PDA

View Full Version : Pandora’s Box



EJ
01-19-07, 01:04 PM
Pandora’s Box (http://www.morganstanley.com/views/gef/archive/2007/20070117-Wed.html)
January 18, 2007 (Serhan Cevik - Morgan Stanley)

The future of Iraq will likely shape the Middle East’s political and economic prospects. The war in Iraq – bringing the country to the verge of a full-scale civil conflict – has opened a Pandora’s Box in the Middle East. After decades of devastating dictatorship that left Iraq without a tradition of power-sharing and trust between sectarian groups, it is not surprising to see ‘pent-up’ rage and attempts to redistribute power. This is how politically impoverished people all around the world have historically reacted to the end of repression. However, the sectarian and ethnic nature of Iraq’s conflict has escalated the cycle of violence beyond comprehension, killing about 3,000 civilians every month and radicalizing even more people every day. The transition from autocracy to democracy may be destabilizing in the beginning, but Iraq’s deepening fragmentation along sectarian and ethnic lines looks more like a chaotic descent towards disintegration, in our view – not the emergence of a participatory political regime. With such a pattern of vengeance weakening the prospect for political compromise, Iraq is facing the risk of disintegration, which could spiral into sectarian conflicts throughout the Middle East.

AntiSpin: Not the political reticence you'd expect from the world's largest hedge fund.

When you think of Wall Street, you think of Morgan Stanley, and when you think of Washington, you think of Wall Street. Take, for example, the recent rotation of former S.E.C. Chairman Richard Breeden into the role of head of Breeden Partners, a Greenwich, Conn. based hedge fund, and of ex-Chairman and Chief Executive Officer of The Goldman Sachs Group, Inc. into the role of Treasury Secretary, succeeding John Snow. In breaking silence and criticizing wars intended to defend the interests of both Washington and Wall Street, MS hints not only at the potential for a Vietnam-esque loss but of something more dire. Like the Soviet suppression of a revolt in Hungary in 1956 and the British led Suez Crisis in the same year, did the US invasion of Iraq and Afghanistan leave a high water mark of the latest imperial era? Our sources tell us that the wars have become enemy #1 both on Capital Hill and on the Street, posing a level of threat to the fortunes of both on a scale not faced by a group of politicians and their financiers since the aristocracy of Western Europe confronted democracy, and ethnic and religious pluralism at the turn of the last century.

Cevik of MS says,"the risk is not just to the future of Iraq, but also to the greater Middle East." Naill Ferguson makes a similar point at the conclusion of his article "The War to Start all Wars (http://www.theatlantic.com/doc/prem/200701/ferguson-comment)" (registration required) in the month's Atlantic: "The really sobering lesson of the twentieth century is that some civil wars can grow into more than regional wars. If the stakes are high enough, they have the potential to become world wars."

Meanwhile, David Leonhardt estimates in the New York Times that $1.2 trillion is the total cost of the war in Iraq (http://blog.foreignpolicy.com/node/3140), not the $400 billion estimated by the government. The somnambulant scientific intelligentsia stirred to move the hands of the doomsday clock another two minutes forward (http://www.southbendtribune.com/apps/pbcs.dll/article?AID=/20070119/News01/701190386/-1/NEWS01) in response to a sudden awakening to the perils of 27,000 nuclear weapons, 2000 of them ready to launch within minutes, and the destruction of human habitats from climate change. China not so secretly tested a new space war weapon (http://www.time.com/time/world/article/0,8599,1580595,00.html), breaking a 15 year old unspoken rule against such weapons development. Also on the weapons systems innovation front, a proof-of-concept, economical rail gun that delivers the punch of a missile at bullet prices (http://fredericksburg.com/News/FLS/2007/012007/01172007/251373) was demonstrated. Given weapons development since the last world war, another one really is unthinkable.

