity of labor. A hunter armed with bows and arrow will gather more meat per hour of hunting than one armed with a spear. A root gatherer armed with a digging stick will collect more kilograms of roots per hour than one using only his or her hands. Wheeled carts will allow a human being to transport a larger amount of mass per hour than ordinary human locomotion. And so forth.

Adding external energy sources to the mix further improves labor productivity. If a horse is used to transport the hunter, he can cover more ground in a given period of time and take more game. If an ox is attached to a wheeled cart then the amount of human effort required to transport a given mass of material drops dramatically. The use of fossil fuels did not qualitatively change the direction technological improvement to economic production. Their use merely accelerated the rate of improvement in productivity.

In my view it is impossible to separate productivity into separate contributions made by labor, tools, and energy. There is no such thing as a labor free process. No matter how automated the machinery used, someone has to build and maintain the machines, extract and deliver the energy which runs the machines, and so forth. Energy does not 'replace' labor; It creates a more productive synergy of labor and tools. Properly speaking one can only speak of the productivity of a given economic synergy and not the productivity of the individual components of that synergy. Labor productivity can be used as a metric, but labor productivity cannot really be separated from the overall productivity of all inputs to the production process.

In order to discuss this productive synergy I will introduce a concept which I call the average productivity function P. I define P as the average productivity per hour of labor in the non-energy producing sector of the economy. I will assume that P=P[E] where E is the energy per worker hour available in the non-energy producing sector of the economy. What form might the function P[E] take? One possibility is that it is a linear function of E. In this case, if I double the energy per worker hour I double my productivity. If I triple the energy per worker hour I triple my productivity, and so forth. It is easy to show, however, that if productivity increases linearly with E forever, then an absurd conclusion will be reached.

Suppose that I work a total of H hours and I spend a fraction f of those hours obtaining energy and fraction 1-f using that energy to provide useful goods and services. The net energy available for the production of useful goods and services is:

Net Energy = H×f×µ/r

Since the hours worked in the non-energy producing portion of the economy are H×(1-f) the energy per worker hour is given by:

[2] Energy/Hour = E = (µ/r)×f/(1-f)

If the average productivity is linearly proportional to C×E (where C is a constant), then the total production will be proportional to H×(1-f) times this number:

Total Production = C×H×(µ/r)×f

From this equation we see that total production increases with f without having a maximum. That is, if I worked at harvesting fuel all year along until one hour before I knocked off for my New Year's Eve celebration, I would be more productive in the remaining hour than if I had stopped gathering fuel at any earlier time. This conclusion is obviously absurd. One can reach the same conclusion by considering a factory that employs 1000 people. If 999 people are fired the remaining employee has 1000 times as much energy available per hour as he or she did before the layoff, so that under the assumption of a linear relation between energy per hour and productivity one employee could match the output of 1000 employees. Therefore a strictly linear relation between energy/hour and productivity is not possible. As energy use per hour increases, the marginal return on additional energy use per worker hour must decrease. The graph below depicts qualitatively the general form that P[E] must take:

I have depicted P[E] going to zero as E goes to zero. One could also have P intersect the E=0 axis at a positive value corresponding to some background level of productivity obtainable with human muscle power only.

The E axis has the same units as µ/r, the net energy produced per hour of labor in the fuel producing process. The units of this axis are not important as one can define a new energy/hour scale by setting E’=k×E where k is a constant. Any point on the P[E] curve can be reached for any energy source with a positive value of µ/r by simply making the hours spent in the non-energy producing part of the economy arbitrarily small. However, at each point on the P[E] curve, only one value of µ/r makes the total productivity a maximum at that point. That is to say that for a given function P[E] of the form shown, there is an optimum operating point for an energy source of a given quality as measured by µ/r.

The total production will equal P times the hours spent in the non-energy producing portion of the economy. That is the total production is given by:

Production =H×(1-f)×P

From the expression for E given above (equation [2]) we can solve for f in terms of µ/r:

f = E/(E+µ/r)

Therefore P[E]×(1-f) can be expressed as a function of E. The particular function given is P[E]=ln(E+1). On the following graph I show the P[E]×(1-f) vs. E for three different values of µ/r. I have chosen the values of µ/r so that the maxima correspond the E=24, 130, and 800 (The same values marked in the previous figure).

