Mainstream media finally getting it?
 

[url=http://money.cnn.com/2008/06/30/news/economy/energy_demand/index.htm]Energy's easiest fix: Use less[/url]: [i]While calls for more oil drilling dominate the headlines, experts say taking simple steps to use less could save twice as much.[/i]
[quote]NEW YORK (CNNMoney.com) -- Want to help the country save a quick million barrels of oil a day? Drive 5% less. Slow down. Inflate your tires.

Those three steps would reduce U.S. oil consumption by 1.3 million barrels a day immediately, according to the Alliance to Save Energy, a conservation group running an efficiency campaign backed not only by environmental groups but also the auto and oil industries.
[b]
That's nearly twice the estimated daily oil production that could come from drilling in the Alaska's Arctic National Wildlife Refuge, according to the government's Energy Information Administration.[/b][/quote]

[b]
Gas Price Update
[/b]
Forgot to post last week [was out of the office Friday and offline Fri-Sunday]: last week's Sunnyvale Valero Gas Prices held steady with unleaded regular self-serve costing $4.47[sup]9[/sup] per gallon, unchanged from Fri, 20 Jun.

IEA claims "speculation not to blame"
 

[url=http://money.cnn.com/2008/07/01/news/economy/oil_speculation/index.htm?postversion=2008070106]Speculation not to blame for oil - report[/url]: [i]The $140 (a barrel) oil question: Does the existence of more speculation lift oil prices? In a new study, the International Energy Agency answers 'no.'[/i]
[quote]NEW YORK (CNNMoney.com) -- An influential oil-policy group released a report Tuesday arguing that the increase in oil-market speculation is not driving up crude prices. But the study far from ends the debate.

Since 2003, the volume of investment funds in commodity markets - especially oil - rose from about $15 billion to $260 billion, according to the International Energy Agency ([url=http://en.wikipedia.org/wiki/International_Energy_Agency]IEA[/url]), which issued the report.

And many argue that all that extra money sloshing around is to blame for prices doubling from $71 last July to roughly $140 today.

The IEA isn't buying it.

"There is little evidence that large investment flows into the futures market are causing an imbalance between supply and demand, and are therefore contributing to high oil prices," the report said.

Instead, the IEA put the blame for higher crude prices squarely on strong growth in demand coupled with limited growth in supply.

"If supply is constrained and demand is increasing, prices have to rise," read the report.

The IEA argues that if speculation drives prices too high, the market would be unbalanced. Either demand would fall off, or stockpiles would rise. Neither has happened.

...

The IEA also made the argument that many commodities - such as coal and rice - are showing similar price increases, even those without the possibility of speculation.[/quote]
Sorry, not buying it, for the following reasons:

A. Demand *has* in fact fallen off in markets like the U.S. [which dominates global oil consumption and imports]. The countries which import much of their oil and in which demand has not yet plummeted [e.g. China and India] have in common that they are fast-growing emerging markets flush with dollars from an imbalance of trade with the U.S. Those dollars have to find a home, and one such home - especially with U.S. Treasury yields below inflation - is subsidizing the cost of oil-derived products in their home markets. Even so, there are clear signs that the costs of such subsidies are really starting to bite.

B. There is evidence that some key world stockpiles are indeed rising - the U.S. has recently completed filling of its strategic petroleum reserve, and Iran is pumping much of its high-sulfur crude [which is the first grade of crude to get dropped by refiners faced with skyrocketing crude prices] into tankers. [If it has not already curbed output due to limited tanker supply.]

Lastly, the bit about "other commodities showing similar price increases" is disingenuous. Many of these commodities [e.g. coal and iron ore] are expensive to extract and transport, so increased global energy prices [e.g. the price of diesel used by mining machinery and of the fuel powering ore-carrying trains and shipping] will also affect those commodities. Second, grain markets are most definitely *not* immune to speculation - even if some grains have no futures markets, those that do will be directly affected, and if prices of grains X and Y are rising fast, prices of grain Z may follow even in the absence of any direct futures-market linkage, simply because worries about the "rising price of grain" seen in X and Y may lead to hoarding of grain Z. Hoarding is the oldest form of commodities speculation, and requires no high-tech futures market.

