Looking back and looking forward some now.
Its been a while since I started this blog, and I need to stay more current with it.
What was last years predictions? Ending the year at $70/bbl requiring some signs of recovery to hit that mark. We ended the year at $75/bbl with some signs of recovery. Im not sure we saw all the signs I anticipated - unemployment may not yet have hit its peak, and housing is still very slow. Going into the new year Oil has gone up to $80 but its been in this range for over 6 months so it doesnt mean a whole lot.
Thinking about the interactions between supply and demand and the region of $60 to $80 is the most elastic region, meaning its comfortable floating in this region with a small amount of excess capacity. To go much higher we need to get the impression that growth is returning and the excess capacity we have will not be enough. Thats easily possible this year of the credit/housing/employment picture improves.
I have decided to sell the motorcycle I bought. It just isnt economically viable once insurance and maintanence costs are factored in. To justify those expenses gas needs to be $8/gal - I wont ride in cold or wet weather either so that was a limiting factor.
So what to expect in 2010? Well Honestly I havnt kept my nose to the data latley, my gut tells me to expect to see $90/bbl in the first half of 2010 as the economy makes noises about recovery - OPEC meetings where production increases are discussed - who knows what they will do. I half expect them to hold it steady (and enjoy the prices) but they may open the taps a little making some noises about not wanting to hurt the recovery. But then Im sure the world will be shocked when "opening the taps" doesnt really add much to the supply side.
We shall see.
Monday, January 4, 2010
Thursday, June 11, 2009
Wow, I looked back at some of my posts from earlier this year. Kind of frightening how its playing out.
Whats odd is that its going how I thought it would - I still dont feel any better - actually I feel worse.
So to recap, I said (about the price of oil):
$50 by april
$60 by August
$70 by end of 2009
Well we already made $72/bbl and its still June. So directionally I was right but its beating even my expectations. I probably should have invested some money and set $60 as my selling point. I could have doubled my money!
But to put some meat on the bones I explained to make that future happen we would need to see the following:
Unemplyment peaking, housing inventory falling, some inflation and dollar weakening.
Frightening. So New unemployment numbers are out today and beat analysts expectations - new claims are down again (for what the 5th weak in a row?) continuing claims are still rising but not as fast. So depending on the measure you could argue we are peaking. Housing info is turning positive, new builds are still slow but thats helping to reduce inventory. Prices still falling a bit but not nearly as fast - I think we are seeing it bottom out. Inflation and dollar weakening - check!
My garden is working out OK, the tiller did its job, the seedlings I started in the Bonus room went in the ground in late April. The peppers blanched a little the first week in the bright sunlight but now they are growing nicely. Onions - some have grown well, others seem to have failed. Not sure why? 3 blueberry bushes are growing well but the birds are eating this years fruit. I guess thats ok, I need the bushes to grow and wasnt counting on fruit this year anyway. Ill get a cage for them next year. Finally we have a family or two of squirrels, some chipmunks, birds eating the acorns, and I saw a rabbit this morning - im glad because I was tired of falling on my acorns. I got wild strawberries and blackberries too although I didnt realize I had strawberries until I had mowed them once so their fruit was small.
And now we have ourselves a golf cart. I was thinking of selling my motorbike, but that was before oil went from $50 to $70 in a few weeks. Now Im thinking I might need it again.
Change is coming. In spades. I think this economic "recovery" I spoke of may never truly come.
Whats odd is that its going how I thought it would - I still dont feel any better - actually I feel worse.
So to recap, I said (about the price of oil):
$50 by april
$60 by August
$70 by end of 2009
Well we already made $72/bbl and its still June. So directionally I was right but its beating even my expectations. I probably should have invested some money and set $60 as my selling point. I could have doubled my money!
But to put some meat on the bones I explained to make that future happen we would need to see the following:
Unemplyment peaking, housing inventory falling, some inflation and dollar weakening.
Frightening. So New unemployment numbers are out today and beat analysts expectations - new claims are down again (for what the 5th weak in a row?) continuing claims are still rising but not as fast. So depending on the measure you could argue we are peaking. Housing info is turning positive, new builds are still slow but thats helping to reduce inventory. Prices still falling a bit but not nearly as fast - I think we are seeing it bottom out. Inflation and dollar weakening - check!
My garden is working out OK, the tiller did its job, the seedlings I started in the Bonus room went in the ground in late April. The peppers blanched a little the first week in the bright sunlight but now they are growing nicely. Onions - some have grown well, others seem to have failed. Not sure why? 3 blueberry bushes are growing well but the birds are eating this years fruit. I guess thats ok, I need the bushes to grow and wasnt counting on fruit this year anyway. Ill get a cage for them next year. Finally we have a family or two of squirrels, some chipmunks, birds eating the acorns, and I saw a rabbit this morning - im glad because I was tired of falling on my acorns. I got wild strawberries and blackberries too although I didnt realize I had strawberries until I had mowed them once so their fruit was small.
And now we have ourselves a golf cart. I was thinking of selling my motorbike, but that was before oil went from $50 to $70 in a few weeks. Now Im thinking I might need it again.
Change is coming. In spades. I think this economic "recovery" I spoke of may never truly come.
Thursday, May 28, 2009
So during March and April I was beginning to think that my "turning point" post might have been premature. Perhaps it was - as we saw some continued inventory build. But since May came along we have seen 3 weeks of falling inventory in a row. And since April weve also seen the equities markets make something of a rally. Ben Bernanke has been talking about "green shoots" and signs of a recovery, Unemployement data is showing that new claims are falling, housing is SLOWLY making a come-back.
And when we look at the demand picture we see that gasoline is about even with this time last year, Jet fuel and distillate demand is off about 9% (and accounts for a little less than half the consumption in the US) So overall oil demand is off about 4 to 5%.
I think we are seeing that supply has come down by about 4 or 5%, and Global demand hasnt fallen in all places (like China) so the global picture may continue to tighten this year - we should expect US inventory to fall a little more.
Some wonder if all the stored oil (stored due to the massive market contango that we saw months ago) starts to unwind we might see some prices come down, but I cant help thinking that that the stored oil was already "priced in" to the market when we were at $50. So as those storage tankers drop their cargo we will simply see global inventory fall which will support prices (this assumes people are counting tankers as they should be)
So the big questions still hang on OPEC policy.
What price will OPEC open the taps at? They claim to want $75/bbl but I cant help wonder if they will let it go way past that - they went well past their targets last time. And additionally how long will it take to get there? If it takes more than about a year we might lose enough capacity in OECD and non opec countries due to depletion that the OPEC taps will lose their market influencing power.
I still think its possible to see $80/bbl this year so we might see what OPEC has in store, but I suppose it really all depends on the "recovery". There are still plenty of worrying signs that the recovery wont happen this year at all. 1 in 8 homes in the US are behind on payments or in foreclosure. Thats a staggering statistic this late in the crisis. youd think by now that most of the trouble would be behind us and that those who remain in their home would be more up to date than that. 1 in 8 tells me there may be a lot of bad news yet to come.
And when we look at the demand picture we see that gasoline is about even with this time last year, Jet fuel and distillate demand is off about 9% (and accounts for a little less than half the consumption in the US) So overall oil demand is off about 4 to 5%.
I think we are seeing that supply has come down by about 4 or 5%, and Global demand hasnt fallen in all places (like China) so the global picture may continue to tighten this year - we should expect US inventory to fall a little more.
Some wonder if all the stored oil (stored due to the massive market contango that we saw months ago) starts to unwind we might see some prices come down, but I cant help thinking that that the stored oil was already "priced in" to the market when we were at $50. So as those storage tankers drop their cargo we will simply see global inventory fall which will support prices (this assumes people are counting tankers as they should be)
So the big questions still hang on OPEC policy.
What price will OPEC open the taps at? They claim to want $75/bbl but I cant help wonder if they will let it go way past that - they went well past their targets last time. And additionally how long will it take to get there? If it takes more than about a year we might lose enough capacity in OECD and non opec countries due to depletion that the OPEC taps will lose their market influencing power.
