June 3, 2008: Tuesday
(Woodland, WA) At 15:30 yesterday, I headed back to Tigard, over the Hwy 20 to Hwy 22 route. After a brilliantly sunny morning and early afternoon, if but a little cool and gusty, a dome of lenticular clouds had covered the sky and lent an ominous, closed-in, air to the drive through the deep, forested mountains. Thick snows covered the ground among dead, charred trees from massive fires of years past, ones that delayed me on a return trip from Idaho. Light rain greeted me as I crossed over the 4,800-foot summit, and slowly intensified, with the cloud deck lowering and darkening. Altostratus became stratus, with patches of scud. As I rolled through the foothills, the rain picked up to moderate in places. The trees dripped. Cars blasted spray from a wet road. The Pacific Northwest was now presenting its best June gloom.
Gas prices are phenomenal. With few exceptions, gas prices were above $4.00/gal throughout my WA and OR travel area. Most stations showed $4.10 to $4.19 a gallon for regular grade—87 octane. There is no escaping the reality that a new era of rapidly escalating energy cost has arrived.
June 9, 2008: Monday
(Vancouver, BC) Rain, yet again, is falling outside, with the temperature at Vancouver International a cool 50ºF. This could be December, save for all the green on the deciduous trees and among yards and gardens. Deep puddles stand in streets, trees drip, a low, gray and fast-moving deck of stratus hangs darkly in the sky, moving in out of the southeast. We've had rain on-and-off for much of the week, and over the weekend.
The world energy crisis clearly has stepped up a notch. I suppose some might say it is screaming an alert. On Friday, the price for a barrel of WTI jumped $10.75, to a new record close of $138.54/bbl. It briefly broke $139/bbl intraday. This jump happened after about a $5.70/bbl climb on Thursday! Many explanations have been given, including a threat by Israel that a military strike on Iran was inevitable. However, it is still quite apparent to me that the fundamental driver is the tight supply situation. World oil exports have been falling since about 2005, and at an accelerating rate. Key fields, such as Cantarell in Mexico, are experiencing production crashes at incredible rates, and this has affected imports into the United States. Due to the longer time-lines, about 3-5 days compared to 30, it takes more tankers to keep the same rate-of-flow into the Gulf of Mexico offloading ports for oil coming out of Mexico compared to the Middle East. This means more cost, as more tankers have to be hired. Right now, crude oil inventories in the Gulf of Mexico region are at critical lows, and they have been this way for several weeks now. This points to a difficulty in securing the oil at current prices. Amazing. Just one example of the impacts from a rapidly changing situation.
The average price for regular gasoline in the United States broke $4.00/gal over the weekend. On my return trip through Washington, just about all stations were at $4.19/gal and up. In Bellingham, the Chevron I usually stop at posted $4.36/gal for regular and $4.62/gal for 92 octane. Up here in Vancouver, stations are showing $1.436/liter to $1.468/liter in Canadian dollars. That's around $5.55/gal with no currency adjustments.
In any event, I sense very high tensions right now. A kind of gloom hangs in the air. The rainy, cloudy conditions that persist are very appropriate to what I'm feeling. The rapidly escalating prices worry me. My anxiety levels are up. I suspect something big is on the near horizon. Maybe in the next month or so. I certainly hope not, but it is hard not to think that some kind of world-changing event will occur soon as the various "powers that be" begin to respond to an escalating oil-production shortfall.
And, in this setting, I need to load up the car and head back into Washington.
(Olympia, WA) Surges of heavy rain greeted me in Blaine, and then further south, with the bright, blue hole shining vividly to the west. The clouds overhead, nearly charcoal black, were so low they nearly touched the ground. Streamers and plumes of scud easily stretched from the treetops to the cloud ceiling, sometimes mimicking little tornadoes. Some of these low bases took on the billowing, muffin-like appearance of mammatus, the lowest I have ever seen such a cloud feature. And, yet, the blue hole stood out, with deep convection to the southwest and far west forming the walls of the vast Olympic-downslope opening. I suppose a hurricane's eye might have a similar appearance.
And, indeed, strong wind showed up in the Bellingham area. Trees swayed dramatically. Cottonwoods lost leaves, twigs and small branches. Douglas-firs shed plumes of dark green needles. Sights that would prove common for much of the way to Olympia. Sometimes the shoulders of I-5 were covered in tree sheddings. Maple and other leaves took to the air in some of the heavy gusts, flapping around like birds and flying far above my roof. Some gusts thudded into the car, physically shaking the vehicle, slowing it down slightly. Flags few high.