I stand by my assertion that the dramatic rise in oil [and grain, and iron, and...] prices over the past 5 years [in dollar terms] is due in roughly equal measure to

1. Increased global demand

2. Dollar devaluation

3. Commodities-market speculation [driven in part by [2]].

[i]Edit: Gah! Completely forgot to add a key note about why trade imbalances can lead directly to inflation in emerging-market economies. I'll let Mike Shedlock explain it, with the caveat [in respect to his "global savings glut" comment] that roaring export economies in countries with a traditionally high personal savings rate *can* in fact lead to a "savings imbalance" which will try to find a profitable home in all kinds of places around the globe, including the commodities markets:

[url=http://globaleconomicanalysis.blogspot.com/2008/06/deflationary-hurricanes-to-hit-us-and.html]Deflationary Hurricanes to Hit U.S. and U.K.[/url]
[quote]Inflation is indeed out of control in Asia, notably China, India, and Vietnam. That inflation stems from Asia central bankers printing local currency to buy US dollars, in an attempt to keep their export machines going.

Bernanke foolishly calls this a savings glut. Printing money to buy dollars does not constitute savings. It is amazing that a Fed governor does not understand this simple truth.[/quote][/i]

My purpose in posting about the article describing Doug Wood's solar dish was simply to illustrate that one statement in my previous reply to Fusion_power wasn't necessarily true, not to tout Doug Wood's invention as something extraordinary.

[quote=Uncwilly;137045][URL="http://books.google.com/books?id=OEhHtP24ybIC&pg=PA207&lpg=PA207&dq=%22solar+motor+company%22&source=web&ots=awfc7NoHrN&sig=D2l7gu86My_FcGsHiv52YoiUT0Y&hl=en&sa=X&oi=book_result&resnum=7&ct=result"][COLOR=#22229c]http://books.google.com/books?id=OEh...um=7&ct=result[/COLOR][/URL] Start at the bottom of page 208

...

My understanding about the Google solar project is, that they will be using Sterling engines.[/quote]To what Google solar project do you refer? The book reviewed at your books.google.com link seems to be about history, not some current project. The bottom of page 208 is followed by a notice that pages 209-238 "are not part of this book preview".

[quote]This is over 100 years behind the times (or previously was 100 years ahead)[/quote]Yes, there is a long history of solar energy uses. Why, exactly, is Doug Wood's solar dish over 100 years behind the times? Has there been a "12-foot-wide mirrored dish ... made from a lightweight frame of thin, inexpensive aluminum tubing and strips of mirror" commercially available for over 100 years?

I hope you aren't thinking that just because I quoted a title including the phrase "Could Revolutionize Energy Production", I am necessarily endorsing that the device actually is revolutionary.

[quote][URL]http://www.montanagreenpower.com/solar/curriculum/timeline.html[/URL] Look at 1861 to 1941
and
[URL]http://www.solarenergy.com/info_history.html[/URL]
[/quote]Are some parts of those relevant to Doug Wood's solar dish, other than documenting that Mr. Wood is not the first inventor of a solar device? If not, what is your point?

[quote]added: IIRC France had a huge solar furnace that would burn through steel beams, not melt, burn with flames like a torch.[/quote]Home-sized and home-priced?

[quote]A. Demand *has* in fact fallen off in markets like the U.S. [which dominates global oil consumption and imports]. The countries which import much of their oil and in which demand has not yet plummeted [e.g. China and India] have in common that they are fast-growing emerging markets flush with dollars from an imbalance of trade with the U.S. Those dollars have to find a home, and one such home - especially with U.S. Treasury yields below inflation - is subsidizing the cost of oil-derived products in their home markets. Even so, there are clear signs that the costs of such subsidies are really starting to bite.[/quote]and further:

[quote][I]Inflation is indeed out of control in Asia, notably China, India, and Vietnam. That inflation stems from Asia central bankers printing local currency to buy US dollars, in an attempt to keep their export machines going.

Bernanke foolishly calls this a savings glut. Printing money to buy dollars does not constitute savings. It is amazing that a Fed governor does not understand this simple truth.[/I][/quote]I don't buy this at all at least as far as India goes. India has operated a current-account deficit economy much like the US for the past gazillion years. Look at the back page of any recent issue of The Economist and you will see that Indian forex reserves are puny compared to China or even Taiwan or Singapore. Moreover, the Indian government is most certainly not printing and the central bank has increased the reserve ratio for banks recently which is most certainly deflationary. So I call BS on this one.

