A Networked World

Crossing the bar

The thing about Peak Oil is that we will only know when its happened after the event, but the swallows are starting to build up to a post peak summer in NZ: Christchurch police checking for overloaded buses.

Police in Christchurch have been cracking down after reports of overloaded buses.

As high fuel prices drive commuters out of their cars and onto public transport, the extra numbers are putting pressure on the system.

The number of people catching the bus has reached a 30-year high and is climbing each month.

It's the same in many main centres, with motorists feeling the pinch of petrol prices.

Maybe it was $1.50 a litre, maybe it was $1.80, but the shift was under way well before we went through $2 and skipped quickly to $2.12 with $2.50 being talked about in the news as if it is normal.

Whenever it was, the price signals are working in favour of public transport at last; one woman said with the weekly bus pass at $20 and the petrol for her car at $70, there was no contest. I live in one of the most vehicular countries on earth, with the average age of said vehicles being pulled well into teens by a long tail of gas guzzlers that are a cashflow-liability these days; as we make the transition out of that way of life, stories like this will become more frequent and the big question is how we will fund the capital investment in new rolling stock while paying off the old and fading technology.

Were are standing at the foot of a very steep learning curve, and innovation wont be something we do because its profitable, it'll be soup du jour.

Travel

This from the Thai Airways lounge in HK. Because this will possibly be the last big trip for a long time, I'm actually having a ball. The Air NZ flight was 2 hours late leaving Auckland (fog, then they had to change a wheel before they would clear the flight) 11 hours in the air and I arrive here to find the connecting transfer desk to Lufthansa is not open yet.

So I bowl into Thai's lounge and ask what to do. Thai hospitality is A1.

I grabbed the Alexandria Quartet as I was leaving the house and started reading it again, the last time was when I was about 17. Amazing what 40 years can do for your understanding.

Then I have a long, albeit technically challenging yap with Jon Husband who appears to have taken my disruptive advice at WebCom 2008 in Montreal and said something outrageous.

And what did he say? "I'm extremely bored and really fed up" Apparently it went down a treat. I can't stand conferences where the people we expect say things we already know again. rule number one; if it doesn't make them sit up in their seat or squirm in it, shut up and sit down. We can be bored to death anywhere, any time, if we are burning precious resources to be somewhere together, we owe it to each other to take some risks and stimulate the conversation.

Clap harder!!!

OK, its election year both here and in the US and both countries are taking a major wedgie from increased costs of formerly cheap resources like oil and food. And on both sides of the pacific some pollies have come to the same conclusion; magic works: PM: Govt would veto regional fuel taxes.

The Government is likely to veto any move by councils to implement regional fuel taxes in the near future as consumers reel from rising food and petrol prices, Prime Minister Helen Clark indicated today.

Her statement follows Energy Minister David Parker yesterday confirming the Government is considering delaying parts of its emissions trading scheme (ETS) so consumers are not hit with even greater petrol price rises.

It has been estimated the scheme would add 6c-to-8c to the price of a litre of petrol from January next year.

Other legislation before Parliament would allow regional councils to impose a 5-10c a litre regional fuel tax.

Auckland Regional Council is under pressure to generate money for transport projects, but under the legislation it and other councils must get Cabinet sign-off to proceed with a tax.

Helen Clark today said that would not be happening in the near future.

"I can assure you that any suggestion of the Auckland region slapping 5c on the petrol next year is absolutely ridiculous. It's not going to happen," she said on TVNZ's Breakfast programme.

Meanwhile Hillary Clinton is proposing a "summer holiday" from US excise taxes on fuel that will save individuals almost nothing, cost thousands of jobs (well the money pays for road and bridge maintenance and if it ain't coming in what do you think they will use for pay?) and allow the gas companies to stick up (deliberate choice of words) the price of petrol and reap the windfall.

Here's the news; the price of petrol will exceed $2 a litre in NZ and $4 a gallon in the US, it will go to maybe $200 in the foreseeable future and NOTHING anyone can do will change that. Nothing.

So laying in some pre-emptive taxes will change only the timing of the pain and will at least give us some choices, delaying them will achieve exactly the opposite, same pain at least but with no money in the kitty to alleviate it. Great leadership there.

And to propose a delay in climate change legislation because the cost of polluting is getting too high has a fine level of cynicism. It seems our kids and grandkids will have to bite the bullet because we are too weak, cowardly, stupid and venal to do it for them. SUCH parental love.

So clap harder everyone and if you really really close your eyes tight and believe with all your might, reality will be suspended for just a little longer.

I can't HEAR YUOOOOOO!!!!!!

Update: the latest nuttiness is that the government wants to force oil companies to announce in advance any price increases.
So here's what will happen.