The best deterrent to a larger Middle East conflict is a strong US economy and compelling moral leadership. With the latter squandered, the former is all that remains. Alas, that too is showing signs of stress as the Recession of 2007 (http://www.itulip.com/forums/showthread.php?t=743) continues to develop. Friends in the VC community who come out of the semiconductor industry noted last summer the decline in semiconductor stocks, as reliable an indicator of declining future demand for chips and, later, the finished goods they go into, as any. Yet even as Motorola cut thousands of jobs (http://today.reuters.com/news/articlebusiness.aspx?type=ousiv&storyID=2007-01-19T170916Z_01_N19292990_RTRIDST_0_BUSINESSPRO-MOTOROLA-JOBS-DC.XML&from=business), the Fed worried about inflation (http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=OBR&Date=20070119&ID=6359356). The prediction by Europe's LEAP/2020 team (http://www.itulip.com/forums/showthread.php?t=834) for rate hikes earlier this year followed by a series of cuts later as the Fed changes course looks as credible as any today.

Christoph von Gamm
01-19-07, 01:14 PM
See a special comment on my blog http://www.interenterprise.ch

Together with the LEAP/2020 team I conclude that the biggest threat is currently not Iraq itself but rather Saudi Arabia:

Here's why:

1. New agile regime. The former king died in 2006 with now the new king Abdullah bin Abdulaziz being much more agile and agressive pursuing politial and hegemonial ideas. Especially the idea of the Saudis being the successors of the Khalifs, means the protectors of the holy sites: Mekkah, Medinah, Baghdad, Cairo and sic (!) Jerusalem there is enough tension for further conflicts, along with the money. But this about to run out, see Point 2.

2. Peak oil: It is estimated that Saudi Arabia is GREATLY EXAGGERATING the amount of oil reserves available, therefore needing new sources of funds if the oil reserves run flat. One of the new reserves would be Iraq. Therefore Point 3.

3. Military expansion - new missiles and weaponry from hightech suppliers will help give a strategic advantage. Just recently they tested a 2000 kms range missile being able to bear nuclear bombs. With Pakistan next and needy for funds the question is not if but when Saudi Arabia gets support. In the hands of a Point 4:

4. A very unstable regime with a small nomenclatura of sheiks not being able to keep stability, whilst at the same time a series of princes and upperclass Saudis did fund Al-Khaeda. In order to learn, many of those princes engaged as hobby warlords in military operations in their Afghanisatan advantures. Now with them being back in Saudi Arabia - Afghanistan has become too hot the instability grows. They need to act fast, as there is Point 5.

5. An ever dwindling Dollar therefore a fresh need for other currency or a severe increase in the oil price, best led by a military conflict which lets the oil prices explode. In order to get the back free, they have undertaken Point 6, a very wise step.

6. Peace treaties with Jemen and Oman to get away from Border conflicts, same as with Jordan. Therefore we have Point 7, where the inlanders sniff the problem.

7. The MSCI Saudi index same as the Dubai stock exchange already noticed a servere decline downwards the last year from 1200 to 444,7 now - a 63% decline off its peak, usually a precursor of a severe crisis as the fast money exits. At the same time, with this dwindling of felt wealth of middle classes in Saudi Arabia, the political tension even increases.

I hope my conclusions are wrong.

Charles Mackay
01-19-07, 01:32 PM
The elite cabal is switching horses... they've used up the political capital of the Bush Admin and now they will get their dirty work done thru the Democrats.
-----------

Goldman Sachs's William Dudley to head the [NY Fed] market's group. former Goldman executives control or influence the oversight of key aspects of the US financial system and hold prominent positions throughout the Bush White House. They include: Hank Paulson, the Treasury secretary and former Goldman chief executive; Reuben Jeffrey, a former Goldman managing partner who is the chief regulator of commodity futures and options trading; Joshua Bolten, White House chief of staff who served as a Goldman executive director; Robert Steel, the former Goldman vice-chairman who advises Mr Paulson on domestic finance; and Randall Fort, the ex-Goldman director of global security who advises Condoleezza Rice. Bush's working group on financial markets is composed of Mr Paulson, Mr Jeffrey, - would be Mr Bush's first port of call in the event of a financial crisis. Mr Dudley would also play a crucial role in stabilising the markets in the event of a meltdown [B]Goldman represented the biggest single donor base to the Democratic party ahead of this year's mid-term elections. Jon Corzine, the New Jersey governor, and Robert Rubin, the former [Clinton] Treasury secretary, are Goldman alumni. (FT, Dec 4)