India is a very different case from China and Mish is falling into the trap of failing to distinguish the two. India can hardly be classified as an export economy when imports>exports and total trade volume is a relatively smaller fraction of GDP than most countries.

Which leads me to the thought that perhaps Mish and others like him are not really understanding the reasons behind global commodity inflation fully. Perhaps supply and demand is a much larger component than they think and it is becoming so apparent now because we have reached a sort of tipping point and speculation merely seems to bring it into sharper relief.

Here in the northern and western part of Europe you fill up your tank at the gas station for €1.60 per liter. In 1 gallon goes 3.7854 liter and in a euro goes 1.5778 dollar. So we pay about $9.50 per gallon. By far the most of it is local taxes. (local equals country here)

Actually, I'm pretty happy with it. Otherwise we would have to pay taxes through other means and it made the continent far more proof for changes in crude oil prices. And the standard of living is equal to the US while being 30% more energy efficient.

[QUOTE=garo;137168]Which leads me to the thought that perhaps Mish and others like him are not really understanding the reasons behind global commodity inflation fully. Perhaps supply and demand is a much larger component than they think and it is becoming so apparent now because we have reached a sort of tipping point and speculation merely seems to bring it into sharper relief.[/QUOTE]

Speculation as a "supply-demand-dynamic amplifier" ... I like it. But that still begs the question of what is behind the huge increase in speculative commodities investing worldwide in the past few years: a combination of currency [especially dollar] debasement and laxer exchange rules on speculative trading seem to be the major drivers - Garo, your take?

Like Mish, I also fell into the trap of lumping India in with China - thanks for the BS call on that one.

On the oil-production front, hot off the Bloomberg presses:

[url=http://www.bloomberg.com/apps/news?pid=20601072&sid=arXTpOY4omL4&refer=energy]Russia’s Oil Output Falls in June, Extending Decline[/url]
[quote]July 2 (Bloomberg) — Russian oil production declined in June, bringing the world’s second-largest crude exporter closer to its first annual drop since 1998.

Production fell to 9.77 million barrels a day (40 million metric tons a month), 1 percent less than in June last year, according to data released by CDU TEK, the dispatch center for the Energy Ministry. Output rose 0.2 percent compared with May.

Russia’s production may have peaked as producers struggle with aging fields, rising costs and increasingly remote new deposits, senior executives at Moscow-based OAO Lukoil and TNK-BP, the country’s two-biggest independent oil companies, have said. The finance and energy ministries are developing tax-cut proposals in a bid to revive growth.[/quote]

[QUOTE=cheesehead;137148]My purpose in posting about the article describing Doug Wood's solar dish was simply to illustrate that one statement in my previous reply to Fusion_power wasn't necessarily true, not to tout Doug Wood's invention as something extraordinary.[/quote]Fair enough. I am just good and rotten tired of people thinking that solar power is new".

[quote]To what Google solar project do you refer? [/quote]
[url]http://www.google.com/corporate/green/energy/[/url]
It appears that what i heard was incorrect, but Google's solar plans and Sterling systems have gotten mentioned in several articles together.

[quote]The bottom of page 208 is followed by a notice that pages 209-238 "are not part of this book preview".[/quote] When I looked at it, it refered to the "Solar Motor Company" and their early 1900's boiler systems.

[quote]Has there been a "12-foot-wide mirrored dish ... made from a lightweight frame of thin, inexpensive aluminum tubing and strips of mirror" commercially available for over 100 years?[/quote]Maybe not exactly, but there have been 1.6m solar cookers used for years and other solar home systems.

BTW: Why not attach tubes to the backs of photovoltaics? Heat and electricity.

[quote]I hope you aren't thinking that just because I quoted a title including the phrase "Could Revolutionize Energy Production", I am necessarily endorsing that the device actually is revolutionary.[/quote]Not you, him.:rant:

[quote]If not, what is your point?[/quote]Solar's popularity is inversely proportional to the expense of other power. When someone "catches the sun" they think that it will be panacea.

Not you, I just don't like giving people like him (and his statements) too much acclaim.

