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Hakan with the reindeer

This is absurd and unreal and it makes me sad, mad and scared beyond anything else:
http://www.bloomberg.com/apps/news?pid=20601103&sid=aZ2IzCD2ZoXY

" May 22 (Bloomberg) -- The market for derivatives expanded at the fastest pace in at least a decade last year as the global credit crisis spurred trading in contracts used to hedge against losses, according to the Bank for International Settlements.

Derivatives, including those based on debt, currencies, commodities, stocks and interest rates, expanded 44 percent from the previous year to $596 trillion, the Basel, Switzerland-based bank said in a report today."

It makes me think of the old saying:
"Things that cannot go on forever, will not"

The beast is not hidden, it's just too big to be recognized. And we are inside it's mouth, right between it's jaws !

Soon, it will bite and swallow...

Richard

As I read your article, I am shell shocked; meaning I read and I am stunned, like left immobilized.

You write that some $1.5 trillion of collateralized debt obligations have been written, and an undisclosed amount is kep in off-balance-sheet funds called variable interest entities.

This means to me that the banks balance sheets are worthless because we do not know the extent of losses kept off the income statement and balance sheet.

And to make matters worse, the amount in VIEs could have been been treated as revenue for all we know, this means that their retained earnins is overstated.

And I never knew that Freddie has $32.4 billion in losses that it is keeping off its books; it's insolvent.

And when the article states For will fall short of reaching profitability in 2009, a long-held company goal, that makes me believe Ford is NOT a going concern; and I believe the only reason why it is trading at $7.16 is that it is owned by institutions, such as penison funds, and universities, which are reluctant to sell it.

Had I believed that the TAF, TSLF, and PDCF would have rallied the stocks, I would have bought a position in Ford.

Carli

Richard, current prices of traded stock are not much more than a shell game or Ponzi scheme, if you will, bankrolled by thousands of cutout Foundations, investor funds and banking institutions, predominantly nominees of the global elite who cause and create the current global scenario, while skimming their profits with every rise and fall of the markets they create, control and manipulate. They participate in this game using "play money", everyone else has to pay with "real money".

It's a stacked deck. Do not play with what you cannot loose. And even if you can afford to play, it's gambling odds. Unless of course you have an inside track, or you go for the long haul, not as a speculator.

blues

The USA has multiple internal weaknesses. The VERY WORST is that we have Pandemic Success Compulsion (PSC). Everyone wants to go to school to become an accountant or a lawyer or a school principle. Anybody who actually produces anything is viewed as an utter failure. Manual labor? That is for someone in some distant land, or maybe "illegals." Real Americans do not do manual labor.

I was raised in the very period when this "ethic" took hold. We also have a Pandemic Anti-cooperation Compulsion (PACC). City and suburban people do not cooperate with one another on any level. In fact, they don't even know each other.

Probably most of the population has suffered from social derogation. They have had restraining orders placed, are on parole, on drugs, etc., since they no longer have elementary social skills. They have been atomized.

In the deep rurals (rural areas), you will still find people unafflicted with success compulsion or anti-cooperation compulsion, and there will be less social derogation. But 95% of us live in the American atomic hive culture. We can't physically do anything other than manipulate symbols. We cannot cooperate with each other, because we are not even taught to deal with one another. Now we are being watched by hidden cameras, with more surveillance, new laws will become enforceable. It will become unfashionable to even talk to one another. THIS IS SOCIALLY ENGINEERED HELPLESSNESS. And it has been systematically foisted upon us by the Ford Foundation types.

But Guess what? The Chinese are now taking it to the next level: Techno-feudalism! The following article is a MUST-READ!:


Rolling Stone

China's All-Seeing Eye

((----- Copy & Paste - W/O The Line Breaks -----))

http://www.rollingstone.com/politics

/story/20797485/chinas_allseeing_eye


With the help of U.S. defense contractors, China is building the prototype for a high-tech police state. It is ready for export.

by Naomi Klein
Posted May 29, 2008

«American commentators like CNN's Jack Cafferty dismiss the Chinese as "the same bunch of goons and thugs they've been for the last 50 years." But nobody told the people of Shenzhen, who are busily putting on a 24-hour-a-day show called "America" — a pirated version of the original, only with flashier design, higher profits and less complaining. This has not happened by accident. China today, epitomized by Shenzhen's transition from mud to megacity in 30 years, represents a new way to organize society. Sometimes called "market Stalinism," it is a potent hybrid of the most powerful political tools of authoritarian communism — central planning, merciless repression, constant surveillance — harnessed to advance the goals of global capitalism.»


