Again, notice the sideways trend in oil prices that turns in to an explosion the second the Federal Reserve attempts to "fix" the economy by making money more readily available:
That oil is already taken by Brazilians - my friends from there frequently mention the exact day they achieved energy self-sufficiency, even when we're talking something completely OT.
The Reserve authorities were disturbed. They had raised the rediscount rate in February from 3'/2 to 4 per cent, hoping that if a lowering of the rate in 1927 had encouraged speculation, a corresponding increase would discourage it-and instead they had witnessed a common-stock mania which ran counter to all logic and all economic theory. They raised the rate again in May to 4'/2 per cent, but after a brief shudder the market went boiling on. They sold the Government bonds they had accumulated during 1927, and the principal result of their efforts was that the Government-bond market became demoralized. Who would ever have thought the situation would thus get out of hand?
Who would have thought that the same actions in 2007 would yield the same results as they did in 1927?
I went to see my accountant today - tax season you know. He is located about five miles north of the Iowa/Minnesota border... we got talking grain prices.
Understand neither of us are young but we have NEVER seen prices like these - never even dreamed they could happen.
He said one of his clients - a fairly large farmer but by no means the largest in the area - came in to drop off his tax stuff then suggested the two go out for beer at one of 'the clubs' (VFW, Moose, whatever)... He said he was sitting on about 100,000 bushels of soy beans & thought it was probably time to start moving them out to get ready for next year's crop. He had never had a wind fall quite like it and wanted advice on what he should be doing - tax wise.
Hire body guards.
Beans have been bouncing around $13-$15/bu... this guy has almost $1.5MM in bins sitting on his farm.
Juxtapose that with the stories of the food riots & I have trouble coming to grips with the extremes.
Ya TED isn't the biggest problem this planet faces.
Let's see. In the last 5 years Russia has renationalized a good chunk of international oil investment in their country, and invested nearly nothing in their current production and their oil infrastructure which is not only technologically obsolete but crumbling.
Mexico has the same issues. Piggy bank for the state, lack of investment, falling output.
Just as anyone reading CR for the past 3 years would have known what was going to happen in housing, anyone who's been reading theoildrum for the last 3 years would have known that Russia is experiencing its second peak right on schedule.
Food prices are clearly affected by corn ethanol, but oil prices are the larger contributor to the spike in consumable commodities. The biggest problem with planting all the corn, however, is the ripple effect on other food staples, and the incentives it creates. Brazilian farmers can't burn down the Amazon fast enough to grow soy, given the doubling in prices in the last year. Indonesians are plowing through the rain forests to create palm oil plantations...
Those who think Islamic terrorism is the major threat of the 21st Century are akin to those who claimed that housing prices will never fall (that much). Climate change and global warming is going to create millions of eco-refugees over the next half century, moving around to avoid starvation. We're already seeing it in Darfur, where communities that were previously separate are now coming into conflict over scarce water and agricultural/grazing resources.
What Scott typed - and even if it is ALL there new supply is over ten years off - and I suspect they are talking about oil in place, not what could be produced (though any way you look at it the technical term for that is 'big').
Also, the food riot scenario will negatively impact oil production as greater regional political instability will almost certainly develop.
AND for real 'black swan' potential in the food scarcity arena consider ug99. It made it to Iran ahead of schedule and the same wind event last year may have enlarged its range...
It's simplistic to equate higher oil prices with higher food prices. Oil prices are volatile, and there are at least four other trends that may be more important than oil in driving food prices permanently higher.
None of these trends are cyclical. They are either permanent or recurring.
They are:
1) Diet changes, mainly in developing countries that are outgrowing rice and grasses as diet staples.
2) Speculation and hoarding by investors.
3) Climate changes for the worse.
4) Conversion of foods into energy stocks -- mainly corn, sugar and some vegetable oils.
For some time, the world may have to grow more, eat less and spend more on food.
It's good news for farmers, and maybe a number of unemployed financial executives could learn a new and more useful trade on farms.
"In the last 5 years Russia has ... invested nearly nothing in their current production and their oil infrastructure which is not only technologically obsolete but crumbling."
At this point, the slower the production, the higher the profits. Their best strategy is to let production taper off in old fields and only invest in new fields. There is no reason to rush.
AND for real 'black swan' potential in the food scarcity arena consider ug99. It made it to Iran ahead of schedule and the same wind event last year may have enlarged its range...
energyecon | Homepage | 04.14.08 - 10:51 pm | #
I took a bunch of biology & microbiology in school - even back then the profs said a plague attacking humans directly is a minor problem, a plague attacking major food stuffs - wheat, corn, potatoes, rice - is a DISASTER. It could kill a couple 2-3 billion in just a few seasons...
MC, your comment sounds like it comes from the WSJ or The Economist. Just because an oil company is state owned/controlled it does not necessarily mean it is inefficient.
Brazil has a state controlled company, and they are investing big time. Just see Mike in AZ link. Petrobras competes with its private peers, all over the world, mainly in deep water projects.
Norways oil company (state controlled) does the same. Its production is falling, but so is Britains (all private). That is due to depletion, not bad management. The same goes on with American oil production.
Russian companies are investing heavily in pipelines to Europe. Some Mexico fields are also facing accelerated depletion.
It seems the only ones not facing such problems (yet) are the Arab producers (most state owned).
Conclusion: each case has to be analyzed separately. Who owns the business, in this case, seems to be not so important.
Rich, those systemic trends (1, 3, and 4) are indeed the real problem over the long term. But in the short term, the rapid increase has been due as much to oil price spikes as anything else. Think about how much petroleum it takes to grow anything on a commercial scale - from fertilizer to farm equipment to processing packaging to transportation. It's downright scary.
It's good news for farmers, and maybe a number of unemployed financial executives could learn a new and more useful trade on farms.
rich | 04.14.08 - 10:53 pm | #
They are already fully qualified for at least one job...
Scroll down until you get to the graph titled, 'The Growing Gap'..
One of the stories on the 'giant' Brazil oil field said it was enough for 'six months of US refinery demand'... not exactly saving the world.
And again, I push Matt Simmons' site.. the president of the largest energy related investment bank in the world... makes all of his papers and presentations available online.
especially the export land model by the poster westexas, which describes the fall of exports from from oil producers due to increasing internal demand.
such a model might be applied to food producers as well, but i have not yet seen a similar treatment.
This topic has been a bee in my bonnet lately, I am relieved to see it out in a thread here - as it will get a lookover from a wide range of perspectives.
BRAWALPINDI, March 5: The Food and Agriculture Organisation (FAO) of the United Nations has asked the authorities of Pakistan and five other wheat-producing countries, located east of Iran, to be on high alert, following a report that a new and virulent wheat fungus has moved to major wheat-growing areas in Iran.
The FAO says the detection of the wheat-rust fungus in Iran is extremely worrisome. The fungus is spreading rapidly and could seriously lower wheat production in countries at direct risk. Affected countries and the international community have to ensure that the spread of the disease is checked in order to reduce the risk to countries that are already hit by high food prices, the UN agency announced in Rome on Wednesday.
The fungus, previously found in East Africa and Yemen, is capable of wreaking havoc to wheat production by destroying entire fields, FAO says.
According to FAO, countries in the predicted, immediate pathway grow more than 65 million hectares of wheat, accounting for 25 per cent of the global wheat harvest.
Brazilian farmers can't burn down the Amazon fast enough to grow soy, given the doubling in prices in the last year. Indonesians are plowing through the rain forests to create palm oil plantations...
Recently read "The Long Hard Time", another on the CR BOMC list. This comment sounds close to what American wheat farmers were doing in the early 1920s after the WWI effort. Everything went under the plow and the ultimate result of all of the increased demand was a collapse in prices.
Took down the trees last month and the fence the other week.
Buying seeds tomorrow and renting a tiller this weekend. The garden moves forward. When the stumps are gone in a month - hiring someone else to do it - I'll expand the plot next year, about doubling it in size.
...the profs said a plague attacking humans directly is a minor problem, a plague attacking major food stuffs - wheat, corn, potatoes, rice - is a DISASTER. It could kill a couple 2-3 billion in just a few seasons...
post on Drudge talks about how more and more are leaning on the potato. My first thought on seeing that was about the Irish Potato Famine.
Maybe CR can morph into an online early morning Ag report, brought to you by DeKalb.
the oildrum used to be my main site before CR. fantastic.
i have a question for fellow oildrummers. for yrs now Russia has been nationalizing their oil projects at the expense of the majors. assuming that the Russian national oil companies like Lukoil are less efficient do you think production could be ramped back up with more expertise? IOW, could this just be a dip?
the combination of peak oil and food shortages could be the coup de grace for world economies.
my retired IB friend recommended POT about 3 yrs ago to me. being the dumbie i am, i held it for a coupla months as it decreased 10%. sold it! luckily stuffed some into my son's custodial acct and its skyrocketed. that one stock alone could've retired me.
What were the economic diseases from which business was suffering? A few of them may be listed categorically.
...
Artificial commodity prices. During 1929, as David Friday has pointed out, the prices of many products had been stabilized at high levels by pools. There were pools, for example, in copper and cotton; there was a wheat pool in Canada, a coffee pool in Brazil, a sugar pool in Cuba, a wool pool in Australia. The prices artificially maintained by these pools had led to overproduction, which became the more dangerous the longer it remained concealed. Stocks of these commodities accumulated at a rate out of all proportion to consumption; eventually the pools could no longer support the markets, and when the inevitable day of reckoning came, prices fell disastrously.
I think that is apt - multiple rice exporters have cut back or eliminated exports to ensure domestic supply - a rigorous approach would be illuminating (though supply response would be quite a bit more dynamic).
For those interested in the fossil fuel content of our diet, an excellent article is "The Oil We Eat", by Richard Manning, available at http://harpers.org/archive/2004/02/0079915
Hey Homedad - you want to do something to help the planet & maybe save your kids - grow heirloom varieties & save the seeds.
The scariest part of the story is the only real source of effective resistance to these blights & rusts are the ones found in 'wild strains' & 'heirlooms'... but their yields suck. The genome wiz's then splice the resistant genes into highly productive varieties that have yield and the 'emergency passes' until a new strain of blight or rust emerges.
They are losing wild & heirloom varieties at an alarming rate - no one is planting them here or abroad.
Join Seed Savers Exchange - get your seeds from them and start saving. It will be another way you can help raise your kids to be really weird (saving seeds).
Hmmm.. Forgot nuclear weapons or biological weapons. Maybe the terrorists will just transport some wheat fungus over here and spread it around Kansas.
Pleasant dreams.
Well, I think that's a biological weapon.
But for this reason - that technology is getting to a point where a small group of angry people could do just this - some scientists argue that human beings won't make it through the end of the century.
IMO there's no real point to worrying about that kind of stuff unless it's your profession.
Dryfly the yield from heirloom varieties may suck,but the flavors can be wonderful.As far as UG99 coming here,these are fungal spores and I seem to recall we have a few airplanes and people coming and going from these areas...fungal spores are remarkably tough and it only takes a few to get things started.
Rich, those systemic trends (1, 3, and 4) are indeed the real problem over the long term. But in the short term, the rapid increase has been due as much to oil price spikes as anything else. Think about how much petroleum it takes to grow anything on a commercial scale - from fertilizer to farm equipment to processing packaging to transportation.
js, You are talking about high-impact, high-cost farming. But we're talking global in this thread and most of the world's food is still grown by low-impact farmers who don't use a lot of commercial fertilizer or heavy equipment and packaging. It's grown and consumed locally.
Part of the problem with high food prices is that it's diverted locally grown/consumed production into higher profit world markets. That's why Brazil had to put on food export tariffs. As more food moves around the world, it takes more oil to move it.
I'm not dismissing oil as a factor. It's important, but it's volatile and cyclical. After oil gets to about $125 a barrel, I'm going to short it. But I'm going to keep my DBA because I can't see food coming down much even after oil does.
The scariest part of the story is the only real source of effective resistance to these blights & rusts are the ones found in 'wild strains' & 'heirlooms'... but their yields suck.
Thanks, Dryfly, I was just about to ask how much of this problem was due to the relative lack of genetic variation in wheat crops nowadays.
I guess the financial markets aren't the only place where everybody chasing yield without considering the attaching risks can get us in a lot of trouble.
idoc, I thought the y2k problems would precipitate the financial debt crisis that is now occurring. Many people seem to forget that this has been brewing for decades. I first grew alarmed in 1991 and began plotting my escape from urban life.
A good starting reference (though somewhat dated, and from a USA centred viewpoint) is "Agricultural Crop Issues and Policies" (1993) available from Agricultural Crop Issues and Policies
Unfortunately, USDA does not seem to have data later that 1970 or so, and the reference does not have data later than 1984. Tables 1-2 and 1-3 in the reference seem relevant. If someone has more current data, i would be most obliged if they would post a reference.
With due apologies to CR (whose analysis of the effects of possibly cheaper oil I basically agree with [were it to happen]), I find myself cheering on this one inflating bubble: dang Americans won't learn the conservation trick until years of $150/barrel oil pry the keys to the F250 out of their broke dumb hands.
(Uh, oh... do I sound bitter? Better stop now, before I mention religion...)
And may I add, get a vacuum sealer to prevent spoilage...
Nitrogen gas and diatomaceous earth do the trick. With those two added, and closed up in tight container, grains are good for years and years. Salt and sugar last virtually forever.
I can't see food coming down much even after oil does.
Oh, absolutely. Cheap food is a thing of the past - we need to start understanding that.