Charles Mackay
01-19-07, 01:38 PM
The prime identifying characteristics of a Banana Republic:

1) A spoiled political system, corrupt wealthy elite in power
2) Control exerted by foreign entities
3) Huge wealth inequities and a shrinking middle class
4) Decayed infrastructure, urban wastelands with filthy pockets
5) Low capital expenditures
7) Capital flight externally to strong countries, elites keep money outside the country
8) Reliance upon foreign capital
9) Heavy monetary inflation
10) Outsized federal budget deficits
11) Excessive import dependence
12) Lowly paid common working class
13) Large police and security forces, enormous prison population
14) Weak currency

The United States has all of the above with no exception.

Thanks to Marc Faber and Jim Willie for this list.

Tet
01-19-07, 01:43 PM
Pandora’s Box (http://www.morganstanley.com/views/gef/archive/2007/20070117-Wed.html)
January 18, 2007 (Serhan Cevik - Morgan Stanley)


AntiSpin: Not the political reticence you'd expect from the world's largest hedge fund.

When you think of Wall Street, you think of Goldman Sachs, and when you think of Washington, you think of Wall Street. Take, for example, the recent rotation of Former S.E.C. Chairman Richard Breeden into the role of head of Breeden Partners, a Greenwich, Conn. based hedge fund, and of ex-Chairman and Chief Executive Officer of The Goldman Sachs Group, Inc. into the role of Treasury Secretary, succeeding John Snow. In breaking silence and criticizing wars intended to defend the interests of both Washington and Wall Street, GS hints not only at the potential for a Vietnam-esque loss but of something more dire. Like the Soviet suppression of a revolt in Hungary in 1956 and the British led Suez Crisis in the same year, did the US invasion of Iraq and Afghanistan leave a high water mark of the latest imperial era? Our sources tell us that the wars have become enemy #1 in both on Capital Hill and on the Street, posing a level of threat to the fortunes of both on a scale not faced by a group of politicians and their financiers since the aristocracy of Western Europe confronted democracy, and ethnic and religious pluralism at the turn of the last century.

Well said.

What Ism do the bankers come up with next? Is Chavez the next Ism for the bankers? Communism blammed the capitalists and not the Monarchy's along with their bankers at the turn of the century who were clearly at fault. It certainly doesn't surprise me that communist financing came out of Wall Street at the time. This year and next should be very deciding years for the future of the planet. Pandora's Box is a very interesting title considering it was Putin who at the start of the War declared that Pandora's Box had just been opened.

Corporate Plebe
01-19-07, 11:06 PM
Cevik writes:

Although some commentators use Bosnia or the Algerian civil war as an analogy to the chaos in Iraq, we think that a more appropriate example is Lebanon, where sectarian militias fought one another for 15 years, killing or injuring 5% of the population and displacing the other half. In other words, with its growing sense of insecurity and pessimism, Iraq is fast moving towards a tipping point, after which it may not be possible to restrain the forces of catastrophic change.

This could be a smoke and mirrors analysis so that we don't compare the United States' military involvement to Bosnia. Because if we compared Iraq to Bosnia we would observe our failures. My understanding is that NATO secured areas in the Bosnia conflict by disarming the militias and staying in the area. In Iraq, we suddenly have the brilliant policy decision to copy this same model-strategy that worked in Bosnia. Wasn't this why our generals called for so many troops prior to the start of the war? Cevik states the "root cause of all these problems is the lack of security. . . " This was foreseeable yet Rumsfeld did not follow this strategy. Why not unless the strategic goal is to stay in Iraq? An unstable Iraq is convenient for such a strategy.

The red flag went up when Cevik had to pull out percentages in order to brand the Iraqi conflict with Lebanon. But Lebanon was a country of 3 million people during its civil war. That means the 5% killed or injured was 150,000 over 15 years. That's an average of 833 injured or killed a month over 15 years compared to 3000 a month in Iraq.

