Stocks are Down because of OIL

Today, 2007 October 15, the major stock market averages were down. In particular, the Dow Jones Industrial Average was down 108.28 to 13984.80; the NASDAQ was down 25.63 to 2780.05, and the S&P was down 13.09 to 1548.71. Why did the stock averages go down? The analysts on CNBC and other places have come up with a number of reasons. The financial stocks all went down, so therefore, they say, they caused the market downturn. We aren't out of the housing crisis yet. They are awaiting the Fed's next move. Earnings of companies are down. Bladada blah blah blah.

No, people. None of these are the reason why the stock market went down. If you will get your head out of all these mathematical models, computer programs, and analysis diagrams, and take a look at some real things, you will see the answer. Gold is real. It is element 79 with symbol Au. The Gold Bugs index (^HUI) was up 5.43 to 418.77, a 1.31% increase. Oil is real. You can never run out of money; you can just print more. But we can and are running out of oil. The AMEX Oil Index (^XOI) was up 15.43 to 1495.47, a 1.04% increase. Why? Because the dollar continues to sink. But more likely because oil continues to go up in price. It went up $2.44 or so today to $86.13, a new high, and only about 14 dollars removed from $100 a barrel.

Why? Oil stocks (meaning supplies) are down. The Energy department had expected them to go up. The International Energy Agency also reported a decline in world supply of oil. OPEC is saying that it will produce 110,000 fewer barrels this year than expected, when it expected a raise. World production of oil reached about 84 billion barrels a day in 2004, nearly a thousand barrels a second. Since then it has been holding steady. Four of the world's largest oil fields, namely Ghawar in Saudi Arabia, Daqing in China, Burgan in Kuwait, and Cantarell in the Gulf of Campeche near Mexico, are starting to decline, some precipitously, as Cantarell, which furthermore got hit by two Category 5 hurricanes this year.

That's the reason why stocks fell. It is also the reason why gold and oil stocks went up, and why the price of oil is up. Our civilization is beginning to run out of cheap oil. To me it looks like prices are going to go up. At $86 a barrel, gasoline prices should be $3.02 in southern Virginia; instead they are around $2.55. There is nowhere to go but up for these prices. Further, especially if prices don't go up much, shortages could develop. And then there will be a big outcry. The outrage at being fooled on the supply of oil will more than exceed that of finding out that there were no weapons of mass destruction in Iraq.

Dean Threaten's Mexico's Oil Output

None of the media outlets have been telling us that the world's oil supply is threatened by Hurricane Dean. Dean is heading straight towards the Cantarell oil field, which has been failing as of late but still produces 1 million barrels of crude oil a day. Don't be surprised to see oil skyrocket after tomorrow.

Also, the sea ice has been melting at an accelerated pace, verifying that fact that global warming has been occurring.

See my other blog Beyond the Wind for more details.

Sixteen Tons and Polar Bear

Someone was singing Merle Travis' "Sixteen Tons".

Coal Miner: "You load sixteen tons."
Polar Bear: "No, don't! Don't load sixteen tons."
Coal Miner: "But if I don't load sixteen tons, I won't have anything to eat."
Polar Bear: "If you load sixteen tons, I won't have anything to eat."

Branner Station

I hear there is a meeting of the Chesterfield County's Board of Supervisors on 2007 August 21 at 7 pm. One of the cases being considered is Branner Station, a development in southern Chesterfield County bordering Branders Bridge road. Of course this is a bad name for the development; it will be confused with Brandermill. The developer, HHHunt, calls for 5000 homes on a tract of 1449 acres, which is about 2.5 square miles. With peak oil coming up and no businesses near the site, I wonder why HHHunt wants to build such a large monstrosity in the county. He says it will take 20 years to develop. Maybe we should call the developer HHHHHHHHHHHHHHHHHHHHunt.