Note how slowly the maximum total production drops off compared to the energy per worker hour E. This slow drop-off is a consequence of the shape of the productivity curve P[E]. Of course the function P[E]=ln(E+1) is just an arbitrary function that has the right qualitative behavior, so that no quantitative conclusion can be reached from this particular example. However, a more general result can be derived from the differential geometry of the P[E] curve without knowledge of the complete function P[E]. In order to derive this result it is convenient to regard P[E] as a function of f via the equation E = (µ/r)×f/(1-f). In figure 3 I show P×(1-f) as a function of f for the same three values of µ/r.

It can be seen that the three values of E chosen correspond to f=0.15, 0.20, and 0.30 respectively. That is as the quality of the energy source (as measured by µ/r) decreases then the fraction of labor dedicated to extracting fuel increases.

Again this example depends on the specific properties of the function ln(E+1). A general result for the values of µ/r and f which maximize the total productivity = P×H×(1-f) can be derived by taking the derivative with respect to f and setting it equal to zero. The total hours worked is constant, so that maximizing P×(1-f) is sufficient to solve the problem. I give the proof in an appendix and here I merely state the results making reference to the following figure:

At a given point on the P[E] curve the value of µ/r which maximizes the total production is given by:

µ/r = [P/(dP/dE)]-E

This equation can be rewritten as:

(dP/dE)×[ (µ/r)+E] = P

Inspection of the figure shows that µ/r is equal to minus the intersection of the tangent line with the E axis:

µ/r = E0

The fraction of labor dedicated to fuel extraction which, combined with the value of µ/r given above, maximizes production at the given point on the P[E] curve is given by:

f = (dP/dE)/(P/E)

This number is the ratio of the slope of the tangent line to the slope of the chord from the origin. The chord from the origin corresponds to a linear increase in productivity/hour with energy/hour. As I showed previously, with such a linear dependence labor productivity can be increased without bound so that f would have no maximum. The above result shows that the maximum occurs when f is equal to the ratio of the marginal increase in productivity with increasing E to the average increase in productivity with respect to E.

The equation for f can be rewritten as follows:

f = [E×(dP/dE)]/P

Inspection of the figure shows that E×(dP/dE) is equal to P-P0 where P0 is the intersection of the tangent line with the P axis. Thus f is given by:

f = (P-P0)/P = 1-(P0/P)

The total production achieved at this operating point is:

Production = H×P×(1-f) = H×P0

H×P is the total production that would be achieved at the given value of E if free energy were available so that all labor effort could be dedicated to producing useful goods and services. Therefore P0 is the effective productivity per hour achieved for all labor hours including those dedicated to producing fuel.

The following figure shows the tangent line and chord to the P[E] curve for the case that f=0.15.

The above results make it clear that within the parameters of this simplified economic model, the characteristic of a high quality energy source is that a small amount of effort spent gathering fuel drives the economy to a point where the marginal return on further energy use is small. Without such a small marginal return on additional use of energy, total production could be further increased by dedicating more resources to further energy extraction. This conclusion is independent of knowing the explicit form of the P[E] function. Thus the idea that that we could substantially back off our energy use while maintaining reasonable levels of productivity is supported by this model.

Up to now I have been talking as if the labor efficiency of energy production were an unchanging constant, and as if the productivity function P[E] was a fixed and eternal mathematical form. Neither of these statements is correct. In the early days of fossil fuel use the labor efficiency of fuel production was being increased steadily both through the discovery of newer higher quality reservoirs of fuel and through advancing extraction technology. The productivity function P[E] also depends on the quality of non-energy resources available (ore grades, etc.) as well as on the general advancement of technological knowledge, on the quantity and variety of the existing set of physical tools, and on the built up infrastructure of society generally.

The economic problem that we are faced with now is a potentially large degradation in the quality (e.g. higher labor and other resource intensities and lower energy balance) of the energy sources available to us and potentially a degradation in the quality of other resources as well (e.g. the necessity of using lower grade metallic ores). These changes will put a large burden on our technological prowess to maintain increasing levels of productivity. Some people claim that in the era of cheap energy, we were careless about energy use, so that a lot of low hanging fruit exists with respect to improvements in energy efficiency. If our economic goal is to produce physically and psychologically healthy human beings with a minimum consumption of resources, this claim may well be true. But if our goal is to produce growth in the traditional economic sense, this conclusion is questionable.

The above analysis suggests that even in the days of cheap energy, energy use was limited by the marginal utility of energy, so that a high motivation for increasing the efficiency with which energy is converted into economic value has always existed. If oil is such a unique, valuable, possibly irreplaceable resource, then why have we been using it to tool down the freeway at high speed encased in tons of metal? If that same energy could have produced a lot more value in some other part of the economy, why didn’t it naturally flow there? The answer to this question may well be that in a culture in which the lawn, jet airplane tourism, home theater systems, etc. have become part of normal life, SUVs and luxury cars are the highest value marginal use of that form of energy that we could come up with. Yes, as energy prices rise, the most marginal uses will disappear first. It is far from clear, however, that we will necessarily be able to produce equal or larger value elsewhere in the economy.

