Daily Digest

Daily Digest - July 20

Tuesday, July 20, 2010, 10:53 AM
  • Morning Gold Fix
  • Higher Education Fund Buys Gold Over Economic Worries
  • Welfare and Warfare
  • A City Outsources Everything. Sky Doesn’t Fall.
  • Cities Rent Police, Janitors to Save Cash
  • 1 in 4 Orange County Offices Are Empty
  • EU ministers to approve tighter sanctions on Iran
  • Home Builders See Demand Further Weaken
  • Larry Summers Says: Spend Now, Pay Later
  • Explained Time and Time Again: Currency Induced Cost Push Hyperinflation
  • Poll: Faith In Social Security System Tanking
  • China Tops U.S. in Energy Use
  • Smart Decline in Post-Carbon Cities
  • Lobstermen Fear Days Are Numbered

Economy

Morning Gold Fix (pinecarr)

The first Gold backed Currency was announced last week. This is the road to ruin for the Dollar as global reserve currency: Slow incremental acceptance of alternatives form [from]seemingly meaningless areas of the world.

Higher Education Fund Buys Gold Over Economic Worries (Rector)

With the state's endowment funds designed to generate a 5.1 percent distribution each year to the University of Texas and Texas A&M University, it is rare for the investment managers to put large sums of money into a commodity whose value usually only grows through inflation.

Welfare and Warfare (JimQ)

The United States has hit the proverbial jackpot, with a rapidly aging population, a $106 trillion unfunded liability, an administration that has piled more unfunded healthcare obligations upon our future unborn generations, spineless politicians that refuse to address the crisis, and as icing on the cake 700 military basis spread throughout the world and an annual defense budget of $895 billion equaling the total spending of the next 11 countries combined. The number of Americans over 65 will surge by 35% over the next 10 years and then by an additional 30% in the following decade. Baby Boom demographics have caught up with politician promises. Therein lays the dilemma.

A City Outsources Everything. Sky Doesn’t Fall. (jdargis)

The school crossing guards were let go. Parking enforcement was contracted out, City Hall workers dismissed, street maintenance workers made redundant. The public safety duties of the Police Department were handed over to the Los Angeles County Sheriff’s Department.

Cities Rent Police, Janitors to Save Cash (cmartenson)

Faced with a $118 million budget deficit, the city of San Jose, Calif., recently decided it could no longer afford its own janitors. So the city's budget called for dropping its custodial staff and hiring outside contractors to clean its city hall and airport, saving about $4 million.

1 in 4 Orange County Offices Are Empty (cmartenson)

Space being added to the market is getting smaller. Landlords got stuck with 143,000 additional square feet of space last quarter because because old tenants are moving out faster than new tenants are moving in — a condition called “negative absorption.” But that compares to more than 221,000 square feet being added to the market in the first quarter and nearly 609,000 square feet added this time last year.

EU ministers to approve tighter sanctions on Iran (cmartenson)

European Union foreign ministers will adopt tighter sanctions against Iran next week, including measures to block oil and gas investment and curtail its refining and natural gas capability, EU diplomats said.

The measures, which go beyond steps approved by the United Nations on June 10, are designed to put pressure on Tehran to return to talks on its uranium enrichment programme which Western powers believe is designed to produce nuclear weapons.

Home Builders See Demand Further Weaken (cmartenson)

Home builders continued to perceive weaker demand in June. The National Association of Home Builders' Housing Market Index declined to 14 last month. That's the lowest reading since April 2009.

Larry Summers Says: Spend Now, Pay Later (cmartenson)

We will see clearly in the years ahead that pushing growth and reducing deficits are complementary, not competing, objectives. Reducing the spectre of prospective deficits will enhance near-term growth. And ensuring adequate growth in the near term will reduce long-term deficits.

Explained Time and Time Again: Currency Induced Cost Push Hyperinflation (Davos)

All hyperinflation in modern history has occurred for one reason, and one reason only. That is loss of confidence in currency.

Loss of confidence in a currency can be brought about by many reasons, but there is one constant factor. When hyperinflation has occurred in modern history EVERY economy involved was decimated as and when it occurred.

Poll: Faith In Social Security System Tanking (joemanc)

A USA TODAY/Gallup Poll finds that a majority of retirees say they expect their current benefits to be cut, a dramatic increase in the number who hold that view. And a record six of 10 non-retirees predict Social Security won't be able to pay them benefits when they stop working.

Energy

China Tops U.S. in Energy Use (Jeff B.)

China's ascent marks "a new age in the history of energy," IEA chief economist Fatih Birol said in an interview. The country's surging appetite has transformed global energy markets and propped up prices of oil and coal in recent years, and its continued growth stands to have long-term implications for U.S. energy security.

Smart Decline in Post-Carbon Cities (cmartenson)

In 2002, after decades of trying to restart economic development like most other Rust Belt cities, Youngstown made a radical change in approach. The city began devising a transformative plan to encourage some neighborhoods to keep emptying and their vegetation to return. The plan, still early in its implementation as we write (March 2010), would raze underoccupied structures, streets, and alleys to form larger land parcels and home lots, more green space, and new parks.

Environment

Lobstermen Fear Days Are Numbered (David B.)

“If they shut down lobstering, I guess I’m going to have to go to Home Depot or something — and that’s not going to pay a mortgage,’’ said Drake, who has been fishing since he was 14. “I can’t make a living on something else, no way.’’

Please send article submissions to: [email protected]

16 Comments

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Re: Daily Digest - July 20

duplicate

 

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Re: Daily Digest - July 20

The good news never ends.

The unemployment rate goes down is the good news.  The bad news is because more quit looking for work.

Welcome to the "give up hope" and "change for the worst" society.Frown

http://www.google.com/hostednews/ap/article/ALeqM5iG41E9cl-hj1iLR6_ln6q-...

 

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Re: Daily Digest - July 20

"WASHINGTON – With a new face and a 60th vote for breaking a Republican filibuster, Senate Democrats are preparing to restore jobless checks for 2.5 million people whose benefits ran out during a congressional standoff over deficit spending. President Barack Obama says, "It's time to do what's right.""

"Democrats note that the GOP is far more concerned about the $33 billion impact of the jobless benefits on the deficit than the far larger cost of extending Bush-era tax cuts. "

"July 16 (Bloomberg) -- The bursting of the U.S. housing bubble has left homeowners buried under about $4 trillion of excess mortgage debt, according to Dhaval Joshi, the chief strategist at RAB Capital.

