The Military Buildup in Asia Over Oil
This summer I read an excellent book Resource Wars: The New Landscape of Global Conflict (by Michael T. Klare ) about how all recent wars have been fought over resources, be they oil, water or diamonds. It was an enlightening read particularly since it was published in 2001, well before we entered Iraq. In a very prescient chapter on oil he saw the upcoming Iraq invasion well before most of us had even heard of neocons or WMD. The following chapter on emerging resource conflicts over oil and gas in the Asian Pacific is worth the read alone. To find signs of growing anxiety over energy access in Asia just look to China & Japan: Japan Suspects China May Be Drilling Gas in East China Sea . China & Japan have been heating up their rhetoric over the past month with protests in China over Japan war crimes and Japan reasserting their territorial claim to these gas fields.

The latest twist in the political and military jostling for position is the rapidly tightening bonds between the new Asian oil axis. On one side we have the USA, India, Taiwan, and Japan being positioned against Russia, China and Iran. Make no mistake, the new budding Asian alliances may be more significant than any current political events in the Middle East, even overshadowing the Israel vs. Islamic Middle East. It's all about the users of cheap oil maintaining their access to it.

Just in the past week these are a sampling of head lines on this topic. Taiwan Holds Military Drill Ahead Of China-Russia Wargames and Pentagon Team To Visit India and US, British, Asian Navies Stage Anti-WMD Exercise In The South China Sea and Russia Plans Sharp Military Spending Hike and Former red armies in war games challenge to America

Lastly, in the direct India & USA vs. China & Russia category. Check out the latest news on Aircraft Carriers. India has one and is looking to buy F-18 aircraft from the US for it. And China is apparently trying to (re)build one. The oceans connecting Asia to shipments of oil are of vital national interest to all. Watch for ever more military build up in the area.

China's oil crisis seems to deepen.
A continuing stream of reports on China's energy shortages. This National Geographic picture is priceless! (hat tip: 321energy) Gas Thief Escapes on Tricycle!
"Speeding from the scene of the crime, a Chinese boy tows a floating plastic bag of stolen natural gas last week. Flouting a government ban, farmers around the central Chinese town of Pucheng frequently filch gas from the local oil field. "

Another good article is in The Financial Times: Beijing under pressure to tackle oil shortages

How I read this is when China fixes their Yaun valuation and their socialist gasoline pricing problems, they will be buying EVEN MORE oil in the future. In the short term they may be experiencing shortages but I bet the Chinese government will work even more aggressively to secure more fuel oil and to prevent their economy from stalling due to energy shortages.

This headline turned my head (hat tip to my friend Jim) California diesel/biodiesel hits price inversion, others to soon follow.
"in Hawaii where Biodiesel is consistently about $.40 a gallon cheaper than diesel (due to the fact that biodiesel is made on the island and #2 Diesel is imported). Now it has happened in California. The average price of #2 Diesel in Bakersfield is $3.17 and about $2.80 for 100% biodiesel. The price of #2 Diesel is up over $1.00 in a year, the price of Biodiesel only up about $.50."

Now this seems on the surface to be a good thing and says the market EROEI for biodiesel is positive. But I am not so sure yet. I think this may be a transitory price inversion. I hope it stays and is a real effect. But I can't get out of my head all the hidden price supports built into biodiesel: farming subsidies, tax credits, tons of cheap oil used in fertilizer and transportation costs.... from where I sit, it looks like the supply chain for biodiesel is very long and for the real price to appear at the pump will take a long time. I pray that this price inversion is still there in ten years. For more information on EROEI and the hidden-ever increasing costs of oil extraction check out this excellent rant from the excellent The Oil Drum blog. Oil Prices Also Affect Oil Costs I highly recommend everyone read it because he cuts to the heart of why higher prices won't just create more oil supply, exploration or extraction.

More noise from China about oil and gas supply shortages. In my earlier post below I noted how all gasoline sales are state controlled. They are also heavily subsidised to the tune of about $10-$20/barrel. China: Where has all the oil gone? IEA wonders discusses this but the IEA also denies that China could really be using all the oil they are buying and demand must taper off. I would not trust the IEA on this one.

