View Full Version : Peak Cheap Oil, Peak Dollar, but no Peak Gold
http://www.itulip.com/images/oildollargold.jpgPeak Cheap Oil, Peak Dollar, but no Peak Gold
by Eric Janszen
Part I: Peak Cheap Oil
While we’ve been bringing on hundreds of welcomed new members these past few weeks, we’re also aware that we’ve perhaps been boring our regular members silly with all of these interviews and rehashing of old news. Time to lay out iTulip’s summary editorial position on oil and the future of oil prices as the US recession that started Dec. 2007 deepens and the dollar enters its next stage of depreciation. Next we’ll rip into the latest gold bashing article from the mainstream business press. Finally, we offer up an anonymous interview with the president of a top 1% hedge fund that has turned each $1 invested in 2002 into $26 today by investing in junior gold mining companies–not only the gold miners themselves but “picks and shovels” firms, too.
First, a brief note for our new readers about our methodology. We are not experts in oil or gold. We are, however, experts in rounding up sources who are experts and at doing analyses on the information they give us over long periods of time (we’ve been at this since 1998) to make reasonably accurate forecasts. Some of those experts are among us, but of course the identities of members and many of our sources that wish to remain anonymous are always kept confidential, including the subject of today's interview.
Peak Cheap Oil
We don’t believe in Peak Oil, the idea that oil will be used up at an increasing rate until one day it’s all gone. When the US ran out of easily (read: cheaply) accessed, high grade crude we shifted to overseas supplies in the 1970s. As those start to run out, where do we go, the moon? No, price will ration supply: we will experience Peak Cheap Oil. Prices will steadily rise. We may already be there.
As we first pointed out in Energy and Money (http://www.itulip.com/energyandmoney.htm) in May 2006, “Inflation is not only determined by the supply of goods available relative to the supply of money to buy them, but also the demand for the currency in which goods are priced relative to the supply of that currency. It can be hard to tell which factor is primarily driving prices.” Here's my latest take on oil prices and the dollar since the major price increases began in 2003 and where I think we are headed.
1. Dollar price of oil rising faster than demand. Global oil dollar prices have been rising far faster than demand for barrels of oil as measured by the OECD since 2004.
http://www.itulip.com/images/oildemandprice.gif
2. Dollar price of most commodities have been rising. The dollar price of nearly every kind of commodity, from foods to metals, has also increased in price at rates that are in most cases a multiple of demand growth.
http://www.itulip.com/images/crbCCIvsSpot.gif
3. Dollar price of most commodities has been rising independent of supply/demand characteristics. If you break that chart down into its component parts, you see dozens of commodities going up in dollar price more or less at the same time and extent. Commodity prices are largely driven by supply and demand. The supply and demand characteristics of all commodities cannot be such that they all share the same price timing. Logically, a price factor common to all of them must be influencing the price of all commodities. The most obvious choice is the dollar money supply.
4. Euro price of oil up only modestly. As evidence of this, note that oil priced in euros has also increased over the same period but only modestly.
http://www.itulip.com/images/oildollarseuros.gif
5. Currency depreciation. During the period, the dollar has depreciated by over 30%.
http://www.itulip.com/images/Dollar.gif
The US has used currency depreciation since 2003 as its primary economic policy tool. The objectives are to promote exports both to boost economic growth and to reduce the trade deficit.
The result has been a temporary boost in exports, a delay in the hard landing we would have otherwise experienced in 2007, but no decrease in the merchandise trade deficit. Last point first.
http://www.itulip.com/images/merchtrade.gif
As you can see, not only did the merchandise trade deficit not improve, it continued to worsen. The reason is that while the aggregate dollar value of exports increased, the dollar value of imports increased even more. Our poll of CEOs and CFOs of companies that export had been telling us all year that revenues and profits were improving, but that nearly all of the sales growth was coming from overseas business with US sales flat; IBM is emblematic. Now, a few production cycles into the inflationary boom they are starting to experience the downside of currency depreciation driven growth: input costs are rising as fast as prices of output; cash flow is squeezed and the purchasing power of profits is declining.
Now the US enters a major recession with a weak currency, large trade and fiscal imbalances, and huge entitlement liabilities. Demand for oil will decline, but the dollar will decline faster as the government comes to the rescue. The only mystery we will all have trouble solving over the next few years is whether higher oil prices are resulting from a diminishing supply of cheaply extracted oil–Peak Cheap Oil–or from an over-supply of dollars, Peak Dollar. Which brings us to our next topic: has gold gone too far too fast as a dollar depreciation indicator or is it just getting started?
Part II – More Lame Gold Bashing by the Mainstream Business Press
The front page of the Personal Investing section of today’s Wall Street Journal writer Eleanor Laise warns readers to not jump into the gold market. The article starts off this way.How to Survive the New Gold Rush (http://online.wsj.com/article/SB120156082315723535.html?mod=money_page_left_hs)
Investors Race Into the Hot Commodity, Even as Advisers
Warn That Gains May Have Peaked; Beware the Tax Hit
Gold has been riding its reputation as a safe haven to new highs. But it also carries substantial risks for investors.
With fears of a U.S. recession prompting investors to abandon stocks, the Dow Jones Industrial Average is down 6.6% so far this year. Gold, meanwhile, has been hitting new records. The precious metal has gained 11% this year, to $927.10 an ounce, and has soared 46% since the end of 2006. As the dollar weakens and the economy and markets appear increasingly unstable, some market watchers believe the metal is now headed to $1,000 an ounce.
Really? $1,000? I went on record in 2001 when gold was dead and trading at $265 saying gold may reach $2,500 an ounce, eventually. Old timers with long track records picking tops and bottoms in the gold price like Jim Sinclair over at JS Mineset (http://www.jsmineset.com) are calling for $1,650 this year.
This gold bashing article is one of hundreds like it that I’ve read since 2001 when we recommended gold as a hedge against irresponsible government spending and monetary mismanagement. These articles all more or less stick to the script that Laise follows with her four bullet points. I shoot them down, below.• Gold has lately been hitting record highs, but it comes with substantial risks for small investors.
Not so. The risks of gold investing are no greater or less than for any other investment. Are we supposed to believe that investing in bonds is “safe” with the Fed raising interest rates in panic mode? Do you like investing in TIPS when the CPI inflation rate they are based on appears to be cooked? How about owning stocks as the US is in the early innings of a debt deflation, the likes of which are still haunting Japan’s economy more than 18 years after their debt deflation started? I summarize the Debt Deflation Bear Market here.
http://www.itulip.com/images/DDBM2008.gif
The US debt deflation will result in a very weak dollar, which is inflationary. It is how the DOW/Gold ratio returns to 1:1, in case you were wondering.