The CHART OF THE DAY compares the total amount of home loans outstanding with the value of residential real estate, as compiled by the Federal Reserve, for the past two decades. The latter is adjusted to reflect the average 40 percent debt-to- value ratio that prevailed from 1990 to 2005.

Mortgage balances were $3.64 trillion higher than the adjusted figure as of March 31, as shown in the top panel. The actual ratio, which stood at 62 percent at the end of the first quarter, appears in the bottom panel.

To eliminate the excess and bring down the ratio to its historical norm, either house prices would have to surge or home-loan repayments and defaults would have to accelerate, Joshi said today in an interview.

“In either scenario, it would be a disaster,” the strategist said, adding that prices are unlikely to recover any time soon. The U.S. has 4 million more homes than it needs, by his count. Interest rates will have to stay relatively low for “a prolonged period” to revive the housing market, he said. "

"WASHINGTON - THE broadest shake-up in US financial services law since the Great Depression will likely require the Securities and Exchange Commission to beef up its staff with 800 new positions, the SEC's chief said in prepared remarks on Monday.

Carrying out these new responsibilities will be 'logistically challenging and extremely labour intensive,' SEC Chairman Mary Schapiro said in testimony prepared for a House of Representatives subcommittee hearing to be held on Tuesday. "

"CHINA has passed the US to become the world's biggest energy consumer, according to new data from the International Energy Agency.

The milestone reflects both China's decades-long burst of economic growth and its rapidly expanding clout as an industrial giant.

China's ascent marks “a new age in the history of energy”, IEA chief economist Fatih Birol said. The country's surging appetite has transformed global energy markets and propped up prices of oil and coal in recent years, and its continued growth stands to have long-term implications for US energy security."

.........................4A) China Passes US as World's Biggest Energy Consumer

"NEW YORK (CNNMoney.com) -- Just how much will BP pay in fines to the U.S. government? In a worst case scenario, they could top $18 billion.

BP (BP) has already announced a $20 billion fund to compensate disaster victims. But it will also owe a huge amount in fines for violating the Clean Water Act: Up to $4,300 per barrel of oil released if it's found the company was negligent in causing the disaster, according to a Justice Department spokesman.

No one has a precise number for how much oil has spewed into the Gulf. The Coast Guard originally said it was just 1,000 barrels a day. That figure has since been revised up to between 35,000 and 60,000 barrels a day.

Taking the high end of that estimate - over 4.3 million barrels of oil released since the spill began - the fines could total over $18 billion, and that's accounting for the 800,000 or so barrels BP had said it has captured."

"With dozens of California cities and counties seeking to reform soaring employee retirement costs, San Jose Councilman Pierluigi Oliverio on Monday called for voters to decide whether they want to continue paying millions into the city's pension system.

Oliverio wants to change the city charter — which requires a public vote — to remove language that spells out at what age employees can retire and how much the city must pay into their pensions. Instead, he wants the council to have the flexibility to determine those numbers.

While union officials assailed the proposal, Oliverio called the city's pension costs "out of control." Even as it lays off workers, the cash-strapped city will pay nearly $200 million this year to cover its pension obligations; next year, that's projected to swell as high as $250 million.

"If you're a resident and if you've ever said, 'Why is my street not paved? Why is my library not open? Why aren't there enough police officers?', it's because the pension system has grown to such a large proportion," said Oliverio.

Under the current charter, for every $3 an employee contributes to his or her pension, San Jose contributes $8. "You can't do a 250 percent match anymore when the private sector is only getting a 3 percent match," Oliverio argued."

"Commercial enrollment continued to tumble in a tough economy. Commercial membership fell by 440,000 from a year ago. That represents a decline of less than 2 percent, and UnitedHealth said the result was better than expected. In the first quarter, commercial enrollment fell 4 percent."

"Revenue for the Ovations Medicare and Medicare supplement business rose 13 percent to $9 billion. Revenue for the AmeriChoice Medicaid business increased 21 percent to $2.5 billion."

"July 19 (Bloomberg) -- BP Plc’s oil spill may cost the U.S. Gulf Coast region 17,000 jobs and about $1.2 billion in lost economic growth by year-end even if the flow is stanched permanently next month, Moody’s Analytics said.

Under a more pessimistic scenario in which the oil spill continues through December and President Barack Obama’s six- month moratorium on deepwater drilling is extended, economic losses may reach $7.4 billion, and more than 100,000 jobs would be lost, Moody’s said today in a report written by Marisa Di Natale, a director based in West Chester, Pennsylvania. "

"Mortgage insurer PMI has cut its growth projections for 2010 home sales by more than half. The company’s analysts now expect sales of existing homes to rise a modest

2.9 percent for the year to 5.31 million units. That’s a sharp downgrade from a mere month ago, when they were predicting we’d see a 6.1 percent annual gain.

The forecast for new home sales, too, has been slashed. Last month, PMI was forecasting a 19.9 percent jump for the year. But now, they’ve dropped it to 9.4 percent, representing total annual sales of 409,000 units for new homes.

PMI says the falloff in sales numbers now that the tax credit is gone suggests homebuying activity has already reached its high-water mark for the year. Even record low mortgage rates and attractive pricing – both factors that should entice buyers to come off the sidelines – aren’t doing enough to elevate demand in today’s market."

  • Other news and headlines:

Memphis foreclosure rate threatens city's health, Mayor Wharton says

ECB's Noyer: Eurozone Members Must Cut Deficits, Debt Quickly

ECB funding to Greek banks at 93.8 bln eur end-June

Russia's Central Bank says 209 banks need to recapitalize by 2012

NJ faces $10.5B budget deficit heading into next year

Hungary Borrowing Costs Jump as Debt Auction Misses Target; Forint Slips

Pound slips on wider-than-expected UK Budget deficit and UK public deficit higher than expected in June

1 million Ontario workers face wage freeze

Tuition to increase by 10 percent for fall semester (LSU)

Senate lining up more than $100 billion in spending initiatives this week (Blog)

Rendell says 700 layoffs possible (Pennsylvania)

Violent Weekend Plagues Oakland Following Layoffs

NY State General Fund Shows $87.1Mln 1Q Loss -Comptroller

San Bernardino police furloughs OK'd

New Jersey Towns May Be Strained by Cap, Moody's Says

Thousands fear eviction from public housing in San Francisco

Home construction falls 5 percent in June to lowest level since October; building permits rise