Also recent headlines: Gasoline stations jammed as fuel crisis deepens and China Rationing Gasoline And Diesel Fuel.
"Asia's largest oil refiner Sinopec relies on imports for much of its crude for refining, so the surging crude prices on the world market have greatly hurt the oil giant's refining business, when the central government still controls the price of domestic refined oil to stabilize the market," a CNPC official was quoted by the China Daily."

"I don't think the situation is that severe," an analyst in Beijing said. "Perhaps the smaller, independent retail gasoline stations may have some problems in getting a stable supply of diesel and gasoline. Car owners, therefore, might have restrictions on the amount of fuel they can pump each time."

Boo! Chavez threatens oil exports to US

"We do not want to break relations with the US government," Chavez said. "It is not in our plans, but if the aggressions continue to increase ... this could put at risk diplomatic relations between Venezuela and the United States."Washington's attacks could provoke "something more serious: These two daily boats full of Venezuelan oil could head another way instead of going to the United States," said Chavez, whose country is the fourth largest provider of oil to the United States."The US market is not indispensable to us," Chavez said before thousands of young people waving Latin American countries' flags in a Caracas arena during a youth festival.Chavez, who has called US President George W. Bush a "jerk" and "Mr. Danger," also joked that he may give the US leader a scare at the Summit of the Americas in Argentina in November."I have something in mind," Chavez said. "I will walk to him very quietly and say 'boo.'"

For an interesting perspective on Iraq and Iran, look at it through China's eyes. They had been working for years to establish strong ties with Iraq to get access to their oil. Establishing access to oil has been part of their long term China oil strategy.

This quote pretty much sums it up:

"With so much competition for assets, China has pursued deals with international pariah states that are off-limits to Western oil companies because of sanctions, security concerns or the threat of bad publicity. CNPC is the largest shareholder in a consortium running much of the oil patch in Sudan, a country accused by the US of genocide in its western region of Darfur. Last year, China signed a US$70 billion oil and gas purchase agreement with Iran, undercutting efforts by the United States and Europe to isolate Teheran and force it to give up plans for nuclear weapons. If CNOOC acquires Unocal, it would have gas fields and a pipeline in Burma, whose operation by the US company has been criticized by human-rights groups.

``No matter if it's a rogue's oil or a friend's oil, we don't care,'' said an energy adviser to the central government who spoke on the condition he not be identified, citing the threat of government disciplinary action. ``Human rights? We don't care. We care about oil. Whether Iran would have nuclear weapons or not is not our business. America cares, but Iran is not our neighbor. Anyone who helps China with energy is a friend.''

Pretty tough talk on preserving China's access to oil... sounds just like the Carter & Bush doctrine that access to oil is in the vital interest of the USA. What's good for the US must be good for China too, right?

China is so different econmonically from the US that it pays to consider how they sell & distribute gasoline. It is allocated using rationing coupons. "Sinopec is the largest oil retailer on the mainland. It operates 30,164 petrol stations across the country while its rival, PetroChina, runs 17,403. And in many provinces, Sinopec in fact monopolizes the market.
This leaves consumers no other choice but to buy the coupons if they want to use Sinopec Group's services. Lack of competition, harking back to the old socialist days, maintains this vestigial system. However, sharply fluctuating international energy prices are motivating Sinopec to finally scrap the coupon system - but, again, in an apparent desire to safeguard its own interests."

"despite fundamental changes in the Chinese economy and society over more than the past two decades, Sinopec Group has continued to issue the [gasoline] coupons and its stations only accept such coupons as payment for fuel.
The only difference is that the coupons are no longer allocated by the government, according to budget needs. Instead customers must pay cash to buy them beforehand."

Things are changing fast though in China's energy policy. This just in: China Raises Taxes on Oil and Gas:

"China has increased its resource taxes for crude oil and natural gas for the first time since 1993 to standardize the taxation system and keep up with rising oil prices.
China raised the tax rate for oil at least 75 percent and for gas by at least three times, the State Administration of Taxation said Tuesday.
The rates apply to oil and gas explored and produced locally from July 1. The new rate for domestic firms is between 14 and 30 yuan (HK$13.40 and HK$28.75) for a tonne of oil, and between seven and 15 yuan for a thousand cubic meters of gas"

The humble potato. A true survival food. Here's a Mother Earth News article with more information than you could ask for about setting up your Peak Oil Victory Garden using the reliable spud as your caloric cornerstone.