In any event, it is clear that in a growth oriented economy we will always push out along the curve of marginal utility as swiftly as we can. No matter how clever we are at increasing our manufacturing efficiency, the tendency of the economy will be to push up against the limits of available energy resources as fast as possible.

If on the other hand, if we were to decommit from the goal of continuous growth and instead try to maintain a given quality of life with a minimum consumption of resources, then the combination of backing off on total per capita energy use along with efficiency improvements might allow us to maintain a decent quality of life even in the face of decreasing energy quality.

Multiple Resource Costs of Energy Production

I will now consider the role of other resources than labor used in the production of energy. I now suppose that multiple non-energy resources R0, R1,R2 ..., Rn are input to an energy production process that outputs a total amount of energy O. As before I will assume that the energy input is P so that the net energy output is N=O-P. I will assume that R0 is labor since no such thing as a labor free production process exists. If the other non-energy inputs have labor and energy embedded in their production, I assume that these inputs are included in P and in R0.

You might ask if the embedded labor and energy have been subtracted from the input of a given resource is there any cost left over? In some cases the answer is no, while in other cases opportunity costs exist that are not captured in the embedded energy and labor. For example we cannot create high quality soil and arable land merely by the application of energy and labor, and since the supply of land and soil are finite there are opportunity costs associated with using these resources to produce energy rather than food.

As another example, consider the water required to process oil shale in the relatively arid American west. There are opportunity costs associated with using the available supply of water to produce fuel that cannot be captured by the labor and energy costs of delivering the water to the shale processing site.

I mentioned embedded energy above, and before proceeding with an analysis of the benefit to cost ratio of energy production in the case of multiple input resources, I want to introduce a concept which I have found helpful in clarifying the role of embedded energy. I call this concept the working reserve of energy. In order to run our economy effectively we need piles of coal, pipelines full of natural gas, tanks of refined petroleum fuel, stockpiles of uranium fuel rods, etc sitting around available for use by various economic producers. Energy producers pull fuel out of these stockpiles, but unlike other producers they also put fuel back into these same stockpiles, which I call the working reserves of energy.

In order for the economy to keep running on an ongoing basis the energy producers must keep the reserve full. That is they must not only replace the fuel that they themselves remove but also the fuel removed by all other economic producers. Withdrawals of fuel by energy producers can be direct or indirect. That is they can directly purchase fuel to run their machinery, or other producers can draw out fuel and create output which they sell to the energy producers for use in the fuel extraction process. This indirect withdrawal of fuel from the working reserves is embedded energy.

So now let us consider the benefit to cost ratio of producing energy under the simple assumption of the economic equivalence of all forms of energy which is generally (though incorrectly) used for energy balance calculations. Since multiple input resources are involved we need some method of converting resource quantities into units of a universal scale of value. Whether it is truly possible to objectively define such a scale in the real world may be doubted, but we cannot make progress in economic analysis without assuming that it exists. Therefore I will assume that the value of a unit of energy is Ve and the opportunity cost of dedicating one unit of a non-production resource Ri to the energy production process is Ci.

The benefit of energy production in our universal scale is then given by:

Benefit = Ve×(O-P) = Ve×N

Where O is the gross output energy, P is the energy consumed in the production process (both directly and indirectly) and N=O-P is the net energy produced. You might try to argue that Ve×O is the benefit of the energy production process, but this claim is false. The very last time you run an energy production process you can claim the whole output as a benefit, since you do not have to reinvest any of the energy to produce more energy. But the extra energy P that you get from this last batch is balanced by the energy P that you had to beg, borrow, or steal to process your first batch. In between, the production energy used in processing any particular batch of energy is not available to the rest of the economy.

The cost of producing the net energy N is given by:

Cost = C0×R0 + C1×R1 + ...+Cn×Rn

The opportunity costs Ci are not the same as market prices. For one thing embedded labor and energy cost have been subtracted out (except for C0 which is the opportunity cost of dedicating a unit of labor to the energy production process). As I pointed out previously, a finite resource such as land or fresh water may have opportunity costs associated with their use which are not captured in the embedded labor and energy.