FDIC Sells Pool of AmTrust Nonperformers for 37 Cents on the Dollar

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Re: Daily Digest - July 20

Bill Gross weighs in on the economy below. The guy makes more sense than most.  I'm becoming more resigned to the fact that if the governments of the world want gold to stay in the basement, it will. I'm reminded of the old saw " The market can remain irrational longer than I can remain solvent".  This is particularly true if irrationality is the chosen agenda. If stocks are going to go up by decree, regardless of reality, maybe that's where the prudent investor should position a portion of his wealth.  It's easier to understand once you realize you're not going to be allowed to profit on anything that the state doesn't approve of.

http://money.cnn.com/magazines/moneymag/moneymag_archive/2010/08/01/105959264/index.htm

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Re: Daily Digest - July 20

Am I the only person in the country who sees housing numbers like these and does a jig for joy?  One of the biggest problems we face is an overbuilt housing infrastructure.  Getting back to balance from the housing bubble is going to take an adjustment period of lower construction.  I know this is bound to hurt an economy that in which construction is such a large part, but the sooner we figure out a way to get by on less, the better it's going to be in the long run.  And let's not even get into the envoromental toll all of this construction takes.  We can't expect the ecological processes that sustain life to keep functioning when humanity keeps appropriating more and more of the resource base to our own use.

Now, as far as all of you anti-gubmint types out there cheering on the privatizing of all of those municipal functions, if you live in one of those cities, you'd better learn to habla espanol quick.  This is another classic case of what's good for the smaller unit (the city in this case) is going to be awful for the larger one (the country.)  I can't think how diverting all of that tax money to immigrant families in foreign countries is an improvement over cycling it back through the US economic system.

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Re: Daily Digest - July 20

green_acres,

You lost me in your second paragraph.  How do you link anti-gubmint types with diverting all of that tax money to immigrant families in foreign countries?

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just when you thought things couldn't possibly get worse...

The fractured BP wellhead, site of the former Deepwater Horizon, has become the epicenter of frenetic attempts to quell the monstrous flow of methane.

The subterranean methane is pressurized at 100,000 pounds psi. According to Matt Simmons, an oil industry expert, the methane pressure at the wellhead has now skyrocketed to a terrifying 40,000 pounds psi.

Another well-respected expert, Dr. John Kessler of Texas A&M University has calculated that the ruptured well is spewing 60 percent oil and 40 percent methane. The normal methane amount that escapes from a compromised well is about 5 percent.

More evidence? A huge gash on the ocean floor—like a ragged wound hundreds of feet long—has been reported by the NOAA research ship, Thomas Jefferson. Before the curtain of the government enforced news blackout again descended abruptly, scientists aboard the ship voiced their concerns that the widening rift may go down miles into the earth.

That gash too is hemorrhaging oil and methane. It’s 10 miles away from the BP epicenter. Other, new fissures, have been spotted as far as 30 miles distant.

MORE

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Re: Daily Digest - July 20

Shelters turn away most homeless families

http://www.abc.net.au/news/stories/2010/07/21/2959524.htm?section=justin

Australia's homeless shelters are struggling to cope with demand, according to the latest national statistics.

The Australian Institute of Health and Welfare found up to 80 per cent of couples with children were turned away from shelters in 2008 and 2009 because they were already full.

The institute's Felicity Murdoch says that providing more beds will not necessarily solve the problem.

"Even though the data seems to indicate that a small number of additional places could alleviate the demand for accomodation, we've got evidence to suggest that that's not the case," she said.

"For example, people who are accomodated tend to stay for a long period, which means that none of the beds would become available again until those people leave the accomodation.

"What happens is that a lot of the beds that are available for family groups are taken up each day, and there seems to be no place where they can actually go to get out of the accomodation, given the lack of affordable accomodation in other areas."

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Re: just when you thought things couldn't possibly get ...
Damnthematrix wrote:

The fractured BP wellhead, site of the former Deepwater Horizon, has become the epicenter of frenetic attempts to quell the monstrous flow of methane.

The subterranean methane is pressurized at 100,000 pounds psi. According to Matt Simmons, an oil industry expert, the methane pressure at the wellhead has now skyrocketed to a terrifying 40,000 pounds psi.

Another well-respected expert, Dr. John Kessler of Texas A&M University has calculated that the ruptured well is spewing 60 percent oil and 40 percent methane. The normal methane amount that escapes from a compromised well is about 5 percent.

More evidence? A huge gash on the ocean floor—like a ragged wound hundreds of feet long—has been reported by the NOAA research ship, Thomas Jefferson. Before the curtain of the government enforced news blackout again descended abruptly, scientists aboard the ship voiced their concerns that the widening rift may go down miles into the earth.

That gash too is hemorrhaging oil and methane. It’s 10 miles away from the BP epicenter. Other, new fissures, have been spotted as far as 30 miles distant.

MORE

Check out the threads discussing this on The Oil Drum. This is errant nonsense and should not be uncritically repeated here. Considering that pressures are usually contained by rock overburden that provides about 1 psi per foot of depth, Simmons is talking about gas coming from 100,000 ft down. He seems to be off his meds.

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Re: Daily Digest - July 20

Check out the threads discussing this on The Oil Drum. This is errant nonsense and should not be uncritically repeated here. Considering that pressures are usually contained by rock overburden that provides about 1 psi per foot of depth, Simmons is talking about gas coming from 100,000 ft down. He seems to be off his meds.

+1

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Re: Daily Digest - July 20

Hey, Nate.  I guess I wasn't very clear about that.  I was thinking of all of those building maintenance, parks maintenance and janitorial and such jobs.  When they get contracted out I guarantee you most of the work will end up being done by imigrant labor.  A big chunk of those government funded wages will then go back to the families in the home country.  It's easy to look at a headline like that and think, "Oh, good, that'll save a lot of money by cutting out the wasteful gubmint."  Maybe so, at least to some extent, but there's also a downside.  At some point someone in this country has to work for a living.  We can't have an economy based on teaching each other aerobics and serving each other fast food and overpriced coffee.  (Or even on creating really informative and entertaining web sites.)