As oil heats up in price and global investment markets chase opportunities to cash in on the rise in energy costs, keep an eye on sugar. It is viewed by many as an energy source more than a sweetener - thanks to Brazil's successful and expanding ethanol programs.

Tom Whipple at the small Falls Church News in Northern Virginia is paying attention to peak oil and is writing some good articles about how this will transform our future. This positive article points out how the good old US Post Office maybe headed for greater importance in the developing Post-Peak World. I think they are on the right track in predicting how things will play out.

Here's some more good Peak Oil articles from the Falls Church News:
The Peak Oil Crisis: Rationing
The Peak Oil Crisis: The Real Energy Bill
The Peak Oil Crisis: Mid Year-2005
The Peak Oil Crisis: A Bible for Oil Deception

(There are more articles too. Search their site for "Peak Oil")

Here's an interesting Renewable Energy Map that lists renewable energy resources overlaid on the a map of the USA. Not cheap at $475 but could be worth it if you are planning where to set up solar, wind, etc. generation facilities or off-grid communities.

One of the frustrating questions about Peak Oil is "what can I do?" or "How can out community prepare?" here's one such answer. Past the Peak-
How the small town of Willits plans to beat the coming energy crisis
By R. V. Scheide It's a start and I hope it inspires others.

More on Iran and pricing oil in euros... I see a pattern here. Excert below:

"To date, one of the more difficult technical obstacles concerning a euro-based oil transaction trading system is the lack of a euro-denominated oil pricing standard, or oil 'marker' as it is referred to in the industry. The three current oil markers are U.S. dollar denominated, which include the West Texas Intermediate crude (WTI), Norway Brent crude, and the UAE Dubai crude. However, since the summer of 2003 Iran has required payments in the euro currency for its European and Asian/ACU exports – although the oil pricing these trades was still denominated in the dollar.[13]

Therefore a potentially significant news story was reported in June 2004 announcing Iran's intentions to create of an Iranian oil bourse. This announcement portended competition would arise between the Iranian oil bourse and London's International Petroleum Exchange (IPE), as well as the New York Mercantile Exchange (NYMEX). [Both the IPE and NYMEX are owned by U.S. consortium, and operated by an Atlanta-based corporation, IntercontinentalExchange, Inc.]
The macroeconomic implications of a successful Iranian bourse are noteworthy. Considering that in mid-2003 Iran switched its oil payments from E.U. and ACU customers to the euro, and thus it is logical to assume the proposed Iranian bourse will usher in a fourth crude oil marker – denominated in the euro currency. This event would remove the main technical obstacle for a broad-based petroeuro system for international oil trades. From a purely economic and monetary perspective, a petroeuro system is a logical development given that the European Union imports more oil from OPEC producers than does the U.S., and the E.U. accounted for 45% of exports sold to the Middle East. (Following the May 2004 enlargement, this percentage likely increased).

Despite the complete absence of coverage from the five U.S. corporate media conglomerates, these foreign news stories suggest one of the Federal Reserve's nightmares may begin to unfold in the spring of 2006, when it appears that international buyers will have a choice of buying a barrel of oil for $60 dollars on the NYMEX and IPE - or purchase a barrel of oil for €45 - €50 euros via the Iranian Bourse. This assumes the euro maintains its current 20-25% appreciated value relative to the dollar – and assumes that some sort of US "intervention" is not launched against Iran. The upcoming bourse will introduce petrodollar versus petroeuro currency hedging, and fundamentally new dynamics to the biggest market in the world - global oil and gas trades. In essence, the U.S. will no longer be able to effortlessly expand credit via U.S. Treasury bills, and the dollar's demand/liquidity value will fall. "