Note that input energy is not included as part of the cost. It subtracts from the benefit but does not add to the cost. This claim may require some further explanation. As I mentioned previously, when the first batch of energy is produced from a new energy production process the input energy P must obtained from somewhere. Either some energy producer must process some extra energy, or the use of energy elsewhere in the economy must be curtailed. This initial input of energy is a cost. However, after the first batch of energy is processed and the output is placed in the working reserves, the energy producer has effectively provided the input for his or her next batch of energy. (I am assuming a positive energy balance.) For succeeding batches of energy no other energy producer has to provide extra energy. No other economic process has to forego the use of energy. Finally, when the last batch of energy is processed the initial input energy is recovered. Therefore society has incurred no net energy cost from the existence of this process.

The benefit to cost ratio is given by:

Benefit/Cost = (Ve×N)/(C0×R0 + C1×R1 + ...+Cn×Rn)

Dividing the numerator and denominator of this expression by the gross output energy O gives an interesting expression for the benefit to cost ratio:

Benefit/Cost = (Ve×N/O)/(C0×R0/O + C1×R1/O + ...+Cn×Rn/O)

I rewrite this equation as:

Benefit/Cost = (Ve×µ)/(C0×r0 + C1×r1 + ...+Cn×rn)

Where µ=N/O and ri=Ri/O. Clearly µ is the energy utilization rate discussed earlier. The values ri=Ri/O I call the resource intensities or resource costs of gross energy production. The value ri represents the amount of resource required to produce 1 output unit of energy. The values µ and r0, r1, ...,rn are physical parameters that depend on the nature of the energy producing process. In particular r0 is the labor intensity of energy production which I discussed previously. The parameters Ve, C0, C1, ...,Cn are not physical parameters and are not constants. They are complex functions of the operation of the entire economy, among other things depending on the total scale of the economy and on the quality of natural resources available. Nevertheless if one takes a snapshot of the economy at a particular instant of time Ve, C0, C1, ...Cn may be regarded as approximately constant with respect to the extraction of a marginal unit of net energy and may therefore be used (assuming one really knew how calculate them) to estimate the benefit to cost ratio.

Note that with respect the physical parameters of energy production, two different (though often related) effects can lower the benefit/cost ratio. The energy balance as represented by the energy utilization rate µ rate can go down, or the resource intensities of energy production can go up. Often times both effects occur at the same time. Oil produced from oil shale has a lower energy balance than conventional oil and the labor and fresh water intensity of producing a barrel of oil from this source is much higher than for conventional oil.

In order for an energy production process to provide any economic benefit the benefit/cost ratio must be greater than 1, which implies that:

(C0×r0 + C1×r1 + ...+Cn×rn)/Ve < µ

The left side of this equation is the ratio of the non-energy cost of producing a unit of energy to the value of the unit of energy so produced. Since not all of the energy produced is available for the production of useful goods and services the upper limit on this cost ratio is µ rather than 1. If this ratio is much smaller than 1.0, then very small values of µ can be economically justified. I call this limit the magic wand limit of energy production. If large quantities of energy could be harvested with trivial expenditures of labor and other non-energy related resources, then net economic value could be produced even with very small energy balances.

On the other hand, if this ratio is >=1 then the energy production process in question is economically useless no matter how good the energy balance may be, since the value of the non-energy resources consumed is equal to or greater than the value of the energy produced. For example, suppose you found a magical energy crop which grew and harvested itself without human intervention. The energy rich sap of some species of tree flowed out of the trees through underground channels and filled a natural reservoir. You go to the reservoir once a year and find that it is full of fuel. If dedicating that land to energy production meant that you would starve to death, then you would not give a damn about the perfect energy balance (or the infinite EROEI if you prefer).

Remember that the opportunity costs Ci are not constants. For example, if you use currently fallow land to produce fuel the opportunity cost of dedicating that land to energy production could be close to zero. On the other hand, if biofuel production is ramped up to the level where a large fraction of farm land is being dedicated to the production of fuel, then the opportunity cost of dedicating additional land to producing fuel could become quite high, so that even if the physical aspects of energy production as measured by the energy utilization rate µ and the land intensity of energy production remain constant, the benefit to cost ratio may drop significantly.

As another example, consider the labor cost of producing oil from tar sands. I have read that in Canada general labor costs are rising as tar sands production rises, so that people trying to hire retail clerks or food service personal are having to pay higher wages because of the competition from energy production. On average the labor of one human being supports one human being so, that if the fraction of total labor dedicated to energy extraction becomes significant, it can affect overall economic production.

