When it comes to listening to the news media, there are two stupid things a person can do:
1. Assume that everything that the media says is correct.
2. Assume that everything that the media says is wrong.
© 2006 Neil McKenzie Cameron, http://one-salient-oversight.blogspot.com/
FAQ about the author
This work is licensed under a Creative Commons Attribution-NoDerivs 2.5 License.
I can now reveal to you all some of the events that have been bothering me and the family for a while - I have accepted a job offer to teach at Griffith High School. This is only a temporary position that will last until the end of the year, but there is a decent chance that I may be able to find some more permanent work at the same school over the long term.
I will begin teaching on July 31st - day 1 at the High School. The family will remain behind in Newcastle for most of third term and then will move in with me during the holidays between terms 3 and 4 (October 1-15).
The reason for Anna and the kids to stay behind is pragmatic - Anna has a two-day per week position at Centrelink where she works as a Social Worker. For her to leave her job straight away and for all of us to travel to Griffith without the promise of full-time employment (or even accomodation) is too risky. But it also means that we'll be apart for a long period, which sucks.
I've contacted a church in Griffith that looked good and discovered that I was at Bible College with the pastor's wife back in the early nineties. She then informed me that a married couple, graduates of the college, have been attending the church for a few years, which means that three people I went to Bible College with are at the church.
All this is huge. I have given both the pastor and my future head teacher at the High School this blogsite address so they can see pictures of me and read my FAQ to find out more about me. Hello to both of you.
There's a number of friends I haven't spoken to directly about this yet so sorry but things have been a bit hectic.
There are other major issues that still bother us - but these shall be revealed presently. In the meantime thanks for your prayers.
Jason Gillespie is finally taking wickets for Yorkshire.
After his recent scores of 161 not out and 63 not out against Pakistan A, Shane Watson's first class batting average is now over 50, making him a contender for the Australian middle order. His bowling, however, is not as developing as well.
Big scores have been seen all around county grounds in England, the most impressive being 309 not out by South African Test discard Hylton Ackerman.
Jim Troughton, the grandson of Patrick Troughton (Dr. Who), is not scoring enough runs for Warwickshire at present.
Ian Sailsbury, the forgotten English legspinner, is taking lots of wickets for Surrey this season.
22 year-old Victorian captain Cameron White is captaining Somerset this season, and is averaging nearly 50 with the bat. Unfortunately his bowling average is 76. FAC (Future Australian Captain) has probably been written on his locker.
Standout Aussies in England at the moment:
Michael DiVenuto (Derbyshire), 636 runs at 45.42
Andy Bichel (Essex), 12 wickets at 20.25
Mark Cosgrove (Glamorgan), 750 runs at 62.50
Ian Harvey (Gloucestershire), 479 runs at 68.42, 13 wickets at 23.76
Shane Warne (Hampshire), 30 wickets at 19.03
Brad Hodge (Lancashire), 505 runs at 101.00
Stuart Law (Lancashire), 520 runs at 57.77
Matthew Nicholson (Northamptonshire), 305 runs at 30.50, 22 wickets at 27.36
Craig White (Somerset), 747 runs at 53.35
Murray Goodwin (Sussex), 912 runs at 60.80
Phil Jaques (Worcestershire), 921 runs at 102.33
Matthew Mason (Worcestershire), 13 wickets at 23.92
Darren Lehmann (Yorkshire), 898 runs at 69.07
Jason Gillespie (Yorkshire), 23 wickets at 33.65
I've been having an email conversation with a Christian guy about the subject of Peak Oil. I responded to many of his questions in a fairly detailed way and, as a result, I have decided (with his permission and the editing of certain things) to post much of the dialogue here since I think it would be helpful to some people (click "Read more")
Hello Pete,
Some practical questions if i might. Do you think it would be wise to stop putting extra funds into super and redirect them instead to mortgage payments?? What do you think will probably happen to superfunds. (Mine "matures" in a few years - if I take early retirment.) Would investing in land be wise - perhaps from a practical and financial point of view??(At least it provides a fallback position if food does become scare. Market gardens could help feed the church and supplement communty food stocks) Is there any point in investing in anything??
I feel very unsure about specific questions like this but I will attempt to answer them the best way I can.
All funds, as far as I know, have some level of "balance" in them between things like shares, property, bonds, cash and overseas investments. The economic damage wrought by Peak Oil will naturally affect people's investments, but there is one thing we can probably count on and that is the increase of interest rates.
As the price of oil increases so will the inflationary effect. As you probably know, it is the responsibility of the Reserve Bank to control inflation, and it does this via interest rates. If the bank sees inflationary pressures increasing (and it will as the peak closes in and passes by) then they will increase interest rates in order to solve inflation.