I still think its possible to see $80/bbl this year so we might see what OPEC has in store, but I suppose it really all depends on the "recovery". There are still plenty of worrying signs that the recovery wont happen this year at all. 1 in 8 homes in the US are behind on payments or in foreclosure. Thats a staggering statistic this late in the crisis. youd think by now that most of the trouble would be behind us and that those who remain in their home would be more up to date than that. 1 in 8 tells me there may be a lot of bad news yet to come.
Thursday, February 19, 2009
A turning point?
Well for a while I thought my predictions for oil price may have been bullish.
Today I wonder may be the start of an important turnaround.
For the last few months Ive watched the US oil inventory numbers and seen the inventory buildup. Last few weeks though have shown increased gasoline consumption Vs this period last year. That's interesting and perhaps it shows how the cheap gas - even with our sour economy is too tempting for the average American to resist. This time last year the prices were in the $3 range - now were paying $1.75 or so.
So now inventory fell for the first time this year (the first time since about august of last year?) Imports were down (maybe the OPEC production cuts starting to bite?)
I didn't pare the figures down to see which regions were down or where the imports came from (or didn't come from) but I wonder if this is the start of a new trend. Global demand is indeed falling - but perhaps very slowly. Maybe global production is catching up and overtaking.
Anyway I made a chart for the oildrum that seems overdue. I should have thought of this a long time ago.
Its the relationship between supply and demand and explains the volatility in prices.
The trick with this chart is to take each curve by itself. The supply curve for example is well known and can be plotted with available data - Ill try to dig it up. I approximated it for our purposes.
the demand curve is much more difficult to resolve because its dependant on other factors - the main one being the availability of alternatives.
Demand is realtivley unchanged when the fuel is cheap. Even if you give the fuel away for free there is little more demand than just "cheap" fuel. Once the price starts to rise to levels seen in 2008 we find some demand destruction of a few percent. Demand will fall in the following ways
1) people drive less (combine trips, a little carpooling here and there)
2) next purchase is more efficient
3) next home purchase or job change is made with reduced commuting distance
All those things have a slow effect, but persist with time as people gradually adapt.
When things get really expensive though people start looking for wholesale alternatives. this is how we got through the last oil crunch. We quit using oil to make electricity. By switching to only coal and natural gas we were able to continue growing for another 30 years.
Its possible that wholesale shift could occur for passenger cars. Gasoline makes up more than half the total demand for oil. Heating oil, diesel AND jet fuel combined dont even account for half of the oil used.
for this to occur we need an alternative. EVs (lithium batteries?) plug in hybrids, natural gas powered cars, or some combination of those.
With a viable alternative a price ceiling could be reached. The demand curve therefore shows to basic points:
1) The demand if the product is given away for free
2) the price at which demand goes to zero (price ceiling)
The whole curve can of course move to the left or right depending on the overall size of the global economy.
Where the supply curve and the demand curve cross - thats the "correct" price for the commodity.
Fun huh?
Thursday, January 22, 2009
OK, well I dont have a whole lot to add to my predictions but I ran across this graph which I guess puts me in the category of "Oil Bull" compared to all the other analysts polled.
Im hoping to post more about my attempts to create a vegetable garden - one that we can use.
My plan is to grow at least the following:
Onions
Potatos
Bell peppers
Carrots
Those are the most frequently used fresh vegetables in our house and the easiest to grow (compared to beans/peas etc... which require frames/vines)
My first posts on the subject will likley focus on all the fun I had getting the tiller to work.
Saturday, January 3, 2009
whats new since I last wrote?
1) The financial crisis is continuing to play out. Demand for EVERYTHING is down, oil, electricity, steel, copper you get the idea. So prices are down, investment is down, exploration down, rig count down etc...
2) No bottom in sight yet. The Dow spent december in the 8000 range and closed above 9000 for the first time in a while today, it may be signalling a bottom but that would be a leading indicator - plenty of other things will unravel before demand would pick up in commodities. Some others are prediciting the big upswing in the next few months, I tend to think we wont see a strong bottom signal until after March or much later. Caterpillar is battening down the hatches big style - Like i have never seen before. Cancelling 2010 bonuses (which actually really hurts the higher level executives) and laying off agency and contract workers. There is also plenty of effort to move engine assembly away from the Unions - imagine that. 2009 will be an interesting year, im sure we havnt seen the last of the layoffs yet.
3) I have become obsessed with making an old 5hp Craftsman Tiller work. A good friend gave it to me. I think he gave it to me - if he wants money for it then I might need to reconsider because this thing is trouble. I think Adam and Eve used it in the Garden of Eden, did I mention that its old? When I picked it up it had a simple fuel leak (looked like the rubber hose was bad) and dry rotted tires. While fixing the fuel leak I managed to break the carburetor (nice work Phil). Luckily a mower shop had a similar carb on their dusty shelves. It wasnt exactly the same though and was full of varnish. Long story short but the carb is on and the engine runs but it runs like crap, I think the idle circuit is plugged because its hard to nail the mixture at idle and high speed running. I turned my attention to the tires and ordered some new tires for it. They arrived yesterday and I managed to get one off and the new one on today. Turns out they need to have their "bead seated" which generally involves using a compressor to pump lots of air into it. I dont have a compressor so I tried an old trick which sometimes works. Spray starting ether into the tire and light it - the woof/bang inflates the tire so quick it seats the beads. Well it only succeeded in burning the hairs off my hand. I guess I will need to use a compressor. All this so I can make the tiller work - till a spot in my garden and plant some vegetables which will likley fail anyway.
4) It turns out that Cleveland likes to eat Sophia's wax crayons. I act mad at him but I dont really mind too much, we have a billion crayons anyway.
So much has changed but there is much to look forward too in 2009, crappy home grown vegetables for example.
But since I made some predictions in 2008 (with varying success) I thought I should take another stab at it in 2009.
To recap:
I said the Cubs would take the world series. Not a terrible call - they made the playoffs and won their division, but somehow the dodgers stomped them in 4 games. Ouch, not even a pennant. OK so I conceed that one - whoda thunk it the Cubs didnt really win the big one? :)
I said Obama would win the election. I think that was moderatley prescient, I dont think he had even won the primarys when I made that call but I had a feeling about him and I was right.
OK so Im 1 for 2 a real nostradamus.
Oil prices were the fun topic last year and I didnt see the big one. I had a feeling at $130 we were close to top and I was right, we made it up through 140 but not for long. While some were calling for 200+ (A number I knew wasnt yet supported by fundamentals) we started to slide back towards 100. I think 100 to 120 was an appropriate price for the first half of 2008 but by the second half the demand was tanking quickly and I didnt see that coming. I guess I wasnt looking in the right places because the recession had already begun in December 2007!
So I give myself half credit for that one. I saw the reversal (Or overshoot) but not the extent.
So here we are in 2009 in the 30 to 50 dollar range until something big happens. Some are calling for $25 due to some nightmarish economy. Others think by April we'll be slowly marching up to 60+ I tend to think the latter.
Im not assuming that by the end of 09 we will be back over $100.
So what am I saying?
Well give or take about $10/bbl heres what i think.
April $50
August $60
December $70
To do this the economy will need to show signs of strength - unemployment will top, home inventory will start to fall. We may even see some inflation and dollar weakness.
1) The financial crisis is continuing to play out. Demand for EVERYTHING is down, oil, electricity, steel, copper you get the idea. So prices are down, investment is down, exploration down, rig count down etc...
2) No bottom in sight yet. The Dow spent december in the 8000 range and closed above 9000 for the first time in a while today, it may be signalling a bottom but that would be a leading indicator - plenty of other things will unravel before demand would pick up in commodities. Some others are prediciting the big upswing in the next few months, I tend to think we wont see a strong bottom signal until after March or much later. Caterpillar is battening down the hatches big style - Like i have never seen before. Cancelling 2010 bonuses (which actually really hurts the higher level executives) and laying off agency and contract workers. There is also plenty of effort to move engine assembly away from the Unions - imagine that. 2009 will be an interesting year, im sure we havnt seen the last of the layoffs yet.