NYT Article about the Saudi Khurais Oil Field
 

[url=http://www.nytimes.com/2008/07/01/world/middleeast/01saudi.html]Saudi Oil Project Brings Skepticism to the Surface[/url][quote]Khurais, about 90 miles east of Riyadh, the Saudi capital, is one of the planet’s last giant oil fields. The Saudis say that it holds 27 billion barrels of oil — more oil than all the proven reserves of the United States — and that it will significantly bolster the kingdom’s production capacity once it starts pumping a year from now, easing global need.
...
The Khurais complex, which includes two smaller adjacent fields, was discovered in 1957. It got only limited use, because its oil is less accessible than that of the great Ghawar field, the world’s largest.[/quote]
Notice the theme here - lots of oil still in the ground, but of the increasingly-expensive-to-extract variety.
[quote]During their presentation, Aramco officials acknowledged that they faced unusual challenges here, including a plan of daunting complexity in a tight contractor market. There are also risks: if the current high prices drive down demand, the Saudis could find their market for all this oil shrinking.

But they said they were on schedule or ahead of it, with the pipeline network 88 percent complete and the main processing plant 55 percent done. They also vehemently disputed the claims of oil-supply skeptics.

A variety of new technologies, including multiple lateral wells and microscopic robots swimming through rock pores deep underground, will allow the company to start recovering much more of the oil in its fields, said Mohammed Saggaf, who runs Aramco’s advanced exploration research wing. The company expects to increase the amount of oil it can recover from its fields to 70 percent from 50 percent over the next 20 years, Mr. Saggaf said, adding another 80 billion barrels to reserves.

With all this oil becoming available, the Aramco officials said they were baffled that the market seemed to be behaving as though there were a shortage.

“We’ve asked all the international oil companies that buy from us if they want more oil,” Mr. Nasser said. “But we can’t find customers.”[/quote]
The last quote is interesting - the (Big Oil == evil) tinfoil hat bloggers will immediately scream "price collusion!", but it could simply be that with oil companies already unable to pass much of current oil prices onto consumers in the form of higher gas prices [believe it or not, gas prices have not risen nearly as much as crude prices], refining margins have gotten so tight that Big Oil is actually losing money on the gasoline side of the equation. Evidence for that is that many oil companies are [url=http://news.yahoo.com/s/nm/20080612/bs_nm/exxon_dc]getting out of the retail gas station business[/url].

[quote=Uncwilly;137217][URL]http://www.google.com/corporate/green/energy/[/URL][/quote]Wow! Thanks for the link!

[quote]there have been 1.6m solar cookers used for years and other solar home systems.[/quote]There is an unusually large fraction (maybe 1-in-10) of house roofs sporting solar thermal systems in my former neighborhood a mile-plus from here -- I presume (never asked) an artifact of solar credits from three decades ago.

The problem is that even that modest fraction of solar-sporting houses is all too uncommonly-high compared to most U.S. urban or suburban areas.

[quote]BTW: Why not attach tubes to the backs of photovoltaics?[/quote]If the PV photon-absorbing material reflects most infrared, or at least doesn't let much through, then that kills the tube-heating efficiency. Even if most IR gets through, much has been scattered, so that it's not possible to concentrate it much by mirror now that the IR photons are traveling in a much wider range of directions.

But I could be wrong.

[QUOTE]Speculation as a "supply-demand-dynamic amplifier" ... I like it. But that still begs the question of what is behind the huge increase in speculative commodities investing worldwide in the past few years: a combination of currency [especially dollar] debasement and laxer exchange rules on speculative trading seem to be the major drivers - Garo, your take?[/QUOTE]

I suspect we won't really know for sure until after the event. Till then we can only "speculate". I suspect mass psychology has a role to play as everyone piles on to the winner. Certainly, the commodities indices play a huge role as has been pointed out by you. The devaluation of the dollar and the fact that many oil producing countries have their currencies linked to it lay a role too.

But basically we are running out of easy to extract oil. We haven't run out of it yet but people are being conditioned into accepting that fact and thus be more willing to pay a higher price for it. Also, I think that oil price was artificially low for many years around the turn of the century so that makes this higher price seems much worse.

Brent crude hits $146
 

Nice article here: [url]http://news.bbc.co.uk/1/hi/business/7486764.stm[/url]

Paul