The financial organisations that control your super have a responsibility to look after your funds properly, and there are mechanisms in place to ensure that money is taken out of poorly performing investments and re-invested into better performing ones.
This is important for all of us because it means that when interest rates rise, it becomes more attractive for investors to put money into the government bond market. Simultaneously, the dampening effect that higher interest rates have upon the economy will result in poorer performing investments in property and shares.
What I'm saying is that your super fund should react to the rising of interest rates by putting more money into government bonds, thus preserving the funds that are entrusted to its control. The returns may not be stellar, but they will be relatively safe. Riskier investments will lose out more, though, since the balance of the investments will be in shares and property and overseas shares.
***Don't sell your house.*** Although the property market will suffer as well (probably doubly so considering the property bubble that has developed over the last 5-6 years), it is actually those purchasing houses for investment that will suffer the most. People who live in the houses that they have mortgages on will naturally suffer a loss of equity, but these homeowners are much better off keeping their house to live in. In the meantime they should pay off their mortgage ASAP, because interest rates will increase as the peak gets closer.
In response to Peak Oil, a friend has changed his mortgage and is seriously trying to pay off as quick as he can. He often laments about buying his house but I'm always quick to remind him that ordinary homeowners are not all going to go bankrupt because they have mortgages.
Another thing to avoid would be borrowing against equity. Again, this sort of thing will become increasingly rare as interest rates rise.
It's hard to say whether you should invest in "land" because after the peak some land will be less valuable and some will be more. Property in areas far from the urban centre and reliant almost exclusively upon cars for transport will become less valuable since it will become more expensive for people in these areas to travel to and from work. Conversely, properties around public transport, such as train stations and major bus routes, will probably increase in value since transport will become cheaper for these people.
The increase in transport costs will affect global trade. It will become increasingly more cost efficient to produce goods closer to where the customers live. Thus it is also likely that industrial production in Australia will increase to provide Australians with basic goods, while sourcing these from places like Asia will become less viable. This doesn't mean that global trade will stop, or that Australians will no longer buy things from China or Japan, but it does mean that there will be a readjustment that will favour Australian industry.
The most obvious place for buying shares would be in mining companies, especially those who specialise in oil, coal and natural gas. As energy prices skyrocket, these companies will make large profits, and shareholders will make a killing.
I know you think ecovillages are overkill(though personally they have always appealed to me and I think the simple,sustainable and communal aspects are in fact a more God honouring way of living) but at the least ,wouldnt it be wise to "ecofarm" your back yard ,put in a water tank and perhaps some solar panels etc to help counteract the massive energy and food price rises??
None of these suggestions would hurt but you probably need to work out the opportunity cost of time spent cultivating your own backyard garden compared with what you could do doing other things. As food prices increase so will the response of the market - farmers will start to grow more food and employ more people to do it. Only if vegetables are exceptionally expensive would it be wise to set up your own backyard garden - and by that time there are probably people dying of starvation.
I'm not saying don't do it (that is, set up a backyard garden), but just remember that it may not be necessary.
Solar power is probably a good idea. As energy costs rise so will our electicity bills, making solar power more economically viable.
Which jobs do you think will be safest? Do you think christian and non elite private schools will close? What skills would be wise to learn ?eg Permaculture?? I was planning to spend a year or two upgrading my Tesol qualifications but Im wondering if there is any point??
All these are interesting questions. The friend I mentioned who is concerned about Peak Oil has decided that he will pull his son out of his Christian school at the end of this year and instead send him to the local primary school so that they can free up more funds to pay off their mortgage. Privatised and independent education has increased markedly in the last 10-15 years and, as people's disposable income is eroded through higher interest rates and/or unemployment, many may well choose to send their kids to public schools. I think this is a real possibility and I can foresee many independent schools closing as a result. However, there will still be rich people and they will always have enough money to send their kids to private schools, so the chances are that many of these parents will "downgrade" to a private school of lesser stature.
There is no doubt that our highly specialised economy, whereby the market rewards those with specialist qualifications, will begin to tilt towards those with multiple skills the further along the peak we go. In order to save money, people will begin to do things themselves and this will reward people who are competent in multiple skills.
I don't think that the peak will bring about a complete destruction of western society and its economy - there will still be a great need for specialist training, but the situation will tilt against them (ie they won't be as financially better off).
I have no idea about Permaculture and whether it would be a good thing to get into or not. I'm not convinced that we're going to have to set up backyard farms unless there is a major catastrophe. Even 100 years ago the best way to farm was for large scale agribusiness selling its wares in the marketplace.