On to the second fallacious point.• Pure-play gold investments can be extremely volatile.
“Can” be volatile, but please don’t mention that for the past six years gold investments “have not been” volatile and never, ever compare gold to the DJIA since 2001.
http://www.itulip.com/images/GOLDvsDOW.gif
Which was more volatile? Which provided better returns? Gold. When will we read about that in the WSJ? Next.• Though it's seen as a hedge against rising prices, gold hasn't always kept up with inflation -- and it can wreak havoc on your tax bill.
That’s true. Gold is taxed as a “collectible” at a rate of 35% on capital gains–even a gold ETF. But why? Why can’t I take out a $250,000 loan, buy gold and write the interest off against my income taxes every year for 30 years the way I can with a home mortgage? Why can’t my wife and I pocket $500,000 in gold capital gains profits tax free every two years the way we can with our primary residence? Why can’t I take out an interest only ARM with a nutty teaser rate to buy gold? Why not pay 15% on long term capital gains as on a stock? Wonder what might happen to the price of gold if these tax benefits were suddenly put in place. Think maybe the gold price might go up?
Wonder which asset the government wants US citizens to own? (Hint: Not the one that is a bet that incompetent fiscal and monetary management will result in high inflation.)• Broadly diversified funds that hold a wide range of commodities, including gold, may be a better bet for investors, advisers say.
Gold is a metal so it is in a literal sense a commodity like copper or nickel. But that’s like saying cats are food because they’re animals. Cats have one very special quality that makes them not food: cats are kept by humans as pets. We have conferred upon them a special value as companions and discounted their value as a meal to zero. Similarly, gold is not a commodity because it is the only metal held as a reserve asset by central banks. This fact is conveniently forgotten by most business writers who fail to ask the obvious question: if gold no longer has any value as a backing for currencies, why do central banks still own 20% of all the gold that has ever been mined 37 years after it was ostensibly de-linked from all currencies?
The reason is that central banks know that the incompetent, spendthrift governments they are loosely shackled to will continue to pursue inane policies and that these, in addition to their own irresponsibility such as interest rate policies under the Greenspan Fed, will eventually cause their fiat currencies to lose substantial value or worse so they’d better have something to fall back on. That was one of the reasons we recommended it in 2001 and we have not seen any compelling evidence to change our minds. As gold increased from $260 then to $924 today, what do you suppose has happened to the value of central bank gold reserves? You can bet the central banks aren’t complaining.
Part III: Peak Gold?
Today I interviewed the president of a hedge fund that invests in gold by investing in junior mining companies. Not only junior mining companies, but also mining equipment companies, so-called “picks and shovels” stocks.
The fund is in its 6th year and clearly caught the gold wave early and played it well. How well? A dollar invested at inception is $26 today. The fund has been in the top 1% since inception.
EJ: Why is gold going up?
HF: Because all currencies are going down. Have been for a while. A few funds are buying gold. That's it.
EJ: Do you see the US economy going into recession? How will that impact gold?
HF: Yes. The conclusions are so obvious that most people can’t believe it. The die is cast. It’s Argentina early 1990s and UK 1960s all over again. Things will get worse and worse. We’ll have alternating booms and bust with inflation for a decade. Peak Gold? ($ubscription) interview continued... (http://itulip.com/forums/showthread.php?p=26149#post26149)
Note: This article may be reprinted in its entirety including the link above.
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KeithOK
01-31-08, 07:08 AM
"We don’t believe in Peak Oil, the idea that oil will be used up at an increasing rate until one day it’s all gone."
Is there some sizable group of people that do believe this? It certainly doesn't describe the beliefs of peak oil believers.
"We don’t believe in Peak Oil, the idea that oil will be used up at an increasing rate until one day it’s all gone."
Is there some sizable group of people that do believe this? It certainly doesn't describe the beliefs of peak oil believers.
Peak Oil Believers do not believe that "oil will be used up at an increasing rate until one day it’s all gone." What they say is that as oil supplies decline, prices will go up and demand will go down -- It is an axiom of economics that supply always equal demand - with price being the intermediary.
As supplies decline, there are two ways to allocate that limited supply -- by pricing mechanisms (and I believe that this is what EJ is saying) or by government rationing (e.g. gas coupons issued by the government)
The first method hits the "less well to do" the hardest -- hence the possible "political" need for government purchases and rationing. The likely response to limited supplies -- e.g. of food and energy -- is a combination of both approaches.
"We don’t believe in Peak Oil, the idea that oil will be used up at an increasing rate until one day it’s all gone."
Is there some sizable group of people that do believe this? It certainly doesn't describe the beliefs of peak oil believers.
Search google for "Peak Oil" and these are the first two links returned.
"Civilization as we know it is coming to an end soon. This is not the wacky proclamation of a doomsday cult, apocalypse bible prophecy sect, or conspiracy theory society. Rather, it is the scientific conclusion of the best paid, most widely-respected geologists, physicists, bankers, and investors in the world. These are rational, professional, conservative individuals who are absolutely terrified by a phenomenon known as global 'Peak Oil.'"
http://www.lifeaftertheoilcrash.net (http://www.lifeaftertheoilcrash.net) Optimistic estimations of peak production forecast a peak will happen in the 2020s or 2030s and assume major investments in alternatives will occur before a crisis. These models show the price of oil at first escalating and then retreating as other types of fuel and energy sources are used.
Pessimistic predictions of future oil production operate on the thesis that the peak has already occurred or will occur shortly and, as proactive mitigation may no longer be an option, predict a global depression, perhaps even initiating a chain reaction of the various feedback mechanisms in the global market which might stimulate a collapse of global industrial civilization.
http://en.wikipedia.org/wiki/Peak_oil (http://en.wikipedia.org/wiki/Peak_oil)
iTulip position: "We have plenty of oil. But we're running out of cheap oil and there are no cheap alternatives."
Energy and Money, 2006 (http://www.itulip.com/energyandmoney.htm)
The operative word here is "cheap" as in representing a low or declining fixed cost to the economy. The US economic response to higher oil prices has been declining energy intensity, meaning a decline in the amount of energy needed to produce a dollar of GDP. We are optimistic that this trend will continue and accelerate as Peak Cheap Oil drives demand for conservation technologies and less energy intensive forms of production and transportation, and a changing definition of "necessary" transportation.
Charles Mackay
01-31-08, 12:23 PM
EJ, it wasn't too many months ago that you wrote an article on iTulip saying that gold could not skyrocket because it had no government support. That it would go up at the rate of inlfation. I made a comment in that thread that I'd like to refer to but can't find that article now. Can FRED or someone point me to the link. I have not been able to find it by searching.