Clearly, the dietary awakening of China and India is only going to accelerate, putting that much more pressure on supplies, and requiring even more industrialized agriculture to meet demand.
regarding the commodity boom and its much anticipated demise by several posters here. altho i don't agree with all of Puplava's predictions, esp. the one about new Dow all time highs this yr, i do think he makes a good pt about how a bubble can't be forming in many of these commodities if you look at storage inventory levels. the housing and dotcom bubbles were characterized by inordinate supply levels unlike what we're dealing with now in commodities.
homedad, we relocated twelve years ago to an ag town the size of a postage stamp. We are only partially off the grid, but can handpump H2O and use a woodstove.
Tom Stone writes:
Dryfly the yield from heirloom varieties may suck,but the flavors can be wonderful.As far as UG99 coming here,these are fungal spores and I seem to recall we have a few airplanes and people coming and going from these areas...fungal spores are remarkably tough and it only takes a few to get things started.
Tom Stone | 04.14.08 - 11:26 pm | #
You are preaching to the choir. BTW my wife went to college a few miles from seed savers - I used to fly fish streams just north of there in Minnesota (Iowa was put-n-take, Minnesota had wild trout). We'd stop in & pick up samples & grew some heirlooms over the years - tomatoes mostly - wonderful!
As far as spores - all it takes is a little dirt on the shoe from an infected field. Works better than box cutters.
"Falling oil prices would really help cushion the U.S. recession"
Gee, I wonder how we might accomplish that feat? I suppose we could start by seeing what actions might be driving prices so high. And then perhaps what could be done to avoid making the same mistakes that seem to be driving prices up.
Maybe we need to try pavlov's experiments on Ben, to see if they actually work?
After oil gets to about $125 a barrel, I'm going to short it. But I'm going to keep my DBA because I can't see food coming down much even after oil does.
Hmmmm... just from what I've read about the 70s I personally would be terrified to short commodities outright.
So many people got destroyed trying to short silver, for example.
There are so many things that can happen with hoarding and genuine production shocks in real goods as opposed to Wall Street securities that effectively have limitless supply.
IMO it makes more sense to buy puts on ETFs if you're going to make that kind of bet.
But that's just opinion without a whole lot of experience to back it.
BTW for all my griping about commodities, I don't really have any bearish bets on them. I might do something though if the tension gets to the point where it seems like the government is going to be forced to step in.
Lay in stores of salt, sugar, rice, beans, canned tuna, and flour at the very least.
Salt, Sugar and canned tuna will keep fairly easily.
The rice, beans and flour will not, unless there is some way to vacuum pack them (to keep the bugs at bay).
Another handy item is yeast. Try to find some with a respectable amount of time left on the date stamp. Honey (while expensive) will last a very long time.
C'mon. Don't they have Cosco in 3rd world countries? Free samples, people. How can you be hungry if there are free samples? And, also, if you are mad about paying higher food prices, why riot? Just spend your time better...hunting and, then, eating your neighbors' pets.
CR - the real feature is food prices as I have said maybe a month ago.
This will be the Archilles heal that will break a few economies. And this is an evolution of current market conditions.
Natural Gas futures say that by September US consumers will spend 30% more on home heating. US futures say a loaf of bread will be double what it is today....the necessities will consume disposable income.
Dryfly,the choir sure has grown a lot.My mother was gardening organically in the 1950's.Not a new age nut or a hippie,just a microbiologist who read a few Rodale press books.She was considered quite crazy back then.I usually plant 4 varieties of heirloom tomatoes and a couple of varieties of hybrid cherries,I am right on the sunny edge of the Fog Belt and the best variety one year isn't the best every year.
One thing that seems to be missing from the "Oooh! We found more oil, so party like it's 1999!" discussion is that continuing to drive paleo-carbon back into the atmosphere from which it was once sequestered, drives us back into the Messozoic or something.
It's critically important to have the plant base (pun intended) to resequester that carbon at a higher rate than it's currently being burned in order to "de-industrialize" the atmosphere.
On Gilligan's Island, they had some experimental carrots that made your eyesight great. If I had an organic farm, I'd plant those without using chemicals, so I could read the fine print on my ARM.
The rice, beans and flour will not, unless there is some way to vacuum pack them (to keep the bugs at bay).
You can keep their population down by periodically freezing them - a week outside in a Minnesota winter does the trick. Or a deep freeze set real cold.
The bugs aren't gone but they are dead - even kills a lot of their eggs too. Really knocks the infestation down but not totally out. You have to do it fairly often - say four to six times a year.
The few dead bugs remaining can easily be washed out of beans & rice before cooking (they mostly float) or 'milled' into the flour with a sifter before baking - whole wheat is best... really hard to tell the difference between bugs parts and wheat hull.
altho i don't agree with all of Puplava's predictions, esp. the one about new Dow all time highs this yr, i do think he makes a good pt about how a bubble can't be forming in many of these commodities if you look at storage inventory levels
Well, it sounds to me from the "Only Yesterday" quote that actual commodity inventory was succesfully concealed in the 1920s. I don't know that that's happening know, but that's exactly what I'd try to do if I were a big player in commoditiy speculation.
Also, I don't think stocks will hit new highs this year, but I can't rule it out. Especially after reading about 1928 where the economy appeared to be coming apart and everybody was bearish, including experienced people in the finance industry.
In part due to all the short interest this generated the market went straight up.
The element that appears to be missing today is the enthusiasm on main street about stocks and America's limitless future because of industrialization. Basically Main Street may have been bullish while Wall Street got bearish, and a few key players start buying stocks to use both factors to generate a renewed melt-up.
But that period proved one thing - recessions don't guarantee stocks will go down.
i have a question for fellow oildrummers. for yrs now Russia has been nationalizing their oil projects at the expense of the majors. assuming that the Russian national oil companies like Lukoil are less efficient do you think production could be ramped back up with more expertise? IOW, could this just be a dip?
Why would Russia or any other state owned oil producer rush to bring oil to the market. (even if they could). It would hurt their long run profits, both in terms of production and price. They know this and the U.S. can't do a thing about it. That is the crux of Oil- the U.S. can't set prices. We are basically screwed. Cheers
yes, but why let production fall in the face of continued price rises? if i were Russia i would get the infrastructure in place and slowly bleed out the oil at the rate i choose.
I've kept (white) rice for years in it's original white plastic mesh bag (the 25# bags from the Asian grocers). Never had a problem with bugs or rancidity or anything.
As far as I can tell, the stuff's indestructible.
At any rate, if push came to shove, I'd rather eat rancid, buggy white rice than dirt.
idoc:
""i have a question for fellow oildrummers. for yrs now Russia has been nationalizing their oil projects at the expense of the majors. assuming that the Russian national oil companies like Lukoil are less efficient do you think production could be ramped back up with more expertise? IOW, could this just be a dip?""
Not much of a chance of that. Simmons' book, 'Twilight in the Desert' shows on page 288, production profiles for 8 giant or supergiant fields, includin Russia's Samotlor and Romashkino... those are about 70 - 80 percent depleted.
FYI, Prudhoe Bay in Alaska is about 70 percent depleted, but is still the most productive field in the US.
I am right on the sunny edge of the Fog Belt and the best variety one year isn't the best every year.
Here on the plains you would think it would be more uniform but it isn't. Our weather is whatever blows in from somewhere else... so it could be disgustingly hot & humid if the flows are up the lower Mississippi Valley & the Gulf of Mexico... or hot and dry if from the southwest (say Kansas, Oklahoma, New Mexico)... or freezing ass cold if down from Canada.
And it can change in a day - that's why the severe storms are so dangerous and unpredictable... Canadian cold front crashing into hot sticky Gulf air stationary front and Dorthy & Toto go for a ride.
But its never temperate. That you can count on.
So it makes sense to have a few varieties going simultaneously here too. You plants your garden and you takes your chances.
For those who don't know.. the US set oil prices for about fifty years, from the 30s onward... to 1971, when our own production peaked.
The Texas Railroad Commission told people what to produce, and how much to charge. Simmons figures that this slowed US production way down. So much so, that it gave us another ten years before our ultimate peak and decline.
So you know, the slower you pump oil out of the ground, the higher your recovery rate.
At any rate, if push came to shove, I'd rather eat rancid, buggy white rice than dirt.
waitinginPNW | 04.15.08 - 12:18 am |
If you get enough bugs in it (say you didn't check & had an infestation)... its hard to tell from dirt. They just swarm the rice. But the damned things do wash out...
Dryfly,the biggest gamblers,and the best businessmen I know are Farmers.It is Temperate here,but we are overdue for a BIG quake on the Hayward Fault...And the toxic fallout from the fires may do nasty things to central valley farmland.Time for me to gracelessly retire,enjoy the show,all y'all.
idoc. go check your oildrum today. Lot's of stuff on Russia's falling production. People with PHD's in this stuff post everyday. To your question: I can only say that if I was Russia- I would hold onto the miracle of Oil as long as I could.
I suppose the bugs float to the top when you rinse the rice before cooking. So it shouldn't be a big problem. Unless we run out of water at the same time that we run out of food. But we won't go there.
The rice in parts of China back in the 90's was full of tiny rocks. Not bad tasting, but very hard on the teeth. If I had to choose between dirt and tiny rocks, I'm going with the dirt.
Ahh, the new Google....Wheat!
I am thinking that we might just want to take a moment to take in the fact that folks are getting ready to go Kinda Nutz for something to eat while on Barry's blog we have the device that allows 2 Ipods to "talk" to each other.
"Something's Gotta Give"......
"MC writes:
Let's see. In the last 5 years Russia has renationalized a good chunk of international oil investment in their country, and invested nearly nothing in their current production and their oil infrastructure which is not only technologically obsolete but crumbling.
Mexico has the same issues. Piggy bank for the state, lack of investment, falling output."
Let's not forget Puto Chavez. By placing loyalists and Komissars at the State oil Co of Venezuela, guess which direction their output is trending...
The oil Drum is a peak oil site. I have read various publications on peak oil and they made sense to me. What has convinced me that Peak Oil is authentic has been the tracking of oil pricing since 1999. The rise in oil has been relentless. The peaks in oil prices have been ever higher and the lows are higher as well. The problem is that our infastruture is based on transporting of goods and people over wide distances. How many grocery stores have local produce? This when local produce is intra state. Sadly, this moment in time may be the best America has to offer. We've squeezed the middle class so far that the worlds largest consumer can't afford to maintain it's life style. Our economy is based on consumerism and constant expansion. High oil pricing will eat into lower and middle class spending with no relief is sight. We have no manufacturing and the service industry won't survive the loss in purchasing power of the consumer. The Financials don't produce anything but paper and thats going down the toilet. Hard times are here and they will get worse!
Heres a song from the country of Panama that expresses the current frustrations of the people. The song came out in January and was a mega hit for the Carnivals. The song is real simple in lyrics with basically a list of complaints followed by ..... su madre.
They use the US dollar in Panama for currency.
This blog explains the song better than I, its number 2 on her list.
Let's not forget Puto Chavez. By placing loyalists and Komissars at the State oil Co of Venezuela, guess which direction their output is trending...
Francois
Let me guess. The same direction that US output is trending?
I'm still awake so I'll make another 2cent comment. Francois: Let's not forget Puto Chavez. By placing loyalists and Komissars at the State oil Co of Venezuela, guess which direction their output is trending. My comment: Chavez and company are doing us a favor here. High prices should forced us to change our ways. In the 70's we could have made changes. We would have paid a price , but likely would have changed the course of our recent history. Now we have another chance-the option of transitioning now - some pain- but not the -price and shortage -fiasco that procrastination will bring.
In the 70's we could have made changes. We would have paid a price , but likely would have changed the course of our recent history. Now we have another chance-the option of transitioning now - some pain- but not the -price and shortage -fiasco that procrastination will bring.
bigchubasco
And let us not forget the million people who have already died in Iraq to guarantee supplies of cheap oil for Dick Cheney & Friends. This is important.
"If something cannot go on forever, it will stop."
~ Herb Stein
Chairman of the Council of Economic Advisers under President Nixon and President Ford.
++++++++++
Consider this: The economies of the rest of the world are rising swiftly.
China and India especially.
If the entire world consumed oil (liquid hydrocarbons) at the rate of the USA we would need 400 million barrels per day instead of 86-87.
This will never happen... even if global warming were not an issue.
++++++++++
Other contributions to the shortages and price rises of food are:
1. poor crops due to drought in Australia and a couple other places,
2. huge diversions of food into biofuels.
3. Huge increases in the standards of living in consuming countries (e.g. Asia) coupled with the usual growth of population.
+++++++++++++=
Note: Production of conventional crude oil had a peak in May 2005 and had declined fairly consistently until late 2007 and in January 2008 rose to just above May 2005 - i.e. flat at best. 74,300,000 barrels per day.
What we see in the 86 to 87 million barrel per day numbers we read in the newspapers includes all bio fuels, hydrogen, and something the industry calls NGL (Natural Gas Liquids) which is the 4 gases: ethane, propane, butane and pentane - all counted as liquids.
++++++++
Biggest threat of sudden change to the USA?
Perhaps the fact we import 60+% of the oil we use.
Exporters only sell their "extra" stuff.
We see Resource Nationalism with food (rice) where exports are being stopped to avoid in-country inflation and unrest thus making inflation in the importing countries much worse.
Consider the UK. Their best year for oil production and oil exports was 1999. In that year they exported a peak of 1,258,000 barrels per day.
Yet 6 years later, by Q4 of 2005, exports had gone to zero and they then became a net importer.
Production had only declined about 40%. What happened? Internal growth of consumption continued.
Serving the home folks before the export customers took care of the remainder.