3) I have become obsessed with making an old 5hp Craftsman Tiller work. A good friend gave it to me. I think he gave it to me - if he wants money for it then I might need to reconsider because this thing is trouble. I think Adam and Eve used it in the Garden of Eden, did I mention that its old? When I picked it up it had a simple fuel leak (looked like the rubber hose was bad) and dry rotted tires. While fixing the fuel leak I managed to break the carburetor (nice work Phil). Luckily a mower shop had a similar carb on their dusty shelves. It wasnt exactly the same though and was full of varnish. Long story short but the carb is on and the engine runs but it runs like crap, I think the idle circuit is plugged because its hard to nail the mixture at idle and high speed running. I turned my attention to the tires and ordered some new tires for it. They arrived yesterday and I managed to get one off and the new one on today. Turns out they need to have their "bead seated" which generally involves using a compressor to pump lots of air into it. I dont have a compressor so I tried an old trick which sometimes works. Spray starting ether into the tire and light it - the woof/bang inflates the tire so quick it seats the beads. Well it only succeeded in burning the hairs off my hand. I guess I will need to use a compressor. All this so I can make the tiller work - till a spot in my garden and plant some vegetables which will likley fail anyway.
4) It turns out that Cleveland likes to eat Sophia's wax crayons. I act mad at him but I dont really mind too much, we have a billion crayons anyway.
So much has changed but there is much to look forward too in 2009, crappy home grown vegetables for example.
But since I made some predictions in 2008 (with varying success) I thought I should take another stab at it in 2009.
To recap:
I said the Cubs would take the world series. Not a terrible call - they made the playoffs and won their division, but somehow the dodgers stomped them in 4 games. Ouch, not even a pennant. OK so I conceed that one - whoda thunk it the Cubs didnt really win the big one? :)
I said Obama would win the election. I think that was moderatley prescient, I dont think he had even won the primarys when I made that call but I had a feeling about him and I was right.
OK so Im 1 for 2 a real nostradamus.
Oil prices were the fun topic last year and I didnt see the big one. I had a feeling at $130 we were close to top and I was right, we made it up through 140 but not for long. While some were calling for 200+ (A number I knew wasnt yet supported by fundamentals) we started to slide back towards 100. I think 100 to 120 was an appropriate price for the first half of 2008 but by the second half the demand was tanking quickly and I didnt see that coming. I guess I wasnt looking in the right places because the recession had already begun in December 2007!
So I give myself half credit for that one. I saw the reversal (Or overshoot) but not the extent.
So here we are in 2009 in the 30 to 50 dollar range until something big happens. Some are calling for $25 due to some nightmarish economy. Others think by April we'll be slowly marching up to 60+ I tend to think the latter.
Im not assuming that by the end of 09 we will be back over $100.
So what am I saying?
Well give or take about $10/bbl heres what i think.
April $50
August $60
December $70
To do this the economy will need to show signs of strength - unemployment will top, home inventory will start to fall. We may even see some inflation and dollar weakness.
Saturday, November 1, 2008
So I better get back to blogging a bit more.
One of the things I thought I would do would be to share some goals I have for the future, and then as things progress we can revisit things and see how they go.
So before I start its worth remembering that I had some predictions, back in May, and we can already revisit them and see how they went.
Cubs did not win the world series. The Cubs did however win the NL central division and have the best record in the National League. They therefore made it to the playoffs (the last 8 teams) but got smacked around by the Dodgers.
The election is on Tuesday (today is the Saturday night before the big Tuesday). All indications are the Obama will win as I predicted but its by no means a slam dunk. In fact after all this I wouldnt be surprised if McCain pulls off an upset. The problem with an upset is that it will.... Upset a lot of people. That could get interesting.
Prices did fall (as predicted) but they fell a lot further than I predicted. I guess I wasnt counting on a recession to cease all global growth. So far the IEA report due in November is already leaking all over the place - some people are being bullish about it, other bearish so we will need to wait and see what it really says. My gut tells me that the economy will start bottoming soon, and once it starts climbing again we will see a return to the staircase we were on with oil prices. Its entirely possible that by 2010 we will see the dizzy numbers again, if the economy holds next time it could get really ugly so Im still counting on energy being expensive in a long term outlook.
SO anyway back to the goals.
1) Car
I do want to "finish" the mustang. Finished will look like this: Front disk brakes, front suspension upgraded with new perches, strut rods and bump steer correction. Rear end with a 3.55 or steeper gear, traction aid. Decent cylinder heads, engine making about 400hp. New mufflers - bit more tone. Bodywork, new paint, ducktail trunklid, maybe some side scoops, fiberglass hood.
Thats all going to take a lot of time and money. It might not ever come together so lets talk about more important stuff.
2) Bike
I do need to rejet, and Id also like to play with some headlight options and carbon fiber. but the jet kit is the top priority.
3) vacations
I REALLY like showing Tara around in Britain. We really want to do Scotland, but we also like to revisit some of the places we have been before. Id like to show her St Davids.
We also really badly want to go to Florence, Italy.
Ive always wanted to go out West, Nevada, California, National parks. Maybe travel in an RV. Ive also wanted to run down the 101 in a convertable or maybe on a bike.
Id like to do a real skiing trip, with real mountains.
Oh yes, Ive always wanted to see the Reno Air races too.
4) Sports/experiences.
Id really like to do some horseriding with Tara and Sophia. Actually if we get on with that OK, we could combine that with the trip out west and do some horse/camping. I like the idea of that - rather like the canoe trip I took years ago.
I still want to get my Bow straightened out. Its not right still, but I need to get it set up for less draw (and more weight). Maybe try a little hunting.
I think im ready for some firearms, mostly because im worried about what the future might bring. But its going to take time to get the right stuff together. So im thinking about a .45 ACP, but probably not a 1911, probably something cheaper in a polymer frame (glock or a springfield xD). I do want a shotgun though, and of course a rifle. Im trying to pick a rifle caliber that functions well as a medium game caliber, but is easy to shoot and has cheap and plentyful ammo. I think that means something that can run on 223/5.56 NATO rounds, some AR15s can hunt good.
5) Home.
The home, id like to make the home much more energy efficient. Id like to get a wood stove in the living room so we can use less (none?) gas. Id also like to improve the insulation. Id like to add a back porch that wraps around some. And of course the vegetable garden is a main goal. Perhaps a shed to store the garden tools in to free up space in the garage. Maybe add underfloor heating and tile in the bathroom and put more wood down in the living room.
Maybe be writing these goals out it will breath a little life into them?
One of the things I thought I would do would be to share some goals I have for the future, and then as things progress we can revisit things and see how they go.
So before I start its worth remembering that I had some predictions, back in May, and we can already revisit them and see how they went.
Cubs did not win the world series. The Cubs did however win the NL central division and have the best record in the National League. They therefore made it to the playoffs (the last 8 teams) but got smacked around by the Dodgers.
The election is on Tuesday (today is the Saturday night before the big Tuesday). All indications are the Obama will win as I predicted but its by no means a slam dunk. In fact after all this I wouldnt be surprised if McCain pulls off an upset. The problem with an upset is that it will.... Upset a lot of people. That could get interesting.
Prices did fall (as predicted) but they fell a lot further than I predicted. I guess I wasnt counting on a recession to cease all global growth. So far the IEA report due in November is already leaking all over the place - some people are being bullish about it, other bearish so we will need to wait and see what it really says. My gut tells me that the economy will start bottoming soon, and once it starts climbing again we will see a return to the staircase we were on with oil prices. Its entirely possible that by 2010 we will see the dizzy numbers again, if the economy holds next time it could get really ugly so Im still counting on energy being expensive in a long term outlook.
SO anyway back to the goals.
1) Car
I do want to "finish" the mustang. Finished will look like this: Front disk brakes, front suspension upgraded with new perches, strut rods and bump steer correction. Rear end with a 3.55 or steeper gear, traction aid. Decent cylinder heads, engine making about 400hp. New mufflers - bit more tone. Bodywork, new paint, ducktail trunklid, maybe some side scoops, fiberglass hood.
Thats all going to take a lot of time and money. It might not ever come together so lets talk about more important stuff.
2) Bike
I do need to rejet, and Id also like to play with some headlight options and carbon fiber. but the jet kit is the top priority.