I read an editorial in the Chester Village Voice which suggests that this development will be built along the lines of something called "Smart Growth". That is, the development will take care of such problems as inadequate roads and schools. The developers plan to construct a road through the development and to improve Branders Bridge road, which was designed when horses were the main means of transportation. They plan to construct a school or to provide for the construction of the school on the grounds of the development. There will be a retail area, a park, and some trails. These are all in accordance with Smart Growth.

Fine. However, Smart Growth is still growth. That is one thing that Chesterfield (and indeed the entire world) does not need now. We already have too many developments here. How are the people in Branner Station going to travel once gasoline becomes really expensive, or even unavailable? How are they going to get food? Do they allow for residences to grow vegetables in suitable plots? How is this planned development going to shorten commutes for these people? Many of the residents of this development will probably go to work at Fort Lee, which is doubling in size due to base closures and cutbacks elsewhere. Fort Lee is a 25 minute drive from the area, and will get longer as population grows and traffic lights proliferate.

I think the county needs to reconsider Branner Station. HHHill has done about a 50% job in coming up with a good development design. But he and his people need to read up on peak oil, zero growth, permaculture, cohousing and other housing alternatives before coming up with a new design that takes these future trends into account.

Drop the Bomb!

After a six-month hiatus, I have finally found new input on Kenneth Deffeyes' peak oil blog, at http://www.princeton.edu/hubbert/current-events.html. He reiterates what he has said before, with figures to support him in Excel spreadsheets. The peak of conventional oil occurred in 2005 May, and conventional oil production has held at around 73 million barrels a day since then. The peak of Saudi oil has apparently been hit at the same time, at about 9.6 million barrels a day; it now has shrunk slightly to the 8 millions. This is only conventional oil, apparently. Adding in unconventional sources raises the total to 84 million barrels a day, and this has also held steady for the past couple of years, indicating this peak has been reached.

I feel no change in my lifestyle, however, other than a constant carping at my church and other places to cut our carbon emissions. This may be cutting demand slightly. But there are some who say that the demand is the same as in the past few years, despite increases in demand from China, India, and the US, because third world countries like Zimbabwe can't afford it any more and has quit buying it. This plateau will last for a while, but will be followed by a decline, and I am not sure what is going to happen after that. I think that supply and demand will play a big role in holding back the ill effects of peak oil, reducing demand by making human life here in the states more efficient and bringing solar, wind, clean liquid coal (if there is such a thing) and nuclear power into the forefront. But eventually, a great depression may await us as we gradually run out of power to run our society as it is presently constructed, sometime in the twenty teens.

This should be a major issue in the 2008 Presidential campaign. But it is no issue at all. Some of the Democrats bring up global warming, but that is not the same thing. Kenneth Deffeyes notes this and says: "It looks as if we will go through another US presidential election with no candidate calling attention to the world oil problem, or to the North American natural gas problem. My only hope is that a candidate, who learns from private polls that he or she is behind, will drop the oil bomb into the debate."

This matter needs to be discussed. Almost nowhere in any of the debates have I noticed any of the political candidates talk about peak oil. They need to talk about it. So this is my message to the candidates, especially those who are not leading: Drop the Bomb!

Sell?

Today, 2007 July 12, in his Clusterfck Nation Chronicles, Jim Kunstler said this in his "Daily Grunt":

Go figure. The Dow Jones is up over 100 points at 10:30 a.m. in the face of the following headlines:

U.S. Trade Deficit Widened 2.3% in May to $60 Billion
U.S. Foreclosures Increase 87 Percent as Prices Fall
Al-Qaeda Is More Capable of Attacking West, U.S. Report Says
Crude Oil at $73.48
Euro at $1.3773
More Subprime Woes to Come

Seems as though the bulls ran wild today. The Dow was actually up 283 points today. Yet Jim points out all these ominous events, including record foreclosures, rising oil prices, and Al Qaeda on the jihadpath. Sort of like a victory party on the Titanic.

Is Jim trying to say this is a Sell signal?