Oil production in Mexico has been declining since 2004. Exports declined Y-O-Y Feb 2007 to 2008 by 19% and could drop to almost nil by 2013 or so.
+++++++++
In my opinion this makes the real estate bubble, subprime mortgage, financial engineering mess look a bit less important.
I'm still up more 2cents. " And let us not forget the million people who have already died in Iraq to guarantee supplies of cheap oil for Dick Cheney & Friends". This is important: Amen- Brother. Supposedly there was a faith something or other in Pennsylvania w/Hillary and Obama. No mention of this at all. I'm glad you did though. Maybe you should run for Pres.
Basically, the crises of the 21st century have materialized, and are presently all heading our way at warp speed. Food shortages, water problems, peak oil, implosion of the finance ponzi scheme, etc. Throw in some sort of pandemic, a conflagration with Iran courtesy of Herr Bush, and you really have something like 4 Horseman of the Apocalypse galloping our way.
I think it's all becoming too complicated for the human brain to appreciate. And I agree it's scary. Honestly, I've been asking a lot of existential, teleological questions lately--and I have to wonder whether the clock has run out on capitalism.
The few dead bugs remaining can easily be washed out of beans & rice before cooking (they mostly float) or 'milled' into the flour with a sifter before baking - whole wheat is best... really hard to tell the difference between bugs parts and wheat hull.
Don't ask me how I know.
Don't feel like the lone ranger...My wife once made a meal with some old TVP a friend let us try. I asked what the white wiggly things were in the sauce and did not like the answer.
Don't forget, nat gas is used to make hydrogen (cheaper than electrolysis of water) to make ammonia (fertilizer, explosives, etc). Corn needs lots of N. Also, I have a 1958 ford tractor. The user manual from that time contains maintenance info about their propane carburetor/fuel tank. There are substitutes for oil. Invest accordingly?
Speaking of Dick Cheney, and I was, did anyone else notice that the Vice Prezidiot of the United States made 2.5 million taxable dollars last year? I'm going to guess that 2.4 million of those taxable dollars came directly from Haliburton (actually, that wasn't a guess, it was in the article). The other rounding error part of his taxable income came from the office of the VP.
Given the disparity in size between his income as an elected official, and his job as shadow CEO of Haliburton robbing the public treasury, why would I think he is at all dedicated to public service? How stupid does he think I am?
My brother -- who has long been ahead of the curve on many things, including the housing bubble -- has been in commodities for decades.
Long ago he predicted our debt to China would be paid in food. He said nothing brings nation to its knees faster than a food shortage. What he couldn't understand is why no one in a position of power in national security could see this coming.
The discover is of '33 billion barrels of oil equivalent'
Which means natural gas and condensates also, which thus means less than 33 billion barrels of oil.
The world uses approximately 85 million barrels of oil a day. Do the math about the greatest discovery of the last 30 years - it will cover world oil demand for about a year. Let's hope we found one just as large last year (oops), the year before (oops), the year before that (oops).
Or maybe we find one as large next year, and the year after that, and the year after - starting to notice a pattern?
As for depletion - both the UK and Norway are in decline, and neither country is famous for having a state owned oil industry ruining their production due to neglect and incompetent politicians.
Of course, the granddaddy of declining oil production is the U.S. Jimmy Carter, a nuclear engineer naval officer graduate of Annapolis (he didn't have to wave his hands about building nuclear reactors - he actually worked on them - 'From 3 NOV 1952 to 1 MAR 1953 he served on temporary duty with Naval Reactors Branch, US Atomic Energy Commission, Washington, D.C. "assisting in the design and development of nuclear propulsion plants for naval vessels." From 1 MAR 1953 to 8 OCT 1953 he was under instruction to become an engineering officer for a nuclear power plant. He also assisted in setting up on-the-job training for the enlisted men being instructed in nuclear propulsion for the USS Seawolf (SSN575).' Jimmy Carter's Naval Service - lucky we have had a MBA running things the last eight years, instead of that failure Carter) was not kidding about the strategic challenges facing the U.S. unless we could deal with the fact that American oil production would continue to decline. Including his prediction that in a generation, American soldiers would be fighting in the Middle East for oil.
Some of you may be naive enough to believe that Iraq is about anything but oil, but I'm not. And considering that two of the four successors to a president that also has an oil industry background are from the oil industry (including a woman who had an oil tanker named after her - how sweet), it would be hard to believe that they are that naive either.
rent_to_own, I think the current administration is focused on getting the easy (well, easier) oil rights secured for private industry before they leave office. They know there isn't much oil in the Arctic Wildlife Preserve and the various offshore US areas. But what there is would be profitable at today's prices particularly. Hence the relentless public relations pressure "there's plenty of oil there, but those damned environmentalists won't let us drill. You are suffering because of them!" They absolutely do not care about encouraging any behavioral changes. I would say the 100% focus is getting rights secured to produce oil in these areas, regardless of whether it "helps" or "hurts" the country. It will produce some good profit for the shareholders over the next decade, even if it hurts the US by giving the illusion (as my niece puts it as she drives her huge SUV that "there's plenty of oil up there.")
Juxtapose that with the stories of the food riots & I have trouble coming to grips with the extremes...
Food costs have gone up in the US too. I used to buy what I wanted at the supermarket and just pay for it without a thought. Now, however, I have begun to notice that a bunch of items that I used to pay, say, $30 for are about $50 or more instead. I now look at the charge slip wondering what items cost so much.
Sue-
I lack any special insight into the personal motivations of various administration figures in how they expect to handle Iraq's oil, but I am very certain that much of the geostrategic planning involving the Middle East (which predates my birth and stretches back to before WWII, a war where the nations that preserved their access to oil won) is completely dominated by the need for oil. In part, because some of the people I grew up around where involved in just that, though most had a focus on anticipating how the Soviet Union would try to seize the region, and preventing it. Surprisingly, to most, Iraq War I was Jimmy Carter's war, using tools like Stealth bombers and cruise missiles and pre-positioned materials and airfields which were planned and then implemented under the Carter Doctrine -
'a policy proclaimed by President of the United States Jimmy Carter in his State of the Union Address on 23 January 1980, which stated that the United States would use military force if necessary to defend its national interests in the Persian Gulf region. The doctrine was a response to the 1979 invasion of Afghanistan by the Soviet Union, and was intended to deter the Soviet Unionthe Cold War adversary of the United Statesfrom seeking hegemony in the Persian Gulf. After stating that Soviet troops in Afghanistan posed "a grave threat to the free movement of Middle East oil," Carter proclaimed:
Let our position be absolutely clear: An attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force.
....
Brzezinski modeled the wording of the Carter Doctrine on the Truman Doctrine, and insisted that the sentence be included in the speech "to make it very clear that the Soviets should stay away from the Persian Gulf."
In The Prize: The Epic Quest for Oil, Money, and Power, author Daniel Yergin notes that the Carter Doctrine "bore striking similarities" to a 1903 British declaration, in which British Foreign Secretary Lord Landsdowne warned Russia and Germany that the British would "regard the establishment of a naval base or of a fortified port in the Persian Gulf by any other power as a very grave menace to British interests, and we should certainly resist it with all the means at our disposal." Carter Doctrine - Wikipedia, the free encyclopedia
Basically, Saddam wasn't aware that he was being introduced to how World War III was supposed to play out when he invaded Kuwait at that time.
I certainly agree that in comparison to a nation such as Germany (a leading economic power in conservation and developing renewable energy source - also a loser of WWII due to its failure to secure adequate oil supplies to keep its military functioning), the U.S. has been unbelievably short sighted and ignorant about the future.
You do not have to be a believer in the idea that finite oil supplies will prove to be finite to see how much of our world is shaped by oil. American exurbia comes to mind, a concept that only works if both time and fuel cost less than the money saved living there. A fool's bargain in most cases, I believe.
But if there is one thing I expect the Bush Administration to be, it is foolish. That they make money from it merely proves that they profit from foolishness, not that they aren't fools themselves.
But we have been fooling ourselves since Carter's time that oil would never be a major concern of anybody except companies that earn a measly 10 billion in profits each quarter. Much of the rest of the world is at least aware of what dwindling oil production means - especially in places like Indonesia, the UK, or Norway, where that dwindlnig production is not theoretical, but quantitatively measured by what is flowing through a pipeline. Only in the U.S. do most people still sincerely believe that the Earth is so full of oil that there is no need to worry about a future where there is less oil being pumped than in 2005 - the last year where oil production was not less than the following year. Though some purists argue for 2006, and some reasonable people argue that at least a decade or so must pass before we recognize that oil production has peaked, not merely on a per nation basis, but globally. Which is always a strange facet of those who feel that peak oil is flawed - regions decline, and have since the start of the age of oil (Pennsylvania and Romania come to mind), but globally, oil production will never decline, because...... My problem remains in how 'because' is considered an adequate answer to the argument that depleting a finite resource by burning it means that adequate (or even growing) quantities will always be available, 'because.'
"There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."
Lord John Maynard Keynes (1883-1946)
It's become a meme here to lament our failure to recognize energy-related problems in the 1970s, so permit me to remind all of several things they know already.
As a result of embargo-induced shocks, we established mileage ratings for most vehicles. R factor became important in the construction trades. Energy efficiency ratings appeared on the labels of electrical appliances. Low-pressure sodium lighting became commonplace for streets and highways. Virtually every sort of fuel-consuming device was redesigned, and countless ways of eliminating waste were sought and found.
We used existing technologies or developed refinements or novel processes. What you tend to think of as normal and wasteful now, because it is commonplace, actually represents a vast improvement in terms of efficiency over practices pre-embargo.
Unless the current crises remain stubbornly in the public awareness, I see no reason to believe we won't abandon the search for solutions at the first possible opportunity, just as we have done over the past few decades.
I've never heard any seeker of political office opine that we ought to heat (light, cool, transport) and feed ourselves without tapping the resources of others. But that seems to me a minimum standard of decent conduct.
On my way to work (the place I sit all day waiting for the pink slip) I am noticing lots and LOTS of big trucks and SUVs on lawns For Sale.
One of the most successful RE developments in our area (meaning they actually continue to sell houses) has no pool, no tennis courts...but it does have an organic Farm for the community (CSA). NOthing in the place under 400 grand and these are not DFH...
"There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."
Lord John Maynard Keynes (1883-1946)
Thanks anonymous!
1) Had to be repeated.
2) I wonder how many in Congress even understand this quote.
3) I wonder how many at the federal reserve even understand this quote.
4) I know Bush and his band of money printing republicans have no idea what this quote means.
war=inflation.
Sometimes with a lag, as in the Vietnam war and now.
Politicians never raise taxes to pay for wars,wars are always paid for with money printing and are always inflationary.
I have a friend who has had an inside view of mortgage bank behavior--from the legal side, and all this pal of mine wants to do now is get out of nyc, grab some farmland and hunker down.
Re heirlooms etc - another friend loaned me Barbara Kingsolver's book - animal, vegetable miracle - for non-gardners like me, a very easy read and primer into the world of sustainable farming. - lots of guides in the book on where to buy those disease-resistant heirloom varieties for all you yard / lot owners btw:
Also, for those lucky ones here who can afford to look past their own back yards - might be a good time to donate to your local food pantry -they are hurting. Ones in nyc are particularly troubled (and yes, I can imagine a food riot in Manhattan, more vividly nowadays)
Ottawa to pay farmers $50-million to slaughter hogs
PAUL WALDIE AND JOE FRIESEN
From Tuesday's Globe and Mail
April 15, 2008 at 12:27 AM EDT
TORONTO AND WINNIPEG In an unprecedented move, the federal government plans to pay hog farmers up to $50-million in total to slaughter as many as 150,000 breeding swine.
Farmers will receive $225 for every hog they kill, so long as they agree to wipe out their entire breeding herd and stay out of the hog business for three years. The government hopes the program will reduce a glut on the market that has helped drive down prices.
OMG, what's up with this thread? Did I stumble into some wingnut blog or is the Calculated Risk?
Chill out everyone, there will be no massive plague, oil isn't running out yet, there will be no depression or food riots in NYC. Some of you really have over-active imaginations. And you also need to broaden your lives and get outside more often to enjoy the sunshine.
High food prices are due in large part to high oil prices.
Sorry, Sir I do not buy this. Or only marginally. The death spiral in which a couple of major currencies have engaged have pushed a significant numbers of savers (real ones) to play the "raw materials" speculation games.
Food is obviously a currency when currencies are no more stores of values.
Crude for May delivery was last up $1.69 at $113.45 a barrel on the New York Mercantile Exchange. Earlier Tuesday, the contract hit a record of $113.66.
Every time the price of oil goes up boards get flooded with peak oil posts. Then somebody writes the obvious:
It's the dollar stupid.
There's enough oil in the Canadian tar sands to fill US hummers for a 100 years. Oil production is being supressed in Iran, Venezuela, Sudan etc. because multi nationals are fighting over production rights. Russia wouldn't be building all those pipelines if it didn't have oil to pump through them. Africa is just getting started. The Caspian Basin is just getting started. Iraq is sitting on 10% of the World's known reserves. They aren't going to hand it over no matter if you stay there a hundred years. Talk about defelecting attention. If oil really was running out they wouldn't be building more pipelines and cars now would they?
I'm surprised nobody has pointed out the inefficiencies involved in meat production.
Cutting down the waste (in both food and fuel) of converting vegetable protein to animal protein (simply so we can enjoy a fine BBQ, etc.) would go some way towards alleviating these issues. This is a much bigger issue than ethanol production. But of course suggesting that people might consider adopting anything resembling the vegetarian's diet is akin to asking them to don funky sweaters from the seventies to stay warm. That dog won't hunt, sadly enough.
the most truthful statement on this thread. some people need to stop obsessing about doom and destruction and enjoy what life they have left. guess what? things will work out and the world will keep turning. and you'll be dead and won't have to worry about the next batch of problems.