It should be observed that these ant-farm cultures are arising at the very top of the Hubbert Peak Oil syndrome. Some of you probably know that I like to think in terms of Primitive Economics, which is actually a personal hangup, I suppose. I don't think in terms of money, interest, derivatives, etc. I think in terms of psychology and physical resources. The thing about this Peak Oil is that ENERGY IS ADDICTIVE. If energy becomes even slightly less accessible, this will have a non-linear "exponential" DEVASTATINGLY DESTRUCTIVE effect on the ant-farm hive cultures. Without energy they will die. And their populations, which cannot cooperate without authority from above, and are atomized, and derogated WILL NOT HAVE THE ABILITY TO ADAPT!

They will go insane and die.

That is why energy is very important right now. Scary, huh?

blues

Actual photo of the Shenzhen Hive itself:


((----- Copy & Paste - W/O The Line Breaks -----))

http://www.dailygalaxy.com/photos

/uncategorized/2008/05/21/shenzhen2_2.jpg

andrei

While I would love that this whole mess is just a financial mess I think peak oil has something to do with it.

My predictions:
US will go throw a URSS style collapse.
Nuclear plants will be build.
A black market for US nuclear material will emerge.
Most countys will be in war like economy or a communist economy with rationed resources.

I don't see a WWIII.

Patricia

Hi! I had to respond the this: " all Canadians are singing 'O, Canada, We are rich" I live in Edmonton Alberta, Canada. Our pump price for gas went from $1.24 a litre ($5.64 a gal) to $1.29 a litre ($5.86 a gal)!! Nobody here is cheering very much. The little people here ie: most of the population gets no benefit from the rise in price. Only the large corporations do.

Like our American cousins our cost of living is soring. Food is going up every week. Housing costs accross the board have gone up 300% in the last 3 years. Never in the 50 years I have lived here have I seen the homeless situation so bad. We actually have hidden Hooverviles! Not just an American problem.


All the manufacturing jobs that paid a good salary vanished. Service jobs that don't pay enough to cover the rent on a one bedroom apartment are in abundance. I guess that is what they call the booming Alberta economy. How many people have the skills to go up north and work at the tar sands? Never mind the cost of living up there will eat up most of your salary.

On a lighter note I enjoy reading your blog.

Patricia


Elaine Meinel Supkis

Thanks for the information, Patricia.

You are all suffering from global inflation as all the oil pumping nations have this. This is due to the US printing money for export. We always do this in order to get energy without exporting goods.

Europe is not doing this, by the way. Japan is doing this via proxy, through the dollar.

The 'little people' across the entire earth are being asked to fix the US oil addiction financial problems via reduction in our living standards. This is what inflation is in the end.

About the Derivatives Beast: I missed that Bloomberg story. I predicted it would DOUBLE EVERY YEAR and indeed, grow even faster.

When it was at $500 trillion, I was horrified. So now it is over a quadrillion dollars? If that doubles every year it will become as big as the entire universe. Because it is being compounded, not just linear growth. A thing that doubles in size every cycle goes from half full to full in one time cycle. And nothing ever goes to infinity.

Canuck

Well Patricia I’m afraid I’ll have to disagree with you pretty much in total. Energy prices are not driven by local conditions in the Edmonton market or even the Western Canadian market. We’re locked into a market driven supply demand schema, good or bad regulations and controls have been abandoned and deconstructed broadly. There is no public pressure to re-instate nationalization of resources or increased regulation at this point (unless you talk to someone from Eastern Canada, but they can’t change the constitution unilaterally, can they?).

Yes, oil companies are raking it in but so is the provincial government. If you’ve been checking the headlines and government WebPages lately you’ll see that provincial revenues and expenditures are at record rates (again), this is your oil revenues in action. We’ve got the highest provincial expenditures per capita in the country and that includes health care. Even though you don’t have to go far to hear about difficulties in the health care arena, believe me these are minor compared to what would be experienced with revenue shortfalls in the provincial arena.

Housing costs in the Alberta market cannot be accounted to a single cause, it certainly cannot be laid at the feet of oil affluence alone. Housing costs have risen in unison with American and European markets for the run up. Deflation in values has not as yet met with experiences in other parts of the world but signs are that this could easily be triggered. The primary differentiation in the Alberta market has been 8 – 10 years of net in-migration causing housing market pressures and specifically oil affluence causing up-scaling of accommodations. The up-scaling aspect has pretty much run its course and concluded approximately Aug. ‘07. Any continuation of net out migration as experienced in the early part of this year will have a drastic effect on pricing in the housing market.