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Re: Daily Digest - July 20

"If stocks are going to go up by decree, regardless of reality, maybe that's where the prudent investor should position a portion of his wealth.  It's easier to understand once you realize you're not going to be allowed to profit on anything that the state doesn't approve of."

Not that I disagree with you, but where did you find any of this in the Bill Gross interview?

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Re: just when you thought things couldn't possibly get ...

Actually:

Simmons is talking about gas coming from 100,000 ft down. He seems to be off his meds.

That is not as silly as it seems if you regard abiotic gas and oil as realistic.  Note that the Russians drilled a heavily producing gas well in Novaya Zemlaya to 40,000 feet.  They drilled another in Kola that struck molten sulphur.

Our famous Deepwater Horizon got to 35,000 feet into production. 

http://www.deepwater.com/fw/main/IDeepwater-Horizon-i-Drills-Worlds-Deep...

Where are the fossil dinosaurs at that depth?  Give you a clue?  They are not there.  There are no fossils at that depth.  Anywhere.  No how.  No where.  Perhaps the fossils were brought in by UFOs and aliens.  This is abiotic oil that no one wants to admit exists.  It is under enormous pressure that cannot be controlled.  Politically and scientific dynamite.

Look at the enormous production of these ultra deep wells. 

http://www.allbusiness.com/energy-utilities/oil-gas-industry-oil-process...

Look at the huge production at the ultra deep Sakhalin wells in Russia:

http://www.huliq.com/19627/exxon-drills-world-s-deepest-well-at-its-russ...

This is the information that all the "peak oil" enthusiasts and "cap and trade" clowns want suppressed.  The public needs to be managed into paying higher prices for gas and oil because it is bad for the atmosphere. 

 

 

 

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Re: just when you thought things couldn't possibly get ...
printfaster wrote:

Actually:

Simmons is talking about gas coming from 100,000 ft down. He seems to be off his meds.

That is not as silly as it seems if you regard abiotic gas and oil as realistic.  Note that the Russians drilled a heavily producing gas well in Novaya Zemlaya to 40,000 feet.  They drilled another in Kola that struck molten sulphur.

Our famous Deepwater Horizon got to 35,000 feet into production. 

http://www.deepwater.com/fw/main/IDeepwater-Horizon-i-Drills-Worlds-Deep...

Where are the fossil dinosaurs at that depth?  Give you a clue?  They are not there.  There are no fossils at that depth.  Anywhere.  No how.  No where.  Perhaps the fossils were brought in by UFOs and aliens.  This is abiotic oil that no one wants to admit exists.  It is under enormous pressure that cannot be controlled.  Politically and scientific dynamite.

Look at the enormous production of these ultra deep wells. 

http://www.allbusiness.com/energy-utilities/oil-gas-industry-oil-process...

Look at the huge production at the ultra deep Sakhalin wells in Russia:

http://www.huliq.com/19627/exxon-drills-world-s-deepest-well-at-its-russ...

This is the information that all the "peak oil" enthusiasts and "cap and trade" clowns want suppressed.  The public needs to be managed into paying higher prices for gas and oil because it is bad for the atmosphere. 

printfaster,

I appreciate your opinion. However, The Oil Drum has much to say in opposition to the subject of abiotic oil. Watch the video that compliments the article, then go to The Oil Drum itself to read the discussion from it. This from 2005: -

[quote=]

Abiotic Snake Oil

Posted by Dave Cohen on November 4, 2005 - 7:25pm
Topic: Geology/Exploration
Tags: abiogenesis, abiotic oil, black lion, thomas gold, vietnam, white tiger [list all tags]

A few days ago, Energy Bulletin reported that CNBC hosts 'Deep Oil vs. Peak Oil' debate. This turned out to be brief dialogue between Matt Simmons and Craig R. Smith, author of Black Gold Stranglehold: The Myth of Scarcity and the Politics of Oil. This book promotes the theory of abiogenic petroleum formation as we see from this worldnetdaily.com blurb.

Smith and co-author Jerome Corsi contend in "Black Gold Stranglehold" that oil is not a product of decaying dinosaurs and prehistoric forests, but that oil is constantly being produced by the earth, far below the planet's surface, and that it is brought to attainable depths by the centrifugal forces of the earth's rotation.

The book seems to be a follow-up to Thomas Gold's 1998 book The Deep Hot Biosphere in which the maverick astronomer contends that

Gold's theory of oil formation, which he expounded in a book entitled The Deep Hot Biosphere, is that hydrogen and carbon, under high temperatures and pressures found in the mantle during the formation of the Earth, form hydrocarbon molecules which have gradually leaked up to the surface through cracks in rocks.

Here, we will examine some specific claims made by Smith during his CNBC debate (mov clip) with Simmons to see if they are true. We will defer a more theoretical discussion of abiotic oil claims to a later date but as a bonus, we'll learn something about petroleum geology as it relates to Vietnam's oil production where the alleged "super deep" oil comes from.

During the CNBC interview, Smith claimed that Vietnam's White Tiger and Black Lion fields proved that abiotic oil was a reality and used this argument to support his general claim that worldwide oil depletion is a fiction. More information is available at EIA's Vietnam Analysis Country Brief. These kinds of claims have been around for the last few years. Back in 2003, Julie Creswell wrote Oil Without End (orignally from Fortune Magazine 02/15/03) and reported

In the quiet waters off the coast of Vietnam lies an area known as Bach Ho, or White Tiger Field. There, and in the nearby Black Bear and Black Lion fields, exploration companies are drilling more than a mile into solid granite--so-called basement rock--for oil. That's a puzzle: Oil isn't supposed to be found in basement rock, which never rose near the surface of the earth where ancient plants grew and dinosaurs walked. Yet oil is there. Last year the White Tiger Field and nearby areas produced 338,000 barrels per day, and they are estimated to hold about 600 million barrels more.

So, the "mystery" here is that oil is being extracted from porous granite basement rock which has presumably always been deeply buried, not sedimentary (source) rock that was formed by the burial, heating, chemical transformation and compaction of organic matter.

Looking further, I consulted an article from the American Association of Petroleum Geologist's (AAPG) Explorer series entitled Vietnam Finds Oil in the Basement to find out what was really going on here. First, these offshore fields are producing.

Bach Ho (White Tiger), Vietnam's largest oilfield, produces almost 280,000 barrels of oil per day from granitoid basement.

Recently, a basement-reservoir play extension in the nearby Su Tu or "lion" fields generated wide industry interest.