...of converting vegetable protein to animal protein...
hmmm...if i remember correctly, i read this stuff as a kid, and the world was supposed to end because of this sometime around the year 2000. (how long ago was diet for a small planet published?) just like pollution was going to kill the planet by then too. the world didn't end, the population has grown, and not much has changed. Oh yeah, oil was going to run out by 2020 too, as I recall. The people who predicted those things are, ummm, dead and I'm still here. wooohooo!
If you get enough bugs in it (say you didn't check & had an infestation)... its hard to tell from dirt. They just swarm the rice. But the damned things do wash out...
Different experiences, different climates...
In desert climates clean, dry grain will store for decades with no special treatment. In humid areas you may end up with dirt.
The best bet for long term storage is HDPE pails with Mylar liners and oxygen absorbers. After the O2's locked up you're left with almost a pure nitrogen atmosphere which kills the bugs.
I've been storing food for a decade or more and come from a long line of nutters (storing food is pretty cheap insurance policy).
But, even then I hate these periodic dooms-day blow-ups (70's "too many people", 80's "nuclear winter", Y2K "computers are out to get us").
And it looks like we're headed for another one with "peak oil, climate change".
Even if by chance the current crowd happens to be "right" the timescales are decades. But, the hoarding and speculation tend to have timescales of weeks and months. It becomes a self-fulfilling prophesy.
Oh, we aren't too far from the point that we could cost effectively convert air to gasoline. There are alternatives to oil even if your constraints are net zero C02 and keeping current infrastructure.
Famine and doom are already happening - just not here. My expertise is in history, not real estate, and, yes, the Four Horsemen forever ride with us humans.
Kicker -
That LANL press release has "fund me" written all over it.
The CO2-to-fuel research might pay for Dr Grantswinger's vacation home, but don't count on it to fill yer car.
So Alberta's entire tar sand industry uses a little more water than one small city and that's going to somehow drain all the water in the country with the largest water reserves on the planet? Perhaps you would like to explain that to us.
Dryfly,the choir sure has grown a lot.My mother was gardening organically in the 1950's.Not a new age nut or a hippie,just a microbiologist who read a few Rodale press books.She was considered quite crazy back then.I usually plant 4 varieties of heirloom tomatoes and a couple of varieties of hybrid cherries,I am right on the sunny edge of the Fog Belt and the best variety one year isn't the best every year.
Tom Stone | 04.15.08 - 12:00 am | #
Kind of reminds me of my "aunt and uncle" (actually close childless friends of the family). She was a big early believer in growing things organically, always had the best tomatos. The irony of it was that he was a big time exec at Union Carbide, so her organic farming stuff drove him nuts and was sort of an embarassment around the office. But since Phyllis was an artist type most of the folks there sort of just rolled their eyes and were sympathetic to Bob.
energyecon, the ug99 is pretty scary. The shortage of Roundup all of a sudden partly due to Roundup Ready crops is a warning of how fast a disease like ug99 can get out of hand. If the disease shows up in major wheat growing areas there will be immense spraying. There is not enough fungicide in inventory to cover any significant increase in spraying. Western countries and pesticide manufacturing countries like India and China will hoard fungiced or pay through the nose for it. Poor and weak nations will be hurt much worse.
If terrorists were smart they would smuggle infected plants into the US and release them in Southern states that are wetter and more at risk for rust diseases. I might add that in recent years we have Middle Eastern varieties of rust on leeks and powdery mildew on peppers here in California. The pepper mildew strain is supposed to already be fairly resistant to fungicides. Since there are only a few families of fungicides commonly used in disease control we do not have enough good chemicals to rotate effectively and avoid resistance. As soon as a weak variety is besieged by an unusually heavy disease year (due to temperature and humididty being right for that disease) and growers throw the kitchen sink at it we have the conditions to make a very resistant strain of the disease.
The same problem of just a few chemical families of rust fungicides to rotate for resistance management is a big issue. If a farmer in a third world country has a big rust problem and has access to these fungicides what will he do when faced with starvation or financial ruin? He will spray everything he's got over and over until it doesn't work. I have seen it with crappy little growers here in the US. One grower sprayed the same chemical for thrips ~20 weeks in a row in his green house until it had no effect. Little vegetable growers in Hawaii and Georgia have done the same thing sometimes with chemicals that were not even registered for use in their state.
Folks, peak oil does not mean running out of oil, it means the world has reached the point at which it can no longer increase the annual output of oil, a very different concept. Yes there are huge reserves of energy in the tar sands, but the rate at which it can be extracted is limited by the water availible. It should be noted that to get the tar oil, you have to use a lot of natural gas, so there is a trade off of a relatively clean fuel for a bit more of a very dirty fuel. Yes the recent discoveries of Brazil (look at PBR) are very significant. However they are in 6000' of water, and there are just tens of semi subs and drill ships capable of developing those fields, and most of them are already on long term (3+ year) charters. The owners of those rigs will make out like bandits (RIG, DO, PDE are some of the best plays). Yes more equipment will be built (look at NOV) but it will take time.
The key point is when peak oil is reached, then essentially the sullpy curve turns vertical. Higher prices can not induce a supply response and so for the market to clear, all the response has to fall on the demand side. That is a recipe for higher prices. There are imperfect substitutes for oil, and so falling demand does not have to no transportation, heating etc, at least in the developed world. However, its going to be a rocky road from here to there. Problems do not have to be of the end of the world magnitude to be both A) serious and B) highly investable.
Reading here about oil and food got me to thinking about things long ago and far away. In 1954 my to be ex girlfriend started at UC Berkeley and I would attend some of her classes when we had a date. I also would read some of her take home readings from her classes. It was a good way to extend my education also. One book had my first reading of the coming peak oil period. Looks like we had a 50 year running head start on that one and didn't do a damn thing about it.
The other was a lecture by a food agronomist at Ames Research Center in 1971 where the guy almost broke down talking about how India was only one monsoon failure away from mass starvation. We had a 30 year running head start on that one too and didn't do diddly.
A lot of far sighted people have been warning us for decades but it all comes down to the old saying: If the music is still playing you have to dance. Looks like the band is starting to put away its instruments.
The rice, beans and flour will not, unless there is some way to vacuum pack them (to keep the bugs at bay).
It is easy to protect this stuff. The technology you speak of is the polyethylene sack. Buy good ones, double bag them, and you can use a heat-sealer if you live in such a lively environment that tight overhand knots will get infiltrated.
Just accept that some packages will be ruined by pre-existing egg contamination and plan for the storage wastage.
Handwave all you want about Canada's immense existing water resources - but I want details of this pipeline between the Great Lakes and Alberta, or any reasonable alternative route, before I will simply except someone whose knowledge of both basic engineering and basic geography seems lacking.
Problems are not solved by proposing a reason why the problem can be ignored if you don't pay attention to it. Please at least give a sketch of the massive engineering which allows water to appear where the tar sands are (an 800 mile pipeline to transport the oil cost 16 billion, by the way)- after all, the current water resources in a region essentially larger than Florida or Texas are at their limit right now.
It's not just in Canada, Venezuela has the same reserves. Canada is littered with lakes and rivers and most of the country is untouched. A vast expanse with a tiny population. You know nothing about my knowledge so please don't pretend that you do. Since the start of the tar sands efficiency has grwon in leaps and bounds making even the tailings attractive for extraction. There is no shortage of egineers in the oil industry and the US has some best of the best in the World. More efficient techniques are already required for future expansion. As long as there is a market for it will happen.
after all, the current water resources in a region essentially larger than Florida or Texas are at their limit right now.
I already wrote that the entire industry uses slightly more water than a city of 1 million. The populations of Texas and Florida are over 40 million on a much smaller patch of land. Your comparison is laughable.
CR,
At least there was a bit of good news today regarding oil:
World's biggest oil discovery in 30 years
All this news is bumming me out. At least Delta and Northwest will merge. That is good...oh wait, more layoffs...
Sigh.......
Again, notice the sideways trend in oil prices that turns in to an explosion the second the Federal Reserve attempts to "fix" the economy by making money more readily available:
May Crude
an oil 'find' or rather encouraging drill results are a small step in bringing new supply online.
The true costs of bubbles lies in the misallocation of capital.
The true costs of bubbles lies in the misallocation of capital.
Depends on who you are:
The true benefit of bubbles lies in the misallocation of capital.
That oil is already taken by Brazilians - my friends from there frequently mention the exact day they achieved energy self-sufficiency, even when we're talking something completely OT.
Huge point of pride...
to understand oil i suggest running to The Oil Drum | Discussions about Energy and Our Future and studying carefully!
Looks like I'll have to dig out my old "square foot" gardening books from the 70's.
Some environmental groups reject the focus on ethanol in examining food prices.
"The contrived food vs. fuel debate has reared its ugly head once again," the Renewable Fuels Association says on its Web site..."
Calling the Renewable Fuels Association an "environmental group" is like calling the Mortgage Bankers Association a consumer advocacy group.
Sorry, I wasn't clear--that quote was from the CNN article CR linked to.
Also, again, some insight from way back in 1931:
The Reserve authorities were disturbed. They had raised the rediscount rate in February from 3'/2 to 4 per cent, hoping that if a lowering of the rate in 1927 had encouraged speculation, a corresponding increase would discourage it-and instead they had witnessed a common-stock mania which ran counter to all logic and all economic theory. They raised the rate again in May to 4'/2 per cent, but after a brief shudder the market went boiling on. They sold the Government bonds they had accumulated during 1927, and the principal result of their efforts was that the Government-bond market became demoralized. Who would ever have thought the situation would thus get out of hand?
Who would have thought that the same actions in 2007 would yield the same results as they did in 1927?
Go figure.
I went to see my accountant today - tax season you know. He is located about five miles north of the Iowa/Minnesota border... we got talking grain prices.
Understand neither of us are young but we have NEVER seen prices like these - never even dreamed they could happen.
He said one of his clients - a fairly large farmer but by no means the largest in the area - came in to drop off his tax stuff then suggested the two go out for beer at one of 'the clubs' (VFW, Moose, whatever)... He said he was sitting on about 100,000 bushels of soy beans & thought it was probably time to start moving them out to get ready for next year's crop. He had never had a wind fall quite like it and wanted advice on what he should be doing - tax wise.
Hire body guards.
Beans have been bouncing around $13-$15/bu... this guy has almost $1.5MM in bins sitting on his farm.
Juxtapose that with the stories of the food riots & I have trouble coming to grips with the extremes.
Ya TED isn't the biggest problem this planet faces.
Let's see. In the last 5 years Russia has renationalized a good chunk of international oil investment in their country, and invested nearly nothing in their current production and their oil infrastructure which is not only technologically obsolete but crumbling.
Mexico has the same issues. Piggy bank for the state, lack of investment, falling output.
MC
Depends on who you are:
The true benefit of bubbles lies in the misallocation of capital.
I really should not pontificate that way. I wouldn't know capital if it bit me in my better aspect.
From last thread, in case anybody's interested:
An mp3 of the webcast now available through my blog: Note on "Shadow Foreclosures"
Volker's speech is also there.
WOLFMAN GOT NARDS!
I guess I'm young enough to remember that movie. My brother played it a million times on VHS...
I drink their milkshake! Sluuuuuuuuuuurp. I drink it up!
Just as anyone reading CR for the past 3 years would have known what was going to happen in housing, anyone who's been reading theoildrum for the last 3 years would have known that Russia is experiencing its second peak right on schedule.
that oil find is about 400 days worth of world oil demand.
and the oil find is also not proven. 33 bil barrels, if it is that, and given who found it, doesn't mean squat.
Food prices are clearly affected by corn ethanol, but oil prices are the larger contributor to the spike in consumable commodities. The biggest problem with planting all the corn, however, is the ripple effect on other food staples, and the incentives it creates. Brazilian farmers can't burn down the Amazon fast enough to grow soy, given the doubling in prices in the last year. Indonesians are plowing through the rain forests to create palm oil plantations...
Those who think Islamic terrorism is the major threat of the 21st Century are akin to those who claimed that housing prices will never fall (that much). Climate change and global warming is going to create millions of eco-refugees over the next half century, moving around to avoid starvation. We're already seeing it in Darfur, where communities that were previously separate are now coming into conflict over scarce water and agricultural/grazing resources.
You want problems, how about clean water?
What Scott typed - and even if it is ALL there new supply is over ten years off - and I suspect they are talking about oil in place, not what could be produced (though any way you look at it the technical term for that is 'big').
Also, the food riot scenario will negatively impact oil production as greater regional political instability will almost certainly develop.
AND for real 'black swan' potential in the food scarcity arena consider ug99. It made it to Iran ahead of schedule and the same wind event last year may have enlarged its range...
It's simplistic to equate higher oil prices with higher food prices. Oil prices are volatile, and there are at least four other trends that may be more important than oil in driving food prices permanently higher.
None of these trends are cyclical. They are either permanent or recurring.
They are:
1) Diet changes, mainly in developing countries that are outgrowing rice and grasses as diet staples.
2) Speculation and hoarding by investors.
3) Climate changes for the worse.
4) Conversion of foods into energy stocks -- mainly corn, sugar and some vegetable oils.
For some time, the world may have to grow more, eat less and spend more on food.
It's good news for farmers, and maybe a number of unemployed financial executives could learn a new and more useful trade on farms.