1. Oil companies annoucne increase
2. People rush to fill up
3. Some petrol stations run out
4. People can't get fuel at any price and either run out in transit or can't start their journeys and all of them get PO'd. Some of them get violent
5. Petrol thefts and siphoning from cars goes up
6. More PO'd people
7. Exactly the same amount of fuel is bought at the current price and the price goes up anyway but since a significant percentage of people have not been able to manage their fuel use they have to fill up empty tanks instead of topping up as normal and there is another shortage at some stations.

Yep, brilliant, that will work a treat.

Update 2.

Oil now tapping on the $120/bbl mark, I think I'll run a sweep on when it gets to $200. Maybe it will have to be a tontine.

Houston, we have a problem

In the last 10 days the IMF, the World bank and the UN have all come out with warnings on the food crisis. They have pointed to food riots in haiti and egypt and other places as suggested that, apart from the starvation of untold people, the crisis thrweatens the whole international order.

But for most of us in the 'affluent west' the thought has been that it is Africa and parts of Asia that are suffering, as usual.

No, it ain't: Food Rationing Confronts Breadbasket of the World.

MOUNTAIN VIEW, Calif. — Many parts of America, long considered the breadbasket of the world, are now confronting a once unthinkable phenomenon: food rationing.

Major retailers in New York, in areas of New England, and on the West Coast are limiting purchases of flour, rice, and cooking oil as demand outstrips supply. There are also anecdotal reports that some consumers are hoarding grain stocks.

At a Costco Warehouse in Mountain View, Calif., yesterday, shoppers grew frustrated and occasionally uttered expletives as they searched in vain for the large sacks of rice they usually buy.

"Where's the rice?" an engineer from Palo Alto, Calif., Yajun Liu, said. "You should be able to buy something like rice. This is ridiculous."

It is not ridiculous, it is serious. Very serious. And most of us are not even vaguely ready. And check out your Kübler-Ross, disbelief is the first stage, and anger is the second.

Caltex drops another veil

At last, a reality-based word from an oil company: Petrol 'will go to $3 a litre' | The Daily Telegraph.

The cover of the latest issue of Caltex's magazine The Star features a cover predicting some time in the next decade when prices are 334.9c per litre.

The publication, sent to employees, franchisees and resellers, includes a foreword from managing director Des King saying prices in other countries were already more than $2 a litre and consumers have had to adjust to these.

Damned right, my mates in Sweden (along with taxes to loosen political bowels in this part of the world) are already paying SEK12.43 or about NZ$2.55. Tghis is exactly why we chose to buy a house within walking distance of my wife's workplace when we shifted home to NZ.

And here's the payoff, still well hidden down the article

Mr King believes prices will soar over the next few years as crude oil supplies dwindle and governments introduce charges to combat climate change.

Copy, paste, enlarge, print, stick up on the wall of your favourite Peak Oil denier.

"the next few years as crude oil supplies dwindle"

So, Where is the "Resistance"?

The market technicians talk about "support" - how far will a stock or a market fall before it reaches a low that people are prepared to buy into, and "resistance" - a high that buyers will no longer accept and switch to finding ways to do without.

Over the last week there have been several of these kinds of headlines: Crude closes above $105 for first time.

Crude-oil futures rose for a second day Thursday and closed above $105 a barrel for the first time, after hitting a record high of $105.97 earlier in the session. Crude oil for April delivery rose 95 cents, or 0.9%, to settle at $105.47 a barrel on the New York Mercantile Exchange.

So, where will it go from here? How long will it take to reach $150? $200? Is there any realistic top for a product where demand exceeds supply by increasing amounts? And at what level does it break the economics based on cheap, plentiful supply that exceeds demand?

We ALL have skin in THAT game. No doubt someone will tell me its just the speculators again, and that any day now the high prices will result in a flood of alternative sources into the market; that IS how its supposed to work isn't it?

And, ahem!

Crude's new record was brought by a new low of the value of the dollar against the euro, an unexpected drop in U.S. inventories, and the escalating tensions between Colombia and Ecuador.

Call me cynical but when a US surrogate state laden with "advisers" and CIA people stages an attack in a neighbouring country that is daggers drawn with the US, over oil, the first thing that occurs to me is, that SOMEONE is trying to start another war over oil.

Especially since the "Iran is going to kill us all in our beds" shtick appears to have been treated with contempt.

No doubt there is a perfectly innocent expalnation and i'm sure we will see several orf them as the year progresses; possibly including, "we had to invade to close down the drug barons and oh, look, we just happened to get control over the oil".

Not Here

Over there: Hostility to the notion of limits to growth.

Martin Wolf, to his credit, realizes that these two realities are incompatible, and is looking for compromise. But he is not quite looking in the right place yet:

Prediction is tough

Especially about the future.

Jim Kunstler has been on to it for a long time, watching the meltdown of the western. credit fueled, financial capitalist economy,the very slow meltdown: The Final Blowout.