Thanks
Charles
EJ, it wasn't too many months ago that you wrote an article on iTulip saying that gold could not skyrocket because it had no government support. That it would go up at the rate of inlfation. I made a comment in that thread that I'd like to refer to but can't find that article now. Can FRED or someone point me to the link. I have not been able to find it by searching.
Thanks
Charles
It's in EJ's keynote presentation to the 2007 Hard Assets Conference (http://itulip.com/forums/showthread.php?t=1992).
Does not say gold can't skyrocket but that it cannot meet the iTulip definition of an asset hyperinflation, which requires government support. Gold will rise in spite of government not because of it as in the case of the housing bubble.
iTulip position:
"We have plenty of oil. But we're running out of cheap oil and there are no cheap alternatives."
example,
http://www.suncor.com/links_popup.aspx?ID=3250
Calgary, Alberta (January 30, 2008) – Suncor Energy announced today that its Board of Directors has given final approval to a $20.6 billion investment that is expected to boost crude oil production at the company’s oil sands operation, located north of Fort McMurray, by 200,000 barrels per day (bpd).
vinoveri
01-31-08, 02:49 PM
That’s true. Gold is taxed as a “collectible” at a rate of 35% on capital gains–even a gold ETF. But why? Why can’t I take out a $250,000 loan, buy gold and write the interest off against my income taxes every year for 30 years the way I can with a home mortgage? Why can’t my wife and I pocket $500,000 in gold capital gains profits tax free every two years the way we can with our primary residence? Why can’t I take out an interest only ARM with a nutty teaser rate to buy gold? Why not pay 15% on long term capital gains as on a stock? Wonder what might happen to the price of gold if these tax benefits were suddenly put in place. Think maybe the gold price might go up?
Wonder which asset the government wants US citizens to own? (Hint: Not the one that is a bet that incompetent fiscal and monetary management will result in high inflation.) • Broadly diversified funds that hold a wide range of commodities, including gold, may be a better bet for investors, advisers say.Gold is a metal so it is in a literal sense a commodity like copper or nickel. But that’s like saying cats are food because they’re animals. Cats have one very special quality that makes them not food: cats are kept by humans as pets. We have conferred upon them a special value as companions and discounted their value as a meal to zero. Similarly, gold is not a commodity because it is the only metal held as a reserve asset by central banks. This fact is conveniently forgotten by most business writers who fail to ask the obvious question: if gold no longer has any value as a backing for currencies, why do central banks still own 20% of all the gold that has ever been mined 37 years after it was ostensibly de-linked from all currencies?
The reason is that central banks know that the incompetent, spendthrift governments they are loosely shackled to will continue to pursue inane policies and that these, in addition to their own irresponsibility such as interest rate policies under the Greenspan Fed, will eventually cause their fiat currencies to lose substantial value or worse so they’d better have something to fall back on. That was one of the reasons we recommended it in 2001 and we have not seen any compelling evidence to change our minds. As gold increased from $260 then to $924 today, what do you suppose has happened to the value of central bank gold reserves? You can bet the central banks aren’t complaining.
Great Points!
I know of no one (except evidently the IRS) who considers recently minted gold bullion coins (e.g., eagles, maples, kruggerands, etc.) to be collectibles. Taxing L.T. capital gains at ordinary income rates is just another way to discourage folks from holding it.
It makes more problematic Ron Paul's initial strategy for returning to gold based money: https://www.mises.org/story/2826
....
"The First Step: Gold Coinage
The heart of Mises's proposal to restore gold to our monetary system is a gold coinage. He wrote,Gold must be in the cash holdings of everyone. Everybody must see gold coins changing hands, must be used to having gold coins in his pockets, to receiving gold coins when he cashes his paycheck, and to spending gold coins when he buys in a store.[7] (https://www.mises.org/story/2826#note7) In this one detail — the critical importance of the gold coinage — I believe lies the key to establishing a new gold standard.
We should make no mistake about it: the more progress we make toward reestablishing the gold standard, the more aggressive our opposition will become. Some vested interests, as you know, have a lot to lose if we succeed in getting the monetary system reconstructed on a gold basis. The first political step is, therefore, to get the coinage into circulation.
One objective might be to aim for every American to become a gold owner. We must encourage a broader base of political support for gold ownership and the availability of gold for personal economic objectives. Certainly a broader base of gold ownership in the country would help to reduce the threats of discriminatory taxation or regulation of gold ownership and gold coin transactions, which are seriously favored in Congress today."
.....
By the way, deos anyone know more of this agreement between the Central Banks referenced in the GLD prospectus (see below)?
http://www.streettracksgoldshares.com/pdf/streetTRACKS.pdf.
"Substantial sales of gold by the official sector could adversely affect an investment in the Shares.
The official sector consists of central banks, other governmental agencies and multi-lateral institutions that buy,
sell and hold gold as part of their reserve assets. The official sector holds a significant amount of gold, most of
which is static, meaning that it is held in vaults and is not bought, sold, leased or swapped or otherwise
mobilized in the open market. A number of central banks have sold portions of their gold over the past 10 years,
with the result that the official sector, taken as a whole, has been a net supplier to the open market. Since 1999,
most sales have been made in a coordinated manner under the terms of the Central Bank Gold Agreement,
under which 15 of the world’s major central banks (including the European Central Bank) agreed to limit the
level of their gold sales and lending to the market. It is possible that the agreement may not be renewed when it
expires in September 2009. In the event that future economic, political or social conditions or pressures require
members of the official sector to liquidate their gold assets all at once or in an uncoordinated manner, the
demand for gold might not be sufficient to accommodate the sudden increase in the supply of gold to the
market. Consequently, the price of gold could decline significantly, which would adversely affect an investment
in the Shares."
I realize that this is a broad disclaimer to fully apprise the investor of every possible risk they can think of, but what (if anything) could motivate central banks to dump gold?
Finster
01-31-08, 04:25 PM
It's in EJ's keynote presentation to the 2007 Hard Assets Conference (http://itulip.com/forums/showthread.php?t=1992).
Does not say gold can't skyrocket but that it cannot meet the iTulip definition of an asset hyperinflation, which requires government support. Gold will rise in spite of government not because of it as in the case of the housing bubble.
Presumably there's no intentional government support. If you allow for government "support" by mismanagement, malfeasance, credit overexpansion, and wrecking the currency ...
Presumably there's no intentional government support. If you allow for government "support" by mismanagement, malfeasance, credit overexpansion, and wrecking the currency ...
That's not "support." That's your government hard at work! We're working hard! To wreck your economy!