"In the last 5 years Russia has ... invested nearly nothing in their current production and their oil infrastructure which is not only technologically obsolete but crumbling."
At this point, the slower the production, the higher the profits. Their best strategy is to let production taper off in old fields and only invest in new fields. There is no reason to rush.
AND for real 'black swan' potential in the food scarcity arena consider ug99. It made it to Iran ahead of schedule and the same wind event last year may have enlarged its range...
energyecon | Homepage | 04.14.08 - 10:51 pm | #
I took a bunch of biology & microbiology in school - even back then the profs said a plague attacking humans directly is a minor problem, a plague attacking major food stuffs - wheat, corn, potatoes, rice - is a DISASTER. It could kill a couple 2-3 billion in just a few seasons...
Imagine a food riot in Manhattan.
One of the 'old school' economic catechisms I learned was every major city is three days from hunger and a week from starvation...
MC, your comment sounds like it comes from the WSJ or The Economist. Just because an oil company is state owned/controlled it does not necessarily mean it is inefficient.
Brazil has a state controlled company, and they are investing big time. Just see Mike in AZ link. Petrobras competes with its private peers, all over the world, mainly in deep water projects.
Norways oil company (state controlled) does the same. Its production is falling, but so is Britains (all private). That is due to depletion, not bad management. The same goes on with American oil production.
Russian companies are investing heavily in pipelines to Europe. Some Mexico fields are also facing accelerated depletion.
It seems the only ones not facing such problems (yet) are the Arab producers (most state owned).
Conclusion: each case has to be analyzed separately. Who owns the business, in this case, seems to be not so important.
Rich, those systemic trends (1, 3, and 4) are indeed the real problem over the long term. But in the short term, the rapid increase has been due as much to oil price spikes as anything else. Think about how much petroleum it takes to grow anything on a commercial scale - from fertilizer to farm equipment to processing packaging to transportation. It's downright scary.
It's good news for farmers, and maybe a number of unemployed financial executives could learn a new and more useful trade on farms.
rich | 04.14.08 - 10:53 pm | #
They are already fully qualified for at least one job...
Just so you all know... worldwide oil discovery peaked forty years ago. It's been declining every since.
Try this link.
Peak oil primer and links | Energy Bulletin
Scroll down until you get to the graph titled, 'The Growing Gap'..
One of the stories on the 'giant' Brazil oil field said it was enough for 'six months of US refinery demand'... not exactly saving the world.
And again, I push Matt Simmons' site.. the president of the largest energy related investment bank in the world... makes all of his papers and presentations available online.
Simmons
He's been talking to oil execs about Peak Oil for years. Reinvesting capital is just giving us a little more decline until the big decline.
And of course if you want, classic 'doomer' stuff from Kunstler... well written, though. Funny.
James Howard Kunstler
Scroll down until you get to 'The ClusterF@@ck Chronicles" .. funny, yet horrifying stuff.
Be good.
I second the recommendation of theoildrum.com
especially the export land model by the poster westexas, which describes the fall of exports from from oil producers due to increasing internal demand.
such a model might be applied to food producers as well, but i have not yet seen a similar treatment.
This topic has been a bee in my bonnet lately, I am relieved to see it out in a thread here - as it will get a lookover from a wide range of perspectives.
FAO warning over virulent wheat fungus
By Amin Ahmed
BRAWALPINDI, March 5: The Food and Agriculture Organisation (FAO) of the United Nations has asked the authorities of Pakistan and five other wheat-producing countries, located east of Iran, to be on high alert, following a report that a new and virulent wheat fungus has moved to major wheat-growing areas in Iran.
The FAO says the detection of the wheat-rust fungus in Iran is extremely worrisome. The fungus is spreading rapidly and could seriously lower wheat production in countries at direct risk. Affected countries and the international community have to ensure that the spread of the disease is checked in order to reduce the risk to countries that are already hit by high food prices, the UN agency announced in Rome on Wednesday.
The fungus, previously found in East Africa and Yemen, is capable of wreaking havoc to wheat production by destroying entire fields, FAO says.
According to FAO, countries in the predicted, immediate pathway grow more than 65 million hectares of wheat, accounting for 25 per cent of the global wheat harvest.
[snip]
Yes, and theoildrum.com ... the Calculated Risk of the energy industry. Great stuff.
Brazilian farmers can't burn down the Amazon fast enough to grow soy, given the doubling in prices in the last year. Indonesians are plowing through the rain forests to create palm oil plantations...
Recently read "The Long Hard Time", another on the CR BOMC list. This comment sounds close to what American wheat farmers were doing in the early 1920s after the WWI effort. Everything went under the plow and the ultimate result of all of the increased demand was a collapse in prices.
Took down the trees last month and the fence the other week.
Buying seeds tomorrow and renting a tiller this weekend. The garden moves forward. When the stumps are gone in a month - hiring someone else to do it - I'll expand the plot next year, about doubling it in size.
But the only farm job Ben is qualified for...
Okay - I'll let it go now. Though I'll be in farm country all day tomorrow & smell bankers at work.
Grrr... try this:
http://www.ces.purdue.edu/pork/images/apply/mmcd162.jpg
Dryfly writes:
...the profs said a plague attacking humans directly is a minor problem, a plague attacking major food stuffs - wheat, corn, potatoes, rice - is a DISASTER. It could kill a couple 2-3 billion in just a few seasons...
post on Drudge talks about how more and more are leaning on the potato. My first thought on seeing that was about the Irish Potato Famine.
Maybe CR can morph into an online early morning Ag report, brought to you by DeKalb.
Ah, yep.
OT: Casino group reacts to lowered spend from visitors - by sacking 400 managers.
Yahoo! 404 - Page Not Found
the oildrum used to be my main site before CR. fantastic.
i have a question for fellow oildrummers. for yrs now Russia has been nationalizing their oil projects at the expense of the majors. assuming that the Russian national oil companies like Lukoil are less efficient do you think production could be ramped back up with more expertise? IOW, could this just be a dip?
the combination of peak oil and food shortages could be the coup de grace for world economies.
my retired IB friend recommended POT about 3 yrs ago to me. being the dumbie i am, i held it for a coupla months as it decreased 10%. sold it! luckily stuffed some into my son's custodial acct and its skyrocketed. that one stock alone could've retired me.
OT -- uh oh, this guy is in trouble with gary and M-A-:
null
What were the economic diseases from which business was suffering? A few of them may be listed categorically.
...
my retired IB friend recommended POT about 3 yrs ago to me.
Glad I finished reading the paragraph.
Duuuuuuude.
sidd,
I think that is apt - multiple rice exporters have cut back or eliminated exports to ensure domestic supply - a rigorous approach would be illuminating (though supply response would be quite a bit more dynamic).
For those interested in the fossil fuel content of our diet, an excellent article is "The Oil We Eat", by Richard Manning, available at
http://harpers.org/archive/2004/02/0079915
Hmmm.. Forgot nuclear weapons or biological weapons. Maybe the terrorists will just transport some wheat fungus over here and spread it around Kansas.
Pleasant dreams.
Hey Homedad - you want to do something to help the planet & maybe save your kids - grow heirloom varieties & save the seeds.
The scariest part of the story is the only real source of effective resistance to these blights & rusts are the ones found in 'wild strains' & 'heirlooms'... but their yields suck. The genome wiz's then splice the resistant genes into highly productive varieties that have yield and the 'emergency passes' until a new strain of blight or rust emerges.
They are losing wild & heirloom varieties at an alarming rate - no one is planting them here or abroad.
Join Seed Savers Exchange - get your seeds from them and start saving. It will be another way you can help raise your kids to be really weird (saving seeds).
homedad
i wrote you an answer last thread.
Hmmm.. Forgot nuclear weapons or biological weapons. Maybe the terrorists will just transport some wheat fungus over here and spread it around Kansas.
Pleasant dreams.
Well, I think that's a biological weapon.
But for this reason - that technology is getting to a point where a small group of angry people could do just this - some scientists argue that human beings won't make it through the end of the century.
IMO there's no real point to worrying about that kind of stuff unless it's your profession.
Not sure what good it does.
Just enjoy humanity's last few years on Earth.
dryfly writes:
Grrr... try this:
I can't decide whether to laugh or cry.
Speaking of foodstuffs, I'll repeat what I said to everybody in 98-99 about gold/silver:
If you're not stocking up, you're crazy.
Nobody listened then, I wonder if anyone will listen now. Lay in stores of salt, sugar, rice, beans, canned tuna, and flour at the very least.
Dryfly the yield from heirloom varieties may suck,but the flavors can be wonderful.As far as UG99 coming here,these are fungal spores and I seem to recall we have a few airplanes and people coming and going from these areas...fungal spores are remarkably tough and it only takes a few to get things started.
unirealist
now YOU were early
idoc:
Got the comment, thanks.
dryfly:
Local state museum here does some things with heirloom seeds. Actually think that I'll take a look at that.
Muchas gracia.
Unirealist: And may I add, get a vacuum sealer to prevent spoilage...
js, You are talking about high-impact, high-cost farming. But we're talking global in this thread and most of the world's food is still grown by low-impact farmers who don't use a lot of commercial fertilizer or heavy equipment and packaging. It's grown and consumed locally.
Part of the problem with high food prices is that it's diverted locally grown/consumed production into higher profit world markets. That's why Brazil had to put on food export tariffs. As more food moves around the world, it takes more oil to move it.
I'm not dismissing oil as a factor. It's important, but it's volatile and cyclical. After oil gets to about $125 a barrel, I'm going to short it. But I'm going to keep my DBA because I can't see food coming down much even after oil does.
Kicking myself for selling the food dehydrator at a yard sale two years ago.
Damn.
dryfly writes:
The scariest part of the story is the only real source of effective resistance to these blights & rusts are the ones found in 'wild strains' & 'heirlooms'... but their yields suck.
Thanks, Dryfly, I was just about to ask how much of this problem was due to the relative lack of genetic variation in wheat crops nowadays.
I guess the financial markets aren't the only place where everybody chasing yield without considering the attaching risks can get us in a lot of trouble.
Rich:
DBA?
idoc, I thought the y2k problems would precipitate the financial debt crisis that is now occurring. Many people seem to forget that this has been brewing for decades. I first grew alarmed in 1991 and began plotting my escape from urban life.
Re: vulnerability of monoculture crops
A good starting reference (though somewhat dated, and from a USA centred viewpoint) is "Agricultural Crop Issues and Policies" (1993) available from Agricultural Crop Issues and Policies
Unfortunately, USDA does not seem to have data later that 1970 or so, and the reference does not have data later than 1984. Tables 1-2 and 1-3 in the reference seem relevant. If someone has more current data, i would be most obliged if they would post a reference.
Unirealist:
So how far into the woods are you? And are you off of the grid?
With due apologies to CR (whose analysis of the effects of possibly cheaper oil I basically agree with [were it to happen]), I find myself cheering on this one inflating bubble: dang Americans won't learn the conservation trick until years of $150/barrel oil pry the keys to the F250 out of their broke dumb hands.
(Uh, oh... do I sound bitter? Better stop now, before I mention religion...)
homedad43 writes:
Kicking myself for selling the food dehydrator at a yard sale two years ago.
thats ok. just buy DBA. its the ag ETF which has equal parts wheat, corn, soybeans, and sugar.
And may I add, get a vacuum sealer to prevent spoilage...
Nitrogen gas and diatomaceous earth do the trick. With those two added, and closed up in tight container, grains are good for years and years. Salt and sugar last virtually forever.
btw everyone should look at the graph of DBA. its stalled and i think poised to move up. i own DBA.
Oh, absolutely. Cheap food is a thing of the past - we need to start understanding that.
Clearly, the dietary awakening of China and India is only going to accelerate, putting that much more pressure on supplies, and requiring even more industrialized agriculture to meet demand.
regarding the commodity boom and its much anticipated demise by several posters here. altho i don't agree with all of Puplava's predictions, esp. the one about new Dow all time highs this yr, i do think he makes a good pt about how a bubble can't be forming in many of these commodities if you look at storage inventory levels. the housing and dotcom bubbles were characterized by inordinate supply levels unlike what we're dealing with now in commodities.
homedad, we relocated twelve years ago to an ag town the size of a postage stamp. We are only partially off the grid, but can handpump H2O and use a woodstove.
Tom Stone writes:
Dryfly the yield from heirloom varieties may suck,but the flavors can be wonderful.As far as UG99 coming here,these are fungal spores and I seem to recall we have a few airplanes and people coming and going from these areas...fungal spores are remarkably tough and it only takes a few to get things started.
Tom Stone | 04.14.08 - 11:26 pm | #
You are preaching to the choir. BTW my wife went to college a few miles from seed savers - I used to fly fish streams just north of there in Minnesota (Iowa was put-n-take, Minnesota had wild trout). We'd stop in & pick up samples & grew some heirlooms over the years - tomatoes mostly - wonderful!
As far as spores - all it takes is a little dirt on the shoe from an infected field. Works better than box cutters.
"Falling oil prices would really help cushion the U.S. recession"
Gee, I wonder how we might accomplish that feat? I suppose we could start by seeing what actions might be driving prices so high. And then perhaps what could be done to avoid making the same mistakes that seem to be driving prices up.
Maybe we need to try pavlov's experiments on Ben, to see if they actually work?
To tell you the truth, my sense is hiking rates would instantly drive a stake through oil prices and food prices at the same time.
After oil gets to about $125 a barrel, I'm going to short it. But I'm going to keep my DBA because I can't see food coming down much even after oil does.
Hmmmm... just from what I've read about the 70s I personally would be terrified to short commodities outright.
So many people got destroyed trying to short silver, for example.