The Lebanese civil war seems to have been caused by evolutionary means of demographic changes stressing political structures (like Christians constitutionally guaranteed political control pre-civil war). Whereas Yugoslavia and Iraq were caused by rapid power vacuums from toppled dictators (Tito and Hussein). Old factional conflicts rekindled from arbitrary borders established by Western countries in WWI and II.

Both Yugoslavia and Iraq have similar population sizes. Yugoslavia about 23.5 million in '91, and Iraq about 26.7 million by latest estimates. It's estimated that 200,000 died and 1.3 million were displaced. That war was 3 years, from '92 to '95. Yet Iraq is Lebanon? If it were compared to Yugoslavia by US talking heads, then US policy might be exposed for what it seems to be outside the US, a strategic play to maintain US dollar hegemony over the purchase of oil. How much of Iraq's current population is under 20 years old?

So maybe those guys over at LEAP/E2020 are insightful after all. Because Morgan Stanley's analysis seems to be prepping us for conflict with Iran while not being very critical of the Administration. In fact, Cevik, says:

However, we should not overlook the role of administrative stalemate, institutional failures and pervasive corruption in depressing private investment and employment growth . . . Problem is, he is blaming Iraq. But, part of the showdown between democratic Congress and the White House will be over the potential of the US's role in said pervasive corruption. My understanding is there was hardly any oversight by the Republican Congress regarding Iraq reconstruction efforts. And that is very ironic considering the great branding effort put forward to compare US-Iraq to WWII, where there was actual oversight and war-profiteering watchdog for a President.

It seems whenever "the people" are about to find out how much money has gone missing that a war starts. Maybe these Black Swan events are predictable after all?

spunky
01-20-07, 04:29 AM
Come on guys. I am 40 yrs old and we have been talking about a war with Iran since I was in grade school :confused: Even a broken clock is right 2 times a day.

America is always primed for a war.

jk
01-20-07, 09:05 AM
the comparison with lebanon is trotted out to make only one real, and scary, point: these civil wars can last for a long, long time.

and some time ago the saudis said that in the event of ongoing sunni-shi'a civil war in iraq, they'd start funding the sunnis. so this could turn into a regional intra-religious war, with the centers of power being shi' iran and sunni saudi arabia. the recent drop in oil prices is widely seen as a saudi-engineered move to defund the iranians. for the moment, at least, saudi capacity and reserves are sufficient to be a real weapon.

Tet
01-20-07, 11:00 AM
the comparison with lebanon is trotted out to make only one real, and scary, point: these civil wars can last for a long, long time.

and some time ago the saudis said that in the event of ongoing sunni-shi'a civil war in iraq, they'd start funding the sunnis. so this could turn into a regional intra-religious war, with the centers of power being shi' iran and sunni saudi arabia. the recent drop in oil prices is widely seen as a saudi-engineered move to defund the iranians. for the moment, at least, saudi capacity and reserves are sufficient to be a real weapon.
The Brit Empire always ruled their colonies through Civil War, this is the desired outcome in Iraq. The Saudi's do what they're told, Chenney himself was just there to make things clear. The Wall Street and London mobs want higher prices not lower prices so the Saudi's will play their role in trying to get higher prices. What possibly can Iran do with $50 oil or $75 oil? I seriously doubt Iran is going to purchase US stocks, Boeing jets or shitty US military gear. What does anybody care how many d0llars Iran collects just as long as they're collecting d0llars?

Only one thing causing lower oil prices and that's Siberian oil exports to China are skyrocketing and are projected to skyrocket further. None of this oil is sold through London or Wall Street. Oil tanker fill-ups are occuring at a greater rate out of the Russian Baltic and that trade isn't being conducted through London or Wall Street either. Russia during the summer said we'd have $45 to $50 oil this spring and meanwhile Bernanke said we'd have $75 oil for as far as he could see. Now which side is telling us the truth and which side is trying to have you left holding the bag?

jk
01-20-07, 11:45 AM
high price oil funds putin, amadinejead and chavez. putin was much more pliable when oil was at $10/barrel. i imagine the big oil tools in washington are a bit conflicted. [but see addendum below]

the saudis are afraid of the iranians becoming the regional hegemons, and imho protecting the saudis is the real reason the u.s. stays in iraq. if iraq goes shi' and an extension of iranian power, the shi' will be on saudi arabia's northern border, and the iranians will be reminding the world that the persian gulf is called persian for a reason.