A lot of new headlines today. Here's the connecting arc I see joining a combination of accelerating trends:
1) The reason Iran is so boldly restarting their uranium enrichment program is the backing of China. In exchange, China gets access to Iran's oil and a foothold in the Middle East oil hot bed. (Last year Iran and China signed an ambitious agreement, under which China may buy as much as $70 billion of Iranian liquefied natural gas over the next 30 years, while developing a large Iranian oil field.)
2) Yes Oil prices are rising - topping $65 a barrel today, but the real back story is what does this do to the value of the dollar and the US economy? Read this article from 321energy.com What happens when oil does peak?
3) I have been reading for a while about the risk of global warming becoming a runaway positive feedback loop due to the release of large quantities of frozen methane that is trapped in arctic regions. It appears that this is not theory but fact - as the Guardian reports it is happening on a large scale in Siberia. This news is staggering in its' implications.

Of these news items the financial issues described in item 2) particularly need to be looked at closely. I would suggest that if things get ugly in the market, do NOT put your trust in government bonds. To incite you to read the links above please peruse these excerpts:

"Although the initial effect of higher oil prices is inflationary, ultimately the result is deflation. Deflation in growth forecasts, deflation in stock prices and deflation in jobs. That means overall tax-take will be lower than he expected, which in turn means his budget deficit will remain high.
Consequently, a declining supply of oil must be accompanied by either a declining supply of money or by hyperinflation. In either case, the result for the global banking system is the same: total collapse. This may be what led Stephen Roach, the chief economist for investment bank Morgan Stanley, to recently state, "I fear modern day central banking is on the brink of systemic failure."

Within a few months of global oil production hitting its peak, it will become impossible to dismiss the decline in supply as a merely transitory event. Once this occurs, you can expect traders on Wall Street to quickly bid the price up to the $200 per barrel range as they realize the world is now in a state of permanent oil scarcity.

With oil at $200 per barrel, gas prices will hit about $10 per gallon virtually overnight. This will cause a rapid breakdown of trucking industries and transportation networks. Importation and distribution of food, medicine, and consumer goods will grind to a halt. The collapse will be hastened by the fact that the US national debt will become completely unsustainable once the price of oil gets into the $100 range.

Once this mark is passed, the nations of the world will have no choice but to pull their investments out of the US while simultaneously switching from the dollar to the euro as the reserve currency for oil transactions. Along with the breakdown of domestic transportation networks, the global financial shift away from the dollar will wholly shatter the US economy.
Every dollar increase in the price of a barrel of imported oil increases the size of the U.S. trade deficit, which puts more pressure on the value of the U.S. dollar, which leads to a weaker dollar, which makes OPEC countries want to raise the dollar-denominated price of a barrel of oil to make up for the dollar’s fall, and so on." -Joel Bainerman

And this from Richard Heinberg at MuseLetter.com about the value of the dollar.

"To understand why the dollar is America's Achilles heel, a metaphor is useful. Imagine being able to write checks and then convince the people you give them to not to cash them. Perhaps they find the checks themselves comforting to hold onto; or maybe you have a friend who agrees to sell groceries or gasoline for your checks only, and then happily stockpiles and re-circulates them. In either case, you may be tempted to write checks for much more than you have in your bank account. As long as the checks themselves are regarded as valuable and not cashed, you get a free ride. But if people stop finding your checks comforting to hold onto, or if your friend starts selling groceries for other people's checks or for gold or silver, then the game is up. It will be revealed that your account is overdrawn and you will be in trouble.

The metaphor is not perfect. In fact, every nation in the world is attempting to write checks beyond its means. But the US has managed to do by far a better job of it than any other nation. The checks we are not talking about are not just hoarded paper dollars (though there are billions of these stuffed in mattresses around the world) but dollar-denominated investments and securities, including T-bills, stocks, and mortgages. Currently the US is running a $700 billion per year trade deficit, this on top of trillions in government debt and trillions more in consumer debt. No other nation in the world comes remotely close to this level of bad-check writing, on either a total or a per-capita basis.

If a run on the US dollar were to occur, then the only financial solution would be to create even more dollars (presumably through government borrowing), which of course wouldn't actually solve the problem and would in the long run make matters worse. The currency would become almost worthless, and in the process real wealth (land, factories, and natural resources) would be confiscated and turned over to creditors.