Food costs are a global problem and are not unique to Alberta therefore with our energy affluence and the stronger economic Canadian position due to demand for our resources and the organization of our society we are in a better position to deal with this issue. We really aren’t in a position to complain in comparison to the majority of humanity.

I think you’ll be hard pressed to find any of the social agencies will disagree that net in-migration of people trying to over the last 8 – 10 years has not increased the numbers of people in the requiring assistance, these increased numbers are not indicative of increased unemployment, far from it. As for working poor being unable to get accommodation, this happens every single Alberta boom, for that matter it happens in just about every location there’s an economic boom. It comes with the territory. Check out the dormitories in China for wal-mart production workers if you think we have it so bad. People around here won’t even accept to live like that, they’ll demand the government handout first. We’ll be the first people in history to repair social ills with money? Hardly.

Patricia you must be blind, manufacturing jobs have vanished? Come on, really. I go to Ft. McMurray frequently and every single time during daylight hours I pass 3-12 huge manufactured modules heading north on Hwy. 63. Take a look and the module assembly yards in south Edmonton and see how much steel is there. There’s one off 17th street north of Sherwood Park Fwy. Go take a look if you don’t believe me. There’s literally 100’s of billions of investment in upgraders in the industrial heartland and the corridor to the extents of Ft. McMurray. I recently interviewed for a project coordinator position at the latest Scottford upgrader, they need 600 people for that projected construction alone, not even considering adjacent projects. Projects are slated for the next 10 – 15 years, these are on the books and approved now. We’re talking 100’s of billions of dollars here. Costs for us to rebuild a small high tolerance gear pack has gone from $15,000 to $35,000 over the last year, that’s due to demand. Check out the manufacured home businesses, the one in Barrhead is bringing in Chinese temporary workers for crying out loud!

Let’s get real, I travel the country frequently, the level of affluence here is astonishing. You can’t drive for two minutes just about anywhere in Alberta without seeing a 4 door mega ½ ton jacked up with flashy chrome monster wheels. Get out of the city, take a look at the opulent houses in remote rural locations, I drive past these houses constantly; they can’t be supported by a rural economy. People are rolling in cash; the help wanted signs are still everywhere and yes this is due to our resources. Look at all the trucks driving around Edmonton with business signs on the side for home construction and renovation, there everywhere.

You say you’ve been in Edmonton for 50 years, fine; I’ve been here my whole life. I remember struggling to try and find a job in the mid eighties, I remember when people were handing there house keys to the banks and having to auction their businesses, I worked in Nisku when it was a ghost town. Alberta’s still rocking with no end in sight despite frayed edges of the social structure.

Jim Smith

To Elaine, I would like to say that we Canadians (as I sense the feeling after studying it for most of eighty years) DO NOT HATE AMERICANS but have a profound sense of companionship with them. It is the elite wealth-accumulators of both countries that are dragging us down at an ever increasing speed.

To Patricia, I do commiserate with you, but at least in Alberta your provincial sales tax is zero, ours in Ontario is 8% on almost everything. For a century, Ontario was the driver and support of the Canadian Confederation, but now our manufacturing industry is rapidly draining away and we are becoming a "have not" province looking for a handout.

RobG

Ahhh, some real gems over at http://market-ticker.denninger.net/. I especially like the quote about being 'all-in'.


The Fed has intentionally contaminated its balance sheet, debasing the stability of US Treasury debt, and then Congress is surprised when, instead of flying to safety in Treasuries, people look for a different option?

I'm not surprised at all - the obvious dislocation this can cause in things like oil prices ought to be clear to anyone with an IQ larger than their shoe size.

Congress spent another day attacking "speculators" ...

This is not about speculation.

It is about the fact that Mr. Bernanke, aka "The Wizard", has debased the former "safe haven" for money, that is the Treasury market through his "alphabet soup" games, and Paulson and Congress have done their part by blowing $450 billion in stimulus checks and housing bailout proposals. The result of all of this is that people are now looking for somewhere else to run to when threatened by fear in equities, and right now that "somewhere else" is OIL!

This is what happens when Ben and Congress try to save their banking buddies from having to take their marks and eat their losses. You generate yet another problem; you simply can't toss around nearly $1 trillion all-in without seeding horrifyingly bad consequences throughout the economy, and to think you can do this sort of thing without creating dislocations far and wide is the height of arrogance.