What is the name of the Hedge fund whose president you interviewed? How can I contact them?
I'm sorry but your analysis of PEAK OIL is quite wrong. If I may respond to EJ's
"Why I don't believe in Peak Oil in One Chart",
Here is why I DO BELIEVE in PEAK OIL, in ONE CHART of course.
Courtesy of James Dines & Co. From the Atlantic Magazine
KeithOK
02-01-08, 09:14 AM
While I'm not a big fan of the first two google links research methodology, I'll be happy to respond. The examples you give never say "oil will be used up at an increasing rate until one day it’s all gone."
More importantly, if you want to do internet research to find out what peak oil believers believe, go to one of their sites. For example, from the peak oil overview at www.theoildrum.com (http://www.theoildrum.com) :
"What is peak oil?
"Peak oil" is the term used to describe the situation when the amount of oil that can be extracted from the earth in a given year begins to decline, because geological limitations are reached. Extracting oil becomes more and more difficult, so that costs escalate and the amount of oil produced begins to decline. The term peak oil generally relates to worldwide production, but a similar phenomenon exists for individual countries and other smaller areas."
This is not a cherry-picked quote. I've been reading about peak oil for several years, and have never seen any of the leading peak oil voices describe peak oil in the way you have. Since it is a common misconception, I'm sure you can find the "running out of oil" view by some journalist or in blog comments, but not by anyone with any influence in the peak oil community. I have seen it described as a misconception to be avoided, as in this excerpt from a British article on preparing for peak oil [http://www.odac-info.org//welcome/documents/PFPO_Final.pdf]: (http://www.odac-info.org//welcome/documents/PFPO_Final.pdf%5D:) "What is Peak Oil? People usually ask when the world’s oil is going to ‘run out’, but this is the wrong way to frame the question. Peak oil refers to the year in which global oil production will reach its maximum level, never to be exceeded, and then fall into sustained decline. This is expected to happen ‘at the midpoint of depletion’ - when only half the oil that will ever be produced has been consumed, and the other half is still underground."
The "oil suddenly running out" view of peak oil is not only a misstatement of the peak oil view, it is totally inconsistent with the methodology used by peak oil theorists to forecast peak oil: Oil depletion curve estimates for various countries, sources or fields, with peaks at different years, are combined to get an overall forecast. While different researchers come up with different curves, they all show the oil depletion continually for decades (the British article cited above gives a 3% estimate for annual fall in oil production after the peak). An example of one of these estimates, showing peak oil about a decade away but oil production still above 1970s level in 2050, can be found at: http://www4.tsl.uu.se/isv/UHDSG/.
The iTulip view that "we're running out of cheap oil and there are no cheap alternatives" does not stand in opposition to peak oil theory, it's central to it. One of the leading peak oil theorists, Dr. Colin J. Campbell, co-authored a peak oil paper in Scientific American in March 1998 entitled "The End of Cheap Oil" [http://dieoff.com/page140.pdf] (http://dieoff.com/page140.pdf%5D), and I've seen peak oil theory characterized in those same terms numerous times.
I'm not sure why you're fighting peak oil believers when, for the most part, they are saying the same thing you are (though a few in the community may be unrealistically optimistic about cheap energy alternatives).
I challenge any of your readers to go to some of the sites like theoildrum.com or peakoil.com, check out some of the links, scan a few articles by peak oil theory advocates like Matthew Simmons, Dr. Campbell or James Kunstler. Then they can judge for themselves whether peak oil theory more closely resembles the iTulip view of "the end of cheap oil", or the "running out of oil" view you ascribe to peak oil believers.
Lukester
02-01-08, 10:33 AM
KeithOK -
Your observation is entirely correct, and in fact iTulip have been apprised of this before, but the observation elicits a "no comment".
The differences between iTulip's "Peak Cheap Oil" [TM] and the rest of the world's plain old "Peak Oil" are 98% semantic. The reason this semantic difference has been constructed and is required to exist is to dissociate iTulip's interpretation of this event from the Peak Oil community, many of whose members elicit a certain "socio-political distaste" around here. I agree, it's a bit silly. There is an old expression: "Call a Spade a Spade", which I think is applicable here.
Good job pointing this issue out, as it was crying out for clarification. Whether iTulip acknowledge the distinction is semantic or not, it remains so infinitesimally subtle as to remain indeed purely a semantic difference. They are now officially in bed with the peak oil community, unless and until they refute Peak Oil. How distressing is that?
Its because it is apparently too simple for you to understand:
Peak oil means oil will NEVER be produced at the rates it is today.
Peak cheap oil means the rate of oil production is not the issue, it is the area under the cost * production curve.
Peak cheap oil means it is very possible that oil production could go up in the future, but the price would still be higher.
Peak oil means a permanently increasing price as all the Mad Max'ers circle around the last refinery.
Peak Cheap Oil, Peak Dollar, but no Peak Gold
by Eric Janszen
Part I: Peak Cheap Oil...
...Full Disclaimer (http://www.itulip.com/GeneralDisclaimer.htm)
Great. Just what we need. Another Peak Oil Thread ;)
There's a much more pressing and immediate issue at stake. I have just arrived back in the Arabian Gulf, and the jet lag at my age is awful, so forgive me if I missed it, but I don't see a posting anywhere setting out The Official iTulip Position - Patriots vs Giants?
We could just presume hometown bias on the part of iTulip, but on all other critical topics such presumptions have historically proven deadly, as EJ has repeatedly shown that conventional thinking rarely pays out... :p
Eagerly anticipating your views.
Great. Just what we need. Another Peak Oil Thread ;)
There's a much more pressing and immediate issue at stake. I have just arrived back in the Arabian Gulf, and the jet lag at my age is awful, so forgive me if I missed it, but I don't see a posting anywhere setting out The Official iTulip Position - Patriots vs Giants?
We could just presume hometown bias on the part of iTulip, but on all other critical topics such presumptions have historically proven deadly, as EJ has repeatedly shown that conventional thinking rarely pays out... :p
Eagerly anticipating your views.
http://www.itulip.com/images/NewEnglandPatriots.jpg
brucec42
02-02-08, 10:45 PM
From the column:
"The reason is that central banks know that the incompetent, spendthrift governments they are loosely shackled to will continue to pursue inane policies and that these, in addition to their own irresponsibility such as interest rate policies under the Greenspan Fed, will eventually cause their fiat currencies to lose substantial value or worse so they’d better have something to fall back on. That was one of the reasons we recommended it in 2001 and we have not seen any compelling evidence to change our minds. As gold increased from $260 then to $924 today, what do you suppose has happened to the value of central bank gold reserves? You can bet the central banks aren’t complaining."