Resource Costs of Energy Production and the Overall Scale of the Economy

Finally I want to discuss in more detail the relation of energy balance to the overall scale of the economy mentioned at the end of the last section. In this discussion I will make use of the concept of the working reserve of energy which I introduced earlier. The figure below shows hypothetical working reserves of energy for two economies run off of two different fuel sources with different energy balances (µ=0.5 and µ=0.9 respectively). I have represented the size of the reserves by the total area of a series of squares. The energy to the left of the vertical bar is used in the energy extraction process (directly or indirectly). The energy to the right of the vertical bar is used to produce useful goods and services. Energy producers naturally put energy into the reserves as well as taking it out. At the end of the effective lifetime of the reserves they are still full because the energy producers have put back all of the energy that was taken about by all varieties of producers.

If we assume the that working reserves of both fuels are intended to represent energy available for the same time period, then the second energy source provides nine times the net energy of the first energy source in the same time period. Can we therefore conclude that the relative economic value of these energy sources is in a ratio of nine to one? The answer to this question is not straightforward. The next figure shows the working reserves for the same two energy sources for the case where they are both providing the same amount of net energy. In order to get from case 1 to case 2 the size of the working reserves and the total rate of fuel production for the energy source with µ=0.5 has been expanded by a factor of 9.

Naturally this large expansion in energy production could not take place over night. It would take a substantial period of time to grow energy production by this amount. In order to achieve such growth one would have to dedicate to energy production a fraction of the total energy larger than the energy utilization rate µ (=0.5). So if growth is referred to a yearly time period, then dedicating 54% of the total available energy to the production of more energy would result in an energy production growth rate of 4% per year. As energy production grew the total non-energy resource cost of energy production would also grow. That is, if labor, land, and water are being used to produce energy, we would have to continuously expand the amount of these resources being dedicated to this process.

If there are negative externalities associated with energy production and consumption these are also growing as energy production grows. These resource costs and the negative externalities determine the economics of a given fuel source and not the disappearance of energy during the production process per se. Of course, the energy balance does affect these resource costs since, all other things being equal, a smaller energy balance implies a larger total energy extraction and a larger resource cost to produce the same amount of net energy.

The resource cost multiplication factor can be derived as follows. Recall that the cost of producing energy is given by:

Cost = C0×R0 + C1×R1 + ... + Cn×Rn

Where R0 is the labor input and Ri are other resources whose costs cannot be reduced to the embedded labor and energy. We are interested in the cost per unit of net energy produced so we divide by N and do a bit of algebra:

Cost/N = (O/N) × {C0×R0/O + C1×R1/O + ... + Cn×Rn/O}

Recalling that Ri/O=ri (the resource intensity of energy production) we find:

Cost/N = (O/N)× {C0×r0 + C1×r1 + ... + Cn×rn}

The quantity in curly brackets is the cost of production of 1 unit of gross output energy, so that the required cost multiplication factor due to the energy balance is (O/N) = 1/µ. For the two energy sources depicted in the above figure the values of (O/N) are 2.0 and 1.11 respectively. The ratio of these two numbers is the same as the ratio of the size of the required working reserves.

In general, a fuel source with a low energy balance will be more likely to run into problems of scale than one with a high energy balance as energy production is ramped up to produce a given amount of net energy. The real problem with biofuels is not low energy balance per se, but the large requirements of land, water, and soil as production is ramped up to high levels. Of course, the real cost of the scaling up a given energy source cannot be determined in any simple way from the energy balance. This cost depends on many complex interactions in the total economic system. Economics cannot be reduced to calculating energy ratios.

Appendix: Derivation of the values of labor efficiency of energy production (=µ/r) and of the fraction of labor dedicated to energy production (=f) which maximize the total productivity

We wish to maximize the following function:

Taking the derivative with respect to f and setting it equal to zero we find:

We rewrite this equation as:

[1]

I have shown previously that the energy per worker hour E is given by:

[2]

Taking the derivative with respect to f we find:

[3]

From equation [2] we see that:

[4]

Substituting this expression for µ/r into equation [3] we find:

[5]

If we substitute equation [5] into equation [1] and multiply by f we find:

Solving for f we find:

[6]

Referring to the figure below we see that the fraction of labor dedicated to energy production which will maximize the total production (= P×H×[1-f]) is given by the ratio of the slope of the tangent line to the slope of the chord drawn from the origin.