3) vacations
I REALLY like showing Tara around in Britain. We really want to do Scotland, but we also like to revisit some of the places we have been before. Id like to show her St Davids.
We also really badly want to go to Florence, Italy.
Ive always wanted to go out West, Nevada, California, National parks. Maybe travel in an RV. Ive also wanted to run down the 101 in a convertable or maybe on a bike.
Id like to do a real skiing trip, with real mountains.
Oh yes, Ive always wanted to see the Reno Air races too.
4) Sports/experiences.
Id really like to do some horseriding with Tara and Sophia. Actually if we get on with that OK, we could combine that with the trip out west and do some horse/camping. I like the idea of that - rather like the canoe trip I took years ago.
I still want to get my Bow straightened out. Its not right still, but I need to get it set up for less draw (and more weight). Maybe try a little hunting.
I think im ready for some firearms, mostly because im worried about what the future might bring. But its going to take time to get the right stuff together. So im thinking about a .45 ACP, but probably not a 1911, probably something cheaper in a polymer frame (glock or a springfield xD). I do want a shotgun though, and of course a rifle. Im trying to pick a rifle caliber that functions well as a medium game caliber, but is easy to shoot and has cheap and plentyful ammo. I think that means something that can run on 223/5.56 NATO rounds, some AR15s can hunt good.
5) Home.
The home, id like to make the home much more energy efficient. Id like to get a wood stove in the living room so we can use less (none?) gas. Id also like to improve the insulation. Id like to add a back porch that wraps around some. And of course the vegetable garden is a main goal. Perhaps a shed to store the garden tools in to free up space in the garage. Maybe add underfloor heating and tile in the bathroom and put more wood down in the living room.
Maybe be writing these goals out it will breath a little life into them?
Thursday, October 9, 2008
Back at it again
Wow, its been forever since I posted.
Im trying to find the time, and I need to post more personal stuff with this too, so I may change up the format some to try and squeeze in more family and personal photos and fun.
But seriously the last few months have been a bit of a whirlwind.
I went back to Tasmania in September right after Hurricanes Gustav and Ike hit the Gulf coast and crippled refineries and a few oil platforms. The end result was a gasoline shortage all over the South East that we are only now pulling out of.
Then sometime near the end of September - roughly the same time, the government started making noises about the banks that were failing.
it what is now being coined the "credit crisis" we have discovered that banks are low on cash after making too many loans to all sorts of people that couldnt repay them. Tensions run high (as we head into the final phase of the elections) and finger pointing is everywhere. Some blame the mess on the government (some are blaming democrats for encouraging sub prime loans for decades) others put the blame on the banks, the interest rates (Greenspan and the federal reserve) or the home buyers who drank the banks Kool-aid.
The results are truly frightening, the Dow is falling every day, down from 14,000 a year ago to around 8700 today. Every day so far in October has been a down day. Trillions of dollars have been lost. I dare not look at my 401K portfolio.
The reverberations are being felt in the commodity markets. Oil is falling fast on the speculation that if the economy implodes and a depression sets in there wont be much demand for oil. So here we are feeling what some Peak oilers predicted:
Rapid increase in prices
followed by economic response
Followed down by oil price - which doesnt seem like a good deal since no-one will be able to afford even cheap oil.
meanwhile in a cheaper oil environment the oil companies wont be spending lots of money to go exploring and will rely on the rapidly depleting exsisting fields. Our Post peak production curve may therefore dip faster than expected. Its possible that with some economic recovery, and a return of high prices the exploration will pick up and even production numbers might temporarily rebound (like the production of Russia after the fall of the Soviet Union did). But ultimatley there is a sense that if producers start shutting oil in we may have seen the official global peak already.
Its a sobering thought that we may now be stuck between the rock and the hard place:
The Rock - weak economy - falling GDP - a correction with unknown proportions.
The Hard place - if the economy ever recovers we will be faced with $150+ oil - which may mean the economy NEVER recovers.
I guess in the meantime - since I still have a job to do and a Salary coming in, life is good, fuel is getting cheaper and It might buy me some time to prepare for any future problems.
One idea I should mention in a future post is an emergency kit, to help transition if things get really nasty.
I am working on getting the back garden set up for planting lots of vegetables in the spring....
Ill let you know how that goes.
Im trying to find the time, and I need to post more personal stuff with this too, so I may change up the format some to try and squeeze in more family and personal photos and fun.
But seriously the last few months have been a bit of a whirlwind.
I went back to Tasmania in September right after Hurricanes Gustav and Ike hit the Gulf coast and crippled refineries and a few oil platforms. The end result was a gasoline shortage all over the South East that we are only now pulling out of.
Then sometime near the end of September - roughly the same time, the government started making noises about the banks that were failing.
it what is now being coined the "credit crisis" we have discovered that banks are low on cash after making too many loans to all sorts of people that couldnt repay them. Tensions run high (as we head into the final phase of the elections) and finger pointing is everywhere. Some blame the mess on the government (some are blaming democrats for encouraging sub prime loans for decades) others put the blame on the banks, the interest rates (Greenspan and the federal reserve) or the home buyers who drank the banks Kool-aid.
The results are truly frightening, the Dow is falling every day, down from 14,000 a year ago to around 8700 today. Every day so far in October has been a down day. Trillions of dollars have been lost. I dare not look at my 401K portfolio.
The reverberations are being felt in the commodity markets. Oil is falling fast on the speculation that if the economy implodes and a depression sets in there wont be much demand for oil. So here we are feeling what some Peak oilers predicted:
Rapid increase in prices
followed by economic response
Followed down by oil price - which doesnt seem like a good deal since no-one will be able to afford even cheap oil.
meanwhile in a cheaper oil environment the oil companies wont be spending lots of money to go exploring and will rely on the rapidly depleting exsisting fields. Our Post peak production curve may therefore dip faster than expected. Its possible that with some economic recovery, and a return of high prices the exploration will pick up and even production numbers might temporarily rebound (like the production of Russia after the fall of the Soviet Union did). But ultimatley there is a sense that if producers start shutting oil in we may have seen the official global peak already.
Its a sobering thought that we may now be stuck between the rock and the hard place:
The Rock - weak economy - falling GDP - a correction with unknown proportions.
The Hard place - if the economy ever recovers we will be faced with $150+ oil - which may mean the economy NEVER recovers.
I guess in the meantime - since I still have a job to do and a Salary coming in, life is good, fuel is getting cheaper and It might buy me some time to prepare for any future problems.
One idea I should mention in a future post is an emergency kit, to help transition if things get really nasty.
I am working on getting the back garden set up for planting lots of vegetables in the spring....
Ill let you know how that goes.
Wednesday, July 30, 2008
Apologies for my absence
Paradoxically I choose today to write again - a day that I really dont feel well.
I saw a video on youtube of a professor who had terminal liver cancer. he gave his last lecture back in December last year, and finally passed away on July 25th of 2008. No - im not terminally ill, but part of my inspiration for this blog was to leave something behind - something long lasting, I hope Im going to be long lasting too but you never know.
But I dont feel well so Im not doing much but read and feel miserable. I thought I would revisit my blog because oil prices have tumbled in what experts are calling a market correction.
This is where I should point readers to my predictions back some time ago about a correction. At the time I made that prediction oil did start to fall but it only lasted a few days then some supply worries and talk of Iran made prices rise. This is apparently the real correction, although prices bounced today some. We havnt made it below 120 yet, which I kind of thought would be our floor. So time will tell if we are done correcting or if there is a little more to come. I feel that some overshoot and correction was due, but so far although the price has fallen sharply im not seeing a lot of folks celebrating - perhaps because the majority are now aware of the longer term picture and only a fool would call the spike "over" and predict the return of permanently cheap oil.
There is still plenty of bullish news on oil all over the web, but now its becoming balanced by the amount of news concerning demand destruction and changes to lifestyle.
Im not the only one who bought a two wheeled gas miser. But bicycles, walking and mass transit are all seeing major upticks in popularity. And of course SUVs and trucks are increasingly becoming relics of an older age. All this means that at least the US demand for oil is falling and can be shown to be at least somewhat "elastic".