I'm sure there's a factor that mitigates against this, but if the central banks can affect the money supply, and raising that can cause gold to rise due to the monetary inflation, isn't it in their interest to inflate away to run up the value of their own gold holdings? Seems like a conflict of interest on the surface.
http://www.itulip.com/images/NewEnglandPatriots.jpg
God bless satellite TV. No small feat, but we've figured out how to get the game live over here (it's a 2:30 am kick off). Now this Canadian has the privilege of trying to explain American football to some Arabs, most of whom have never seen the game. Qualifications for that task? Dubious at best. Through my engineering student days in the '70's I was a devout fan of the Bud Grant/Fran Tarkenton Vikings. Three Super Bowl losses in 4 years. I'm still bitter about 1977. Foreman, Rashad, Sammy White, Alan Page, an 11-win season, and the bums still couldn't do it. :mad:
Go Patriots.
Oh ya. And God Bless America too...
God bless satellite TV. No small feat, but we've figured out how to get the game live over here (it's a 2:30 am kick off). Now this Canadian has the privilege of trying to explain American football to some Arabs, most of whom have never seen the game. Qualifications for that task? Dubious at best.
go to youtube and find george carlin's comparison of football and baseball. that will not only help explain football, it will help explain america.
“Petro dollar 50 yard suite seats”,,,, maybe they buy the place before they get out of town.
http://www.azcentral.com/community/phoenix/articles/0203dubai0203.html
Dubai partnership sought
Phoenix wants to start business connections
Casey Newton
The Arizona Republic
Feb. 3, 2008 12:00 AM
Phoenix is taking some key first steps to establishing a long-term partnership with the Middle Eastern port of Dubai, hoping ties to the wealthy emirate will result in more jobs for the Valley.
The Greater Phoenix Economic Council is hosting a delegation of government and business leaders from Dubai this weekend. The delegation includes Mohammed Bin Ali Alabbar, chairman of real-estate giant Emaar Properties, and Richard Rodriguez, who oversees Emaar's developments in the United Arab Emirates.
Dubai officials plan to watch the Super Bowl and meet with local business leaders and elected officials. <!-- BOXAD TABLE --><TABLE id=boxAdTable cellSpacing=0 cellPadding=0 width=10 align=left border=0><TBODY><TR><TD style="COLOR: gray" vAlign=top align=middle>
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“Petro dollar 50 yard suite seats”,,,, maybe they buy the place before they get out of town.
http://www.azcentral.com/community/phoenix/articles/0203dubai0203.html
Dubai partnership sought
Phoenix wants to start business connections
Casey Newton
The Arizona Republic
Feb. 3, 2008 12:00 AM
Phoenix is taking some key first steps to establishing a long-term partnership with the Middle Eastern port of Dubai, hoping ties to the wealthy emirate will result in more jobs for the Valley.
The Greater Phoenix Economic Council is hosting a delegation of government and business leaders from Dubai this weekend. The delegation includes Mohammed Bin Ali Alabbar, chairman of real-estate giant Emaar Properties, and Richard Rodriguez, who oversees Emaar's developments in the United Arab Emirates.
Dubai officials plan to watch the Super Bowl and meet with local business leaders and elected officials. <!-- BOXAD TABLE --><TABLE id=boxAdTable cellSpacing=0 cellPadding=0 width=10 align=left border=0><TBODY><TR><TD style="COLOR: gray" vAlign=top align=middle>
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Let's see now...sold the Arabs Citi stock and AMD stock. Why not sell them a homebuilder or two while the stock price is still in the toilet? Maybe the next housing boom will be remembered for having a minaret on every residence?
JoeSixpack
02-04-08, 02:48 PM
I wondered if anyone here is in the position to comment on NATGAS in the context of peak-cheap oil / Bonar / AltEnergy. I did some research but the results are ambigious. Sorry if there is a topic on this i didnt find it.
Regarding the dollar, i read opinions saying NatGas is too much of a local market to become affected by the USD depreciation, which can be clearly seen in any chart so far...
However, could this could become a true demand driven bull market, especially the US and Canada, if oil becomes ever more expensive ? UK is an example what happens on a supply shortage with prices...
- i read it takes 2 "barrels" of NatGas to extract 1 barrel of OilSands, which is one of the biggest known resources of oil, and in secure places (Canada, OilSands is one the investments i watch)
- GTL (Gas-to-Liquid) is becoming a viable technology to replace Airplane fuel, but they might find more competitive means of biofuel, too...
- GTL can be easily used as a diesel substitute in EXISTING machinery, in fact it is already added to various diesel fuels
- US is the heaviest user of NatGas but has limited resources
- It fits the Clean&Secure Energy theme very good
- Retail customers rely on NatGas for heating and electricity and might shift if prices go up, but what alternatives should they use ?
- Greenspan said the US could face a severe NatGas shortage.. well you might see that as a contra-indicator, but he had his clear moments, too :)
From a technical perspective, the days of cheap NatGas are long gone, too. It traded at 2$ now its trending around 7$ without impact from the hurricane season. Breaking 9$ could get the smart money interested
Appreciate any thoughts!
I wondered if anyone here is in the position to comment on NATGAS in the context of peak-cheap oil / Bonar / AltEnergy. I did some research but the results are ambigious. Sorry if there is a topic on this i didnt find it.
Regarding the dollar, i read opinions saying NatGas is too much of a local market to become affected by the USD depreciation, which can be clearly seen in any chart so far...
However, could this could become a true demand driven bull market, especially the US and Canada, if oil becomes ever more expensive ? UK is an example what happens on a supply shortage with prices...
- i read it takes 2 "barrels" of NatGas to extract 1 barrel of OilSands, which is one of the biggest known resources of oil, and in secure places (Canada, OilSands is one the investments i watch)
- GTL (Gas-to-Liquid) is becoming a viable technology to replace Airplane fuel, but they might find more competitive means of biofuel, too...
- GTL can be easily used as a diesel substitute in EXISTING machinery, in fact it is already added to various diesel fuels
- US is the heaviest user of NatGas but has limited resources
- It fits the Clean&Secure Energy theme very good
- Retail customers rely on NatGas for heating and electricity and might shift if prices go up, but what alternatives should they use ?
- Greenspan said the US could face a severe NatGas shortage.. well you might see that as a contra-indicator, but he had his clear moments, too :)
From a technical perspective, the days of cheap NatGas are long gone, too. It traded at 2$ now its trending around 7$ without impact from the hurricane season. Breaking 9$ could get the smart money interested
Appreciate any thoughts!