Cooling Dance

On 2007 July 7, many places around the world celebrated Live Earth Day. At my church, we had a combined meeting of the Chesapeake Climate Action Network and Moveon.org that attracted many people from my congregation, featured what people, including Democratic Presidential candidates, would do about global warming, and even featured an actual product: an LED lamp.

But was Live Earth in general a success? Jim Kunstler doesn’t think so. In his Clusterf nation Chronicles for today, "Rain Dance", he says that the event was dominated by all these rock bands strutting out their stuff making loud noises that consume electricity. That is what some of us thought at First Church when the TV turned towards what was happening elsewhere for Live Earth Day. Actually, one might call Live Earth a Cooling Dance.

You cannot do anything about peak oil or curb global warming with prima donnas playing rock music all over the place to mesmerized audiences. What does this rock music have to do with global warming? These stars could eventually allow a dictator to make use of these crowds of "fans" to take absolute power.

And what's Al Gore doing anyway, says Jim Kunstler. Why does he make movies like the prima donnas do and wail about global warming instead of getting somewhere where he can do something about it? Why doesn't he run for President?

Localize Fireworks

Every year at this time I go out into our development to see fireworks. I run or walk out among the streets hunting for fireworks displays. In past year, I have seen some impressive displays from people of our neighborhood, and I expect to do the same tonight. A problem is that these displays in many cases are illegal. They can also be dangerous and all the authorities are telling us not to do it and instead go to a public display. Indeed they can be dangerous. You need to handle them as if it could go off at any instance a flame is nearby. They cannot be handled by children and require adult supervision. But I still go out and see these displays.

Of course I could go see one of the public fireworks displays in the community, but the joy of seeing these fireworks is diminished by the traffic jams and parking problems that come with these displays.

Indeed that is a major problem of these displays. People every year get into their car or SUV and drive to a public fireworks display, causing parking and traffic problems, when so many people jam into such a small space. They consume huge amounts of gasoline, especially if they get stuck in displays. They go to the parking lots of big box stores such as Wal-Mart to watch a few fireworks ascend about 15 degrees above the horizon from some place far away.

Peak oil tells us there may be a day soon when we will not be able to drive all over the place for the pleasure of seeing pyrotechnic stars blaze in the heavens. What will we do then? All these years I go in the neighborhood to see local fireworks display, I run or walk - a good way to get exercise in too. I urge all of us to try that this year. It's a way of localizing fireworks.

A lot of other things will need relocalizing as well: growing food, getting medicine and health care, buying consumer goods, and celebrating community with the people around you. Until that day happens, at least we can enjoy fireworks and not get into traffic and parking hassles; see them locally.

Americans for Balanced Energy Choices Signs People Up Without their Permission

Yesterday I received in the mail a letter from the Americans for Balanced Energy Choices (ABEC) (Warning: Music). This letter said that I have just joined the organization. Huh? I don't remember explicitly joining such a group. I have been a member of CCAN (Chesapeake Climate Action Network) and my church's Earth Committee. These organizations seek to combat global warming and other environmental concerns through a variety of methods. I went to a conference in Wilmington, NC on global warming. I have been attending meetings of the Charlottesville Peak Oil group, and have been concerned about peak oil for some time. Did I somehow join up for something that I did not remember, or did my signing something get me to be a member of yet another environmental group that fights pollution through oil, natural gas, and coal production, among other things?

I looked at the letter. It talks about providing affordable energy. Good enough. But you can't tell organizations from their own literature any more. That is not where you get the truth. I go to something independent of ABEC; in particular, Wikipedia. Surprise! I find that it is a political action committee promoting the coal industry. I would have never signed up for something like this. Although I think we should consider coal as an option, I know from my own calculations that the disasters spoken of by the global warming people can happen only because of the use of coal. So given this, do you think I would support a group that promotes coal production? That promotes civilizational suicide?