I saw a video on youtube of a professor who had terminal liver cancer. he gave his last lecture back in December last year, and finally passed away on July 25th of 2008. No - im not terminally ill, but part of my inspiration for this blog was to leave something behind - something long lasting, I hope Im going to be long lasting too but you never know.
But I dont feel well so Im not doing much but read and feel miserable. I thought I would revisit my blog because oil prices have tumbled in what experts are calling a market correction.
This is where I should point readers to my predictions back some time ago about a correction. At the time I made that prediction oil did start to fall but it only lasted a few days then some supply worries and talk of Iran made prices rise. This is apparently the real correction, although prices bounced today some. We havnt made it below 120 yet, which I kind of thought would be our floor. So time will tell if we are done correcting or if there is a little more to come. I feel that some overshoot and correction was due, but so far although the price has fallen sharply im not seeing a lot of folks celebrating - perhaps because the majority are now aware of the longer term picture and only a fool would call the spike "over" and predict the return of permanently cheap oil.
There is still plenty of bullish news on oil all over the web, but now its becoming balanced by the amount of news concerning demand destruction and changes to lifestyle.
Im not the only one who bought a two wheeled gas miser. But bicycles, walking and mass transit are all seeing major upticks in popularity. And of course SUVs and trucks are increasingly becoming relics of an older age. All this means that at least the US demand for oil is falling and can be shown to be at least somewhat "elastic".
Tuesday, July 8, 2008
defining 2008
As time goes on with this blog it is becoming apparent that Oil prices are going to define 2008.
Its possible that there was this much buzz in the early 1970s, but I wonder if back then there was such a sense of doom, of storm clouds gathering?
My thoughts for this week are on natural gas. I realized that I have spent way too much time focusing on oil prices and have thought little about heating homes this winter. Its easy to do that when its 90 degreesF outside.
So I checked my NG bills for the winter of 07/08. My coldest most expensive month had me consuming about 130 Centa Cubic feet which is roughly 130 therms of gas. There is a "therm factor" which converts CCF into therms based on the specific calorific value of the gas at the time but its usually close to 1. My price at the time was about $1.10 per therm and we also pay a standing monthly charge of about $25. By the time all the taxes and fees were added we aid $180.
Today's price for natural gas is around $1.52 per therm. roughly a 40% jump. I should expect my worst month this winter (if prices stop rising today) to be around $240. That's if prices magically stop rising.
My provider wont lock my price for me, they are a relatively small co-op and cannot afford to guess incorrectly and lose their shirt. Large providers will allow a 12 month lock but they offer $1.69 if we lock now. Clearly they expect rates to go that high by wintertime (or even slightly higher). Assuming they are accurate in their predictions I should expect to pay about $260 or more for my worst month. That's a significant difference from my $180/month bill.
The lesson here is that while gasoline prices have risen and may continue to rise, we need to be considering home energy - particularly home heating - this winter. many people will be paying over $100/month more to heat their home this winter than they did last year, and for some this will come as a shock.
I'm going to call my wood supplier and hopefully catch a favorable rate for firewood before the mad scramble starts in the fall.
Here is how my domestic energy profile looks for 07/08 and a three year average. The charts suggest I am using more energy which is entirely true. The reason is simple, my 3 year average includes more than one year where we didnt have a child and wasnt heating or cooling the upstairs of the house, nor doing as much laundry, dishes or baths. So you can see in some rough way what having a child means in terms of energy comsumption.
Monday, June 30, 2008
What am I doing about it?
Yes long time no post. Im getting lazy. Actually im getting busy.
This is what I was busy with:
This is what I was busy with:
This is my hedge against crazy oil prices. It gets between 50 and 60 mpg (US gallon). So I have effectivley doubled my reach as far as mileage goes. Leaving the 4 cylinder car for my wife to use instead of the larger 5 cylinder truck, also saves us money. Of course I must pay for the bike, but these things can last a LONG time because they are so easy to work on. Engines can be replaced etc...
I will be able to afford to commute all the way up to about $10/gal. I wonder if I will still have a job at that point? Also I have started car pooling with a co-worker. This is a somewhat short term strategy since he retires in about a year. But in the meantime we can ride together and split the costs - effectivley the same cost per mile as the motorcycle (or less since the tires and maintanence will be less).
Im preparing a thread to talk about other strategies. Some obvious, others not so obvious. The goal is to be able to transition to a post peak world, without causing total economic collapse (grapes of wrath style).
On the motorcycle theme see this local news story.
And oh yeah Oil is now firmly above $140. Now around $141 to $142. So we will see Gasoline rise to approx $4.20 over the next few weeks if oil stays up there.
Monday, June 16, 2008
market reaction?
I think this sums it up:
From an AP article by John Wilen.
"We have a weaker U.S. dollar, and the buyers are out in force right now," said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.
Saudi Arabia, the world's largest oil producer, told U.N. chief Ban Ki-moon over the weekend that it would boost output by 200,000 barrels a day, or by 2 percent, from June to July. In May, the kingdom raised production by 300,000 barrels a day.
The latest promise of a production increase by the kingdom was largely ignored by traders Monday amid strong global demand and falling production elsewhere.
Cordier said Saudi Arabia has "to increase by north of 1 million barrels per day" to have an impact on prices, "and the market doesn't think they have it."
My emphasis added.
So we have a fire in the North Sea, and instead of calming the market the Saudis are farting around with small numbers and losing credibility by the day. Now we have a new trading record near $140.
From an AP article by John Wilen.
"We have a weaker U.S. dollar, and the buyers are out in force right now," said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.
Saudi Arabia, the world's largest oil producer, told U.N. chief Ban Ki-moon over the weekend that it would boost output by 200,000 barrels a day, or by 2 percent, from June to July. In May, the kingdom raised production by 300,000 barrels a day.
The latest promise of a production increase by the kingdom was largely ignored by traders Monday amid strong global demand and falling production elsewhere.
Cordier said Saudi Arabia has "to increase by north of 1 million barrels per day" to have an impact on prices, "and the market doesn't think they have it."
My emphasis added.
So we have a fire in the North Sea, and instead of calming the market the Saudis are farting around with small numbers and losing credibility by the day. Now we have a new trading record near $140.
Sunday, June 15, 2008
Lazy day
OK well there isn't a huge amount of news for the last week.
So I'm going to be lazy and give you my Short summary and some additional reading.
The EIA report (US government) that came out Wednesday was very similar to the previous week. Almost 5 million barrels of crude were consumed from Inventory by the refineries but not replaced by production or imports.
Oddly enough the market reaction was the exact opposite of the prior week.
In the week ending June 6th the market initially saw the increase in gasoline reserves as proof of demand destruction - the price of crude consequently fell.
This week, ending on June 13th, folks instead realized that with Morgan Stanleys news of falling tanker traffic and the dropping crude inventory that perhaps it was more prudent to consider CRUDE numbers instead of gasoline numbers.
Refineries are apparently over-producing relative to demand, their margins are now almost all gone and we should expect to see utilization drop a little. It has fallen slightly the last few weeks but if the trend continues we will see that drop further. They cant keep turning lemons into lemonade if no-one's buying their lemonade...
The media is of course still full of finger pointing, rage and denial. I don't bother with the articles asserting that oil should be $50/bbl or that its all the fault of Democrats who don't want to allow drilling in US territory. By the way search for McCains voting record on ANWR. Is he really a republican at all?
It looks like my prediction is dead as a do-do. Price seem to be relaxed in the 130-140 range, some analysts have called recent movements "range finding" since no significant news has occurred since the 6th. That was until today, Sunday the 14th - more on that further down.
So today I will post articles that offer some insight, or just seem to me to have found the needle of truth in the haystack of Bull Excrement that the mainstream media has to offer.
http://www.newsweek.com/id/141524/page/1
This might be my favorite article for a long time. Robert recognizes peak oil, he recognizes that we cant drill our way out - but that we might at least want to get started on the new wells anyway (since it takes so long to get to production). He also recognizes that while corn ethanol doesn't represent a final solution, that there is work to be done on cellulosic ethanol and Biodiesel from algae. This guy seems to have his thoughts together. I will look for further stories from him in the future.