What could cause this to happen? A decision by OPEC to openly sell oil for euros could be a trigger. Some oil is already quietly being sold for euros, and several countries including Iran and Saudi Arabia have floated the possibility of valuing oil against a basket of currencies (meaning, effectively, dollars and euros). The Arab OPEC states have also toyed with an idea that must be equally worrisome to Brussels and Washington: to sell oil for gold (the gold dinar). If and when this happens, the full wrath of America will descend upon the Arab Middle East - and that's why it hasn't happened yet."

Some notes on alcohol production and biofuels:
I got into a discussion with my friend Jim over the energy efficiency of alcohol production. He pointed out that common perceptions about Ethanol production being a net looser is based on the oil industry financed and discredited research. The site http://www.ncga.com/ethanol/debunking/ (funded by corn growers) does a good job of summarizing several research studies about ethanol and shows it does produce a net energy gain.

I never expected ethanol to have a negative net energy. It does look like the true net energy gain is in the 1.2 -1.6 range. But for all the labor and energy expended to make it, 20% -60% return seems really small to me. It helps but it seems more like “hamburger helper” in making the expensive oil go a little further. Cars that are 20% -40% more efficient seem like a better investment of money.

And like the oil-industry funded studies are biased to show a negative energy return I believe the “Corn Growers” association study is also biased in their favor.

The best new information on alcohol I read about yesterday involves using switchgrass, a native prairie species, to make alcohol using a new bacteria that eats the woody fibers and produces alcohol. The energy return ratio here is around 4.4! http://www.westbioenergy.org/july98/0798_01.htm Which is a real return on investment (440%) to me. I don’t see how anyone can make a profit from all the energy inputs to corn ethanol production only getting a 20% return. The switchgrass process could also be used on the corn & wheat stalks… taking a waste product and making energy from it.

Lastly, take a look at this conference in September covering how to turn organic farm waste into energy: http://www.focusonenergy.com/data/common/calendarfiles/Conference%20Brochure.pdf sponsored by BioCycle Journal (that might be worth subscribing to - energy production from agriculture waste)

This article is possibly the best yet from Mr. Simmons. Check it out at http://www.financialsense.com/transcriptions/Simmons.html . Instead of $60/barrel (which is 42 gallons of oil) he suggests the real value & price of oil could and should realistically reach $210-$420/barrel. I agree and have thought this way for several years after looking at the value we get form all that stored potential energy and work. Here are some excerpts I selected from the interview on how unrealistically cheap oil is today:

"JIM: You gave an analogy in terms of how cheap oil is at $60/barrel, I wonder if you might share that with our listeners?
MATT: Sure. Because every time I get into a discussion now about the future of oil I always get asked, “well, where will oil prices be?” And my response is, “I don’t have any idea where they’re going to be, other than the fact I think on a secular move, we are still at a very, very cheap level of oil prices.” And that immediately gets a response, “Cheap?! Oil’s at $60 a barrel!” And one of the things I’ve observed is that people don’t really understand what a barrel is. They can kind of conceive what a barrel might look like. But when you put it in terms people can understand, I say “what $60 per barrel is, is 18 cents a pint.”
And then I get a response, “How did you do that?!”
“Well, you divide 60 by 42, to get a gallon of oil, and you divide a gallon by 8 to get a pint of oil, and that just happens to be 18 cents a pint.”
And then they say, “ Oh, that’s really cheap, isn’t it?”
And obviously it’s cheap. I don’t know what’s the next cheapest liquid we actually sell in any bulk is, that has any value. I suspect there are places around the United States where municipal water costs more than 18 cents a pint. And yet for some reason, we created a society that was built on a belief that oil prices in a normal range were some place in the $15-20 level. It turns out $15/barrel, which is the average price of oil – in 2004 dollars – it sold for, for the last 140 years, is less than 4 cents a pint. So we’ve basically used up the vast majority of the world’s high flow rate, high quality sweet oil at prices that were effectively so cheap, you basically couldn’t sustain an industry. And now we’re left with lots of oil. But it’s heavy, gunky, dirty, sour, contaminated with various things oil, it doesn’t come out of the ground very fast, is very energy intensive to get out of the ground and we’re going to pay a fortune for it. [13:42]"