addendum- big oil is in something of a dilemma over high oil prices. yes, high prices are currently generating huge profits for them. but why, some ask, do they continue to plan their exploration budgets and forecasts on low priced, $30/barrel, oil? big oil contracts specify revenue/reserve splits based on the total revenue that has been generated by an oil project. once a certain number of dollars of revenue have been generated by a project, the big-oil partner gets a much lower percentage of revenues/reserves going forward. see matthew simmons' pieces on this.

e.g.
"They [big oil companies] actually need low prices—around the $25 or so a barrel they persist in using in forecasts—to have a reliable business plan. It is very counterintuitive, but once you understand it, it starts to explain why they are so passionate that oil prices are going to come down. The reason is that to the extent that oil prices keep rising, the major oils have to start regurgitating ever higher percentages of reserves already-booked in foreign production deals to their partners.

"the reserves start reverting to Angola or whatever country. By contrast, if oil prices stay relatively low, the majors essentially stand to keep 80%-90% of the projects for themselves. So if you have a field that is coming on stream that is going to produce 100,000 barrels a day for two or three years before it goes into decline, at $25-$30 oil, basically you can figure on getting 99% of the revenue, because you won’t reach payout over that span.

" Generally, once you hit payout, oops, you only have rights to 50,000 barrels a day and a problem—because you have already booked proven reserves, assuming you were going to get 80%. So you are going to have to write them off. Then, even worse for the big oil companies, it is really hard in a high oil price environment to go into a country like Angola and negotiate a really juicy deal—because all of a sudden your partner has money. Finally, the majors have been too big for some time to grow by the drill bit. So they have had to acquire reserves. It is easy to use your financial clout when oil prices are low because everyone else is maimed. It is easy to use your financial clout when oil prices are low because everyone else is maimed. But when oil prices are high, [companies don't] want to be acquired.... So what do you do? You are basically just going into liquidation and there is nothing you can even spend your money on to meaningfully change that."
from an interview, "running on empty," 1/06

Tet
01-20-07, 04:30 PM
high price oil funds putin, amadinejead and chavez. putin was much more pliable when oil was at $10/barrel. i imagine the big oil tools in washington are a bit conflicted. [but see addendum below]

the saudis are afraid of the iranians becoming the regional hegemons, and imho protecting the saudis is the real reason the u.s. stays in iraq. if iraq goes shi' and an extension of iranian power, the shi' will be on saudi arabia's northern border, and the iranians will be reminding the world that the persian gulf is called persian for a reason.



addendum- big oil is in something of a dilemma over high oil prices. yes, high prices are currently generating huge profits for them. but why, some ask, do they continue to plan their exploration budgets and forecasts on low priced, $30/barrel, oil? big oil contracts specify revenue/reserve splits based on the total revenue that has been generated by an oil project. once a certain number of dollars of revenue have been generated by a project, the big-oil partner gets a much lower percentage of revenues/reserves going forward. see matthew simmons' pieces on this.

e.g.
"They [big oil companies] actually need low prices—around the $25 or so a barrel they persist in using in forecasts—to have a reliable business plan. It is very counterintuitive, but once you understand it, it starts to explain why they are so passionate that oil prices are going to come down. The reason is that to the extent that oil prices keep rising, the major oils have to start regurgitating ever higher percentages of reserves already-booked in foreign production deals to their partners.

"the reserves start reverting to Angola or whatever country. By contrast, if oil prices stay relatively low, the majors essentially stand to keep 80%-90% of the projects for themselves. So if you have a field that is coming on stream that is going to produce 100,000 barrels a day for two or three years before it goes into decline, at $25-$30 oil, basically you can figure on getting 99% of the revenue, because you won’t reach payout over that span.