The only way I would support coal production and other coal activities, such as coal to oil conversion, is if it does not contribute to carbon dioxide in the atmosphere and only as a last resort after other actions are taken. This group signed me up without my permission. They evidently seek to sign up people without their knowledge and then say this is a grass-roots effort on the behalf of the coal industry. I beg your pardon, ABEC. This is not grass-roots. This type of lying is more aptly described as Astroturf.

I request, ABEC, that you drop me from your membership rolls, and drop everyone else that you signed up without their permission.

Jim, We Have Someone

One of the more interesting blogs I have seen on Peak Oil is Clusterfuck Nation by Jim Kunstler. Jim seems more than some of the others to say what he feels is what it's going to be. Some of his predictions have been way off (Dow Jones 4000, instead of the actual 12000), but his general thesis is well taken. People seem to be ignoring the signs of Peak Oil, so maybe someone like him is necessary to get people to listen. One of his points is that such things as Toyota Priuses, ethanol, CAFE standards and the like are merely ways of trying to get us to continue driving like we have been, instead of what he thinks would be better, namely to restructure the way we live and the places we live so we can do with less oil.

In his latest blog ("Both Ways"), he says he would rather have someone who wants us to discourage suburban development instead of pulling the troops home. We have someone, Jim. To me it follows that he would want us to support Dorothy Jaeckle in Chesterfield County, Virginia, who won an upset victory over Jack Wilson, more than Democrats such as Hillary and Obama who want to pull the troops home. At least Dorothy would be a start. She defeated a candidate supported by his boss and by developers all over the place. Her platform, which she documents in a letter (parts of which are here), is that something should be done about unbridled growth and development in Chesterfield County. She put her case convincingly, and won the election easily.

It's a start, but so far she has told us what she is against. What is she for? Hopefully, she will outline a design for the County that will include farmer's markets, design to make the automobile less necessary, and other facets of what is called the "urban village". For we are eventually going to have to adjust to such an environment. The oil may have already hit a peak worldwide, and there will be only less of it as the time goes by.

In the meantime, Hillary Clinton, Barack Obama, and other candidates who yell about pulling troops out of Iraq, about energy dependence, and about bombing Iran should listen to what Dorothy Jaeckle is saying and call for all of us to head in the same direction.

In the meantime, I hope Jim continues his blog, and that his servers stand up better than they did tonight. I could not comment on his blog because of "this page can't be displayed".

Will gasoline hit $4 a gallon in 2007?

Recently an article by Joe Carroll in Bloomberg said that gasoline prices could hit $4 a gallon this year. This is higher than gasoline has ever been around here. The most I have ever seen was $3.25 a gallon, a few days after Katrina struck, when power outages were preventing local pipelines from receiving fuel. But AAA of Maryland has struck back with an article saying that it is premature or irresponsible to say it will do that. So which is right?

There are many factors influencing the price of oil. Some of the ones Bloomberg mentions are hurricanes, tensions in the Middle East, Nigeria, and other places, supply, and demand from consumers, primarily in the US. Any one of these could cause shortages and cause prices to skyrocket. But suppose everything is OK? For a while, then, gasoline prices will stay in the upper $2s, as things will be mostly OK. There is an economic boom in this country, however, and this will cause demand to heat up. But the major factor, I feel, will be supply. There are some serious problems coming up.

The four biggest oil fields in the world are all declining: Ghawar in Saudi Arabia, Cantarell in Mexico, Burgan in Kuwait, and Da Qing in China. More oil is coming online, but this will be from smaller fields and I am not sure that this increase will counteract the declines in the Big 4. Already Pemex, the Mexican oil company, is showing pressure. It is seeing its profit margins declining, and is fearing for the future. If Mexico should stop sending fuel to the US, it could have a dramatic effect on prices.

So I say there is a possibility of gasoline going to $4, because the world has hit peak oil and world oil production is declining. Sooner or later, the decline will filter down to the gasoline pump.