I can't speak for you about your TESOL qualification. I will point out, however, that NESB Australians will always be better off financially and socially if they have a good grasp of the English language. As the peak approaches and passes, and as the economy goes into its tailspin, I think there probably will be a serious demand for TESOL.
My son is living and teaching English overseas. Is it possible he might get stranded there?(When airlines collapse/become too expensive for the middle class)Perhaps it would it be wise to suggest to him to come home at the first big sign/s of trouble?What might those signs be?
From the tone of your question I would assume that maybe you think that the peak will be accompanied by some massive economic and social collapse. My feeling is that it won't. The world is NOT going to suddenly run out of oil. If you haven't understood it so far, try to understand the science behind Peak Oil - the situation will not be a sudden loss of oil, but a long term and gradual decline. This means that the pain will be felt over a longer period.
There is no doubt that many airlines will go under. The cost of ferrying people around the world will become so expensive that many people will stop flying, thus depriving the airline industry of revenue. But with each collapse of an airline, the supply of air travel will reduce, thus making the surviving airlines better off. I don't know how many airlines will go under but it won't be all of them - in fact I think it may be less than half (and many will amalgamate in order to survive).
All I'm saying is that the chances of someone being stranded somewhere because of some sudden airlines collapse is actually very, very rare. Even if air travel becomes prohibitive, travel by ship will become more viable. We may even return to the pre-ww2 days of ship transport rather than airlines.
As I said about your TESOL work, a common language is important for world trade and I think that English teaching will become quite important amongst non-English speakers.
As far as the first sign of trouble - it's been going on since 2004. It's the price of oil. Every few months we hear some "expert" saying that the price rise is only temporary and will be back around $20 in no time. But that hasn't happened. While the oil price fluctuates according to certain crises (eg: Hurricanes detroying oil infrastructre in the Gulf of Mexico; threats of violence from Iran; Israel invading Lebanon; Gunmen attacking oil rigs off the coast of Nigeria... etc), there are also price hikes due to the basic issue of supply and demand.
What I'm saying is that the oil price has gone up and down all the time for the past few decades in response to various world events. In the last two years, however, the price has been steadily going up, which means that there is something else influencing oil. In my opinion it is due to the fact that demand is increasingly outstripping supply.
What we will see in the next few decades is stubbornly high oil prices and interest rates set at levels that cause recessions and hinder recoveries. During a recession, oil prices will actually come down but they will not come down far enough. We won't see a return to the inflation that we experienced in the 1970s because Central Banks the world over (including the US Federal Reserve and our own reserve bank) know how to fight inflation - by raising interest rates. In place of inflation, however, we will have unemployment.
Not a good situation is it? I'm fairly certain that the world will survive this, however. It won't survive unscathed, but my honest opinion is that we will not be returning to medieval fuedalism.
From the Peaknik Department
© 2006 Neil McKenzie Cameron, http://one-salient-oversight.blogspot.com/
FAQ about the author
This work is licensed under a Creative Commons Attribution 2.5 License.
There are some implications of this research that I did tonight. But I'll leave it to later.
I will point out that these statistics clearly show that consumption is always greater than production - although I don't know how this is scientifically possible. Nevertheless, I am assuming that this is merely a statistical characteristic common in this field of study.
What is important in this research is the "%Cons" column. What this column reveals is the "shortfall" between consumption and supply, shown as a percentage of consumption. For the 1970 figures, 45.89 mbd was produced and 46.81 mbd consumed, leaving a shortfall of 0.92mbd, or -1.97% of consumption.
The really frightening thing about this research is the increasing percentage of consumption that is falling short. As time goes on, the difference goes beyond 10% and in recent times has gone as high as 14%. This means that there is an ever-increasing gap between oil produced and oil consumed.
In layman's terms, it means that consumption is increasing faster than production.