" Generally, once you hit payout, oops, you only have rights to 50,000 barrels a day and a problem—because you have already booked proven reserves, assuming you were going to get 80%. So you are going to have to write them off. Then, even worse for the big oil companies, it is really hard in a high oil price environment to go into a country like Angola and negotiate a really juicy deal—because all of a sudden your partner has money. Finally, the majors have been too big for some time to grow by the drill bit. So they have had to acquire reserves. It is easy to use your financial clout when oil prices are low because everyone else is maimed. It is easy to use your financial clout when oil prices are low because everyone else is maimed. But when oil prices are high, [companies don't] want to be acquired.... So what do you do? You are basically just going into liquidation and there is nothing you can even spend your money on to meaningfully change that."
from an interview, "running on empty," 1/06

“The suggestion that petroleum might have arisen from some transformation of squashed fish or biological detritus is surely the silliest notion to have been entertained by substantial numbers of persons over an extended period of time.” Fred Hoyle 1982

Following Matthew Simmons is not in my best interest for keeping the hard earned money I have or turning what money I do have into more. I guess some scams are just better than others. Thinking in terms of valuing reserves, or an inventory write down is pretty funny in the oil business, but it does allow companies to pay less tax.

Pervilis Spurius
01-20-07, 05:57 PM
Hmmm, a follower of Kudryavtsev. I seem to recall Rosneft making a claim that some field of theirs will not (as in ever) go into decline.

Tet
01-20-07, 08:30 PM
Hmmm, a follower of Kudryavtsev. I seem to recall Rosneft making a claim that some field of theirs will not (as in ever) go into decline.

We have been running out of oil ever since oil was discovered. A lack of reinvestment causes production declines, or at least that's what I'd gather looking at the thirty year old pumps that they still use in Long Beach.

jk
01-20-07, 09:00 PM
We have been running out of oil ever since oil was discovered. A lack of reinvestment causes production declines, or at least that's what I'd gather looking at the thirty year old pumps that they still use in Long Beach.

fallacy: never happened before, so it never will.

metalman
01-20-07, 10:16 PM
We have been running out of oil ever since oil was discovered. A lack of reinvestment causes production declines, or at least that's what I'd gather looking at the thirty year old pumps that they still use in Long Beach.

so what are you saying? that the oil in the abandoned fields in tx will grow back? what, it oozes out of the earth? gee, guess there are some pretty stupid people in tx. let's all buy up their abandoned fields and start pumping all that oil they left behind! ha!

i don't buy the peak oil thing, am more in the ej camp... that oil declines slowly as the price goes up and conservation becomes the next big innovation. even the peak oil guys have already phase shifted the fin de la monde prediction at least once. but i do believe oil is the remnant of old plants. it's not intuitive, but geological processes aren't.

Tet
01-20-07, 10:39 PM
so what are you saying? that the oil in the abandoned fields in tx will grow back? what, it oozes out of the earth? gee, guess there are some pretty stupid people in tx. let's all buy up their abandoned fields and start pumping all that oil they left behind! ha!

i don't buy the peak oil thing, am more in the ej camp... that oil declines slowly as the price goes up and conservation becomes the next big innovation. even the peak oil guys have already phase shifted the fin de la monde prediction at least once. but i do believe oil is the remnant of old plants. it's not intuitive, but geological processes aren't.

I can see how you wouldn't expect the 35% asshanding crude has received since the end of summer. Mighty nice of those Rooskies to give all that oil away considering they're going to run out a week from next Tuesday. Dumb Rooskies.

Corporate Plebe
01-20-07, 10:49 PM
I'm kind of in the same thinking as yourself which is why I'd like your opinions about this claim:

from Amazon Editorial Review of Black Gold Stranglehold:

In Black Gold Stranglehold, Jerome Corsi and Craig Smith expose the fraudulent science that has made America so vulnerable: the belief that oil is a fossil fuel and that it is a finite resource. This book reveals the conclusions reached by Dr. Thomas Gold, a professor at Cornell University, in his seminal book The Deep Hot Biosphere: The Myth of Fossil Fuels (Copernicus Books, 1998) and accepted by many in the scientific community that oil is not a product of fossils and prehistoric forests but rather the bio-product of a continuing biochemical reaction below the earth's surface that is brought to attainable depths by the centrifugal forces of the earth's rotation.

jk
01-20-07, 11:10 PM
I'm kind of in the same thinking as yourself which is why I'd like your opinions about this claim:

from Amazon Editorial Review of Black Gold Stranglehold:
no need for any of that stuff once we've got our perpetual motion machines hooked up. besides, that geology stuff can't be right if the earth is only 6000 years old.

btw, the people who shot dodo's and passenger pigeons used the same logic: they never ran out of them before!