The Su Tu Den (Black Lion) field currently produces about 80,000 barrels per day, but PetroVietnam expects to increase output to 200,000 barrels per day within three years.

But most importantly, what is the geological context?

Wallace G. Dow, an AAPG member and consultant in The Woodlands, Texas, calls the Cuu Long oil "paraffinic, classic lacustrine crude" expelled into fractured basement from lower source rock.

"The oils in the basement are virtually identical to the oils in the sandstone sitting around the basement," Dow said.

"This is the key -- they migrate updip through faults into the basement, in horst blocks," he said.

Dow emphasized that the oil's components indicate a lacustrine organic facies with lipid-rich, land-plant debris and fresh-water algal material, refuting theories of abiogenic origin in this area.

The bottom line is that the fractured basement granite containing the oil has been lifted up due to rifting and is now underlain by sandstone source rock. This is the source of the oil, which has migrated up into the basement granite. These fields are not examples of abiotic oil at all. For a rebuttal of abiotic oil, read Richard Heinberg's The "Abiotic Oil" Controversy.

What is disturbing is that these abiotic oil arguments are presented in the mainstream media (MSM, here CNBC) without any critical analysis. In the short interview format TV allows, Simmons was unable (or unwilling) rebut Smith's claim. Many fantastic and unbelievable claims are being put forward now as people scramble around to dispute oil depletion--abiotic oil is one of these. It is perhaps the most insidious of these false claims with its implicit promise that, to paraphrase Duffeyes, everything is OK because "God [the deep hot biosphere] will put more oil in the ground".

Quote:
If abiotic oil were a reality, would we be raging war in the one area of the planet where 60% of remaining oil is under the ground? A fair argument could be calculated by asking the question, "Would the United States and its allies have interests in Iran or Iraq if their soul export was carrots ... ?
... a quote worth noting from our information scout: -

"So the question is really not one of whether or not we will go after it, because we certainly will. The fact that Deepwater Horizon was drilling a field containing an estimated 12 hours of global oil consumption under a mile of water and an additional 3 miles of rock tells us everything we need to know about the state of depletion we are in..."

Please, watch Dr Albert A. Bartlett discussing Limits To Growth before replying to this post : -

Arithmetic, Population and Energy

http://video.google.com/videoplay?docid=4364780292633368976

I'll leave damnthematrix to explain his eloquant opinion on well pressure ...

~ VF ~

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Re: Daily Digest - July 20

*http://tinyurl.com/23puyqr

***Tadeusz W. Patzek and Gregory D. Croft**

Abstract

Based on economic and policy considerations that appear to be unconstrained by geophysics, the Intergovernmental Panel on Climate Change (IPCC) generated forty carbon production and emissions scenarios. In this paper, we develop a base-case scenario for global coal production based on the physical multi-cycle Hubbert analysis of
historical production data. Areas with large resources but little production history, such as Alaska and the Russian Far East, are treated as sensitivities on top of this base-case, producing an additional 125 Gt of coal. The value of this approach is that it provides a reality check on the magnitude of carbon emissions in a business-as-usual (BAU)
scenario. The resulting base-case is significantly below 36 of the 40 carbon emission scenarios from the IPCC. The global peak of coal production from existing coalfields is predicted to occur close to theyear 2011. The peak coal production rate is 160 EJ/y, and the peak carbon emissions from coal burning are 4.0 Gt C (15 Gt CO_2 ) per year. After 2011, the production rates of coal and CO_2 decline, reaching 1990 levels by the year 2037, and reaching 50% of the peak value in the year 2047. It is unlikely that future mines will reverse the trend predicted in this BAU scenario.

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Vanityfox451
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Re: Daily Digest - July 20

The Linked article by Richard Heinberg called The "Abiotic Oil" Controversy didn't work on the article in post #14,and is reproduced below : -

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The “Abiotic Oil” Controversy

by Richard Heinberg

In recent months a few of the many web sites that challenge the official account of the events of 9/11/2001 have also attacked the idea of peak oil. I would prefer to ignore this controversy—and there are good reasons for doing so, as some of these web sites lack credibility on other counts; nevertheless, as these sites are magnets for large numbers of people who are just beginning to find their way out of the consensus societal trance, they appear to be doing some palpable harm. I have received at least a couple of dozen e-mails from sincere people wanting to know my response to claims that “peak oil” is a scam, and that oil is actually an inexhaustible resource.

So, once and for all, here is my take on the abiotic oil controversy.

The Gist of the Situation

The debate over oil’s origin has been going on since the 19th century. From the start, there were those who contended that oil is primordial—that it dates back to Earth’s origin—or that it is made through an inorganic process, while others argued that it was produced from the decay of living organisms (primarily oceanic plankton) that proliferated millions of years ago during relatively brief periods of global warming and were buried under ocean sediment under fortuitous circumstances.

During the latter half of the 20th century, with advances in geophysics and geochemistry, the vast majority of scientists lined up on the side of the biotic theory. A small group of mostly Russian scientists—but including a tiny handful Western scientists, among them the late Cornell University physicist Thomas Gold—have held out for an abiotic (also called abiogenic or inorganic) theory. While some of the Russians appear to regard Gold as a plagiarist of their ideas, the latter’s book The Deep Hot Biosphere (1998) stirred considerable controversy among the public on the questions of where oil comes from and how much of it there is. Gold argued that hydrocarbons existed at the time of the solar system’s formation, and are known to be abundant on other planets (Jupiter, Saturn, Uranus, and some of their moons) where no life is presumed to have flourished in the past.

The abiotic theory holds that there must therefore be nearly limitless pools of liquid primordial hydrocarbons at great depths on Earth, pools that slowly replenish the reservoirs that conventional oil drillers tap.

Meanwhile, however, the oil companies have used the biotic theory as the practical basis for their successful exploration efforts over the past few decades. If there are in fact vast untapped deep pools of hydrocarbons refilling the reservoirs that oil producers drill into, it appears to make little difference to actual production, as tens of thousands of oil and gas fields around the world are observed to deplete, and refilling (which is indeed very rarely observed) is not occurring at a commercially significant scale or rate except in one minor and controversial instance discussed below.

The abiotic theorists also hold that conventional drillers, constrained by an incorrect theory, ignore many sites where deep, primordial pools of oil accumulate; if only they would drill in the right places, they would discover much more oil than they are finding now. However, the tests of this claim are so far inconclusive: the best-documented “abiotic” test well was a commercial failure.