(note: someone else may have done this research before me and may be available elsewhere)
--------------------
Prod = World Oil Production, Millions of Barrels per day (source EIA)
Cons = World Oil Consumption, MBD (Source EIA)
Diff = Difference between production and consumption
%Cons = Difference as Percent of Consumption
-
| Year | Prod | Cons | Diff | % cons |
| 1970 | 45.89 | 46.81 | -0.92 | -1.97% |
| 1971 | 48.52 | 49.42 | -0.90 | -1.82% |
| 1972 | 51.14 | 53.09 | -1.95 | -3.67% |
| 1973 | 55.68 | 57.24 | -1.56 | -2.73% |
| 1974 | 55.72 | 56.68 | -0.96 | -1.69% |
| 1975 | 52.83 | 56.20 | -3.37 | -6.00% |
| 1976 | 57.34 | 59.67 | -2.33 | -3.90% |
| 1977 | 59.71 | 61.83 | -2.12 | -3.43% |
| 1978 | 60.16 | 64.16 | -4.00 | -6.23% |
| 1979 | 62.67 | 65.22 | -2.55 | -3.91% |
| 1980 | 59.60 | 63.11 | -3.51 | -5.56% |
| 1981 | 56.08 | 60.94 | -4.86 | -7.98% |
| 1982 | 53.48 | 59.54 | -6.06 | -10.18% |
| 1983 | 53.26 | 58.78 | -5.52 | -9.39% |
| 1984 | 54.49 | 59.83 | -5.34 | -8.93% |
| 1985 | 53.98 | 60.09 | -6.11 | -10.17% |
| 1986 | 56.23 | 61.83 | -5.60 | -9.06% |
| 1987 | 56.67 | 63.13 | -6.46 | -10.23% |
| 1988 | 58.74 | 65.00 | -6.26 | -9.63% |
| 1989 | 59.86 | 66.10 | -6.24 | -9.44% |
| 1990 | 60.57 | 66.58 | -6.01 | -9.03% |
| 1991 | 60.21 | 67.20 | -6.99 | -10.40% |
| 1992 | 60.21 | 67.45 | -7.24 | -10.73% |
| 1993 | 60.24 | 67.54 | -7.30 | -10.80% |
| 1994 | 60.99 | 68.85 | -7.86 | -11.42% |
| 1995 | 62.33 | 70.02 | -7.69 | -10.98% |
| 1996 | 63.71 | 71.62 | -7.91 | -11.04% |
| 1997 | 65.69 | 73.42 | -7.73 | -10.53% |
| 1998 | 66.92 | 74.09 | -7.17 | -9.68% |
| 1999 | 65.85 | 75.83 | -9.98 | -13.16% |
| 2000 | 68.34 | 76.95 | -8.91 | -11.58% |
| 2001 | 67.87 | 77.70 | -9.83 | -12.65% |
| 2002 | 66.78 | 78.46 | -11.68 | -14.89% |
| 2003 | 69.15 | 80.10 | -10.95 | -13.67% |
| 2004 | 72.46 | 82.60 | -10.14 | -12.28% |
| 2005 | 73.51 | 83.94 | -10.43 | -12.43% |
| 2006 | 73.76a. c.
| 84.67b. d.
| -10.91 | -12.89% |
a. Jan-Mar figures
b. Jan-Feb figures. My own estimation based on OECD figures being approx. 59% of world consumption
c. 2004 - 2006 Production Data can be found here - pdf file 14.2kb
d. 2004 - 2006 Consumption Data can be found here - pdf file 16.4kb
Update 17 July 2006:
A comments thread at Sydney Peak Oil has been discussing this article, specifically addressing the shortfall between production and consumption. I think it is important to make a comment here about the issue.
It has been put forward that the reason why such a disparity exists is because the two sources that I have used are actually measuring different things. The production figures refer to "crude oil" production while the consumption figures refer to "petroleum" consumption. Specifically, the issue of Natural Gas Liquids (NGLs) and the fact that they are not included in the EIA Production figures.
I am willing to agree that the disparity may be due to this particular issue. However it needs to be pointed out that the production figures do include "condensate", which is the raw liquid that NGLs are produced from. I suspect that the reason why NGLs are not included in the production list is because it would involve double counting - the condensate would be included, which is then refined and turned into NGLs.
What this means is that NGLs are included in the production figures via the inclusion of condensate. The real questions is whether the consumption figures include condensate only, or also include the NGLs that are derived from the condensate. The latter case would be a possibility considering that the consumption figures are labeled as "Petroleum" rather than as "Crude Oil".
But this then begs the question of whether the statistical analysis itself is misleading since it would be counting things twice. To include NGLs in the consumption figures and not in the production figures would mean that the consumption figures are being counted twice. I doubt that this is going on, mainly because the market benchmark for measuring NGLs such as Butane, Propane and Ethane is in Gallons, while the benchmark used in the EIA consumption figures is Barrels. It would be very strange to a) count something twice, and then b) to refer to the whole (crude oil, condensate and NGLs) in terms only applicable to crude oil.
So while I have offered a reason why one explanation is probably incorrect, I have yet to offer my own explanation of why a disparity exists between production and consumption.
I think it has to do with the way in which the market measures both production and consumption.
Production would be measured in how many barrels of oil have been pumped into tankers, while consumption may be measured in terms of financial transactions. In other words, consumption is actually measured first (in terms of contracts specifying how much oil is to be delivered) and then production follows.