To find the corresponding value of µ/r we substitute the above expression for f into equation [4]. For notational simplicity we set dP/dE = S. We then find:

This equation can be rewritten as follows:

[7]

Equation [7] can be rewritten as follows:

Inspection of the figure makes it clear that

[8]

To prove that these values of f and µ/r correspond to a maximum of the function P×(1-f) it is necessary to show that the second derivative of this function with respect to f is less than zero. The algebra involved is fairly tedious so I will just state the result:

when f and µ/r take on the values given by equations [6] and [7] above. Since f and 1-f are both greater than zero and the second derivative of P with respect to E is negative for a curve of the shape shown in the figure, we can conclude that P×(1-f) is a maximum at the values of f and µ/r given above.

Summary

1. The cost of finite non-energy production resources such as labor, land, fresh water, etc must be accounted for in determining the economic benefits of energy production in addition to calculating the energy balance.
2. Energy sources with low net energy balance will tend to have higher non-energy resource costs at a given level of net energy production compared to high net energy balance sources.
3. If the opportunity cost of the non-energy resources required to produce 1 net unit of energy are equal to the value of the unit of energy, then the energy production process has no economic benefit no matter how good energy balance may be.
4. In scaling up energy production to large levels the opportunity cost of using non-energy related production resources can rise dramatically. So if producing large amounts of oil shale involves obtaining 40% of the water rights in some large area of the American west then the opportunity cost of this expansion may be far larger than would be computed from the current market price of water in those areas.
5. Use of cheap abundant energy is limited by marginal utility. That is as we extract more and more energy it becomes more difficult to produce of sufficient economic value to justify the extraction of a marginal unit of energy. This claim implies that a strong motivation has always existed to increase the efficiency with which energy is converted into economic value. Therefore the assertion of some people that as energy becomes more expensive we can easily maintain economic growth via greater efficiency is doubtful.

The credit crunch is already having an impact on energy markets. New projects are harder to fund. Highly leveraged companies are sometimes finding it necessary to shed assets. Some players are finding themselves to be the indirect casualties of other players, like Lehman, that have already failed. Long term, we will probably see consolidation and lower production than would have been the case without the credit crunch. Of course, if there is a major recession, it is possible that we won't need as high production.

In this post, I have tried to bring together some of the impacts of the credit crunch on the energy industry that are already being felt. If you are seeing other impacts, please make note of them in the comments.
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One article seems to suggest that speculators are being driven away from the oil and gas industry, and that more care is being taken with counter-party risk:

Credit crunch slows oil trading

The OTC markets in oil have not seized up because of credit issues, but liquidity is lower and participants are treading more carefully.

Platts, a unit of the McGraw-Hill Cos. and which provides price assessments in physical oil markets, says derivatives trading, but not physical deals, is slowing down.

"The number of trades and the length of a trading chain are likely to be reduced because of the problems banks are having," said Jorge Montepeque, Platts global director of market reports.

"But the physical oil markets are carrying on because oil has to be moved from producers to consumers.

They said credit worries were also spurring a shift to clear over-the-counter (OTC) oil trades, such as price swaps, on NYMEX Clearport, which offers clearing for some OTC derivatives. . .

"People are worried about counterparty risk, so if you don't clear your OTC deal you are simply relying on your counterparty to perform," said Bellew.

More marginal production seems already to be getting squeezed:

Credit crisis squeezing western juniors

For Canada's junior oil and gas companies, the credit crunch comes on top of a helter-skelter commodity price drop that has hit company valuations hard.

As a result, new exploration activity now seems more fraught with risk, especially as Alberta is set to implement a new royalty regime in January that will erode profit margins.

"There's no doubt there's not enough capital around in the market," said Kel Johnston, chief executive officer of Alberta Clipper Inc., a Calgary-based junior oil and gas firm. "I can't see anything other than [drilling] levels dropping off, especially in Alberta."

Newer projects are getting squeezed, especially IPOs.

Russian IPOs fall dramatically amid credit crisis

NEW YORK (MarketWatch) -- Capital raised through initial public offerings in the third quarter by companies from Russia and the former Soviet Union fell to the lowest level since 2004, as the global credit crisis took its toll, the PBN Company said Thursday.

Forty-three companies from the Commonwealth of Independent States (CIS) have postponed or pulled their flotations this year, said PBN, a consultancy with a focus on Russia and the CIS.The CIS consists of former Soviet republics, such as Russia, Ukraine, Belarus, Azerbaijan, Armenia, and Kazakhstan, among others.

The credit crisis is providing buying opportunities for the more cash-rich. The recent decline in prices is forcing the more highly leveraged companies to put properties up for sale, and this is putting downward pressure on sale prices of assets.