"JIM: Based on reading your book, and the extensive studies – as you said many of these major oil wells are now at tipping points – we’re likely to wake up one day and find out that oil is over $100/barrel, we can’t meet...
Matt: It’s still cheap at $100!
JIM: Yeah, at $120 it’s 36 cents a pint, which is still cheap.
MATT: What the economists ought to be trying to figure out is: what constitutes a fair price for oil versus their belief that oil prices are really expensive today. I would argue that probably a number in the $5-10/gallon is a real bargain. [51:24]"

Last Thought-Oil at these prices would make many alternative energy sources look quite good financially.

I continue to be impressed by Mathew Simmons. His latest on-line Q&A hosted by the Washington Post is notable for the variety of questions that main-stream news media is not asking. Check it out here: Simmons Interview. It's interviews like this that give me some hope in Democracy and the number of other Americans who are following this topic and not accepting that things are all OK and we should not worry about oil ever declining. Mr. Simmons is eloquent, tactful, and convincing. I believe he is the best current spokesperson for Peak Oil who can be understood by most "USA Today" readers.

Here's a kindred soul: Gone to Croatoan. Fun/informative links to paleo-survival topics.

I also like his link to The Oil We Eat article.

Association for the Study of Peak Oil & GAS – USA (ASPO-USA) has just started a new web site.

They are also hosting the conference Beyond Oil: Inteligent Response to Peak Oil Impacts -A Dialogue with the Experts This will be a high-level conference to discuss the impacts of a peak in world oil production. It will be held in Denver, Colorado on November 10-11, 2005. The two-day forum is sponsored by the City and County of Denver and ASPO-USA. Keynote speakers include Matt Simmons, author of "Twilight in the Desert", and Congressman Roscoe Bartlett, (R-Md).

http://www.wired.com/wired/archive/13.07/solar.html


Great article from Wired Magazine. Very neat solar idea that works. A rooftop concentrator (looks like a daisy - that focuses on an efficient solar cell). Check it out.

Liquid fuels for transportation are the top use of oil in America and also the hardest to replace with a renewable source. My good friend Jim is a strong proponent of using Algae to produce Biodiesel. Honestly, I think it is the only potential replacement on the horizon that is renewable and solar based. Here is his one page summary on the topic.

Bio-diesel from Algae: A renewable liquid fuel for transportation
U.S. transportation: cars, ships, trains, trucks, and aircraft, are 98% reliant on oil supplies for power. No energy source now, or in the foreseeable future, can match oil's energy density, ease of distribution, safety, or simplicity of use. The world's drilled oil is being depleted, yet a renewable oil substitute is now being harvested from crops like soybeans and rapeseed, both in Europe as well as here in Colorado http://www.gobluesun.com/index.html. The oil in the crops is merely pressed out and processed with 10% alcohol to become suitable for most of today's diesel engines. In use, biodiesel produces much lower smoke emissions than drilled oil, has a higher lubricity that reduces wear, can utilize a catalytic converter as it contains no sulfur, and recycles CO2 from use-cycle back to growth-cycle contributing little to global warming.

While using soybean and rapeseed to produce Biodiesel is promising, large scale displacement of existing crops on land needed for food or forage production is not. Requiring oil based fertilizers and high quality irrigation water also reduce economic and environmental attractiveness.

Fortunately, a study on harvesting oil from algae grown in very shallow ponds was performed by Colorado's National Renewable Energy Laboratories (NREL) between 1978 and 1996. The NREL Aquatic Species Program http://www.nrel.gov/docs/legosti/fy98/24190.pdf collected and experimented with various species of algae and found that under certain conditions some algae could generate up to half their body weight in oil. From 1988 to 1990 NREL performed experiments in Roswell NM where shallow open ponds of algae were able to produce 10 to 50 grams of oil per day per square meter of pond surface area. Translated, this is 5,500 to 27,000 gallons of biodiesel per surface acre per year. Funding for this NREL program was discontinued by the federal government in 1997; however, researchers increasingly believe development of large scale algae farming is technologically and economically practical in today's energy climate.