Jim Smith

To: Patricia and Canuck. You are both right. Re-read the story of the six blind men and the elephant!

Canuck

Jim Smith:

Canada is experiencing economic displacement. I would dare to say one that was greatly anticipated in Western Canada during the 70’s oil boom. This was deferred by global economic conditions and exacerbated by the National Energy Program.

Frankly Alberta was poised to take advantage of a transference of economic power during the 70’s and we were not particularly surprised that the Eastern Canadian establishment would take a position to block and prevent it from happening.

Due to Globalization and deregulation of energy markets Central Canada is unable to effect this transference of economic power at this time, either by legislation or restriction of credit.

Elaine Meinel Supkis

Generally speaking all commodity markets love easy money and hated the gold standard. History is very clear about this.

What happened when first the British then the US empire collapsed due to war costs, the pro-gold bankers gave up and joined the commodity people and turned everything in to commodity markets.

PJSV

ELeine,

Please your comments on this:

http://www.globalresearch.ca/index.php?context=va&aid=9042


http://www.globalresearch.ca
/index.php?context=va&aid=9042

rockpaperscizzors

A must read on oil manipulation. The usual suspects of price rigging are: Goldman Sachs, JP Morgan/Stanley, Citigroup, Deutsche Bank. Excerpts from asiatimesonline:
Oil price mocks fuel realities
May 24, '08
By F William Engdahl

"As business and consumers consider the implications for them of crude oil selling at US$130-plus per barrel, they should bear in mind that, at a conservative calculation, at least 60% of that price comes from unregulated futures speculation by hedge funds, banks and financial groups using the London ICE Futures and New York Nymex futures exchanges and uncontrolled inter-bank or over-the-counter trading to avoid scrutiny...The hoax of "peak oil" - namely the argument that oil production has hit the point where more than half all reserves have been used and the world is on the downslope of oil at cheap price and abundant quantity - has enabled this costly fraud to continue since the invasion of Iraq in 2003, with the help of key banks, oil traders and big oil majors.

Washington is trying to shift blame, as always, to Arab oil producers and the Organization of Petroleum Exporting Countries (OPEC). The problem is not a lack of crude oil supply. In fact, the world is in over-supply now......The US government's Energy Information Administration (EIA) concluded in its most recent monthly Short Term Energy Outlook report that US oil demand is expected to decline by 190,000 barrels per day (b/d) this year.......

CHINESE CONSUMPTION, the EIA says, far from exploding, is expected to increase this year by only 400,000 barrels a day. That is hardly the "surging oil demand" blamed on China in the media. Last year, China imported 3.2 million barrels per day, and its estimated usage was around 7 million b/d total. The US, by contrast, consumes around 20.7 million b/d.

That means the key oil-consuming nation, the US, is experiencing a significant drop in demand. China, which consumes only a third of the oil the US does, will see a minor rise in import demand compared with the total daily world oil output of some 84 million barrels, less than half of one percent of total demand.

Big new oil fields coming online

Not only is there no supply crisis to justify such a price bubble. There are several giant new oil fields due to begin production over the course of 2008 to further add to supply....

In the US, stockpiles of oil climbed by almost 12 million barrels in April according to the May 7 EIA monthly report on inventory, up by nearly 33 million barrels since January. At the same time, MASTERCARD'S MAY 7 US GASOLINE REPORT SHOWED THAT GAS DEMAND HAS FALLEN BY 5.8%. And refiners are reducing their refining rates dramatically to adjust to the falling gasoline demand. They are now running at 85% of capacity, down from 89% a year ago, in a season when production is normally 95%. The refiners today are clearly trying to draw down gasoline inventories to bid gasoline prices up..

Goldman Sachs again in the middle

The oil price today, unlike 20 years ago, is determined behind closed doors in the trading rooms of giant financial institutions like Goldman Sachs, Morgan Stanley, JP Morgan Chase, Citigroup, Deutsche Bank or UBS. The key exchange in the game is the London ICE Futures Exchange (formerly the International Petroleum Exchange). ICE Futures is a wholly owned subsidiary of the Atlanta Georgia International Commodities Exchange. ICE in Atlanta was founded in part by Goldman Sachs, which also happens to run the world's most widely used commodity price index, the GSCI, which is over-weighted to oil prices.

http://www.atimes.com/atimes/Global_Economy/JE24Dj02.html


Hubbert's Peak Oil is supported by none other than Matthew Simmons. Simmons is the Chairman of the Simmons & Company International, a specialized energy investment banking firm, and author of Twilight in the Desert...."The firm has completed approximately 600 investment banking projects for its worldwide energy clients at a combined dollar value in excess of $77 billion."
http://www.nps.edu/cebrowski/Docs/energy/Simmonsbio.doc

And according to atimes " friend of Vice President Dick Cheney."