Tet
01-20-07, 11:18 PM
I'm kind of in the same thinking as yourself which is why I'd like your opinions about this claim:

from Amazon Editorial Review of Black Gold Stranglehold:

I believe there is about three theories to oil's formation, none of them have anything to do with the transformation of plant matter into crude. I've heard of Gold and read a few things from Gold but I think it's best to start with the source because that's where Gold gets or steals his information from.

Ukrainian Theory Of Deep Abiotic Petroleum Origins
http://www.gasresources.net/index.htm

I didn't search very long for this link, I recall there being a better one but I think this points you in the right direction.

It's been a few years since I researched this so I'm a bit rusty, but it sure did come in handy to recognize a top to the price of crude. Good luck.

Tet
01-20-07, 11:26 PM
btw, the people who shot dodo's and passenger pigeons used the same logic: they never ran out of them before!
Insanity is also defined as repeating the same process and expecting a different outcome. I'd suggest buying into the Tar Sand Scam, nothing but solid trustworthy stocks come out of Toronto. Bre-X revisited.

Corporate Plebe
01-21-07, 03:48 PM
Thank you for responding wits this information.

slg
01-22-07, 10:00 AM
“The suggestion that petroleum might have arisen from some transformation of squashed fish or biological detritus is surely the silliest notion to have been entertained by substantial numbers of persons over an extended period of time.” Fred Hoyle 1982

And Sir Fred was spectacularly wrong yet again. Not only does oil come from biological debris, you can even use particular compounds in the oil to track it back to the sedimentary rocks where it originated. Deffeyes has some nice examples in his books. Dissolve a chunk of limestone (a sedimentary rock commonly rich in organic matter); you'll find a sheen of oil on top. (Yes, I've done it many times.) And oil shale is an oil source rock that thru geologic happenstance never got cooked into oil. It's a sedimentary rock that's full of biological debris--in places it even contains fish fossils!

slg
01-22-07, 10:03 AM
We have been running out of oil ever since oil was discovered.
A red herring. Oil "peaking" is not the same as oil "running out." And oil-producing regions around the world have repeatedly peaked. Starting with the US Lower 48 in the early 1970s, as King Hubbert had predicted back in the 1950s.


A lack of reinvestment causes production declines, or at least that's what I'd gather looking at the thirty year old pumps that they still use in Long Beach.
Really? The early 1970s "oil shock" led to massive exploration efforts in the lower 48. In particular, Texas production was expected to soar as rig counts skyrocketed. What in fact happened was that production dropped, from ~3.5 Mbbl/day to ~2.3 Mbbl/day, even as producing wells went from ~168K in 1972 to ~220K in 1985. Current production is a bit over 1 Mbbl/day.
<!--[if !supportEmptyParas]--> <o></o>
You find oil when it's easy to find. As the easy stuff is exhausted, you're caught up in a serious case of diminishing returns as you spend more and more effort to get less and less oil.
<!--[if !supportEmptyParas]--> <!--[endif]--><o></o>
(And yes, I'm a geologist who's worked in the oil patch.)