Seems like I keep hearing more about liquefied natural gas, mainly because there are at least three proposed LNG terminals being considered here in Oregon. From the Federal Energy Regulatory Commission (http://www.ferc.gov/industries/lng.asp):
There are about 40 LNG terminals that are either before FERC or being discussed by the LNG industry for North America. Six terminals are already operating on the East Coast, Puerto Rico and Alaska.
Currently, there are 16 facilities under FERC jurisdiction in the continental US. Twelve of the facilities are land-based, peak-shaving plants that liquefy and store LNG during the summer (low demand) months for sendout during winter (high demand) months. The remainder are baseload LNG import terminals, which are the focus of this LNG section.
Any LNG terminal project that is approved must also obtain Coastal Zone Management Act, Section 404 water quality certificate, and Section 404 dredging permits.
The market ultimately determines whether an approved LNG terminal is ever built. Even if an LNG terminal project receives all of the federal and state approvals, it still must meet complicated global issues surrounding financing, gas supply and market conditions. Many industry analysts predict that only 12 of the 40 LNG terminals being considered will ever be built.
From NYTimes (http://www.nytimes.com/2007/12/12/business/12exxon.html):
Exxon Mobil said Tuesday that it would like to build a $1 billion floating terminal for liquefied natural gas about 20 miles off the coast of New Jersey, a move meant to deflect safety and environmental concerns about proximity to populated areas.
...
The company plans to anchor a boatlike structure in the Atlantic Ocean to process natural gas imported by cargo ships from faraway suppliers in the Middle East, Europe and Africa.I'm not sure LNG really fits the "secure" part of "clean and secure energy" if we're importing it from the Middle East and Africa. However...
Natural gas shipped by tanker from abroad in a supercold liquid form accounts for about 3 percent of domestic consumption, but the government estimates that share could rise to 17 percent by 2030. At terminals like those proposed near New York, liquefied natural gas is processed into the gas form, which is used to heat homes, power electric plants and fuel many industrial activities. Natural gas accounts for about a quarter of the nation’s energy supplies....I guess we're not importing all that much. The rest must come from domestic (USA) and Canadian sources?
For Exxon, going so far offshore is an effort to duck the vociferous opposition that has dogged projects on both coasts. Its project, called BlueOcean Energy, would be able to supply 1.2 billion cubic feet of natural gas a day, about 2 percent of the nation’s gas consumption — and enough to meet the needs of five million residential customers.Each of the proposed Oregon facilities also project around a billion cubic feet per day, so I am assuming this would be the typical size / capacity of such terminals.
Imports of liquefied natural gas are expected to jump 35 percent this year compared with last. But the growth is likely to slow next year because of delays with new terminals, according to the Federal Energy Information Administration.
I don't feel qualified to offer an opinion on natural gas in this context, but, thought the above information might be useful.
" - GTL (Gas-to-Liquid) is becoming a viable technology to replace Airplane fuel,"
Not for a long while. Not without purpose built aircraft. It is not viable for existing fleet conversion.
1. Energy density is too low vs Jet A (volumetric and BTU/weight are both issues in this case). 2.6 times as much fuel for the same range capability, all things being equal. (which they aren't. )The added volume and weight of the aircraft would make it not nearly as efficient.
2. on-board storage in an aircraft is a nightmare. (installation weight is much higher, CG constraints, have to redesign the entire aircraft, not transferable to the existing aerospace fleet)
I believe N based hydrogen carries vs C based ones are much more likely as a replacement.
Bio fuel (diesel ) is a no-go in the aviation world, unless they can figure out a way to reduce viscosity and prevent it from freezing at altitude.
Hope this helps
" - GTL (Gas-to-Liquid) is becoming a viable technology to replace Airplane fuel,"
Not for a long while. Not without purpose built aircraft. It is not viable for existing fleet conversion.
1. Energy density is too low vs Jet A (volumetric and BTU/weight are both issues in this case). 2.6 times as much fuel for the same range capability, all things being equal. (which they aren't. )The added volume and weight of the aircraft would make it not nearly as efficient.
2. on-board storage in an aircraft is a nightmare. (installation weight is much higher, CG constraints, have to redesign the entire aircraft, not transferable to the existing aerospace fleet)
I believe N based hydrogen carries vs C based ones are much more likely as a replacement.
Bio fuel (diesel ) is a no-go in the aviation world, unless they can figure out a way to reduce viscosity and prevent it from freezing at altitude.
Hope this helps
This does not appear to be correct, unless I am misunderstanding what has been written.
First, although volume is important in aircraft applications, weight is the governing design limitation. Energy density expressed as combustion energy per unit of mass is more important for aircraft fuels than volume.
Typical Jet A, Jet B or kerosene has an energy density in the range of 42 - 44 MJ/kg (ASTM D1655 requires a minimum of 42.8). Typical GTL has an energy density of about 47 MJ/kg, making it a superior fuel (only on that one measure - there's other reasons it many not actually work in a real jet engine).
Interestingly, GTL is considered a diesel, not kerosene, substitute. Compared with conventional crude based diesel, GTL's energy density is typically 4% higher because it's highly paraffinic (lower aromatic/higher paraffin content). Volumetric density is lower at about 0.76 kg/l for GTL vs about 0.83 kg/l for conventional diesel because paraffins have a higher hydrogen to carbon ratio than aromatics. GTL can be burned directly in compression ignition engines.
GTL has a lot of issues that need to be solved before it will ever become a widely used substitute liquid fuel (in any application), but energy density is not one of them.
A little background is in order:
1. I'm a military pilot, have been for the last ten years.
This does not appear to be correct, unless I am misunderstanding what has been written.
First, although volume is important in aircraft applications, weight is the governing design limitation. Energy density expressed as combustion energy per unit of mass is more important for aircraft fuels than volume.
2. "Although volume is important in aircraft applications"
You miss the argument completely. It is HOW fuel is stored on an aircraft typically (in the wings) that makes volume so important. The type of storage vessel for GTL (a pressurized storage container) mandates locating fuel stowage in the fuselage vs a typical aircraft installation where fuel is stored unpressurized in the wings for the majority of the fuel supply. (Yes there are body tanks, but these are either hard tanks or even in many cases simple flexible fuel bladders that forgo cargo space). It is the weight and complexity of the installation as well as the requirement that all fuel storage be relocated in the fuselage that makes this technology incompatible with the existing aircraft fleet and makes retrofit highly unlikely. Hence the need for purpose built aircraft.
Typical Jet A, Jet B or kerosene has an energy density in the range of 42 - 44 MJ/kg (ASTM D1655 requires a minimum of 42.8). Typical GTL has an energy density of about 47 MJ/kg, making it a superior fuel (only on that one measure - there's other reasons it many not actually work in a real jet engine).