Cash-Rich Oil Firms Snap Up Assets

The turmoil on Wall Street is reshaping the U.S. oil industry, forcing debt-laden smaller producers to sell assets and creating opportunities for larger, cash-rich companies that until recently had been criticized by investors for spending too conservatively.

The latest example: Occidental Petroleum Corp., one of the largest independent oil producers, Thursday snapped up the 50% interest it didn't already own in oil and gas fields in Texas and the Rocky Mountains from smaller company Plains Exploration & Production Co. The $1.25 billion price tag was nearly 20% less than the $1.55 billion Occidental paid less than a year ago for the first half of the assets.

Another credit related sale was the purchase of Constellation Energy by Warren Buffet's Warren Buffet's Mid-American Energy Holdings. About this we read:

Constellation in Quick Deal With Buffett

Constellation's shares had fallen 70 percent since July 31 as investor concerns increased over the liquidity needs of the company's energy-trading business, which was growing until this year. That business relies heavily on financing that has all but disappeared with the turmoil in the financial markets.

Investor and lender confidence was damaged by chief executive Mayo A. Shattuck III's August disclosure that Constellation had dramatically underestimated the collateral it would need to put up if its credit rating were downgraded. Then late last month, the company took several steps to raise capital, selling off some natural gas reserves. That appears to have been too little, too late.

Then there are the indirect problems, coming from the failures of other organizations. For example, the state of Georgia formed the Georgia Municipal Gas Authority in 1987, to help communities get better prices in natural gas. This authority formed Main Street gas corporation, to enter into prepaid gas contracts on behalf of communities. These contracts were entered into with Lehman Brothers, J. P. Morgan, and Merrill Lynch. Now Lehman has defaulted on its contracts, and Main Street and the communities it represents will need to go looking for more natural gas, probably at higher prices. Tax exempt bonds were used to purchase this gas which has "gone missing". One hopes the contracts with J. P. Morgan and Merrill Lynch will hold up better.

Lehman failure leaves natural gas supplier searching

Main Street, an affiliate of the Municipal Gas Authority of Georgia, lost a $709 million, 30-year gas supply contract.

The contract was with a subsidiary of Lehman Brothers, the investment bank which collapsed last week.

Main Street now has to find new gas to replace the low-priced supplies that Lehman was supposed to deliver in Georgia and Florida.

The new gas will almost certainly cost more.

We also have the next layer, a gas marketer, failing as well. In Thursday's Atlanta Journal Constitution, we read:

Catalyst Energy Files for Bankruptcy

De Aguero said his company’s bankruptcy stems directly from the meltdown on Wall Street.

“We are all aware of what’s happening with the macro economy,” he said. “And it’s gone down into the midmarket and now Main Street.”

“It’s very common. It’s going on all over the country right now.”

Catalyst’s credit line and gas supply contracts were both with Constellation Energy, the nation’s largest independent energy marketer. Constellation was a trading partner of Lehman Brothers. Its stock price collapsed after Lehman Brothers’ demise two weeks ago. Constellation announced it was selling itself to Warren Buffett’s Mid American Holdings for a cheap discount a few days later.

Constellation cut off Catalyst late last week, leaving the marketer scrambling for credit in a market that isn’t giving any.

“The illiquid credit markets have exacerbated the issue,” de Aguero said.

The credit crisis can expect to cut back in investment in alternatives. Where an investment is made, it is likely to be made by the larger, better funded organizations.

Credit Crisis May Delay Biofuels Development

LONDON, Sept 29 (Reuters) - A global pull-back from bank lending may dent the commercialisation of biofuel technologies to replace conventional gasoline, said the chief executive of U.S. cellulosic ethanol firm BlueFire Ethanol.

A credit crisis which claimed more bank victims on Monday has raised project finance costs and made ambitious targets to replace fossil fuels with renewable energy sources look less achievable. . .

The credit crisis could slow that transition both through more costly finance and by diverting subsidies from renewables, which are often more expensive than conventional fossil fuels.

Credit Crisis Could Lead to Consolidation in Renewables Industry

A clamp down on the credit market will make it difficult for renewable energy developers to finance new projects, putting utility companies in a strong position to increase their share of the renewables pie, according to a Reuters report.

Utilities have large supplies of cash, and even if they have to borrow, they can do so more cheaply as government-regulated businesses, an analyst at Raymond James & Associates notes.

"The big projects being built by big utilities don't need to borrow from banks for short-term loans," said JP Morgan analyst Chris Rogers. "But if banks don't lend to each other they certainly won't lend to small project start-ups."