There are so many things that can happen with hoarding and genuine production shocks in real goods as opposed to Wall Street securities that effectively have limitless supply.
IMO it makes more sense to buy puts on ETFs if you're going to make that kind of bet.
But that's just opinion without a whole lot of experience to back it.
BTW for all my griping about commodities, I don't really have any bearish bets on them. I might do something though if the tension gets to the point where it seems like the government is going to be forced to step in.
Lay in stores of salt, sugar, rice, beans, canned tuna, and flour at the very least.
Salt, Sugar and canned tuna will keep fairly easily.
The rice, beans and flour will not, unless there is some way to vacuum pack them (to keep the bugs at bay).
Another handy item is yeast. Try to find some with a respectable amount of time left on the date stamp. Honey (while expensive) will last a very long time.
Curious. Can someone help me with this:
If I had invested 1000 euros in gold on Jan 1 2007, how much could I sell the gold for now, in Euros and in Dollars?
If I had had invested 1000 euros in wheat on Jan 1 2007, how much could I sell the wheat for now, in Euros and in Dollars?
C'mon. Don't they have Cosco in 3rd world countries? Free samples, people. How can you be hungry if there are free samples? And, also, if you are mad about paying higher food prices, why riot? Just spend your time better...hunting and, then, eating your neighbors' pets.
AHMEN
CR - the real feature is food prices as I have said maybe a month ago.
This will be the Archilles heal that will break a few economies. And this is an evolution of current market conditions.
Natural Gas futures say that by September US consumers will spend 30% more on home heating. US futures say a loaf of bread will be double what it is today....the necessities will consume disposable income.
Disposable income is MEW. There is no disposable income anymore.
Dryfly,the choir sure has grown a lot.My mother was gardening organically in the 1950's.Not a new age nut or a hippie,just a microbiologist who read a few Rodale press books.She was considered quite crazy back then.I usually plant 4 varieties of heirloom tomatoes and a couple of varieties of hybrid cherries,I am right on the sunny edge of the Fog Belt and the best variety one year isn't the best every year.
One thing that seems to be missing from the "Oooh! We found more oil, so party like it's 1999!" discussion is that continuing to drive paleo-carbon back into the atmosphere from which it was once sequestered, drives us back into the Messozoic or something.
It's critically important to have the plant base (pun intended) to resequester that carbon at a higher rate than it's currently being burned in order to "de-industrialize" the atmosphere.
Why does no one mention this?
On Gilligan's Island, they had some experimental carrots that made your eyesight great. If I had an organic farm, I'd plant those without using chemicals, so I could read the fine print on my ARM.
"Natural Gas futures say that by September US consumers will spend 30% more on home heating"
Who needs heat? We'll get Jimmy Carter out of retirement to get everyone to wear sweaters?
The rice, beans and flour will not, unless there is some way to vacuum pack them (to keep the bugs at bay).
You can keep their population down by periodically freezing them - a week outside in a Minnesota winter does the trick. Or a deep freeze set real cold.
The bugs aren't gone but they are dead - even kills a lot of their eggs too. Really knocks the infestation down but not totally out. You have to do it fairly often - say four to six times a year.
The few dead bugs remaining can easily be washed out of beans & rice before cooking (they mostly float) or 'milled' into the flour with a sifter before baking - whole wheat is best... really hard to tell the difference between bugs parts and wheat hull.
Don't ask me how I know.
altho i don't agree with all of Puplava's predictions, esp. the one about new Dow all time highs this yr, i do think he makes a good pt about how a bubble can't be forming in many of these commodities if you look at storage inventory levels
Well, it sounds to me from the "Only Yesterday" quote that actual commodity inventory was succesfully concealed in the 1920s. I don't know that that's happening know, but that's exactly what I'd try to do if I were a big player in commoditiy speculation.
Also, I don't think stocks will hit new highs this year, but I can't rule it out. Especially after reading about 1928 where the economy appeared to be coming apart and everybody was bearish, including experienced people in the finance industry.
In part due to all the short interest this generated the market went straight up.
The element that appears to be missing today is the enthusiasm on main street about stocks and America's limitless future because of industrialization. Basically Main Street may have been bullish while Wall Street got bearish, and a few key players start buying stocks to use both factors to generate a renewed melt-up.
But that period proved one thing - recessions don't guarantee stocks will go down.
Who needs heat? We'll get Jimmy Carter out of retirement to get everyone to wear sweaters?
barely | 04.15.08 - 12:04 am | #
I'm long sweaters...
i have a question for fellow oildrummers. for yrs now Russia has been nationalizing their oil projects at the expense of the majors. assuming that the Russian national oil companies like Lukoil are less efficient do you think production could be ramped back up with more expertise? IOW, could this just be a dip?
Why would Russia or any other state owned oil producer rush to bring oil to the market. (even if they could). It would hurt their long run profits, both in terms of production and price. They know this and the U.S. can't do a thing about it. That is the crux of Oil- the U.S. can't set prices. We are basically screwed. Cheers
Who needs heat? We'll get Jimmy Carter out of retirement to get everyone to wear sweaters?
barely | 04.15.08 - 12:04 am | #
I'm long sweaters...
I just saw Bill Gross on CNBC arguing that we need to encourage global warming so Americans can keep warm when the heating oil runs out.
Also - and it's probably just a coincidence - I saw a Bloomberg article that PIMCO is now short heating oil.
bigchubasco
yes, but why let production fall in the face of continued price rises? if i were Russia i would get the infrastructure in place and slowly bleed out the oil at the rate i choose.
I've kept (white) rice for years in it's original white plastic mesh bag (the 25# bags from the Asian grocers). Never had a problem with bugs or rancidity or anything.
As far as I can tell, the stuff's indestructible.
At any rate, if push came to shove, I'd rather eat rancid, buggy white rice than dirt.
idoc:
""i have a question for fellow oildrummers. for yrs now Russia has been nationalizing their oil projects at the expense of the majors. assuming that the Russian national oil companies like Lukoil are less efficient do you think production could be ramped back up with more expertise? IOW, could this just be a dip?""
Not much of a chance of that. Simmons' book, 'Twilight in the Desert' shows on page 288, production profiles for 8 giant or supergiant fields, includin Russia's Samotlor and Romashkino... those are about 70 - 80 percent depleted.
FYI, Prudhoe Bay in Alaska is about 70 percent depleted, but is still the most productive field in the US.
I am right on the sunny edge of the Fog Belt and the best variety one year isn't the best every year.
Here on the plains you would think it would be more uniform but it isn't. Our weather is whatever blows in from somewhere else... so it could be disgustingly hot & humid if the flows are up the lower Mississippi Valley & the Gulf of Mexico... or hot and dry if from the southwest (say Kansas, Oklahoma, New Mexico)... or freezing ass cold if down from Canada.
And it can change in a day - that's why the severe storms are so dangerous and unpredictable... Canadian cold front crashing into hot sticky Gulf air stationary front and Dorthy & Toto go for a ride.
But its never temperate. That you can count on.
So it makes sense to have a few varieties going simultaneously here too. You plants your garden and you takes your chances.
I would also add that the financial fiasco is just a redherring. The real danger is with high energy costs. As with subprime- it hurts the poor first.
For those who don't know.. the US set oil prices for about fifty years, from the 30s onward... to 1971, when our own production peaked.
The Texas Railroad Commission told people what to produce, and how much to charge. Simmons figures that this slowed US production way down. So much so, that it gave us another ten years before our ultimate peak and decline.
So you know, the slower you pump oil out of the ground, the higher your recovery rate.
I'm long sheepskins. That stuff is W-A-R-M.
At any rate, if push came to shove, I'd rather eat rancid, buggy white rice than dirt.
waitinginPNW | 04.15.08 - 12:18 am |
If you get enough bugs in it (say you didn't check & had an infestation)... its hard to tell from dirt. They just swarm the rice. But the damned things do wash out...
Again don't ask me how I know.
Dryfly,the biggest gamblers,and the best businessmen I know are Farmers.It is Temperate here,but we are overdue for a BIG quake on the Hayward Fault...And the toxic fallout from the fires may do nasty things to central valley farmland.Time for me to gracelessly retire,enjoy the show,all y'all.
idoc. go check your oildrum today. Lot's of stuff on Russia's falling production. People with PHD's in this stuff post everyday. To your question: I can only say that if I was Russia- I would hold onto the miracle of Oil as long as I could.
Thanks for the info Dryfly......I guess......
I suppose the bugs float to the top when you rinse the rice before cooking. So it shouldn't be a big problem. Unless we run out of water at the same time that we run out of food. But we won't go there.
The rice in parts of China back in the 90's was full of tiny rocks. Not bad tasting, but very hard on the teeth. If I had to choose between dirt and tiny rocks, I'm going with the dirt.
Ahh, the new Google....Wheat!
I am thinking that we might just want to take a moment to take in the fact that folks are getting ready to go Kinda Nutz for something to eat while on Barry's blog we have the device that allows 2 Ipods to "talk" to each other.
"Something's Gotta Give"......
"MC writes:
Let's see. In the last 5 years Russia has renationalized a good chunk of international oil investment in their country, and invested nearly nothing in their current production and their oil infrastructure which is not only technologically obsolete but crumbling.
Mexico has the same issues. Piggy bank for the state, lack of investment, falling output."
Let's not forget Puto Chavez. By placing loyalists and Komissars at the State oil Co of Venezuela, guess which direction their output is trending...
The oil Drum is a peak oil site. I have read various publications on peak oil and they made sense to me. What has convinced me that Peak Oil is authentic has been the tracking of oil pricing since 1999. The rise in oil has been relentless. The peaks in oil prices have been ever higher and the lows are higher as well. The problem is that our infastruture is based on transporting of goods and people over wide distances. How many grocery stores have local produce? This when local produce is intra state. Sadly, this moment in time may be the best America has to offer. We've squeezed the middle class so far that the worlds largest consumer can't afford to maintain it's life style. Our economy is based on consumerism and constant expansion. High oil pricing will eat into lower and middle class spending with no relief is sight. We have no manufacturing and the service industry won't survive the loss in purchasing power of the consumer. The Financials don't produce anything but paper and thats going down the toilet. Hard times are here and they will get worse!
Heres a song from the country of Panama that expresses the current frustrations of the people. The song came out in January and was a mega hit for the Carnivals. The song is real simple in lyrics with basically a list of complaints followed by ..... su madre.
They use the US dollar in Panama for currency.
This blog explains the song better than I, its number 2 on her list.
mtvU Fulbright 2007 » Page not found
Note: This is the censored version of the song.
YouTube - DJ Black - Su Madre
en el pais hay un problema bien . . . . . .su madre.
Gasolina hasta la . . . . su madre
La comida hasta la . . . .su madre
Y el salario in el ghetto . . . . . . su madre.
Let's not forget Puto Chavez. By placing loyalists and Komissars at the State oil Co of Venezuela, guess which direction their output is trending...
Francois
Let me guess. The same direction that US output is trending?
What do I win?
When you run out of rice, soybeans, wheat or sugar, there's always this.
For the wheat heads, My Texas swing project was called the Karnal Bunt Doughboys.
I'm still awake so I'll make another 2cent comment. Francois: Let's not forget Puto Chavez. By placing loyalists and Komissars at the State oil Co of Venezuela, guess which direction their output is trending. My comment: Chavez and company are doing us a favor here. High prices should forced us to change our ways. In the 70's we could have made changes. We would have paid a price , but likely would have changed the course of our recent history. Now we have another chance-the option of transitioning now - some pain- but not the -price and shortage -fiasco that procrastination will bring.
In the 70's we could have made changes. We would have paid a price , but likely would have changed the course of our recent history. Now we have another chance-the option of transitioning now - some pain- but not the -price and shortage -fiasco that procrastination will bring.
bigchubasco
And let us not forget the million people who have already died in Iraq to guarantee supplies of cheap oil for Dick Cheney & Friends. This is important.
Re: lower production, oil exporters
the house of saud reconsiders an agreement from some three score years ago:
"leave it in the ground"
Forbes.com File Not Found
shoulda put on that sweater that carter spoke of. but he also enunciated the carter doctrine...
"If something cannot go on forever, it will stop."
~ Herb Stein
Chairman of the Council of Economic Advisers under President Nixon and President Ford.
++++++++++
Consider this: The economies of the rest of the world are rising swiftly.
China and India especially.
If the entire world consumed oil (liquid hydrocarbons) at the rate of the USA we would need 400 million barrels per day instead of 86-87.
This will never happen... even if global warming were not an issue.
++++++++++
Other contributions to the shortages and price rises of food are:
1. poor crops due to drought in Australia and a couple other places,
2. huge diversions of food into biofuels.
3. Huge increases in the standards of living in consuming countries (e.g. Asia) coupled with the usual growth of population.
+++++++++++++=
Note: Production of conventional crude oil had a peak in May 2005 and had declined fairly consistently until late 2007 and in January 2008 rose to just above May 2005 - i.e. flat at best. 74,300,000 barrels per day.
What we see in the 86 to 87 million barrel per day numbers we read in the newspapers includes all bio fuels, hydrogen, and something the industry calls NGL (Natural Gas Liquids) which is the 4 gases: ethane, propane, butane and pentane - all counted as liquids.
++++++++
Biggest threat of sudden change to the USA?
Perhaps the fact we import 60+% of the oil we use.
Exporters only sell their "extra" stuff.
We see Resource Nationalism with food (rice) where exports are being stopped to avoid in-country inflation and unrest thus making inflation in the importing countries much worse.
Consider the UK. Their best year for oil production and oil exports was 1999. In that year they exported a peak of 1,258,000 barrels per day.