Thus even if the abiotic theory does eventually prove to be partially or wholly scientifically valid (and that is a rather big “if”), it might have little or no practical consequence in terms of oil depletion and the imminent global oil production peak. That is the situation in a nutshell, as I understand it, and it is probably as much information as most readers will need or want on this subject. However, as this summary contradicts some of the more ambitious claims of the abiotic theorists, it may be helpful to present in more detail some of the evidence and arguments on both sides of the debate.

Oil at the Core?

Gold is right: there are hydrocarbons on other planets, even in deep space. Why shouldn’t we expect to find primordial hydrocarbons on Earth?

This is a question whose answer is only partly understood, and it is a complicated one. The planets known to have primordial hydrocarbons (mostly in the form of methane, the simplest hydrocarbon) lie in the further reaches of the solar system; there is little evidence of primordial hydrocarbons on the rocky inner planets (Mercury, Venus, Earth, and Mars). On the latter, possibly the hydrocarbons either volatized and escaped into space early in the history of the solar system, or—as Gold theorizes—they migrated to the inner depths. (Note: very recent evidence of methane in the atmosphere of Mars is being viewed as evidence of biological activity, probably in the distant past. (1)) There is indeed evidence for deep methane on Earth: it vents from the mid-oceanic ridges, presumably arising from the mantle, though the amount vented is relatively small—less than the amount emitted annually in cow farts (incidentally, there are persuasive biotic explanations for the origin of this vented methane).

A new study by the US Department of Energy and Lawrence Livermore Lab suggests that there may be huge methane deposits in Earth’s mantle, 60 to 120 miles deep. (2) But today oil companies are capable of drilling only as deep as six miles, and this in sedimentary rock; in igneous and metamorphic rock, drill bits have so far penetrated only two miles. (3) In any attempt to drill to a depth remotely approaching the mantle, well casings would be thoroughly crushed and melted by the pressures and temperatures encountered along the way. Moreover, the DOE study attributes the methane deposits it hypothesizes to an origin different from the one Gold described.

More to the point, Gold also claimed the existence of liquid hydrocarbons—oil—at great depths. But there is a problem with this: the temperatures at depths below about 15,000 feet are high enough (above 275 degrees F) to break hydrocarbon bonds. What remains after these molecular bonds are severed is methane, whose molecule contains only a single carbon atom. For petroleum geologists this is not just a matter of theory, but of repeated and sometimes costly experience: they speak of an oil “window” that exists from roughly 7,500 feet to 15,000 feet, within which temperatures are appropriate for oil formation; look far outside the window, and you will most likely come up with a dry hole or, at best, natural gas only. The rare exceptions serve to prove the rule: they are invariably associated with strata that are rapidly (in geological terms) migrating upward or downward. (4)

The conventional theory of petroleum formation connects oil with the process of sedimentation. And, indeed, nearly all of the oil that has been discovered over the past century-and-a-half is associated with sedimentary rocks. On the other hand, it isn’t difficult to find rocks that once existed at great depths where, according the theories of Gold and the Russians, conditions should have been perfect for abiotic oil formation or the accumulation of primordial petroleum—but such rocks typically contain no traces of hydrocarbons. In the very rare instances where small amounts of hydrocarbons are seen in igneous or metamorphic rocks, the latter are invariably found near hydrocarbon-bearing sedimentary rocks, and the hydrocarbons in both types of rock contain identical biomarkers (more on that subject below); the simplest explanation in those cases is that the hydrocarbons migrated from the sedimentary rocks to the igneous-metamorphic rocks.

Years ago Thomas Gold recognized that the best test of the abiotic theory would be to drill into the crystalline basement rock underlying later sedimentary accumulations to see if there is indeed oil there. He persuaded the government of Sweden in 1988 to drill 4.5 miles down into granite that had been fractured by a meteorite strike (the fracturing is what permitted drillers to go so deep). The borehole, which cost millions to drill, yielded 80 barrels of oil. Even though the project (briefly re-started in 1991) was a commercial failure, Gold maintained that his ideas had been vindicated. Most geologists remained skeptical, however, suggesting that the recovered oil likely came from drilling mud.

The Russians (I must remind the reader that I am actually talking about a minority even with the community of Russian geologists) claim successes in drilling in basement rock in the Dneiper-Donets Basin in the Ukraine. Professor Vladilen A. Krayushkin, Chairman of the Department of Petroleum Exploration, Institute of Geological Sciences, Ukrainian Academy of Sciences, Kiev, and leader of the exploration project, wrote:

The eleven major and one giant oil and gas fields here described have been discovered in a region which had, forty years ago, been condemned as possessing no potential for petroleum production. The exploration for these fields was conducted entirely according to the perspective of the modern Russian-Ukrainian theory of abyssal, abiotic petroleum origins. The drilling which resulted in these discoveries was extended purposely deep into the crystalline basement rock, and it is in that basement where the greatest part of the reserves exist. These reserves amount to at least 8,200 M metric tons [65 billion barrels] of recoverable oil and 100 B cubic meters of recoverable gas, and are thereby comparable to those of the North Slope of Alaska. (5)

 

However, independent assessments of the situation do not support these claims. First, the US Geological Survey does not agree that the Dneiper-Donets reserves are that large (it cites 2.7 billion barrels for total oil endowment). Second, the appearance of oil in basement rocks is unusual but not unheard of, and there are various ways in which oil can appear in basement rock. In the process of drilling through overlying sedimentary rock, oil can be expelled downward so that it appears to come from below. Then there are situations where igneous or metamorphic rocks have migrated upward, or sedimentary rocks have migrated downward, so that basement rock covers sedimentary rock (in some cases, the overthrust may be hundreds of square kilometers in extent). In his paper “Oil Production from Basement Reservoirs—Examples from USA and Venezuela,” Tako Koning of Texaco Angola, Inc., cites source rocks such as marine shales in nearly all instances. (6) More to the point, numerous studies cite the existence of sedimentary source rocks in the Dneiper-Donets region. (7)

Refilling Fields?