Let us know what you are seeing as well.

Can these countries survive exit of cash? LONDON — As western investors dump emerging assets, the fate of the sector's major economies will hang on whether Brazil, Russia, China and others such as Gulf Oil producers have built up enough funds to survive the storm.

Just months ago, many analysts argued the fast-growing sector had “decoupled” from the developed world. But a Wall Street-led rout has since hit stock markets from Lusaka to Bombay as western banks failed or needed bailing out. [break]

Saved - America finally rescues banks and now petrol could fall to 74p a litre THE world’s economy was saved from total disintegration last night when the United States Congress finally agreed the biggest banking bail-out of all time.

The £397billion package means that struggling US banks will be shored up, with massive knock-on effects for the financial markets and, ultimately, hard-pressed families in Britain.

In separate good news, supermarkets embarked on another petrol price war led by Asda and Morrisons, who will today cut pump prices by up to 2p a litre. At the same time, analysts forecast that the price of a barrel of oil could fall to as low as $30 by next year, which would see petrol plummet to around 74p a litre.

Georgia’s gas shortage exposed fragile system On Aug. 28, Gov. Sonny Perdue officially designated September as “Preparedness Month.” The state, Perdue said, had developed an “ambitious and proactive” campaign with a name that bespoke vigilance: Ready Georgia.

Two weeks later, however, Georgians learned just how unprepared the state was for a rapidly emerging crisis in auto-centric metro Atlanta: a gasoline shortage.

Reducing Work Commutes Not Easy In Some Cities, Study Suggests horter work commutes are one way to reduce gasoline consumption, but a new study finds that not all cities are equal in how easy it would be to achieve that goal.

Research suggests that Atlanta and Minneapolis may be the U.S. metropolitan areas that would find it most difficult to reduce the miles that workers commute each day.

Meanwhile, Las Vegas and Miami may be the metro areas where it would be easiest to reduce commuting miles.

Iran to extend the oil credit facility to Sri Lanka Colombo: Sri Lanka will receive the Iranian oil credit facility for another three months at a concessionary interest rate to meet its crude oil requirements, the government said today.

The Iranian government has agreed to give an extension of three months as the interest-free oil credit facility to purchase the country's crude oil requirement is to end soon.

Iran: Gas conference proof US pressure ineffective A high-profile natural gas conference sponsored in part by two of Europe's largest energy companies opened Saturday in Tehran - evidence, Iran said, that US Pressure was ineffective in preventing the country from developing its vast oil and gas resources.

The Killing Horizon: Capitalism At The Expense Of All Life Humanity faces a real crisis - one that threatens not only Wall Street, but all life on Earth. Call it Global Warming, call it Peak Oil, call it running out of water on a global scale, call it the collapse of industrial agriculture. call it fisheries collapsing, call it mass extinction. Call it the potential of planetary death. Call it what is inside the Black Hole made visible, palpable in its meaning. Call it the real event horizon. Call it the Killing horizon. It’s every bit as complex in all of its intersections as the financial “crisis,” but, unlike the financial “crisis,” it’s real.

And what happens?

Nothing. No significant action. At all.

There's no $700 billion plan to save the Earth - which sustains us all.

Crude: How Wall Street investment banks manipulated oil prices to try to save their hides, screwing American consumers and the rest of the world and breaking the economy anyway James Howard Kunstler, author of The Long Emergency and creator of the popular blog Cluster**** Nation, believes that the effect from the speculative market is “basically witch-hunt stuff.” A peak oil theorist, Kunstler, on the phone from his home in Saratoga Springs, says he believes that the root of the problem lies in our global dependence upon a commodity that is quite simply disappearing.

American scientist M. King Hubbert predicted in the 1950s that American oil production would peak by the early 1970s. His predictive model was the basis for peak oil theory, which, when applied to the global market, indicates that the world may hit peak oil production within the next 20 years or sooner. Kunstler says that “the biggest thing that’s going on right now is the oil export problem or crisis.

“What that means,” he adds, “is the countries that we depend on for imported oil are less and less able to send it out and they’re using more of their own oil even as they’re in depletion. Two of the biggest cases of this are Mexico and Venezuela.”

Alaska: costs prompt exodus to cities With growing evidence of an Alaska Native exodus from villages to the city, Mayor Mark Begich and Schools Superintendent Carol Comeau sent a letter to Gov. Sarah Palin on Monday asking her to organize an emergency task force to find ways to stem the migration.

Anchorage and the state "cannot stand by and tolerate the deterioration of rural Alaska," the letter said.

On the edge of the