Land productivity comparison in growing Biodiesel: http://en.wikipedia.org/wiki/Biodiesel
• Soybean: 40 to 50 US gal/acre/year• Rapeseed: 110 to 145 US gal/acre/year (Canola oil) • Mustard: 140 US gal/acre/year • Palm oil: 650 US gal/acre/year (tropical climate) • Algae: 10,000 to 20,000 US gal/acre/year

Components of a modern algae biodiesel operation:
Ample sunlight to provide energy to the oil through photosynthesis
+ Saline or brackish low quality water found on waste lands that won't support crops
+ Algae seed stock enhanced through bioengineering yet non-dominant in the wild
+ Agricultural run off, livestock waste, or municipal sewage nutrients (get rid of waste)
+ 10% transesterification alcohol from fermenting algae waste or sugar/cellulose crops
+ CO2 from the air, fermentation, or from power plants (especially coal w/CO2 credits)
+ Modern technology for containing algae, harvesting and refining the oil
= Biodiesel oil compatible with conventional vehicles and distribution systems.

The University of New Hampshire projected http://www.unh.edu/p2/biodiesel/article_alge.html that the entire U.S. requirement for transportation fuel, 140 billion gallons/year, could be met by harvesting biodiesel from algae. This would require $300 billion to build the infrastructure, 15,000 square miles of scrub or desert land, and $50 billion in yearly operating costs. In perspective, amortized over 10 years, this would amount to 7% of our military budget, the land area is 0.4% of the U.S. total, and the operating cost is a fraction of our yearly bill for foreign oil.

The most amazing thing about Peak Oil to me is how much oil is used to make and transport our food. We literally are eating oil even when we get organic produce from Whole Foods. Check out this short lesson in how deep the rabbit hole is: Oil and food: A new security challenge

Censored reports on Peak Oil

Here's an article about the suppression of a DOE sponsored report on Peak Oil . (It is a good report by the way.)

The report is here: The Hirsch Report. The bottom line: start preparing NOW because the transition will take decades.

Hats off to two sites that archive information that big brother thinks you do not need. http://www.projectcensored.org/ and http://www.thememoryhole.org/.

Two great video interviews with two of the biggest giants in Peak Oil:

Matthew R. Simmons the author of “Twilight in the Desert”.

Ken Deffeyes One of the nation’s top geologists and world expert in oil exploration and production.

The value of these videos is to see the authors real people. Both are very convincing and do not come across as alarmist or radicals. You see a business man and a scientist both talking with integrity about unpopular ideas. I think it adds more credence to their writing.

Here are some of my favorite web sites on Peak Oil. A great list to start with if you are just waking up to Peak Oil.

http://www.321energy.com/ - great hourly oil price quote graphic
http://www.energybulletin.net/index.php - rich summary of world wide news articles about energy issues
http://theoildrum.blogspot.com/ -one of my favorite peak oil Blogs
http://peake.blogspot.com/ -another good blog- this one from Seattle
http://www.peakoil.org/ -the grandaddy site of much to do with Peak Oil
http://www.wtrg.com/index.html -a useful oil industry site
http://www.rigzone.com/news/ -web site with news on oil exploration and extraction

http://www.lobg2.blogspot.com/ Land of Black Gold – great blog about financial and investing implications of Peak Oil
http://jameshowardkunstler.typepad.com/clusterfuck_nation/ - Jim Kunstler’s (“The Long Emergency” author) weekly column –entertaining and accurate rants about our energy predicament
http://www.dieoff.com/ -Like bacteria that overshoot their environment's carrying capacity...

There are many excellent Peak Oil blogs out there, and I will not try to replicate them. THIS blog will focus on how things will look & feel in the post peak world. Despite how bleak the scenarios look for the future (James Kunstler and DieOff.com) I believe there will be points of stability and growth like there are in any chaotic system. Frankly I agree with most of the future vision described by Kunstler and DieOff because I am an engineer and these scenarios seem the most logical and probable. But I also draw upon a strong spiritual perspective and believe there is some larger lesson being learned by humanity right now that only peak oil can give us. Hold on tight to the lifeboat... it seems the next few decades will be a very wild ride.