Yet 6 years later, by Q4 of 2005, exports had gone to zero and they then became a net importer.
Production had only declined about 40%. What happened? Internal growth of consumption continued.
Serving the home folks before the export customers took care of the remainder.
Oil production in Mexico has been declining since 2004. Exports declined Y-O-Y Feb 2007 to 2008 by 19% and could drop to almost nil by 2013 or so.
+++++++++
In my opinion this makes the real estate bubble, subprime mortgage, financial engineering mess look a bit less important.
I'm still up more 2cents. " And let us not forget the million people who have already died in Iraq to guarantee supplies of cheap oil for Dick Cheney & Friends". This is important: Amen- Brother. Supposedly there was a faith something or other in Pennsylvania w/Hillary and Obama. No mention of this at all. I'm glad you did though. Maybe you should run for Pres.
If your foodstuffs get infested--
or if things get really really bad--
eatbug.com
Basically, the crises of the 21st century have materialized, and are presently all heading our way at warp speed. Food shortages, water problems, peak oil, implosion of the finance ponzi scheme, etc. Throw in some sort of pandemic, a conflagration with Iran courtesy of Herr Bush, and you really have something like 4 Horseman of the Apocalypse galloping our way.
I think it's all becoming too complicated for the human brain to appreciate. And I agree it's scary. Honestly, I've been asking a lot of existential, teleological questions lately--and I have to wonder whether the clock has run out on capitalism.
The few dead bugs remaining can easily be washed out of beans & rice before cooking (they mostly float) or 'milled' into the flour with a sifter before baking - whole wheat is best... really hard to tell the difference between bugs parts and wheat hull.
Don't ask me how I know.
Don't feel like the lone ranger...My wife once made a meal with some old TVP a friend let us try. I asked what the white wiggly things were in the sauce and did not like the answer.
Don't forget, nat gas is used to make hydrogen (cheaper than electrolysis of water) to make ammonia (fertilizer, explosives, etc). Corn needs lots of N. Also, I have a 1958 ford tractor. The user manual from that time contains maintenance info about their propane carburetor/fuel tank. There are substitutes for oil. Invest accordingly?
Speaking of Dick Cheney, and I was, did anyone else notice that the Vice Prezidiot of the United States made 2.5 million taxable dollars last year? I'm going to guess that 2.4 million of those taxable dollars came directly from Haliburton (actually, that wasn't a guess, it was in the article). The other rounding error part of his taxable income came from the office of the VP.
Given the disparity in size between his income as an elected official, and his job as shadow CEO of Haliburton robbing the public treasury, why would I think he is at all dedicated to public service? How stupid does he think I am?
Wait. I already know the answer to that one.
My brother -- who has long been ahead of the curve on many things, including the housing bubble -- has been in commodities for decades.
Long ago he predicted our debt to China would be paid in food. He said nothing brings nation to its knees faster than a food shortage. What he couldn't understand is why no one in a position of power in national security could see this coming.
Gold is uselss when there is no food.
The discover is of '33 billion barrels of oil equivalent'
Which means natural gas and condensates also, which thus means less than 33 billion barrels of oil.
The world uses approximately 85 million barrels of oil a day. Do the math about the greatest discovery of the last 30 years - it will cover world oil demand for about a year. Let's hope we found one just as large last year (oops), the year before (oops), the year before that (oops).
Or maybe we find one as large next year, and the year after that, and the year after - starting to notice a pattern?
As for depletion - both the UK and Norway are in decline, and neither country is famous for having a state owned oil industry ruining their production due to neglect and incompetent politicians.
Of course, the granddaddy of declining oil production is the U.S. Jimmy Carter, a nuclear engineer naval officer graduate of Annapolis (he didn't have to wave his hands about building nuclear reactors - he actually worked on them - 'From 3 NOV 1952 to 1 MAR 1953 he served on temporary duty with Naval Reactors Branch, US Atomic Energy Commission, Washington, D.C. "assisting in the design and development of nuclear propulsion plants for naval vessels." From 1 MAR 1953 to 8 OCT 1953 he was under instruction to become an engineering officer for a nuclear power plant. He also assisted in setting up on-the-job training for the enlisted men being instructed in nuclear propulsion for the USS Seawolf (SSN575).' Jimmy Carter's Naval Service - lucky we have had a MBA running things the last eight years, instead of that failure Carter) was not kidding about the strategic challenges facing the U.S. unless we could deal with the fact that American oil production would continue to decline. Including his prediction that in a generation, American soldiers would be fighting in the Middle East for oil.
Some of you may be naive enough to believe that Iraq is about anything but oil, but I'm not. And considering that two of the four successors to a president that also has an oil industry background are from the oil industry (including a woman who had an oil tanker named after her - how sweet), it would be hard to believe that they are that naive either.
US credit rating under threat
InfoViewer: US credit rating under threat
Nothing Special With Treasuries as Fed Has Mortgages
Nothing Special With Treasuries as Fed Has Mortgages (Update5) - Bloomberg.com
INO Equities Stocks Indexes - U.S $ INDEX (NYBOT:DX) Price Chart and Quote
Default then collapse coming soon.
rent_to_own, I think the current administration is focused on getting the easy (well, easier) oil rights secured for private industry before they leave office. They know there isn't much oil in the Arctic Wildlife Preserve and the various offshore US areas. But what there is would be profitable at today's prices particularly. Hence the relentless public relations pressure "there's plenty of oil there, but those damned environmentalists won't let us drill. You are suffering because of them!" They absolutely do not care about encouraging any behavioral changes. I would say the 100% focus is getting rights secured to produce oil in these areas, regardless of whether it "helps" or "hurts" the country. It will produce some good profit for the shareholders over the next decade, even if it hurts the US by giving the illusion (as my niece puts it as she drives her huge SUV that "there's plenty of oil up there.")
Those more distant suburbs will never recover.
Juxtapose that with the stories of the food riots & I have trouble coming to grips with the extremes...
Food costs have gone up in the US too. I used to buy what I wanted at the supermarket and just pay for it without a thought. Now, however, I have begun to notice that a bunch of items that I used to pay, say, $30 for are about $50 or more instead. I now look at the charge slip wondering what items cost so much.
U.S. retail chains caught in a wave of bankruptcies
U.S. retail chains caught in a wave of bankruptcies - The New York Times
Sue-
I lack any special insight into the personal motivations of various administration figures in how they expect to handle Iraq's oil, but I am very certain that much of the geostrategic planning involving the Middle East (which predates my birth and stretches back to before WWII, a war where the nations that preserved their access to oil won) is completely dominated by the need for oil. In part, because some of the people I grew up around where involved in just that, though most had a focus on anticipating how the Soviet Union would try to seize the region, and preventing it. Surprisingly, to most, Iraq War I was Jimmy Carter's war, using tools like Stealth bombers and cruise missiles and pre-positioned materials and airfields which were planned and then implemented under the Carter Doctrine -
'a policy proclaimed by President of the United States Jimmy Carter in his State of the Union Address on 23 January 1980, which stated that the United States would use military force if necessary to defend its national interests in the Persian Gulf region. The doctrine was a response to the 1979 invasion of Afghanistan by the Soviet Union, and was intended to deter the Soviet Unionthe Cold War adversary of the United Statesfrom seeking hegemony in the Persian Gulf. After stating that Soviet troops in Afghanistan posed "a grave threat to the free movement of Middle East oil," Carter proclaimed:
Let our position be absolutely clear: An attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force.
....
Brzezinski modeled the wording of the Carter Doctrine on the Truman Doctrine, and insisted that the sentence be included in the speech "to make it very clear that the Soviets should stay away from the Persian Gulf."
In The Prize: The Epic Quest for Oil, Money, and Power, author Daniel Yergin notes that the Carter Doctrine "bore striking similarities" to a 1903 British declaration, in which British Foreign Secretary Lord Landsdowne warned Russia and Germany that the British would "regard the establishment of a naval base or of a fortified port in the Persian Gulf by any other power as a very grave menace to British interests, and we should certainly resist it with all the means at our disposal."
Carter Doctrine - Wikipedia, the free encyclopedia
Basically, Saddam wasn't aware that he was being introduced to how World War III was supposed to play out when he invaded Kuwait at that time.
I certainly agree that in comparison to a nation such as Germany (a leading economic power in conservation and developing renewable energy source - also a loser of WWII due to its failure to secure adequate oil supplies to keep its military functioning), the U.S. has been unbelievably short sighted and ignorant about the future.
You do not have to be a believer in the idea that finite oil supplies will prove to be finite to see how much of our world is shaped by oil. American exurbia comes to mind, a concept that only works if both time and fuel cost less than the money saved living there. A fool's bargain in most cases, I believe.
But if there is one thing I expect the Bush Administration to be, it is foolish. That they make money from it merely proves that they profit from foolishness, not that they aren't fools themselves.
But we have been fooling ourselves since Carter's time that oil would never be a major concern of anybody except companies that earn a measly 10 billion in profits each quarter. Much of the rest of the world is at least aware of what dwindling oil production means - especially in places like Indonesia, the UK, or Norway, where that dwindlnig production is not theoretical, but quantitatively measured by what is flowing through a pipeline. Only in the U.S. do most people still sincerely believe that the Earth is so full of oil that there is no need to worry about a future where there is less oil being pumped than in 2005 - the last year where oil production was not less than the following year. Though some purists argue for 2006, and some reasonable people argue that at least a decade or so must pass before we recognize that oil production has peaked, not merely on a per nation basis, but globally. Which is always a strange facet of those who feel that peak oil is flawed - regions decline, and have since the start of the age of oil (Pennsylvania and Romania come to mind), but globally, oil production will never decline, because...... My problem remains in how 'because' is considered an adequate answer to the argument that depleting a finite resource by burning it means that adequate (or even growing) quantities will always be available, 'because.'
It's the dollar stupid.
"There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."
Lord John Maynard Keynes (1883-1946)
It's become a meme here to lament our failure to recognize energy-related problems in the 1970s, so permit me to remind all of several things they know already.
As a result of embargo-induced shocks, we established mileage ratings for most vehicles. R factor became important in the construction trades. Energy efficiency ratings appeared on the labels of electrical appliances. Low-pressure sodium lighting became commonplace for streets and highways. Virtually every sort of fuel-consuming device was redesigned, and countless ways of eliminating waste were sought and found.
We used existing technologies or developed refinements or novel processes. What you tend to think of as normal and wasteful now, because it is commonplace, actually represents a vast improvement in terms of efficiency over practices pre-embargo.
Unless the current crises remain stubbornly in the public awareness, I see no reason to believe we won't abandon the search for solutions at the first possible opportunity, just as we have done over the past few decades.
I've never heard any seeker of political office opine that we ought to heat (light, cool, transport) and feed ourselves without tapping the resources of others. But that seems to me a minimum standard of decent conduct.
Perhaps OT
On my way to work (the place I sit all day waiting for the pink slip) I am noticing lots and LOTS of big trucks and SUVs on lawns For Sale.
One of the most successful RE developments in our area (meaning they actually continue to sell houses) has no pool, no tennis courts...but it does have an organic Farm for the community (CSA). NOthing in the place under 400 grand and these are not DFH...
"There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."
Lord John Maynard Keynes (1883-1946)
Thanks anonymous!
1) Had to be repeated.
2) I wonder how many in Congress even understand this quote.
3) I wonder how many at the federal reserve even understand this quote.
4) I know Bush and his band of money printing republicans have no idea what this quote means.
war=inflation.
Sometimes with a lag, as in the Vietnam war and now.
Politicians never raise taxes to pay for wars,wars are always paid for with money printing and are always inflationary.
Just wondering...how much of this price increase is speculation?
One resource to explore is some of the USDA stats their World Supply Demand report has just been released: WASDE
There is some indication of hoarding.
Not to worry.
One can always use the credit cards and HELOC in a crunch.
CNN reports this morning that credit card balances are up 9.5% and HELOC balances are up 8.1%.
breaking news:
PPI data out:
inflation (headline): +1.1%
strip out food and energy +0.2%
year over year:
inflation: +6.9%
strip out food/energy: 2.7%
wow.
good thing we have a strong dollar policy, and our Fed is fighting inflation or I'd be worried.
Did people actually think that the developing world could expand to Western levels in less than a decade without huge global shocks?
I have a friend who has had an inside view of mortgage bank behavior--from the legal side, and all this pal of mine wants to do now is get out of nyc, grab some farmland and hunker down.
Re heirlooms etc - another friend loaned me Barbara Kingsolver's book - animal, vegetable miracle - for non-gardners like me, a very easy read and primer into the world of sustainable farming. - lots of guides in the book on where to buy those disease-resistant heirloom varieties for all you yard / lot owners btw:
Animal, Vegetable, Miracle
Also, for those lucky ones here who can afford to look past their own back yards - might be a good time to donate to your local food pantry -they are hurting. Ones in nyc are particularly troubled (and yes, I can imagine a food riot in Manhattan, more vividly nowadays)
Feeding America
High food rpcies are probably due to:
1. The higher global demand for meat
2. Growing food for fuel
3. The high oil prices
4. The US dollar devaluatio
Weren't they doing this in the Great Depression:
Ottawa to pay farmers $50-million to slaughter hogs
PAUL WALDIE AND JOE FRIESEN
From Tuesday's Globe and Mail
April 15, 2008 at 12:27 AM EDT
TORONTO AND WINNIPEG In an unprecedented move, the federal government plans to pay hog farmers up to $50-million in total to slaughter as many as 150,000 breeding swine.