Going back to cellulosic ethanol I eagerly await the ribbon cutting on the plant at Soperton in GA. That plant plans to use pine mulch to make ethanol using new process. The process is not a distillery type process, but requires heat and pressure to "gassify" the mulch. The gas is then treated to create ethanol. The process should be much more efficient than the distillation and dehydration process at a corn ethanol plant. I assume that the amount of energy produced is MORE than the amount needed to make it. The net return on Energy invested (EROI) is critical to a post peak world. If we need more natural gas, or electrical energy to make the ethanol then we will only end up in trouble with natural gas or coal - hardly a solution.
I wonder when the plant will start production? Hopefully soon. Here is their website:
http://www.rangefuels.com/our-first-plant
Back to more recent developments:
Saudi Aramco Chief, Al Naimi (remember that name - someday hes going to go down in History as one of the worlds greatest liars) has announced intentions to add about 200,000 barrels a day to Saudi output. I expect this will have some small limited effect on the oil market. We will need to wait until the market opens to find out what effect, but I'm guessing it will be near zero, maybe a few dollars. The reason for skepticism is because the world is slowly starting to realize that the Saudi propaganda machine is, well... A propaganda machine. Any real reduction in price would have to come after we see tanker traffic numbers. The 200,000bpd increase will probably simply offset decline in other fields or other OPEC countries, leaving output flat. That's not really going to help in a world that gets thirstier by the day. Each year the population grows by over 70 million people. And they all want to drive a car!
So I'm posting this article about Saudi Arabian oil information.
http://www.theoildrum.com/node/4153
OK, and here too is a newer presentation by Matt Simmons. (PDF reader needed)
http://www.simmonsco-intl.com/files/Island%20Institute.pdf
I cant help question Matt's credibility a little since he owns a company dedicated to investing in the oil industry. But having said that, if he is fleecing us (them?) with doom and gloom data, hes doing a really remarkable job of making it look real. The more time goes on the more real it looks. His 2004 book "Twilight in the desert" has certainly turned out to be quite the sensation with many of its key points standing the test of time.
One more item I want to address today is the onslaught of
"run your car on water" websites. Several people have approached me asking if this is something they should consider.
http://runyourcarwithwater.youbetterreadthis.com/
this is just one example of the scam. Others do exist - they all bear similarities:
So I'm going to be lazy and give you my Short summary and some additional reading.
The EIA report (US government) that came out Wednesday was very similar to the previous week. Almost 5 million barrels of crude were consumed from Inventory by the refineries but not replaced by production or imports.
Oddly enough the market reaction was the exact opposite of the prior week.
In the week ending June 6th the market initially saw the increase in gasoline reserves as proof of demand destruction - the price of crude consequently fell.
This week, ending on June 13th, folks instead realized that with Morgan Stanleys news of falling tanker traffic and the dropping crude inventory that perhaps it was more prudent to consider CRUDE numbers instead of gasoline numbers.
Refineries are apparently over-producing relative to demand, their margins are now almost all gone and we should expect to see utilization drop a little. It has fallen slightly the last few weeks but if the trend continues we will see that drop further. They cant keep turning lemons into lemonade if no-one's buying their lemonade...
The media is of course still full of finger pointing, rage and denial. I don't bother with the articles asserting that oil should be $50/bbl or that its all the fault of Democrats who don't want to allow drilling in US territory. By the way search for McCains voting record on ANWR. Is he really a republican at all?
It looks like my prediction is dead as a do-do. Price seem to be relaxed in the 130-140 range, some analysts have called recent movements "range finding" since no significant news has occurred since the 6th. That was until today, Sunday the 14th - more on that further down.
So today I will post articles that offer some insight, or just seem to me to have found the needle of truth in the haystack of Bull Excrement that the mainstream media has to offer.
http://www.newsweek.com/id/141524/page/1
This might be my favorite article for a long time. Robert recognizes peak oil, he recognizes that we cant drill our way out - but that we might at least want to get started on the new wells anyway (since it takes so long to get to production). He also recognizes that while corn ethanol doesn't represent a final solution, that there is work to be done on cellulosic ethanol and Biodiesel from algae. This guy seems to have his thoughts together. I will look for further stories from him in the future.
Going back to cellulosic ethanol I eagerly await the ribbon cutting on the plant at Soperton in GA. That plant plans to use pine mulch to make ethanol using new process. The process is not a distillery type process, but requires heat and pressure to "gassify" the mulch. The gas is then treated to create ethanol. The process should be much more efficient than the distillation and dehydration process at a corn ethanol plant. I assume that the amount of energy produced is MORE than the amount needed to make it. The net return on Energy invested (EROI) is critical to a post peak world. If we need more natural gas, or electrical energy to make the ethanol then we will only end up in trouble with natural gas or coal - hardly a solution.
I wonder when the plant will start production? Hopefully soon. Here is their website:
http://www.rangefuels.com/our-first-plant
Back to more recent developments:
Saudi Aramco Chief, Al Naimi (remember that name - someday hes going to go down in History as one of the worlds greatest liars) has announced intentions to add about 200,000 barrels a day to Saudi output. I expect this will have some small limited effect on the oil market. We will need to wait until the market opens to find out what effect, but I'm guessing it will be near zero, maybe a few dollars. The reason for skepticism is because the world is slowly starting to realize that the Saudi propaganda machine is, well... A propaganda machine. Any real reduction in price would have to come after we see tanker traffic numbers. The 200,000bpd increase will probably simply offset decline in other fields or other OPEC countries, leaving output flat. That's not really going to help in a world that gets thirstier by the day. Each year the population grows by over 70 million people. And they all want to drive a car!
So I'm posting this article about Saudi Arabian oil information.
http://www.theoildrum.com/node/4153
OK, and here too is a newer presentation by Matt Simmons. (PDF reader needed)
http://www.simmonsco-intl.com/files/Island%20Institute.pdf
I cant help question Matt's credibility a little since he owns a company dedicated to investing in the oil industry. But having said that, if he is fleecing us (them?) with doom and gloom data, hes doing a really remarkable job of making it look real. The more time goes on the more real it looks. His 2004 book "Twilight in the desert" has certainly turned out to be quite the sensation with many of its key points standing the test of time.
One more item I want to address today is the onslaught of
"run your car on water" websites. Several people have approached me asking if this is something they should consider.
http://runyourcarwithwater.youbetterreadthis.com/
this is just one example of the scam. Others do exist - they all bear similarities:
- Pretty lady talking to you about the product
- Fake testimonials that you cant verify independently
- Half truths - misrepresented - with credible sources talking about the technology
- Money back guarantee - to try to win your confidence.
The problem is that these kits amount to a perpetual motion machine. The amount of energy needed to split water into its component gasses is greater than the energy that can be converted into useful motive power by burning those gasses. And since the energy that splits the water using the old process of electrolysis comes from the battery (and thus the alternator and the engine itself) you are looking a perpetual motion type device.
Just remember that electrolysis is an old well known process - not new technology. The amount of gas recovered from the process is small - nowhere near enough to assist in the operation of an automobile engine. Heck even the mythbusters tried it and showed it to be a fraud.
If it sounds too good to be true it is. Ford, GM, Caterpillar, Cummins, Chrysler, BMW, PSA, Nissan, Honda, Toyota and more. All huge companies that stand to make massive amounts of money from such technology should it show real benefits. With all the engineers in all these companies - myself one of them, how could we have missed something so simple? We didn't. Its a very simple and successful scam, sell a junk product, and hide when the customers come for their money back guarantee. By the time folks figure it out the company owner will be tanning in Brazil or somewhere else that has no extradition treaty. Unfortunately for every garage inventor who makes a brilliant discovery, there are 100 scammers who weave half truths into fraudulent products. They all come out of the woodwork when gas prices rise and the public - laden with SUVs and trucks come looking for a free lunch.
So things to look for this week:
- Market response to Saudi oil production increase.
- EIA inventory report Wednesday - look for further drop in crude inventory and refinery utilization dropping further.
- Any news of supply disruption, depletion etc... bringing prices up
- Any news of demand destruction or faltering global economic news - bring prices down.