To revise a Thomas Paine quote: All national/global institutions of investment houses and central banks, whether Goldman Sachs, JPMorgan/Stanley or Citigroup, appear to me no other than human inventions, set up to terrify and enslave mankind, and monopolize power and profit."

Hubbert's Peak oil is nothing more than a scam promoted and supported by those who profit on human misery.

Elaine Meinel Supkis

Wouldn't it be fun if oil was infinite? Except this is IMPOSSIBLE. Oil is nothing except dead things from the past. The earth had limited number of dead things that could be turned into oil via earth tectonic plate movements and the rise and fall of the oceans.

Since we know oil is LIMITED this means...there is a peak! The peak has several features: easy to pump oil is definitely past its peak.

Harder to get oil is approaching its peak.

Very hard to get oil is barely begun to be used. There is a lot of oil under Greenland's glaciers and perhaps Antarctica.

BUT getting it is increasingly expensive! The longer we seek oil, the more expensive it is to get it out of the ground, process it and move it.

Any one who reads nuts online like Engdahl, for example, can believe in the Tooth Fairy, Santa Claus and infinite oil.

The Peak of EASY oil is already here and going fast! End of story. Fooling yourself about this is not going to help survival chances.

There is speculation about oil but this is due to an artificial restriction on oil because the US is making it as impossible as possible for Iran to sell oil on the open markets. Every time the US prevents either Iran or Iraq from selling oil, world oil prices shoot up.

We want to fix this? We stop hassling Iran.

blues

I have concluded that the Hubbert's Peak Oil is substantially correct, which basically says that petroleum is a finite resource. The only question, in my view, is whether there is much more oil left in the earth. Some people talk about new, or undisclosed oilfields. Maybe. Others talk about abundant hard-to-get oil, such as Russian ultra-deep wells, or deep water wells. maybe, maybe not, and it would be hard-to-get.

When it does run out, it truly will be gone. So far, there are no uncomplicated substitutes for oil, and if we are going to prepare for the future, it will be now or never. We need to stop the absurd wars, and begin preparing. The military/industrial complex shows no signs of ending our national protection racket, however.

It would seem that perhaps the only way around the hydrocarbon feast is fusion energy, if we want to keep technology going. But it produces a vast amount of neutrons, which contaminate containers, etc. There is also the fear that one could blow up suddenly. These problems of fusion reactors are far, far more tractable than those posed by fission reactors. It has recently been proposed that small fusion reactors would be even more efficient than large ones. Without some source of concentrated energy, extreme industrial operations, thus technology, will come to a halt. We will never get to fusion after the age of technology ends, so it's now or never.

Bear of Little Brain

Re: Oil

(Just about to post this and notice Elaine and Blues have posted since I started t-y-p-i-n-g this. Have to go out, so no time to rewrite. Will check back tomorrow.)

Engdahl's writings are always interesting. He has also written about abiotic oil, the creation of oil deep in the bowels of the Earth's crust. The theory (traditionally dismissed in the West, but proposed and accepted in Russia) holds that the oil is produced at a deep level and seeps upwards. Our Western supposition that it is of a fossil origin is considered to be based on the observation of fossilised organisms within the oil. We supposed that the oil was a result of the fossils. The Russians thought that the organisms may have fed on the hydrocarbons (bear in mind the life-forms that exist around the oozing fissures at the depths of the ocean rifts) and had been brought towards the surface with the oil. Observations of the moons around Jupiter have detected atmospheres of hydrocarbons and lakes of the same, obviously not the result of mega-herds of dinosaurs!
If abiotic oil is the correct theory, then we can expect near-surface oilfields to have a rate of replenishment determined by their linkage to deeper levels, but we have probably tapped out the highly-pressurised accumulation and probably cannot expect to ever see those withdrawal rates again from the older fields.
Also, because the abiotic oil that we seem to be finding off the shores of Brazil is so deep, the environment and the temperatures are too extreme for this to be cheap oil.
The Hubbert Peak and the Simmons projections are not necessarily negated by the fact that oil may not be the result of hot, squeezed, fauna and flora, or even that it is not a finite resource (the extraction and replenishment rates determine any depletion rate). The peaking is a characteristic of a pressurised vessel (the oilfield) de-pressurising as it is emptied.
We well may find that we have oil still being generated deep in the crust, but this rate may still not be enough to meet our needs at present levels. Who knows?
The reality seems to be that we just have no remotely accurate model of the world oil situation, or even an agreed, proven model for its creation/generation. Even the data from existing fields are often treated as state secrets.
As to speculation: it happens. Prices overshoot and undershoot. That is the characteristic of a control mechanism. Look at any long-term commodities chart. However, it serves a useful, but painful mechanism for adjustment, but it is not long-term unless there is a real problem. The alternative - the possibility of no indication of a problem - is worse. A blatant exploitation, like the Hunt's attempt to corner the silver market - is not for the faint-hearted and is always temporary (the Hunt's were ruined by changes in the margin rules, if I remember correctly).
Fussing over windfall profits and speculation is good theatre, but that's about all. It adds nothing to our understanding.