Farmers will receive $225 for every hog they kill, so long as they agree to wipe out their entire breeding herd and stay out of the hog business for three years. The government hopes the program will reduce a glut on the market that has helped drive down prices.
OMG, what's up with this thread? Did I stumble into some wingnut blog or is the Calculated Risk?
Chill out everyone, there will be no massive plague, oil isn't running out yet, there will be no depression or food riots in NYC. Some of you really have over-active imaginations. And you also need to broaden your lives and get outside more often to enjoy the sunshine.
High food prices are due in large part to high oil prices.
Sorry, Sir I do not buy this. Or only marginally. The death spiral in which a couple of major currencies have engaged have pushed a significant numbers of savers (real ones) to play the "raw materials" speculation games.
Food is obviously a currency when currencies are no more stores of values.
There is still a huge source of fuel that is untapped Methane hydrate. Anyone interested can keep up with research
NETL: Methane Hydrates - Hydrate Newsletter
Crude for May delivery was last up $1.69 at $113.45 a barrel on the New York Mercantile Exchange. Earlier Tuesday, the contract hit a record of $113.66.
why come people act like this is the first time in history people have felt this way? oh my god no more food energy resources.
oh wait we found some.
sure i had to beat you over the head for it
but c'est la vie
we'll all be fine and then we'll die.
Every time the price of oil goes up boards get flooded with peak oil posts. Then somebody writes the obvious:
It's the dollar stupid.
There's enough oil in the Canadian tar sands to fill US hummers for a 100 years. Oil production is being supressed in Iran, Venezuela, Sudan etc. because multi nationals are fighting over production rights. Russia wouldn't be building all those pipelines if it didn't have oil to pump through them. Africa is just getting started. The Caspian Basin is just getting started. Iraq is sitting on 10% of the World's known reserves. They aren't going to hand it over no matter if you stay there a hundred years. Talk about defelecting attention. If oil really was running out they wouldn't be building more pipelines and cars now would they?
I'm surprised nobody has pointed out the inefficiencies involved in meat production.
Cutting down the waste (in both food and fuel) of converting vegetable protein to animal protein (simply so we can enjoy a fine BBQ, etc.) would go some way towards alleviating these issues. This is a much bigger issue than ethanol production. But of course suggesting that people might consider adopting anything resembling the vegetarian's diet is akin to asking them to don funky sweaters from the seventies to stay warm. That dog won't hunt, sadly enough.
we'll all be fine and then we'll die.
the most truthful statement on this thread. some people need to stop obsessing about doom and destruction and enjoy what life they have left. guess what? things will work out and the world will keep turning. and you'll be dead and won't have to worry about the next batch of problems.
...of converting vegetable protein to animal protein...
hmmm...if i remember correctly, i read this stuff as a kid, and the world was supposed to end because of this sometime around the year 2000. (how long ago was diet for a small planet published?) just like pollution was going to kill the planet by then too. the world didn't end, the population has grown, and not much has changed. Oh yeah, oil was going to run out by 2020 too, as I recall. The people who predicted those things are, ummm, dead and I'm still here. wooohooo!
Oil surges to new record of $113.93
ac - not in the core rate, doesn't count...nothing to see here...
ews flash:
Gloom and Doom overshoots to the downside. Time to go long Gloom and Doom!
ews flash:
pointing out facts is not doom&gloom
If we listened to realwhores and their cheerleading we would be thinking about walking away as we would be underwater.
If we listened to realwhores and their cheerleading
crispy, i might point out that the converse is true too. if i litened to the uber-bears and the nihilists i'd be hanging myself in my office now.
At least you wouldn't need to worry about your ARM resetting.
crispy taking a deliberate stab at me. nice work in the morning!
some people need to stop obsessing about doom and destruction and enjoy what life they have left.
Is this the voice crying in the wilderness?
Really, Ipod, you are such a contrarian.
but not enough fresh water in the west to extract and process it. oops.
Is this the voice crying in the wilderness?
How did you know I was wearing a camel-hair shirt today? Oh look in my lunchbox! Locusts and honey. I wonder what it means....
why come people act like this is the first time in history people have felt this way? oh my god no more food energy resources.
oh wait we found some.
"It's... PEOPLE!!! Soylent Green is... PEOPLE!!!"
If you get enough bugs in it (say you didn't check & had an infestation)... its hard to tell from dirt. They just swarm the rice. But the damned things do wash out...
Different experiences, different climates...
In desert climates clean, dry grain will store for decades with no special treatment. In humid areas you may end up with dirt.
The best bet for long term storage is HDPE pails with Mylar liners and oxygen absorbers. After the O2's locked up you're left with almost a pure nitrogen atmosphere which kills the bugs.
I've been storing food for a decade or more and come from a long line of nutters (storing food is pretty cheap insurance policy).
But, even then I hate these periodic dooms-day blow-ups (70's "too many people", 80's "nuclear winter", Y2K "computers are out to get us").
And it looks like we're headed for another one with "peak oil, climate change".
Even if by chance the current crowd happens to be "right" the timescales are decades. But, the hoarding and speculation tend to have timescales of weeks and months. It becomes a self-fulfilling prophesy.
Oh, we aren't too far from the point that we could cost effectively convert air to gasoline. There are alternatives to oil even if your constraints are net zero C02 and keeping current infrastructure.
Los Alamos National Laboratory (LANL): Synthetic Fuel Concept to Steal CO2 From Air
Now, waiting for the "peak everything" to come out of the woodwork.
Lol CR,
Good post. Gets our mind of the ponzi doom and gloom.
Oh wait....
Food is obviously a currency when currencies are no more stores of values.
Oh, and these people should burn in hell. Pricing the poor out of food so you can get more "alpha" is morally reprehensible.
Those people used to end up with their head on a spike.
Starvin' the Peasants
History House: Starvin' the Peasants
Locusts and honey.
Ipod, my son, I perceive you are a learned man.
How about this: A day's wage for a loaf of bread.
Famine and doom are already happening - just not here. My expertise is in history, not real estate, and, yes, the Four Horsemen forever ride with us humans.
Kicker -
That LANL press release has "fund me" written all over it.
The CO2-to-fuel research might pay for Dr Grantswinger's vacation home, but don't count on it to fill yer car.
js, esq. 10:00 am:
but not enough fresh water in the west to extract and process it. oops.
Bullshit:
In SAGD operations, 90 to 95 percent of the water is recycled and only about 0.2 volume units of water is used per volume unit of bitumen produced.
Oil sands - Wikipedia, the free encyclopedia
Even the environmentalists that decry the the process complain that:
Factoid: the Alberta tar sands use more fresh water in a year than the entire city of Calgary - population 1 million
Terrance Berg | New report: Alberta Tar Sand Companies Undermining Our Environment
So Alberta's entire tar sand industry uses a little more water than one small city and that's going to somehow drain all the water in the country with the largest water reserves on the planet? Perhaps you would like to explain that to us.
some disturbing statistics:
93,000,000 Acres of corn planted by US farmers last year, up 19 per cent on
2006.
76% Amount of US corn used for animal feed.
8kg Amount of grain it takes to produce 1kg of beef.
20% Portion of US corn used to produce five billion gallons of ethanol in
2006-07.
50kg Quantity of meat consumed annually by the average Chinese person, up from
20kg in 1985.
10% Anticipated share of biofuels used for transport in the EU by 2020.
$500m The UN World Food Programme's shortfall this year, in attempting to feed
89 million needy people.
9.2bn The world's predicted population by 2050. It's 6.6bn now.
130% The rise in the cost of wheat in 12 months.
16 times The overall food consumption of the world's richest 20 per cent
compared with that of the poorest 20 per cent.
58% Jump in the price of pork in China in the past year.
$900 The cost of one tonne of Thai premier rice, up 30 per cent in a month.
Wasn't it "a plague attacking major food stuffs" that spurred A Modest Proposal and brought the Irish to America.
Dryfly,the choir sure has grown a lot.My mother was gardening organically in the 1950's.Not a new age nut or a hippie,just a microbiologist who read a few Rodale press books.She was considered quite crazy back then.I usually plant 4 varieties of heirloom tomatoes and a couple of varieties of hybrid cherries,I am right on the sunny edge of the Fog Belt and the best variety one year isn't the best every year.
Tom Stone | 04.15.08 - 12:00 am | #
Kind of reminds me of my "aunt and uncle" (actually close childless friends of the family). She was a big early believer in growing things organically, always had the best tomatos. The irony of it was that he was a big time exec at Union Carbide, so her organic farming stuff drove him nuts and was sort of an embarassment around the office. But since Phyllis was an artist type most of the folks there sort of just rolled their eyes and were sympathetic to Bob.
energyecon, the ug99 is pretty scary. The shortage of Roundup all of a sudden partly due to Roundup Ready crops is a warning of how fast a disease like ug99 can get out of hand. If the disease shows up in major wheat growing areas there will be immense spraying. There is not enough fungicide in inventory to cover any significant increase in spraying. Western countries and pesticide manufacturing countries like India and China will hoard fungiced or pay through the nose for it. Poor and weak nations will be hurt much worse.
If terrorists were smart they would smuggle infected plants into the US and release them in Southern states that are wetter and more at risk for rust diseases. I might add that in recent years we have Middle Eastern varieties of rust on leeks and powdery mildew on peppers here in California. The pepper mildew strain is supposed to already be fairly resistant to fungicides. Since there are only a few families of fungicides commonly used in disease control we do not have enough good chemicals to rotate effectively and avoid resistance. As soon as a weak variety is besieged by an unusually heavy disease year (due to temperature and humididty being right for that disease) and growers throw the kitchen sink at it we have the conditions to make a very resistant strain of the disease.
The same problem of just a few chemical families of rust fungicides to rotate for resistance management is a big issue. If a farmer in a third world country has a big rust problem and has access to these fungicides what will he do when faced with starvation or financial ruin? He will spray everything he's got over and over until it doesn't work. I have seen it with crappy little growers here in the US. One grower sprayed the same chemical for thrips ~20 weeks in a row in his green house until it had no effect. Little vegetable growers in Hawaii and Georgia have done the same thing sometimes with chemicals that were not even registered for use in their state.
"If something cannot go on forever, it will stop."
~ Herb Stein
A far better economist than his boring lil boy
Folks, peak oil does not mean running out of oil, it means the world has reached the point at which it can no longer increase the annual output of oil, a very different concept. Yes there are huge reserves of energy in the tar sands, but the rate at which it can be extracted is limited by the water availible. It should be noted that to get the tar oil, you have to use a lot of natural gas, so there is a trade off of a relatively clean fuel for a bit more of a very dirty fuel. Yes the recent discoveries of Brazil (look at PBR) are very significant. However they are in 6000' of water, and there are just tens of semi subs and drill ships capable of developing those fields, and most of them are already on long term (3+ year) charters. The owners of those rigs will make out like bandits (RIG, DO, PDE are some of the best plays). Yes more equipment will be built (look at NOV) but it will take time.
The key point is when peak oil is reached, then essentially the sullpy curve turns vertical. Higher prices can not induce a supply response and so for the market to clear, all the response has to fall on the demand side. That is a recipe for higher prices. There are imperfect substitutes for oil, and so falling demand does not have to no transportation, heating etc, at least in the developed world. However, its going to be a rocky road from here to there. Problems do not have to be of the end of the world magnitude to be both A) serious and B) highly investable.
Qu'ils mangent de la brioche
Reading here about oil and food got me to thinking about things long ago and far away. In 1954 my to be ex girlfriend started at UC Berkeley and I would attend some of her classes when we had a date. I also would read some of her take home readings from her classes. It was a good way to extend my education also. One book had my first reading of the coming peak oil period. Looks like we had a 50 year running head start on that one and didn't do a damn thing about it.
The other was a lecture by a food agronomist at Ames Research Center in 1971 where the guy almost broke down talking about how India was only one monsoon failure away from mass starvation. We had a 30 year running head start on that one too and didn't do diddly.
A lot of far sighted people have been warning us for decades but it all comes down to the old saying: If the music is still playing you have to dance. Looks like the band is starting to put away its instruments.
The rice, beans and flour will not, unless there is some way to vacuum pack them (to keep the bugs at bay).
It is easy to protect this stuff. The technology you speak of is the polyethylene sack. Buy good ones, double bag them, and you can use a heat-sealer if you live in such a lively environment that tight overhand knots will get infiltrated.
Just accept that some packages will be ruined by pre-existing egg contamination and plan for the storage wastage.
rent_to_own:
Handwave all you want about Canada's immense existing water resources - but I want details of this pipeline between the Great Lakes and Alberta, or any reasonable alternative route, before I will simply except someone whose knowledge of both basic engineering and basic geography seems lacking.
Problems are not solved by proposing a reason why the problem can be ignored if you don't pay attention to it. Please at least give a sketch of the massive engineering which allows water to appear where the tar sands are (an 800 mile pipeline to transport the oil cost 16 billion, by the way)- after all, the current water resources in a region essentially larger than Florida or Texas are at their limit right now.
It's not just in Canada, Venezuela has the same reserves. Canada is littered with lakes and rivers and most of the country is untouched. A vast expanse with a tiny population. You know nothing about my knowledge so please don't pretend that you do. Since the start of the tar sands efficiency has grwon in leaps and bounds making even the tailings attractive for extraction. There is no shortage of egineers in the oil industry and the US has some best of the best in the World. More efficient techniques are already required for future expansion. As long as there is a market for it will happen.
after all, the current water resources in a region essentially larger than Florida or Texas are at their limit right now.
I already wrote that the entire industry uses slightly more water than a city of 1 million. The populations of Texas and Florida are over 40 million on a much smaller patch of land. Your comparison is laughable.