Which means. of course, that in a given year, say the year 1999, 75.83 mbd was agreed upon, and 65.85mbd actually produced.
The important thing to realise is that the contracts may be agreed upon in one year, and then delivered the year after. A contract may be agreed upon in December 1999, and then delivered in Feburary 2000. In terms of the statistics, the consumption contract would appear in the consumption figures for 1999, but the production figures would appear in 2000.
If this is true (and remember I am only offering this as a possible explanation), then the increasing disparity between production and consumption that is noted in my figures can probably be explained by the inability of the oil producers to fulfil their contracts since oil production is not meeting demand. In this case, the contracts may be signed in September, but not delivered until February - a longer lag in delivery time that is caused by slower production.
I am prepared to be proven wrong in this - mainly because I am offering a theory and not anything based on rock solid proof. It would be great if the EIS or Peak Oil bigwigs could offer an explanation. I'm sure that ASPO has been aware of this disparity for some time.
Further Update 17 July 2006:
The Wikipedia article on Petroleum indicates that Crude Oil and Petroleum are synonymous terms - they can be used interchangably. This doesn't offer any reason why the EIA chose to use both names in the production and consumption reports, unless it is the industry's way of talking about the product still in the ground (Crude Oil) and the product that is shipped and consumed (Petroleum).
From the Peaknik Department
© 2006 Neil McKenzie Cameron, http://one-salient-oversight.blogspot.com/
FAQ about the author
This work is licensed under a Creative Commons Attribution-NoDerivs 2.5 License.
This is from a recent article in Salon:
In a hearing before Shays' Government Reform subcommittee last February, Provance testified that the Army had retaliated against him. Provance also made the disturbing allegation that interrogators broke an Iraqi general, Hamid Zabar, by imprisoning and abusing his frail 16-year-old son. Waxman was shocked. "Do you think this practice was repeated with other children?" he asked Provance. "I don't see why it would not have been, sir," Provance replied.
Zabar's son had been apprehended with his father and held at Abu Ghraib, though the boy hadn't done anything wrong. "He was useless," Provance said about the boy in a phone interview with Salon from Heidelberg, Germany, where he is still in the Army. "He was of no intelligence value."
But, Provance said, interrogators grew frustrated when the boy's father, Zabar, wouldn't talk, despite a 14-hour interrogation. So they stripped Zabar's son naked and doused him with mud and water. They put him in the open back of a truck and drove around in the frigid January night air until the boy began to freeze. Zabar was then made to look at his suffering son.
"During the interrogation, they could not get him to talk," Provance recalled. "They said, 'OK, we are going to let you see your son.' They allow him to see his son in this shivering, freezing, naked state," Provance said. "That just totally broke his heart and that is when he said, 'I'll tell you what you want to know.'"
Provance said the boy was timid and afraid. "He was so skinny and so frail, and he was scared out of his mind," Provance remembered. "He was so skinny the handcuffs would not fit securely on his wrist. I had to put this green sandbag on his head. I just felt like a horrible person doing this."
Provance was not an interrogator; at that time, he worked on a security detail at Abu Ghraib. He said he did not see firsthand the boy being abused in the truck, although an interrogator working on the general's case later explained the abuse to Provance in detail.
Provance's account does not appear to be an isolated allegation. It echoes similar accusations at Abu Ghraib and across Iraq. In an interview with military investigators conducted after he was imprisoned, Graner called kidnapping, in addition to detainee abuse, "the other big Geneva Convention violation" going on at the prison. "They were picking up, you know, Joe Snuffy's wife to get Joe Snuffy," Graner explained to military investigators. "So, more or less, we're holding this female with no charges, which happened a lot."
Graner did not say in the interview who was doing the kidnapping. There were a broad range of forces operating at Abu Ghraib, including military Special Operations troops and CIA operatives.
Similar allegations have shown that kidnapping may have been a systematic practice. Special Operations troops, working with an elite unit called Task Force 6-26, allegedly abducted the 28-year-old wife of a suspected Iraqi terrorist during a raid on a house in Tarmiya, Iraq, in May 2004, the month after the Abu Ghraib scandal broke. That is according to a memorandum buried in thousands of pages of documents obtained by the ACLU through the Freedom of Information Act. The memorandum, a formal complaint titled "Report of Violations of the Geneva Conventions," was filed in June 2004 by a 14-year veteran intelligence officer with the Defense Intelligence Agency. The Department of Defense blacked out the officer's name.
Slowly getting Kubuntu to work. I have to backup all my files first before diving in for the final time.