BTW: Oil is held in oil-bearing rock, in the "pores" of the rock. I once thought that oil (always drawn as a black blob in my geography text books) was just a big lake of the stuff. When I asked the engineers at Schlumberger (to whom I had been demonstrating some control equipment) why the ground didn't collapse when the oil was removed, they all had a really good laugh at my stupidity! Then they showed me a rock core sample they'd drilled out. Ho, hum.

Bear of Little Brain

Blues: if you have time check out some of the "Free Energy" vids on you tube. "Joe Cell" and "Mayer" (I think)
Also the brilliant Tesla may have harnessed electromagnetic energy, but he was too naive to outwit the vested interests. This EM phenomenon is something which keeps popping up (and disappearing again!)
Must fly
All the best

rockpaperscizzors

Bear of Little Brain,
I've been reading about the abiotic theory of oil/hydrocarbons. Abiotic is not the accepted Western theory. Western endoctrination and not proven: fossil fuels. Peak Oil is surrounded by the same acceptance/belief/faith endoctrination that protects religion from producing proof of the all knowing all seeing man in the clouds, resurrection, and virgin birth mythology. The belief system of the tooth fairy, Santa Claus, and the the dinosaur of all: fossil fuels. Yes, Virginia, a bazillion dinosaurs perished in a mass grave, aka the Middle East and thus "fossil fuel" was created and now we've entered "Peak OIl."

"The modern Russian-Ukrainian theory of deep, abiotic petroleum origins is not the work of any one single man -- nor of a few men. The modern theory was developed by hundreds of scientists in the (now former) U.S.S.R., including many of the finest geologists, geochemists, geophysicists, and thermodynamicists of that country. There have now been more than two generations of geologists, geophysicists, chemists, and other scientists in the U.S.S.R. who have worked upon and contributed to the development of the modern theory. (Kropotkin 1956; Anisimov, Vasilyev et al. 1959; Kudryavtsev 1959; Porfir'yev 1959; Kudryavtsev 1963; Raznitsyn 1963; Krayushkin 1965; Markevich 1966; Dolenko 1968; Dolenko 1971; Linetskii 1974; Letnikov, Karpov et al. 1977; Porfir'yev and Klochko 1981; Krayushkin 1984)."

two competing theories concerning the origins of petroleum. One theory claims that oil is an organic 'fossil fuel' deposited in finite quantities near the planet's surface. The other theory claims that oil is continuously generated by natural processes in the Earth's magma. One theory is backed by a massive body of research representing fifty years of intense scientific inquiry. The other theory is an unproven relic of the eighteenth century. One theory anticipates deep oil reserves, refillable oil fields, migratory oil systems, deep sources of generation, and the spontaneous venting of gas and oil. The other theory has a difficult time explaining any such documented phenomena.