On this you are correct. I incorrectly used gaseous density, not liquefied density in my previous post.
3. Interestingly, GTL is considered a diesel, not kerosene, substitute. Compared with conventional crude based diesel, GTL's energy density is typically 4% higher because it's highly paraffinic (lower aromatic/higher paraffin content). Volumetric density is lower at about 0.76 kg/l for GTL vs about 0.83 kg/l for conventional diesel because paraffins have a higher hydrogen to carbon ratio than aromatics. GTL can be burned directly in compression ignition engines.
"Volumetric density is lower at about 0.76 kg/l for GTL vs about 0.83 kg/l"
"(lower aromatic/higher paraffin content)"
You said it not me. When the Air Force switched from JP-4 to JP-8 (a fuel with lower volitility and higher volumetric density) our flight duration increased by 15-25% depending on aircraft type! This is an apples to apples comparison of two kerosene based fuels. It also caused huge problems with our engine fuel controls because of the viscosity differential. (we also had to implement special procedures to reduce the risk of flaming out our engines during certain flight regimes)
GTL has a lot of issues that need to be solved before it will ever become a widely used substitute liquid fuel (in any application), but energy density is not one of them.[/quote]
Maybe, but that does not invalidate the points addressed. And, fuel storage installation on-board aircraft is certainly an issue.
JoeSixpack
02-11-08, 03:14 PM
Thanks for the informative replies everyone.
From what i understood the GTL technique and likewise methods generally produce real fuel, which can be transported like any other liquid, in contrast to LNG which is just pressurized gas and a security nightmare even on ground.
Found this on wiki, dont know if it is accurate information:
Processes:
The process of producing synfuels is often referred to as Coal-To-Liquids (http://en.wikipedia.org/wiki/Coal#Liquefaction) (CTL), Gas-To-Liquids (http://en.wikipedia.org/wiki/Gas_to_liquids) (GTL) or Biomass-To-Liquids (http://en.wikipedia.org/wiki/Biomass_to_liquid) (BTL), depending on the initial feedstock. Synthetic crude may also be created by upgrading (http://en.wikipedia.org/wiki/Upgrader) bitumen (http://en.wikipedia.org/wiki/Bitumen) (a tar like substance found in tar sands (http://en.wikipedia.org/wiki/Tar_sands))
Economics:
Synthetic fuels require a relatively high price of crude oil in order to be competitive with petroleum-based fuels without subsidies.<SUP> </SUP>However, they offer the potential to supplement or replace petroleum-based fuels if oil prices continue to rise. Several factors make synthetic fuels attractive relative to competing technologies such as biofuels (http://en.wikipedia.org/wiki/Biofuels), ethanol/methanol or hydrogen (http://en.wikipedia.org/wiki/Hydrogen):
The raw material is available in quantities sufficient to meet current demand for centuries
It can produce gasoline, diesel or kerosene directly without the need for additional steps such as reforming (http://en.wikipedia.org/wiki/Catalytic_reforming) or cracking (http://en.wikipedia.org/wiki/Cracking_%28chemistry%29)
There is no need to convert vehicle engines to use a different fuel
There is no need to build a new distribution network01/02/08
Airbus conducts A380 alternative-fuel demonstration flight
<!-- End ArticleHeading -->By Graham Dunn (graham.dunn@flightglobal.com)
Airbus has kicked-off its alternative fuel research programme by flying an A380 with a synthetic liquid fuel process from gas (GTL) on a three hour flight between Filton in the UK and Toulouse.
The A380, powered by Rolls-Royce Trent 900 (http://www.rolls-royce.com/civil_aerospace/products/airlines/trent900/default.jsp) engines, used Shell International Petroleum (http://www.shell.com/home/content/aboutshell-en)’s GTL jet fuel for the flight.
The trial is part of Airbus’s studies into alternative fuels, with the airframer having announced the GTL project at last year’s Dubai air show in conjunction with a team that includes Shell, Qatar Airways and Rolls-Royce.
Airbus president and CEO Tom Enders says. "Our alternative fuels roadmap requires innovation, diversity of ideas and options that need to be explored.
"This takes bold cross industry and cross border collaboration and that's what we are showing today with our groundbreaking first test flight with alternative fuels. It is part and parcel of Airbus' commitment to providing leadership as an eco-efficient."
Airbus says under the research programme, this marks the first step of a long-term testing phase to evaluate potential alternative fuels.
"GTL could be available at certain locations to make it a practical and viable drop-in alternative fuel for commercial aviation in the short term," Airbus says. "GTL has attractive characteristics for local air quality, as well as some benefits in terms of aircraft fuel burn relative to existing jet fuel.
"Testing GTL today will support future second generation bio-fuels, but which are not presently available in sufficient commercial quantities. Airbus will study viable second generation bio-fuels when they become available," the company says.
metalman
02-11-08, 10:59 PM
Thanks for the informative replies everyone.
From what i understood the GTL technique and likewise methods generally produce real fuel, which can be transported like any other liquid, in contrast to LNG which is just pressurized gas and a security nightmare even on ground.
Found this on wiki, dont know if it is accurate information:
Processes:
The process of producing synfuels is often referred to as Coal-To-Liquids (http://en.wikipedia.org/wiki/Coal#Liquefaction) (CTL), Gas-To-Liquids (http://en.wikipedia.org/wiki/Gas_to_liquids) (GTL) or Biomass-To-Liquids (http://en.wikipedia.org/wiki/Biomass_to_liquid) (BTL), depending on the initial feedstock. Synthetic crude may also be created by upgrading (http://en.wikipedia.org/wiki/Upgrader) bitumen (http://en.wikipedia.org/wiki/Bitumen) (a tar like substance found in tar sands (http://en.wikipedia.org/wiki/Tar_sands))
Economics:
Synthetic fuels require a relatively high price of crude oil in order to be competitive with petroleum-based fuels without subsidies.<sup> </sup>However, they offer the potential to supplement or replace petroleum-based fuels if oil prices continue to rise. Several factors make synthetic fuels attractive relative to competing technologies such as biofuels (http://en.wikipedia.org/wiki/Biofuels), ethanol/methanol or hydrogen (http://en.wikipedia.org/wiki/Hydrogen):
The raw material is available in quantities sufficient to meet current demand for centuries
It can produce gasoline, diesel or kerosene directly without the need for additional steps such as reforming (http://en.wikipedia.org/wiki/Catalytic_reforming) or cracking (http://en.wikipedia.org/wiki/Cracking_%28chemistry%29)
There is no need to convert vehicle engines to use a different fuel
There is no need to build a new distribution network01/02/08
Airbus conducts A380 alternative-fuel demonstration flight
<!-- End ArticleHeading -->By Graham Dunn (graham.dunn@flightglobal.com)
Airbus has kicked-off its alternative fuel research programme by flying an A380 with a synthetic liquid fuel process from gas (GTL) on a three hour flight between Filton in the UK and Toulouse.
