April 29, 2007
I spent the weekend in South Dakota visiting an old friend of mine. Not much exciting to report other than it’s interesting to see the proliferation of wind turbines popping up in Southwestern Minnesota. I counted a good 20-30 turbines that I could see from I-90, and I know there’s a bunch more in the Buffalo Ridge area north of Worthington.
While I was coming home today, I had the cruise control on and spent a few moments just watching the pavement rushing by my car. Here I was, sitting comfortably doing very little while my energy slaves were conveying me home quickly. What used to be a long journey from Minneapolis to Sioux Falls a century ago was completed in just four hours. The amount of sheer power at my control (at a reasonable price to boot) is amazing when you think about it, and when the price of gas becomes too expensive for many of us to take such car trips anymore, the road trip may join other past forms of travel like flying boats or passenger ships as romanticized icons of ages gone by.
April 26, 2007
It’s late April… the ‘summer driving season’ is still a month away and gasoline inventories in the United States are low. Really low. Because of this, CNN is reporting that at least parts of the US are going to see four dollar gasoline at some point this summer, and this is just from normal supply/demand issues. Geopolitical issues and/or a hurricane or two getting into the Gulf of Mexico could mean that four bucks a gallon is only a waypoint on gasoline’s road to five dollars per gallon or higher. So much for the earlier happy talk that gas prices would average less than three dollars this summer.
According to CNN’s story, US refineries are operating at around 88% of capacity (without explaining why), and gasoline stocks are still dwindling. Considering both the threat to the economy high gas prices poses, as well as the money-making opportunity these prices represent, I’m surprised that the refineries aren’t going full-bore. Perhaps it has something to do with PEMEX being unable to deliver the expected amount of crude to the USA? You can’t refine what you don’t have enough of…
Another interesting tidbit comes from Robert Rapier’s blog, where an EIA official comments thusly:
Inventories are very low, no one can doubt that. On a Days Supply basis, the situation is even worse. That said, there are 5 weeks until the Memorial Day weekend (the unofficial start of the peak driving season). The bottom end of the average range at the end of May is 208.6 MMB, or about 14 MMB above where we are right now. So, we would need to see an average build of 2.5-3.0 MB each week over the next 5 weeks just to get back to the bottom end of the average range. Is this possible? Yes. Is it likely? I better leave that answer to others. But we need to see imports stay high (emphasis mine) and start seeing more gasoline production (from higher crude refinery inputs), which means we can’t afford to continue seeing more refinery outages, if we have any chance of reaching that target at all.
By the way, I would have expected to see inventories increase as well.
Good luck to us on all that. I’m heading out on a short road trip this weekend and am glad to be doing so when gasoline prices are still relatively cheap.
I’ve also noticed a lot more new large trucks and SUV’s in the parking lot at work and wonder how all of these people will react when their weekly commuting costs double later this summer… it’s distinctly possible that this will happen.
April 25, 2007
Gail Tverberg is both a professional actuary and a frequent poster over at The Oil Drum. Having previously written up an analysis of the peak oil problem for the insurance industry, she now follows that up with an excellent article looking at the challenges that face us as we reach the limits of Earth’s ability to sustain the human population.
The article is pretty short but covers a lot of different topics including resource issues with soil, fresh water and the like. It’s good stuff and worth your time to read it if you haven’t already.
With more grim news coming out of Australia about the worsening drought down there (links to many stories about it here), we may get to see the effects of resource shortages on a first-world economy much sooner than most people anticipated. Australia is usually a food exporter, so the fact that farmers there may not be able to get enough of a crop to satisfy internal needs let alone exports could have major ramifications across the Pacific Rim.
People scoffed at “Limits to Growth” when it was first released, but as Ms. Tverberg points out, we may be hitting those limits soon, and the effects will be chaotic if not necessarily catastrophic.
April 22, 2007
It’s been a pretty quiet week for me. The weather has improved to the point that I can think about my new garden again, and circumstances (namely an injured foot/ankle) have helped me come to the conclusion that a whole lot of digging just isn’t going to get done anytime soon. With that in mind, I’m now looking at putting in a few small raised beds and trying the intensive route ala “Square Foot Gardening” using lots of mulch to give me some instant soil fertility.
I’m modifying the SFG model a bit by not lining the bottoms of the beds with either plywood or landscaping fabric. Doing that seems to make SFG nothing more that container gardening on steroids, which probably works fine for a lot of people but not me. I am planning on removing the sod underneath the beds, forking up the soil to improve drainage and tilth (a little bit, I know), then putting down a layer or two of cardboard to act as a temporary weed/grass barrier, and then put the bed in as normal. The cardboard will break down eventually and allow the plant roots to get into the soil underneath. The beds will be a mix of SFG and sheet mulching I guess. Some instant fertility along with the ability to improve the underlying soil over time.