Abiotic theorists often point out evidence of fields refilling. The most-cited example is Eugene Island, the tip of a mostly submerged mountain that lies approximately 80 miles off of the coast of Louisiana. Here is the story as related by Chris Bennett in his article “Sustainable Oil?” on WorldNetDaily.com:

A significant reservoir of crude oil was discovered nearby in the late ’60s, and by 1970, a platform named Eugene 330 was busily producing about 15,000 barrels a day of high-quality crude oil. By the late ’80s, the platform’s production had slipped to less than 4,000 barrels per day, and was considered pumped out. Done. Suddenly, in 1990, production soared back to 15,000 barrels a day, and the reserves which had been estimated at 60 million barrels in the ’70s, were recalculated at 400 million barrels. Interestingly, the measured geological age of the new oil was quantifiably different than the oil pumped in the ’70s. Analysis of seismic recordings revealed the presence of a “deep fault” at the base of the Eugene Island reservoir which was gushing up a river of oil from some deeper and previously unknown source. (8)

 

A “river of oil” from an unassociated deep source? This does sound promising. But closer examination yields more prosaic descriptions and explanations.

According to David S. Holland, et al., in Search and Discovery, the reservoir is characterized by

1. Structural features dominated by growth faults, salt domes, and salt-related faulting.
2. Thick accumulations of predominantly deltaic deposits of alternating sand and shale.
3. Young reservoirs (less than 2.5 m.y. old) with migrated hydrocarbons whose origins are in deeper, organic-rich marine shales.
4. Rapidly changing stratigraphy, due to deposition and subsequent reworking.
5. Numerous oil and gas fields with stacked reservoirs, long hydrocarbon columns, and high producing rates. (9)

 

While it is true that the estimated oil reserves of Eugene have increased, the numbers are not extraordinary. The authors note that “From 1978 to 1988, these operations, activities, and natural factors [including better exploration and recovery technology] have increased ultimate recoverable reserves from 225 million bbl to 307 million bbl of hydrocarbon liquids and from 950 bcf to 1.65 tcf of gas.” Other estimates now put the estimate of total recoverable oil as high as 400 Mb.

None of this is especially unusual for a North American oil field: most fields report reserve growth over time as a consequence of Securities and Exchange Commission reporting rules that require reserves to be booked yearly according to what portion of the resource is actually able to be extracted with current equipment in place. As more wells are drilled into the same reservoir, the reserves “grow.” Then, as they are pumped out, reserves decline and production rates dwindle. No magic there.

Production from Eugene Island had achieved 20,000 barrels per day by 1989; by 1992 it had slipped to 15,000 b/d, but recovered to reach a peak of 30,000 b/d in 1996. Production from the reservoir has dropped steadily since then.

The evidence at Eugene Island suggests the existence of deep source rocks from which the reservoir is indeed very slowly refilling—but geologists working there do not hypothesize a primordial origin for the oil. In “Oil and Gas—‘Renewable Resources’?” Kathy Blanchard of PNL writes, “Recent geochemical research at Woods Hole Oceanographic Institution has demonstrated that the wide range in composition of the oils in different reservoirs of the Eugene Island 330 field can be related to one another and to a deeper source rock of Jurassic-Early Cretaceous age.” (10) Her article explains that this kind of migration from nearby source rocks is hardly unique, and discusses it in the context of conventional biotic theory. A technical paper by David S. Holland et al., “Eugene Island Block 330 Field—U.S.A. Offshore Louisiana,” published by AAPG, notes that the Eugene Island oils show abundant evidence of long-distance vertical migration. Based on a variety of biomarker and gasoline-range maturity indicators, these oils are estimated to have been generated at depths of 4572 to 4877 m (15,000 to 16,000 ft) at vitrinite reflectance maturities of 0.08 to 1.0% and temperatures of 150 to 170°C (300 to 340°F). Their presence in shallow, thermally immature reservoirs requires significant vertical migration. This is illustrated on Figure 36, which represents a burial and maturation history for the field at the time of petroleum migration, that is, at the end of Trimosina “A” time approximately 500,000 years ago. A plot of the present measured maturity values versus depth is superimposed on the calculated maturity profile for Trimosina “A” time to illustrate the close agreement between measured and predicted maturity profiles. The clear discrepancy between reservoir maturity and oil maturity is striking and suggests that the oil migrated more than 3650 m (12,000 ft) from a deep, possibly upper Miocene, source facies. Petroleum migration along faults is indicated based on the observed temperature and hydrocarbon anomalies at the surface and the distribution of pay in the subsurface. These results are consistent with those of Young et al. (1977), who concluded that most Gulf of Mexico oils originated 2438 to 3350 m (8000 to 11,000 ft) deeper than their reservoirs, from source beds 5 to 9 million years older than the reservoirs. (11)

Biomarkers

The claims for the abiotic theory often seem overstated in other ways. J. F. Kenney of Gas Resources Corporations, Houston, Texas, who is one of the very few Western geologists to argue for the abiotic theory, writes, “competent physicists, chemists, chemical engineers and men knowledgeable of thermodynamics have known that natural petroleum does not evolve from biological materials since the last quarter of the 19th century.” (12) Reading this sentence, one might assume that only a few isolated troglodyte pseudoscientists would still be living under the outworn and discredited misconception that oil can be formed from biological materials. However, in fact universities and oil companies are staffed with thousands of “competent physicists, chemists, chemical engineers and men knowledgeable of thermodynamics” who not only subscribe to the biogenic theory, but use it every day as the basis for successful oil exploration. And laboratory experiments have shown repeatedly that petroleum is in fact produced from organic matter under the conditions to which it is assumed to have been subjected over geological time. The situation is actually the reverse of the one Kenny implies: most geologists assume that the Russian abiotic oil hypothesis, which dates to the era prior to the advent of modern plate tectonics theory, is an anachronism. Tectonic movements are now known to be able to radically reshuffle rock strata, leaving younger sedimentary oil- or gas-bearing rock beneath basement rock, leading in some cases to the appearance that oil has its source in Precambrian crystalline basement, when this is not actually the case.

Geologists trace the source of the carbon in hydrocarbons through analysis of its isotopic balance. Natural carbon is nearly all isotope 12, with 1.11 percent being isotope 13. Organic material, however, usually contains less C-13, because photosynthesis in plants preferentially selects C-12 over C-13. Oil and natural gas typically show a C-12 to C-13 ratio similar to that of the biological materials from which they are assumed to have originated. The C-12 to C-13 ratio is a generally observed property of petroleum and is predicted by the biotic theory; it is not merely an occasional aberration. (13)

In addition, oil typically contains biomarkers—porphyrins, isoprenoids, pristane, phytane, cholestane, terpines, and clorins—which are related to biochemicals such as chlorophyll and hemoglobin. The chemical fingerprint of oil assumed to have been formed from, for example, algae is different from that of oil formed from plankton. Thus geochemists can (and routinely do) use biomarkers to trace oil samples to specific source rocks.