The notion that oil is a 'fossil fuel' was first proposed by Russian scholar Mikhailo Lomonosov in 1757. Lomonosov's rudimentary hypothesis, based on the limited base of scientific knowledge that existed at the time, and on his own simple observations, was that "Rock oil originates as tiny bodies of animals buried in the sediments which, under the influence of increased temperature and pressure acting during an unimaginably long period of time, transform into rock oil."
Two and a half centuries later, Lomonosov's theory remains as it was in 1757 -- an unproved, and almost entirely speculative, hypothesis."
http://educate-yourself.org/cn/davemcgowanstalinandabioticoil05mar05.shtml

CONFESSIONS OF AN "EX" PEAK OIL BELIEVER
http://www.financialsense.com/editorials/engdahl/2007/0925.html

"The [abiotic] theory is presently applied extensively throughout the former U.S.S.R. as the guiding perspective for petroleum exploration and... there are presently more than 80 oil and gas fields in the Caspian district alone which were explored and developed by applying [this] theory and which produce from the crystalline basement rock [i.e. where there could be no organic source for a fossil fuel]."
http://rongstad.blogspot.com/2008/03/abiotic-oil-theory.html

Personally, I would prefer a society that found alternative energy via, solar and wind that would protect the environment. Gas guzzlers may go the way of the dinosaurs again as they did during Carter's administration. And hopefully, public transportation will become the environment friendly government financed of the future. But then again, that may belong under wishful thinking and fairytales.


Elaine Meinel Supkis

Good grief. Abiotic oil is idiotic. Oil is made from dead things. It does not come from the mantle. EVEN if it did, we would DIE if we try to tap it. For obvious reasons! The world can't be a ball of energy which we consume. That will kill us. Period.

As for understanding oil peaks: this is when the MOST OIL IS PUMPED. This is when we have seemingly endless oil! The price hikes are, as I keep proving, due to the US talking war, war, war against one of the top oil exporting nations on earth! So this causes uncertainty in markets and thus, price speculation.

Duh.

If the US stops this nonsense, the price of oil will drop by at least $50 a barrel. But we are talking even more about embargoing Iran totally. This will definitely drive oil to over $200 a barrel.

Peak oil is very simple: as new wells are found, old ones cease producing ever faster than the discoveries. We can't look at it as it happens. It is seen in RETROSPECT. One fine day, we all realize, the oil depletion rate is faster than the discovery rate and thus, the end of the Oil Era will be at hand over a 100 year period. Namely, the oil doesn't stop the next day. It slowly gets to be less and less and more and more expensive. Bit by bit. Over many years.

Elaine Meinel Supkis

This is why I warn everyone to not put off retrofitting for the decline of oil availability. If we prepare for the Peak, this PUTS OFF THE PEAK. See? The more we do smart things, the longer it takes for the peak to arrive.

If we guzzle oil, the Peak will hit very suddenly and we fall off a cliff. The more we prepare, the less hideous the downside of peak oil. I find this concept very simple. But most people think oil peaks=oil shortage. This is false.

Elaine Meinel Supkis

Another thing: oil comes mostly from dead SLIMY stuff, not 'animals' unless one thinks of algae and dense mats of ferns as 'animals' I suppose.

The oil comes from one sort of rock formation: where there is salt from the ocean flooding once-isolated waters that had millions of years of rotting swampland that was many hundreds of feet thick. This is why there is not oil all over the earth, just in very select places where oceans once were or where land was once at sea level but no longer due to tectonic plate movements. This is also why oil is so good at making other things like plastics, etc. It is organic, not rock.

Just as coal. Coal doesn't need the 'salt dome' to exist. It is also thick layers of rotting plant life that is crushed into coal after being covered by sand or mud [slate and shale] etc. Since it is not liquid, it and be folded by mountain making such as we see in the Appalachians, for example.

But it is still organic, like oil. And we know the coal in the Appalachians is very, very old, from when the first insects came out of the sea and evolved into insects and the first amphibians followed. But coal isn't dead amphibians. It is dead plants. Thick layers compressed brutally.

Bear of Little Brain

Elaine,
Abiotic oil is not idiotic. However, it is interesting. It is a competing theory that explains oil being found 30,000 ft below ground/sea level in an environment and depth that is not compatible with the "dinosaur" explanation. The Russians have tapped oil at these depths and, apparently, have done the same for the Vietnamese oil fields. Now Petrobras has found oil at similar depths off the coast of Brazil, although the actual reserves have yet to be determined. Basically, we just don't know and cannot agree on what is going on and, as far as I know, have been unable to reproduce oil creation in the laboratory from either theory. However, the mere fact that Petrobras even considered exploring where they did shows that there must be some basic rethinking going on in the oil industry, because those test drillings would not have been cheap. None of this dismisses the possibility of peak oil having occurred or about to occur, it merely changes the way we discuss oil origination and our expectations of how it may be found. A scientific theory being disputed is not exceptional.
I don't disagree on the rest. I just wanted to highlight our lack of understanding.