One more thing. Cubs still the best team in baseball this week. The Cubs Soriano is out with a Broken hand, but likewise the St Luois Cardinals Slugger Albert Pujols is also out with a bad calf strain.
Saturday, June 7, 2008
Lets Talk Alternatives
When we think about what we use oil for we need a little context. You can see from this image that we dont use oil for electricity generation in the US - at least not in any meaningful amount.
Since its not being used to generate electricity most of the 20 million barrels per day habit in the US goes towards transportation. Gasoline, Diesel and Jet fuel specifically. Heating oil is another important use for oil. Heating oil, similar to Kerosene (a middle distillate) is most commonly used in the North East of the United States, but is falling out of favor as a heating energy source.
To break the oil habit we need to use "alternatives".
When we select alternatives we need to understand that there are 3 principle sources of energy in the world.
1) Fossil fuels. Conventional wisdom holds that oil, coal, gas peat etc... are comprised of decomposed organic matter. The decomposition process takes an extremly long time (thousands or millions of years), and also requires precisley the right conditions, the right rocks, the right porosity, permeability, temperature, surrounding rocks etc... For the purposes of this discussion, its non-renewable. Once you use it - its gone.
2) Sunlight. Not just solar power. Sunlight powers the atmosphere, so Hydroelectric, wind and solar. Sunlight powers photosynthesis so even biofuels fall into this category. It could be argued that the energy in fossil fuels came from the sun originally but that since the process is so slow it gets its own category.
3) Geothermal and Nuclear. energy from "within" the earth. Both of these forms are limited to various degrees. Some parts of the world are able to exploit Georthermal energy easily. Iceland is a country that enjoys such a relationship. Nuclear energy is derived from large volumes of Uranium that must be enriched and concentrated. Once the fuel is spent it must be disposed of.
If we choose to switch from oil to some other energy source for transportation we need to consider what that alternatives long term availability looks like.
At the moment half of our electricity comes from coal, so if we switch to transportation powered by the electricity grid instead of oil, we're going to be putting that load on Coal, and Nuclear - at least at first.
How much load? Well we use 20 million barrels a day mostly for trasnportation. Assume we switch away 10 million of those to the grid. 1 ton of coal = approx 12 barrels of oil. A switch like that means burning 800,000 extra tons of coal. Thats about 1/3rd of our current coal consumption level (which supplies half our needs for electrcity) So if we switch to "green" electric vehicles on a massive scale the grid will need some massive upgrades.
Cars that use hydrogen, batteries or compressed air, they all get their energy from the grid. Even if they are more efficient than oil burning engines you can see we will need to add a great deal of generating and transmission capacity.
Its possible also to imagine that what is happening now with oil could happen next with coal.
June 6th
Wow,
what a ride.
I wanted to start writing about alternative energy but instead I need to at least mention the amazing day on the NYMEX. Maybe someday people will look back at the 6th of June and view it as some kind of red letter day. Perhaps we will call June 6th "Yergin day" and celebrate the totally reidiculous prophecies from the now infamous Daniel Yergin of CERA.
So what happened. Well only about the biggest one day surge in oil prices in the history of the NYMEX. Not much then. We started Thursday the 5th with oil around 122. We gained about 5 dollars that day ending around 127-128.
This run started because for a couple of reasons.
Some European finance minister anounced that some interest rates would be raised in the Euro, which strengthened the Euro against the dollar (weakening the dollar). The rush to move money caused the price of oil and most other commodities to rise.
Also Israel announced that it would act against Iran if it did not suspend its nuclear program - I think act means "attack", maybe even they just came out and said attack. Either way it frightens the oil industry to think that Irans production might not be secure.
So we gained a few dollars. I'm thinking well thats mostly speculative, itll come down.
Then Friday came along and so did Ole Slorer Executive director at Morgan Stanley. Ole decided to tell everyone that he had been looking at the tanker traffic crossing the ocean, and that he didnt think that what is on its way will be enough to maintain inventory levels through the summer. $128 turned into $138 even 139 for a moment.
Well we do know that the last 2 weekly reports have shown significant declines in inventory.
So anyway my prediction of a few months rest in oil prices is now in tatters. At least for a while.
If Ole's precitions turn out to be true theres every reason to expect higher oil prices this summer. Maybe the market rest I predicted is done, not quite the 2 months or so that I expected, more like 2 weeks.
I always thought I was quite pessimistic, I assumed that oil should be priced around $120 and just as it was getting there we got more bad news... Maybe $130 is a better price. With all the news of demand destruction, Im still seeing plenty of Ford Excursions and H2s driving around like they have their own personal oil well.
While my oil predictions are going sour, the Cubs have lost 2 straight games in LA. When it rains it pours...
this was my favorite article.
The Goldman Sachs analyst that predicts the super spike, also thinks that after the spike hits we might return to lower levels of pricing - like $75. Im not sure. I can believe $100 or $120, but not $75. And after the "crash" from 200 to 120, the long term trend would be upward again...
Why would we return to $75 when at that price demand was still growing rapidly.
what a ride.
I wanted to start writing about alternative energy but instead I need to at least mention the amazing day on the NYMEX. Maybe someday people will look back at the 6th of June and view it as some kind of red letter day. Perhaps we will call June 6th "Yergin day" and celebrate the totally reidiculous prophecies from the now infamous Daniel Yergin of CERA.
So what happened. Well only about the biggest one day surge in oil prices in the history of the NYMEX. Not much then. We started Thursday the 5th with oil around 122. We gained about 5 dollars that day ending around 127-128.
This run started because for a couple of reasons.
Some European finance minister anounced that some interest rates would be raised in the Euro, which strengthened the Euro against the dollar (weakening the dollar). The rush to move money caused the price of oil and most other commodities to rise.
Also Israel announced that it would act against Iran if it did not suspend its nuclear program - I think act means "attack", maybe even they just came out and said attack. Either way it frightens the oil industry to think that Irans production might not be secure.
So we gained a few dollars. I'm thinking well thats mostly speculative, itll come down.
Then Friday came along and so did Ole Slorer Executive director at Morgan Stanley. Ole decided to tell everyone that he had been looking at the tanker traffic crossing the ocean, and that he didnt think that what is on its way will be enough to maintain inventory levels through the summer. $128 turned into $138 even 139 for a moment.
Well we do know that the last 2 weekly reports have shown significant declines in inventory.
So anyway my prediction of a few months rest in oil prices is now in tatters. At least for a while.
If Ole's precitions turn out to be true theres every reason to expect higher oil prices this summer. Maybe the market rest I predicted is done, not quite the 2 months or so that I expected, more like 2 weeks.
I always thought I was quite pessimistic, I assumed that oil should be priced around $120 and just as it was getting there we got more bad news... Maybe $130 is a better price. With all the news of demand destruction, Im still seeing plenty of Ford Excursions and H2s driving around like they have their own personal oil well.
While my oil predictions are going sour, the Cubs have lost 2 straight games in LA. When it rains it pours...
this was my favorite article.
The Goldman Sachs analyst that predicts the super spike, also thinks that after the spike hits we might return to lower levels of pricing - like $75. Im not sure. I can believe $100 or $120, but not $75. And after the "crash" from 200 to 120, the long term trend would be upward again...
Why would we return to $75 when at that price demand was still growing rapidly.
Tuesday, June 3, 2008
Well as you can imagine while things are going my way im going to toot the horn.
WTI fell more today to $124, Obama looks set now to recieve the nomination, Hillary even postured to be the Veep on his ticket. And the Cubs won their 8th straight game.
After reading the Westexas post on Export land model, and how tight the gulf supplies are getting, I am wondering what tomorrows inventory report will bring. Last week supplies fell but were blamed on fog, some folks have gone so far as to check on that story and its beginning to sound like theres more to that story than meets the eye. So I guess tomorrow will tell. A bounce in Inventory levels will show that the fog story had merit, we might even see some folks go short on that news and see the price lose another buck or two. Flat or declining oil inventorys would be bad news, and support a pretty big surge in prices ~ 3 to 5%.
I also got my little fuel leak sorted on the Mustang, and its now ready for a test drive.