slg
01-22-07, 10:06 AM
Not to put too fine a point on it, but Tommy Gold's deep abiogenic oil idea is complete crackpottery. I attended the session at the Geological Society of America's annual meeting some years back where data from the experimental borehole at Siljan, Sweden, which had been drilled to test Gold's ideas, were presented.
<!--[if !supportEmptyParas]--> <!--[endif]--><o></o>
I've never seen such shoddy science. Parts-per-million concentrations of gases were touted as potential indicators of commerical gas. Degraded drilling lubricants, as shown by gas chromatography, were claimed to be oil shows, and so reported in the popular media. Grains of magnetite (Fe3O4) were touted as evidence of bacterial activity, when they were in fact much more probably products of drill-steel oxidation. A colleague at the USGS who worked briefly with Gold on some of these investigations eventually refused to work with him any further.
<!--[if !supportEmptyParas]--> <!--[endif]--><o></o>
But yes, you can find "abiogenic oil" references all over the Web. As I used to tell students when I taught geology, a great deal of what's on the Web is worth exactly what you paid for it.
<!--[if !supportEmptyParas]--> <!--[endif]--><o></o>
If you want a much better reference, look at David Howell et al., The Future of Energy Gases, US Geological Survey Professional Paper 1570, 1993. Contrast Tommy's paper therein with John Castaño's on the prospects for the Siljan basin.

Tet
01-22-07, 10:56 AM
And Sir Fred was spectacularly wrong yet again. Not only does oil come from biological debris, you can even use particular compounds in the oil to track it back to the sedimentary rocks where it originated. Deffeyes has some nice examples in his books. Dissolve a chunk of limestone (a sedimentary rock commonly rich in organic matter); you'll find a sheen of oil on top. (Yes, I've done it many times.) And oil shale is an oil source rock that thru geologic happenstance never got cooked into oil. It's a sedimentary rock that's full of biological debris--in places it even contains fish fossils!
Certainly hydrocarbons passing through sedimentary layers are going to pick up some of the organic matter. Odd don't you think when you look at crude from 7 miles beneath the earth's crust none of these biological markers can be found. Your view says crude goes higher, my view says crude goes lower. TWT.

slg
01-22-07, 11:22 AM
Certainly hydrocarbons passing through sedimentary layers are going to pick up some of the organic matter.
If the hydrocarbons were introduced, we should see evidence of that. Oil flows a lot, and it leaves abundant traces of its passage when it does.
<!--[if !supportEmptyParas]--> <!--[endif]--><o></o>
That's not what we see. Oil shale in fact contains kerogen--very high molecular weight stuff that doesn't flow.


Odd don't you think when you look at crude from 7 miles beneath the earth's crust none of these biological markers can be found. Your view says crude goes higher, my view says crude goes lower. TWT.
_What_ crude 7 miles down? Any citations for this? (Btw, at ordinary geothermal gradients HCs bigger than methane aren't stable at such depths.)

jk
01-22-07, 11:27 AM
Not to put too fine a point on it, but Tommy Gold's deep abiogenic oil idea is complete crackpottery. I attended the session at the Geological Society of America's annual meeting some years back where data from the experimental borehole at Siljan, Sweden, which had been drilled to test Gold's ideas, were presented.
<!--[if !supportEmptyParas]--> <!--[endif]--><o></o>
I've never seen such shoddy science. Parts-per-million concentrations of gases were touted as potential indicators of commerical gas. Degraded drilling lubricants, as shown by gas chromatography, were claimed to be oil shows, and so reported in the popular media. Grains of magnetite (Fe3O4) were touted as evidence of bacterial activity, when they were in fact much more probably products of drill-steel oxidation. A colleague at the USGS who worked briefly with Gold on some of these investigations eventually refused to work with him any further.
<!--[if !supportEmptyParas]--> <!--[endif]--><o></o>
But yes, you can find "abiogenic oil" references all over the Web. As I used to tell students when I taught geology, a great deal of what's on the Web is worth exactly what you paid for it.
<!--[if !supportEmptyParas]--> <!--[endif]--><o></o>
If you want a much better reference, look at David Howell et al., The Future of Energy Gases, US Geological Survey Professional Paper 1570, 1993. Contrast Tommy's paper therein with John Castaño's on the prospects for the Siljan basin.

thanks for posting on this, sig. much appreciated.

slg
01-22-07, 11:50 AM
Oh, and one further thing. Fluids move around a lot in geologic systems, and they leave lots of traces behind when they do. They've been intense objects of study because they're often of economic importance, in systems like ore deposition as well as hydrocarbon occurrence. I've worked on such things a fair amount myself.


Attributing the hydrocarbons to outside introduction is simply an ad-hoc excuse by people who haven't looked at the rocks.