Bear of Little Brain

Having read your latest posting, please correct my tongue-in-cheek use of "dinosaur" to "previously living matter". I wasn't being serious in using that word, but it is about as correct as "fossils" would have been.
Anyway, I really cannot claim sufficient knowledge on all this hydrocarbon stuff. I just find alternative theories interesting and prefer not to dismiss them too quickly.
I'll leave the electromagnetic cosmic theory and the notion of an expanding planet for a later day! ;-)
Take care.

Elaine Meinel Supkis

The Russian claims have NOT been settled by any outside scientists. end of that story.

Also, the Caspian sea area is a part of the planet where the lithosphere has collapsed into the lower levels. This lithosphere has organic materials from earlier eons. See? Geology is not a layer cake, It is folded, curved, tilted and even falling back into the planet. http://elainemeinelsupkis.typepad.com/earth_news/

But the fact remains: NO geologist has proven that oil is NOT organic. Anyone can allege this but proving is a whole different kettle of fish.

I have the Earth News section here that talks about geology a lot.
http://elainemeinelsupkis.typepad.com/earth_news/

Bear of Little Brain

PS: If you find my wandering notions too far off topic, possibly disruptive, please feel free to say so. There is usually little that I can contribute to your political/economic history and analysis, from which I have learned a lot, so I tend to find myself drawn to the minutiae, like this:

"Namely, when Hitler was hiding like the coward he was…"

Whatever anyone may say about Hitler (no, I'm not a fan), he was not by nature a coward. He was awarded the Iron Cross twice in the Great War for bravery under fire, if my memory serves me. His superior officers considered him recklessly brave. Interestingly, the same was said of the young Winston Churchill. Reckless bravery in battle is not a charge that can be held against the Leader of the Free World, or his VP (or Blair or Brown). We do not need to search the past for our cowards.

Robert Sczech

The question whether oil is of abiotic or biotic origin is irrelevant for the problem of peaking oil production. Regardless whether oil is abiotic or not, the problem is that the rate at which we consume crude oil exceeds by many orders of magnitude the rate at which oil is being produced by mother earth. In a couple hundred of millions of years, there will be again plenty of oil on earth. That oil will be either of abiotic or fossil origin. The problem is that this natural production of oil is too slow in order to sustain the pace of our economy. A myriad of depleted oil fields all over the world is convincing proof that oil, regardless whether of abiotic origin or not, is not being reproduced at a rate fast enough in order for the industrial society to have any sustainable future.

Any discussion of credit is incomplete without taking account the depletion of natural resources of which oil is perhaps the most important. The decline of the real US economy since the early 1970 is in my opinion clearly linked to the fact that US oil production peaked in 1970. As of today, more than 90% of the original US endowment with crude oil is gone (depleted). The occupation of Iraq (and Iran in the future) are acts of desperation by a dying empire.

Elaine Meinel Supkis

Hitler hid in a bunker while Germans suffered bombs falling on them and their homes! Total cowardice.


About oil production: it isn't mere 'dead things': it is mostly dead things that aren't EATEN by other living things. In other words, most of earth's oil is from either extinction events or when there were no big animals to eat small creatures or plants. For example, the huge chalk formations we see today were the product of life forms dying and leaving tiny shells behind...because there were no whales to eat them, just for example.

Large filter feeders are all over the ocean ecosystems. If humans kill all of these creatures, the plankton can then peacefully die and create more chalk and oil. But once the large feeders evolved, the masses of dead things dropped dramatically.


It is hard for humans to accept this truth. The extinction events nearly always were due to violent changes in the earth via meteorites and volcanos. So the oil is VERY specific to time and place. It is NOT a continuing process. More oil is NOT being generated by earth processes!

Hard for humans to accept! But we must understand all this if we have even slight hope for the future.

Elaine Meinel Supkis

Any peat fields that could possibly become oil in the future can do so only if the fields are where oceans can overrun them and cover them with sand, mud and salt. Another very curious factor about oil geology is that these tend to be places where the ocean overruns the land and then evaporates repeatedly or are oceanic areas that dessicate due to Ice Ages, for example. This caps the dead plants and animals with a sealer of salt that allows it to 'cook' over the eons. Unsealed dead things can be crushed into coal, for example.

But this requires them being on land and located where they can be covered by dirt somehow, mostly from eroding mountains...usually, again, during extinction cycles.

Paul S

I came across this article re the causes of oil price increases. Here is the link: http://www.middle-east-online.com/english/?id=25878 The reasoning makes sense to me, but if any here could check it out and give their opinions, I would appreciate it.

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