Abiotic theorists hypothesize that oil picks up its chemical biomarkers through contamination from bacteria living deep in the Earth’s crust (Gold’s “deep, hot biosphere”) or from other buried bio-remnants. However, the observed correspondences between biomarkers and source materials are not haphazard, but instead systematic and predictable on the basis of the biotic theory. For example, biomarkers in source rock can be linked with the depositional environment; that is, source rocks with biomarkers characteristic of land plants are found only in terrestrial and shallow marine sediments, while petroleum biomarkers associated with marine organisms are found only in marine sediments.

The Bottom Line

The points discussed above represent a mere sampling of the issues; it would be difficult if not impossible for me to address all of the arguments put forward by the abiotic theorists in a brief essay of this nature. I circulated a draft of this essay on two energy-related email newsgroups and received about a dozen thoughtful comments, some defending the abiotic theory but most critiquing it. About half of the comments were from physicists, geophysicists, or geologists. It quickly became apparent to me that a book-length treatment of the subject is called for.

J. F. Kenney has put forward a succinct and persuasive paper arguing for the abiotic theory (5), but there is no prominently published rebuttal piece that systematically discusses or attempts to refute his assertions. A reader of Kenney’s web site might find fault with some of my statements in this essay (for example, as a counter to my description of the depth “window” of oil formation, a reader might refer to Kenney’s discussion of Russian experiments that have shown that oil can be formed at high temperatures and high pressures—conditions similar to those that must exist in the Earth’s mantle). Yet among the draft comments I received from scientists were convincing criticisms of Kenney’s claims (returning to my example: even if oil were formed in the mantle, as more than one commenter pointed out, abiotic theorists have suggested no plausible means by which it could rise to the depths at which we find it without passing through intermediary regions in which the temperature would be too high and pressure too low for liquid hydrocarbons to survive). Many other assertions by Kenney and critiqued by the experts are more technical in nature and more difficult to summarize.

So, rather than continuing along these lines, I would prefer now to pull back from a focus on details and again emphasize the bigger picture.

There is no way to conclusively prove that no petroleum is of abiotic origin. Science is an ongoing search for truth, and theories are continually being altered or scrapped as new evidence appears. However, the assertion that all oil is abiotic requires extraordinary support, because it must overcome abundant evidence, already cited, to tie specific oil accumulations to specific biological origins through a chain of well-understood processes that have been demonstrated, in principle, under laboratory conditions.

Now, I like scientific mavericks; I tend to cheer for the underdog. Peak oil is itself a maverick position, and for the past several years I have been promoting a view that the Wall Street Journal recently described as “crackpot.” (14) So I feel a bit unaccustomed and even uncomfortable now to be on the side of the scientific “establishment” in arguing against the abiotic oil theorists. The latter certainly deserve their day in the court of scientific debate.

Perhaps one day there will be general agreement that at least some oil is indeed abiotic. Maybe there are indeed deep methane belts twenty miles below the Earth’s surface. But the important question to keep in mind is: What are the practical consequences of this discussion now for the problem of global oil depletion?

I have not personally inspected the oil wells in Saudi Arabia or even those in Texas. But nearly every credible report that I have seen—whether from the industry or from an independent scientist—describes essentially the same reality: discoveries are declining, and have been since the 1960s. Spare production capacity is practically gone. And the old, super-giant oil fields that the world depends upon for the majority of its production are nearing or past their all-time production peaks. Not even the Russian fields cited by the abiotic theorists as evidence for their views are immune: in June the head of Russia’s Federal Energy Agency said that production for 2005 is likely to remain flat or even drop, while other officials in that country have said that growth in Russian production cannot be sustained for more than another few years. (15)

What if oil were in fact virtually inexhaustible—would this be good news? Not in my view. It is my opinion that the discovery of oil was the greatest tragedy (in terms of its long-term consequences) in human history. Finding a limitless supply of oil might forestall nasty price increases and catastrophic withdrawal symptoms, but it would only exacerbate all of the other problems that flow from oil dependency—our use of it to accelerate the extraction of all other resources, the venting of CO2 into the atmosphere, and related problems such as loss of biodiversity. Oil depletion is bad news, but it is no worse than that of oil abundance.

Given the ongoing runup in global petroleum prices, the notion of peak oil hardly needs defending these days. We are seeing the phenomenon unfold before our eyes as one nation after another moves from the column of “oil exporters” to that of “oil importers” (Great Britain made the leap this year). At some point in the very near future the remaining nations in column A will simply be unable to supply all of the nations in column B.

In short, the global energy crisis is coming upon us very quickly, so that more time spent debating highly speculative theories can only distract us from exploring, and applying ourselves to, the practical strategies that might preserve more of nature, culture, and human life under the conditions that are rapidly developing.

Footnotes

1. See New Scientist www.newscientist.com/news/news.jsp?id=ns99996425
2. www.eurekalert.org/pub_releases/2004-09/dlnl-mid091304.php
3. wow.osu.edu/Geology/ebmf.htm
4. See Kenneth Deffeyes, Hubbert’s Peak, pp. 21-22, 171; Walter Youngquist, Geodestinies, p. 114.
5. www.gasresources.net/energy_resources.htm
6. www.dur.ac.uk/react.res/RRG_web/hydrocarbons_meet.htm
7. www.911-strike.com/pfeiffer.htm (link expired; click on “cached”)
8. www.wnd.com/news/article.asp?ARTICLE_ID=38645
9. #20003, 1999, www.searchanddiscovery.com/documents/97015/eugene.htm
10. www.pnl.gov/er_news/08_95/er_news/oil1.kb.html
11. www.datapages.com/97015/eugene.htm
12. See footnote 9.
13. www.giss.nasa.gov/gpol/abstracts/1997/FungFieldB.html
14. “As Prices Soar, Doomsayers Provoke Debate on Oil’s Future,” 9/21/2004
15. www.mosnews.com/money/2004/06/17/oilproduction.shtml

Richard Heinberg is the author of Powerdown: Options and Actions for a Post-Carbon World

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