The Christmas shopping frenzy is upon us and I wonder if this is going to be the very last blowout of the the credit card era.  If it's true that American families are virtually maxed out on their credit card debt, and they still go on a spree to buy Christmas presents, then they will hit a very hard wall in early 2005 when those first bills roll in.

Um, WHEN? oh wait, this is from December 6, 2004     

Because something is happening in the financial markets, Mr. Jones.

     The currency markets have entered a supernatural realm of instability. The dollar can't continue to hemorrhage value without interest rates going up.

Who would continue to hold, not to mention buy, US dollar denominated securities with the dollar losing two cents a week against the Euro and the British Pound? While it's true that nobody -- namely, China, Japan, Europe -- wants to see the US economy tank, neither do they want to write off billions in order to help American dog groomers and NASCAR marketing executives enjoy an artificially high standard of living. Only significantly higher interest rates will induce foreingers to hold onto US Treasuries.

Every single word on the nail.  And we have had quite a few more blowouts since December 2004, each one leading closer to the inevitable, increasingly large, final blowout.

But huge economies, plus endless political finagling, create massive momentum that takes a very long time to coast to a halt. We're closer, much closer, and I completely go with the big picture, but I sure as hell wont be shorting any market myself.

Not because I don't believe it will hit Jim's wall, just that we have no possible way of knowing when it will happen.

A Small Thing

This is fascinating: “Washington County Peak Oil Reading Group”.

I found two main things. One is I bought four fluorescent light bulbs...and emotionally that was a bigger deal than the second step, which was putting up solar panels and a heat pump [for my house]. I mean, that was huge, but I remember it took a real inertia to go out and buy [the light bulbs], because it was so symbolic of “I am changing my life.”

When I buy a lightbulb the only attention I pay to non-CFL bulbs is to wonder why these dinosaurs are still messing up the shelves and have done so since they first hit the market and I could buy a better idea than incandescents.

But what we have here is a beautiful example of how change manifests in the real world (as distinct from the exhibitionist 'coming to Jesus' stuff of public conversion for example). Change is really, REALLY, aversive, and leaving your way of life behind is terrifying, if we can get there by tiny, tiny steps, we can manage the cognitive load much better.

Those of us on this side of the PO fence so often demand that the others come over in bulk and in one, mostly because to do so voluntarily is still better than being forced into it.

But it ain't going to happen like that. That woman ahead of me in the checkout line may just be buying some light bulbs.

Or she may be changing her life.

I wish we could tell.

I'd Rather Be an Oil Grinch

In a way this is pathetic: OPEC says unable to calm runaway oil prices.

OPEC's president today said that "potentially dangerous" high crude prices were beyond the cartel's control as leading members defied pressure to raise their output to help ease the burden of near $US100 oil.

See, its not that they CAN'T increase production its that they WONT.

"These prices are potentially dangerous," Mohammad al-Hamli, who is also the oil minister of the third largest OPEC producer United Arab Emirates (UAE), told a symposium held as part of a rare OPEC summit.

"OPEC is doing all it can for prices to be suitable" for consumers and producers, Hamli said. "But it is clear that factors are beyond OPEC's control."

Hmm, sounds like he is about to fess up. Lets listen in.

Producers have blamed a dramatic decline in the US dollar, speculation by investment funds and geopolitical factors for record prices of more than $US90 a barrel.

Ah, right, its all those factors, the ones that are mostly hot air and have no real relationship to the stuff in the geology.

"Why should we increase production?" said Algerian Energy Minister Chakib Khelil, who claimed a production hike would have no influence on prices.

Here is a guy who is prepared to be seen as a bastard, a grinch, deliberately withholding the drug, rather than all hat and no cattle.

In a report issued from OPEC headquarters in Vienna, the cartel also lowered its estimate for demand this year, a move likely to make those assembled in the Saudi capital less inclined to raise output.

And if the oil prices stay where they are, economic demand SHOULD fall and with it oil demand right? So its a pretty safe bet you would think. Unless Peak Oil is real. Back to the fly on the wall.

Benchmark oil prices fell [See, we told you they would] on world markets, with New York's main contract down 55 cents to $US93.57 per barrel.

The catalyst for the drop in oil prices was data showing a surprising increase in US crude inventories in the latest week.

Whoa there. Hang on, What was the price again? $US93.57?

What was the date of this story Earl? Ah. November 16. Hah, that is SO November 16, right now its November 23, and things look totally different.

Now I don't believe that the world economy has turned around in a week. The US $ continues to devalue for sure, but demand has not picked up, all the inventory hasn't been burned; so what's going on?

Here's an idea. That hot, stinking breath on your neck is not your girlfriend after a meal of garlic and durian, its the tiger in your tank, and its about to bite you on the ass.

But right now, all we get from anyone with access to the media is "Tiger? No tigers here". I think I'll invest in bandages, seat cushions and antiseptic, the market for bitten butts is about to explode.