The A380, powered by Rolls-Royce Trent 900 (http://www.rolls-royce.com/civil_aerospace/products/airlines/trent900/default.jsp) engines, used Shell International Petroleum (http://www.shell.com/home/content/aboutshell-en)’s GTL jet fuel for the flight.
The trial is part of Airbus’s studies into alternative fuels, with the airframer having announced the GTL project at last year’s Dubai air show in conjunction with a team that includes Shell, Qatar Airways and Rolls-Royce.
Airbus president and CEO Tom Enders says. "Our alternative fuels roadmap requires innovation, diversity of ideas and options that need to be explored.
"This takes bold cross industry and cross border collaboration and that's what we are showing today with our groundbreaking first test flight with alternative fuels. It is part and parcel of Airbus' commitment to providing leadership as an eco-efficient."
Airbus says under the research programme, this marks the first step of a long-term testing phase to evaluate potential alternative fuels.
"GTL could be available at certain locations to make it a practical and viable drop-in alternative fuel for commercial aviation in the short term," Airbus says. "GTL has attractive characteristics for local air quality, as well as some benefits in terms of aircraft fuel burn relative to existing jet fuel.
"Testing GTL today will support future second generation bio-fuels, but which are not presently available in sufficient commercial quantities. Airbus will study viable second generation bio-fuels when they become available," the company says.
call me nuts but isn't an airplane the last place you'd put these fuels?
JoeSixpack
02-14-08, 04:22 AM
Metalman, absolutely not - in the very long term.
In the context of competing uses of energy its likely that coal and nuclear are big for electricity, e.g., thermal and solar will have a share too.
However its hard to believe you can fly an airplane with a nuclear reactor or a few solar panels. :)
In the end it will be sorted out by price of oil which might just get too expensive for commercial aviation one day..
Anyways, im just specualting. The original question was if NatGas would go into a long term demand driven bull market.
A little background is in order:
1. I'm a military pilot, have been for the last ten years.
This does not appear to be correct, unless I am misunderstanding what has been written.
First, although volume is important in aircraft applications, weight is the governing design limitation. Energy density expressed as combustion energy per unit of mass is more important for aircraft fuels than volume.
2. "Although volume is important in aircraft applications"
You miss the argument completely. It is HOW fuel is stored on an aircraft typically (in the wings) that makes volume so important. The type of storage vessel for GTL (a pressurized storage container) mandates locating fuel stowage in the fuselage vs a typical aircraft installation where fuel is stored unpressurized in the wings for the majority of the fuel supply. (Yes there are body tanks, but these are either hard tanks or even in many cases simple flexible fuel bladders that forgo cargo space). It is the weight and complexity of the installation as well as the requirement that all fuel storage be relocated in the fuselage that makes this technology incompatible with the existing aircraft fleet and makes retrofit highly unlikely. Hence the need for purpose built aircraft.
Missed the argument completely did I? Please allow me the indulgence of a second attempt:
GTL at STP is a relatively stable liquid with boiling point properties very similar to diesel (Initial boiling point greater than 150 C vs about 170 for typical diesel, final boiling point generally greater than 350 in both cases). Typical diesel/GTL RVP is about 2 kPa compared with motor gasoline (summer) RVP about 50 kPa.
What is it about GTL that makes you think that pressurized storage in the fuselage is necessary?
3. Interestingly, GTL is considered a diesel, not kerosene, substitute. Compared with conventional crude based diesel, GTL's energy density is typically 4% higher because it's highly paraffinic (lower aromatic/higher paraffin content). Volumetric density is lower at about 0.76 kg/l for GTL vs about 0.83 kg/l for conventional diesel because paraffins have a higher hydrogen to carbon ratio than aromatics. GTL can be burned directly in compression ignition engines.
"Volumetric density is lower at about 0.76 kg/l for GTL vs about 0.83 kg/l"
"(lower aromatic/higher paraffin content)"
You said it not me. When the Air Force switched from JP-4 to JP-8 (a fuel with lower volitility and higher volumetric density) our flight duration increased by 15-25% depending on aircraft type! This is an apples to apples comparison of two kerosene based fuels. It also caused huge problems with our engine fuel controls because of the viscosity differential. (we also had to implement special procedures to reduce the risk of flaming out our engines during certain flight regimes).
Speaking strictly as a civilian pilot, I would have thought that increased flight duration would be a highly desirable outcome.
Especially if the fuel management systems and engine characteristics can be engineered to overcome the problems caused by the viscosity differential between the fuels.
GTL has a lot of issues that need to be solved before it will ever become a widely used substitute liquid fuel (in any application), but energy density is not one of them.
Maybe, but that does not invalidate the points addressed. And, fuel storage installation on-board aircraft is certainly an issue.
This is the point I am trying to understand. For decades much more volatile avgas was used routinely in Otto cycle engines at high altitudes without the need for specialized fuselage pressure vessel fuel tanks.
Why can't GTL, a liquid at STP and similar in characteristics to diesel and kerosene, be used in conventional wing tanks?
call me nuts but isn't an airplane the last place you'd put these fuels?
Mike: I would agree with you in normal circumstances. But these are anything but "normal" times. I don't know what's happening in North America in this regard, but in Europe the climate change cohort have recently been particularly zealous targeting the airlines and Airbus (an easy target with its government sponsorship) over carbon emissions, green practices, environmental responsibility, and so forth.
The airlines are scrambling around trying to come up with politically correct responses. Last year Virgin Group's Richard Branson proposed using tugs to tow aircraft between ramps and runways to lower CO2 emissions (smart man...this would save him fuel and transfer the cost to the airport authorities, where they could argue forever about landing fee increases). The Shell-Qatar-Airbus GTL flight (some GTL blended into conventional jet fuel) was a nice promotion for Shell's Pearl GTL project in the State of Qatar, but not much else. Expect more PR stuff and stunts, as the airlines and manufacturers try to prevent their reputations from being trashed as environmental pariahs.
In the meantime, the search for suitable substitutes for crude based aviation fuels will be an interesting challenge that should soak up untold amounts of alternate energy government subsidies. And as cheap oil becomes scarcer, there is the possibility that flying once again becomes the exclusive purview of the financially well off gin and Jaguar set, and the business/government/UN expense account groupies (how else are they going to get to Davos and all those climate change conferences?).
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