WTI fell more today to $124, Obama looks set now to recieve the nomination, Hillary even postured to be the Veep on his ticket. And the Cubs won their 8th straight game.
After reading the Westexas post on Export land model, and how tight the gulf supplies are getting, I am wondering what tomorrows inventory report will bring. Last week supplies fell but were blamed on fog, some folks have gone so far as to check on that story and its beginning to sound like theres more to that story than meets the eye. So I guess tomorrow will tell. A bounce in Inventory levels will show that the fog story had merit, we might even see some folks go short on that news and see the price lose another buck or two. Flat or declining oil inventorys would be bad news, and support a pretty big surge in prices ~ 3 to 5%.
I also got my little fuel leak sorted on the Mustang, and its now ready for a test drive.
Monday, June 2, 2008
More car progress
Dale helped out on Saturday as I did an intake Manifold swap. I was able to procure an Edelbrock RPM airgap intake manifold for cheap - it was new, but had been bolted on an engine and never run.
I took the opportunity to remove the heater hoses for now since I dont ever run the car in the cold.
The engine fired up well, timing seems about right. This is what the timing curve looks like right now. I approximated this by setting RPM with the idle screw and using the timing light to measure timing.
I think it needs more timing but Im not going to adjust it until I can drive the car.
My new fuel lines have a slight leak which I need to fix, then its drive time!
Jun 2nd
Well not much to report in the news.
Thursday last week was exciting with news of massive inventory declines.
I dont pay for up to the minute market data, I just watch the delayed data. Which took hours to catch up with reality. The inventory news caused a massive buying spike, but news came out to explain away the shocking data. The oil was here it was just stuck in the gulf due to fog...
That calmed everything back down and by the end of the day we were back on the gradual downward tradjectory. Last week I predicted a path towards $120 in the coming months, we are somewhat closer, down from around $130, to about $126-127. I think this can continue barring any frightening news of production declines or supply disruptions.
I also predicted a Cubs world series win and Obama winning the presidential election. So far those predictions are also panning out. The Cubs Swept Colorado at Wrigley field making it 7 wins straight and earning the title of "best team in MLB" for now anyway. Obama is inching closer to the nomination.
By the way dont take my predictions to mean I am an Obama supporter. I think if I had the choice I would probably vote McCain - but I wouldnt exactly be smiling my way to the polls. Obama does appear to be the straightest talking politician since JFK though. He told crowds in Detroit that their industry needs to do better. Wow. Does he even know that hes a politician?
Interesting articles:
Net export model
That was an article from Jeffrey Brown who goes by username Westexas on the oildrum. Written last year it warns that production declines from our top producing nations are not the only concern.
When you realize that many of the worlds net exporters actually subsidize their fuel price (they can afford to they are still net exporters! they use oil revenue to do it!) then you understand how oil consumption in those countries continues to rise in some cases at 3 or 4% per year.
A plateaued production curve or a decline suddenly looks much sharper when you account for their own increasing thirst for their own oil.
This makes you stop and think about the Saudis claims about excess production capacity. They may have some extra capacity - but they will likley need it just to cover their own needs - or face the prospect of removing some of those glorious subsidies. Imagine how your population reacts when they suddenly are forced to pay the market price for fuel!! Shock horror.
Thursday last week was exciting with news of massive inventory declines.
I dont pay for up to the minute market data, I just watch the delayed data. Which took hours to catch up with reality. The inventory news caused a massive buying spike, but news came out to explain away the shocking data. The oil was here it was just stuck in the gulf due to fog...
That calmed everything back down and by the end of the day we were back on the gradual downward tradjectory. Last week I predicted a path towards $120 in the coming months, we are somewhat closer, down from around $130, to about $126-127. I think this can continue barring any frightening news of production declines or supply disruptions.
I also predicted a Cubs world series win and Obama winning the presidential election. So far those predictions are also panning out. The Cubs Swept Colorado at Wrigley field making it 7 wins straight and earning the title of "best team in MLB" for now anyway. Obama is inching closer to the nomination.
By the way dont take my predictions to mean I am an Obama supporter. I think if I had the choice I would probably vote McCain - but I wouldnt exactly be smiling my way to the polls. Obama does appear to be the straightest talking politician since JFK though. He told crowds in Detroit that their industry needs to do better. Wow. Does he even know that hes a politician?
Interesting articles:
Net export model
That was an article from Jeffrey Brown who goes by username Westexas on the oildrum. Written last year it warns that production declines from our top producing nations are not the only concern.
When you realize that many of the worlds net exporters actually subsidize their fuel price (they can afford to they are still net exporters! they use oil revenue to do it!) then you understand how oil consumption in those countries continues to rise in some cases at 3 or 4% per year.
A plateaued production curve or a decline suddenly looks much sharper when you account for their own increasing thirst for their own oil.
This makes you stop and think about the Saudis claims about excess production capacity. They may have some extra capacity - but they will likley need it just to cover their own needs - or face the prospect of removing some of those glorious subsidies. Imagine how your population reacts when they suddenly are forced to pay the market price for fuel!! Shock horror.
Thursday, May 29, 2008
Home energy
Attic temperature.
You probably dont think much about attic temperature, but it has a lot to do with your summer cooling load. The attic can get hot from the sun beating down on those asphalt shingles (another petroleum product that could start to get expensive). The shingles get so hot they radiate the heat into your attic. Without adequate ventilation the attic will get much hotter than the ambient air outside.
The problem with a hot attic is that this heat seeps into your house and needs to be cooled by the Air conditioning. Also most air conditioning blowers - and thus the feeding and returning air ducts are also located in the attic spaces. Although most modern air ducts are insulated (as are most attic floors) this insulation just slows the seepage - but doesnt stop it.
Some companies sell attic fans, some are even solar powered (clever!)
But I wanted to know for myself how bad my problem was. So I bought a little inside-outside thermometer
On a typical 80F day in late may - with lots of sun and little wind, my attic gets up to 110F!
with wind or cloud its usually much less like 95F. Still compared with the ambient temp of mid 80s thats a significant extra load to put on all that insulation.
Try it yourself - thermometers are about $10 to $15.
You probably dont think much about attic temperature, but it has a lot to do with your summer cooling load. The attic can get hot from the sun beating down on those asphalt shingles (another petroleum product that could start to get expensive). The shingles get so hot they radiate the heat into your attic. Without adequate ventilation the attic will get much hotter than the ambient air outside.
The problem with a hot attic is that this heat seeps into your house and needs to be cooled by the Air conditioning. Also most air conditioning blowers - and thus the feeding and returning air ducts are also located in the attic spaces. Although most modern air ducts are insulated (as are most attic floors) this insulation just slows the seepage - but doesnt stop it.
Some companies sell attic fans, some are even solar powered (clever!)
But I wanted to know for myself how bad my problem was. So I bought a little inside-outside thermometer
On a typical 80F day in late may - with lots of sun and little wind, my attic gets up to 110F!
with wind or cloud its usually much less like 95F. Still compared with the ambient temp of mid 80s thats a significant extra load to put on all that insulation.
Try it yourself - thermometers are about $10 to $15.
Wednesday, May 28, 2008
Car book
I mentioned I like cars.
Well someday Im going to make a book about my car, and a video. I will do this to prove just how pathetic and obsessed I am about the car. Hopefully I can accomplish this before gasoline becomes $50 per gallon and a ride in the country will require me to fill in forms and get a bank loan.
Im going to make a coffee table book with those nifty websites like shutterfly.
So far I have made a cover photo montage, and thats about as far as I have got.
Someday I will get around to organizing my photos and making something really striking.
Here is the cover art made up from photos of my car.
Well someday Im going to make a book about my car, and a video. I will do this to prove just how pathetic and obsessed I am about the car. Hopefully I can accomplish this before gasoline becomes $50 per gallon and a ride in the country will require me to fill in forms and get a bank loan.
Im going to make a coffee table book with those nifty websites like shutterfly.
So far I have made a cover photo montage, and thats about as far as I have got.
Someday I will get around to organizing my photos and making something really striking.
Here is the cover art made up from photos of my car.
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