Monday, August 28, 2006

Track the Last Hurricane on a Google Map

I've started to build a little Google map mashup about Hurricane Ernesto:

Hurricane Tracker

The last forecast and observed tracks are displayed on the map as well as the location of the oil platforms in the Gulf of Mexico. I'm planning to add also refinery positions along the coast. Enjoy!

Wednesday, August 23, 2006

An Open Letter to my Friends in the Media

by Jeffrey Brown

To my friend in the media:

Russia Overtakes Saudi Arabia as World’s Leading Oil Producer — OPEC
Created: 23.08.2006 11:24 MSK (GMT +3), Updated: 13:39 MSK

Excerpt:
"According to OPEC, in June 2006 Russia extracted 9.236 million barrels of oil, which is 46,000 barrels more than Saudi Arabia. The statistics also showed that Russian production in the first half of this year increased to 235.8 million tons, a year-on-year improvement of 2.3 percent."
I assume that most media outlets that report the captioned story by the Moscow News would describe it as good news regarding Russian oil production. What the Moscow News is not reporting is that current Russian production is 2.8% below its December level. As I outlined in a recent article regarding net oil exports, "Net Oil Exports Revisited", I estimate that oil exports from the top 10 net oil exporters are probably now falling at a double digit annual rate. The captioned article provides additional evidence of the decline, since the June production number is below the May (EIA) production number for Russia.

I have a question for my friends in the mainstream media. Who among you is going to have the courage to step forward and "break" the story that the lifeblood of the world economy--net oil export capacity--is now declining?

I just read this morning in the Dallas Morning News that a builder is breaking ground on a new suburban McMansion subdivision that is closer to the Oklahoma border than it is to downtown Dallas. Perhaps if we had a mainstream media that reported the hard truth about our energy supplies, we would not see stories like this suburban insanity. Builders in the Dallas/Fort Worth area continue to pave over prime farmland for suburban McMansions that will soon be wildly unsustainable, covering up the very farmland that we will soon need to feed the cities.

As I said in an "Open Letter to Two Texas Newspapers", the US media have two choices regarding the Peak Oil issue. To paraphrase Winston Churchill, you can now have either your honor or the status quo. If you do nothing regarding Peak Oil, you will soon have neither the status quo nor your honor.

I should mention that, to its credit, the Dallas Morning News did prominently feature a pro and con segment regarding Peak Oil. However, this is not a one time story. We are looking at a fundamental transformation of our society. Richard Rainwater said that Peak Oil was the only scenario that he had seen that made him concerned about the survival of the human race. I agree with Mr. Rainwater.

Regards,

Jeffrey J. Brown

Jeffrey J. Brown is an independent petroleum geologist in the Dallas area. His e-mail address is westexas@aol.com

Sunday, August 20, 2006

Net Oil Exports Revisited: The No Down Payment Disaster and a Proposed Triage Plan

by Jeffrey J. Brown

Net Oil Exports Revisited

I've written several articles and posts based on "Khebab's" excellent technical work. This was my first article, posted in January, 2006, on The Oil Drum:

Hubbert Linearization Analysis of the Top Three Net Oil Exporters

My concluding statement from this article: "It would seem from this case that these factors could interact this year produce to an unprecedented--and probably permanent--net oil export crisis."

I thought that it would be interesting to compare the decline since December in world crude + condensate production to the decline in production from the top 10 net oil exporters (based on the 2004 list of top exporters).

As of the May, 2006 EIA numbers, the world is down 1.3% since December, an annual decline rate of 3.1% per year, but the top 10 oil exporters are down 3.0%, an annual decline rate of 7.2%.

Note that consumption is growing quite rapidly in most of the exporting countries, and note that in most cases domestic consumption is satisfied before oil is exported. In the captioned article, I showed, using my "Export Land" model, how a 25% drop in oil production and a 20% increase in consumption (over a five year period) would lead to a 70% drop in net oil exports.

I estimate that net oil exports from the top exporters are probably down by 4% to 5% (over a five month period), an annual decline rate of as much as 12% per year, which suggests that exports from the top exporters are falling about three to four times faster than world oil production is falling

As I have been relentlessly pointing out, I think that we are looking at a series of bidding cycles for declining net oil export capacity, with the oil going to the high bidders and with the losers having to reduce consumption. Leanan, on The Oil Drum, has documented several case histories of poorer countries having to reduce consumption. Soon, the developed and rapidly developing countries will be bidding against each other, instead of bidding against regions like Africa.

However, we are beginning to see clear signs of stress here in the US, among poorer households and among financially overstretched homeowners. Consider some recent numbers from the 8/21/06 issue of Barron's.

"The No-Money-Down Disaster"
Lon Witter, Guest Column, 8/21/06 Barron's

Summary:

  • 32.6% of new US mortgages and home equity loans in 2005 were interest only, up from 0.6% in 2000
  • 43% of first-time home buyers in 2005 put no money down
  • 15.2% of 2005 buyers owe at least 10% more than their home is worth
  • 10% of all home owners with mortgages have no equity in their homes
  • $2.7 trillion dollars in loans will adjust to higher rates in 2006 and 2007

At the end of 2003, 1% of Washington Mutual's (WaMu's) option ARM (adjustable rate mortgage) loans were in negative amortization (the borrowers were borrowing more money each month, not even paying enough to pay the monthly interest charge in full). At the end of 2005, 47% of WaMu's option ARM's were in negative amortization (55% by value of the loans).

WaMu is booking these negative amortization payments as earnings. In prior times, loans where borrowers were making less than the interest payments would be classified as non-performing loans. In January-March, 2005, WaMu booked $25 million in earnings from negative amortization payments. In the same period in 2006, WaMu booked $203 million in earnings from these payments. These borrowers are increasing their mortgage balances as property values have started falling, so the default risk on these loans is extremely high.

Mr. Witter estimates that a simple revision to the mean suggests a 30% drop in residential property values in the US over the next three years. This is without considering in the effect of further increases in energy prices.

A Proposed Triage Plan

I believe that vast expanses of American Suburbia are going to become virtually abandoned in the years ahead. Alan Drake has noted that a good deal of suburbia was so poorly constructed that a lot of it is biodegradable. Alan has outlined how we can go back to what we used to have: electric trolley cars connected to electric light rail lines.

CBS Sunday Morning, on 8/20/06, had a segment on "tiny houses." They profiled a home designer and builder who specialized in building very small functional homes of about 100 square feet. You can find more information on his website.

What this builder has realized, and what millions of Americans are just beginning to also realize, is that anything over 100 square feet or so per person is not a necessity; it is optional consumption, a want, instead of a need.

The US is not Switzerland, but Alan Drake has described how Swiss per capita oil consumption in the Second World War was about 0.15% of current US per capita oil consumption. They did it primarily by electrifying their transportation system.

I propose a sort of triage operation: "tiny" homes and multifamily housing along electric mass transit lines. In my opinion, it is the only way that we can preserve some semblance of a civilized society. The suburbs are, by and large, a lost cause.

Jeffrey J. Brown is an independent petroleum geologist in the Dallas, Texas area.
His e-mail address is westexas@aol.com

Tuesday, August 15, 2006

A Repository of Oil Production Datasets in a Public Spreadsheet

I've decided to put the data I use in my posts in a public spreadsheet:

http://www.editgrid.com/user/graphoilogy/Oil_Production

I will slowly add the different datasets I have in the next few days. Different download formats are available here.

Khebab