I celebrated Earth Day by sneaking out in the early morning and planting a few hops rhizomes in the back yard before the rain comes. If everything goes well I should have both Cascade and Kent Goldings hops available in small amounts by the end of summer, with larger crops to come next year.
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April 16, 2007
I was fortunate enough to check out Bill McKibben’s latest book, “Deep Economy” from my local library before the wait list started filling up. I take it as a positive sign that new books covering subjects like these are sought after among other members of the community.
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April 14, 2007
John Michael Greer has written another very good post about one possible pattern a post-peak economic collapse may look like. As usual with his posts, it’s good stuff.
April 14, 2007
I was at the local mega-bookseller trying to fight off the urge to buy a copy of “Square Foot Gardening” yesterday (I did) when I saw something very unusual. This particular bookstore (one of the major national chains) has devoted a good 4 feet of shelf space to titles related to growing marijuana. This is either something new or else I wasn’t paying attention before. Considering that possession or use of pot is illegal in Minnesota (medical marijuana is allowed in a few circumstances), I thought it odd that they were selling a number of books devoted to growing the finest weed you can.
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April 13, 2007
The Strib has an article about how “new figures show foreclosures in Hennepin County doubled during the first three months of this year compared to the same period last year.” This includes the city of Minneapolis as well as some of the wealthiest suburbs in the state. The story states that foreclosure rates are up across the state and that the problem is getting worse, not better.
The scariest part of the story for me was the note about how by some estimates subprime interest rates may rise as high as 12%. That will be a knockout blow for many borrowers, considering that the oldest of these loans are no more than three or four years, so the lion’s share of the monthly payment is interest. Tripling or quadrupling of your monthly payment is a nasty scenario, isn’t it?
The problem isn’t contained to the inner city… pretty much anyone could get a subprime mortgage, so the fallout in terms of declining home prices will affect a lot of people. Anyone who’s got an ARM needs to realize the gravity of their situation and figure out an escape plan soon.
April 11, 2007
I just posted an interesting item about el Jefe & The Economist agreeing on something at Groovy Green. No word on whether there was a total eclipse of the Sun, hell freezing over, or anything of the like.
April 10, 2007
Some interesting items you may not have seen:
- Food costs are rising globally, thanks in part to increasing demand for biofuels. I’ve noticed that our average food bill is going up when we make our bi-weekly run to the megamart, regardless of my attempts to watch for sales, buy less processed foods and whatnot. I’m not keeping close tabs on our bill, but I’d say it’s risen on average by maybe 7-10% over the last six months or so.
- Have I mentioned that I think ethanol is mostly a boondoggle for farmers? More writers are getting on the bandwagon.
- When a financial website mentions that meat prices may be going through the roof, I’d suggest paying attention long enough to do some more research on the subject. I did the vegetarian thing in the past, and while I have no plans to quit eating animal products cold turkey (pun intended), I think that we’ll be eating a lot less meat in the future simply because most of us won’t be able to afford it. For myself, if I have an opportunity to get my mitts on a good source of protein, I’m not going to do a whole lot of soul-searching on where it came from. As Kunstler has written, some day our descendants will have trouble believing that there was ever such a thing as a bad calorie.
- Anyone who thinks the subprime mortgage problem is either A) getting better, or B) going to be limited to that sector of the mortgage market needs to get a reality check. We are just starting to enter the main wave of ARM resets over the next six months or so. Bill Gross of PIMCO (a major bond company) thinks that housing prices could decline by as much as 20% by the time everything is said and done. That’s bad news for a lot of homeowners who have less than 20% equity in their houses, but it could be much worse… that’s getting off light in my book.
- Needless to say, in any market there are winners and there are losers. The ratio of winners to losers is starting look a lot like it was back in the 1920′s. Von Hoffman’s comments on how the national candidates for both major parties are elected by the same 300,000 wealthy people in this country resonate with me…. probably because I’m not one of those 300,000.
- Want to know what the future will look like? The UK Ministry of Defense has painted a picture that isn’t reassuring. That said, EMP weapons are hardly anything new unless they’re talking about one unaccompanied by a nuclear explosion.
- In an unsurprising move, General Motors now appears to be backpedaling on their plans for their ‘Volt’ electric car. There still needs to be a major breakthrough in battery technology unless you think people will be satisfied getting only 20 to 30 miles per charge.
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