As I entered the Chuckanut Mountains, the blue hole became lost, and I was thrown into a world with low, roiling cloud clamped to the hillsides. Thick scud swirled among the forests. Heavy rain thudded into my windshield. As I rounded one bend in the steep-sloped valley, a brilliant lightning bolt seared the sky right in front of me and zapped a nearby mountainside. The radio immediately went to static and the long-lasting bolt flashed from the dark heavens. This proved to be the first of many lightning discharges as I continued south, though I did not see most of them, just heard them on the radio. One lasted for an unusually long time, interfering with the radio for many seconds—long enough for me to think that perhaps the AM 710 tower had been struck and disrupted.
The drama continued through Mt. Vernon and southward, past Arlington. However, by the time I reached about 10 miles north of Everett, the clouds broke, and blue sky stood out vividly. A line of three thunderheads stood up sharply in the distant south to southwest. A mound of cumulus sat over the Cascades. Dark clouds hung over the Olympics quite ominously. An atmosphere thrown into powerful instability by the passage of an unusually strong Pacific front.
A metaphor for the energy crisis? I filled up here in Olympia and paid $4.56/gal for 92 octane. Regular was $4.28/gal. These prices, incredibly high to my American experience, are nevertheless dirt cheap compared to what is being charged up in Canada.
June 28, 2008: Saturday
(Vancouver, BC) After hovering between $132/bbl to $138/bbl for many days, WTI oil surged to new records over the past two days. The $140/bbl “barrier” fell. Yesterday, a short spike approached $143/bbl before falling back to about $140. Tapis reached at least $147.30/bbl. Looks like the next upsurge is in the works. Might take us into the $150 to $160 range. We will see. At the same time, the financial markets appear to have gone into a persistent downturn. The DJIA has fallen to 2006 levels, around 11,300. The current falls appear to be at least partially related to a growing realization that this liquid-fuels energy crisis may not be a short-term one.
21 March 2009
12 March 2009
An Energy Crisis Journal: May 2008
May 8, 2008: Thursday
(Vancouver, BC) Yesterday, in what I believe to be the third trading record in as many days, the price for WTI reached $123.93/bbl. Today, NYMEX trading settled on $123.69/bbl. In after-hours trading, WTI then climbed to $124.49/bbl. These are just amazing prices. And the duration of this new "rally" has been quite sustained, starting from $116/bbl on Monday. My gut feeling is that something in the market has changed. Prices are climbing faster. New record highs are being set quite often now. It's almost becoming commonplace. Many analysts, including Daniel Yergin of CERA fame, are now turning around and predicting oil in the $150 to $200 range in the relatively near term. It appears that a growing awareness of limited production is taking hold. Peak Oil is gaining much traction in the news now. It is being talked about more seriously. I have seen those two ominous words in the Vancouver Sun and other local papers on a number of occasions. I am becoming increasingly confident in the idea that 2008 will be the year in which Peak Oil becomes a central discussion world-wide. If not this year, no later than 2009. A sea-change is coming.
I filled up the tank yesterday at a local Chevron station. I paid $1.303/liter. That's Canadian dollars, of course, which are close to parity with the US dollar right now: $1 Can = $0.9831 US at this moment. At 3.875 liters per US gallon, that's $5.04 /gal in Canadian money, or $4.96 /gal in US dollars. Down in the States, prices are, of course, lower. However, a new record high average for the entire country was set today: $3.645/gal for regular unleaded. Diesel also climbed to match its recent record national-average high: $4.25 /gal.
Such is the backdrop for a summer season where I will likely be doing a fair amount of driving. I should be able to cover the costs, especially if I minimize other driving. I am seriously thinking about getting another bike. Might go back to a trike—something with a lot of utility. May place is 7.5 miles (12 km) from UBC. The exercise would be a good thing for me.
May 20, 2008: Tuesday
(Vancouver, BC) As things continue to unfold at a rapid pace, I am feeling ever more confident in using the term "crisis." Over the past few days, the futures market for oil has shifted from backwardation to contango. This has been a dramatic change, starting about a month ago, and is a different kind of contango that in previous circumstances (such as in parts of 2006). This time, the contracts are selling for ever higher prices as they go further into the future. Oil for 2016 delivery is now about $10/bbl higher than oil selling on the spot market! On The Oil Drum, this kind of potential market change has been discussed for many years now. To see it unfold is rather unnerving. It would seem that expectations were on the mark. Now, we will see if this shift holds. I suspect the contango will endure, and it could very well steepen. Contango is going to present all kinds of problems for businesses that are used to locking in lower prices for future oil deliveries. The airlines will feel this new reality bite strongly, I suspect.
The price of WTI reached another all-time high—yet again!—today: $129.60/bbl during intraday trading. At close, the price was $129.07/bbl. This is amazing. The shift to contango has occurred along with these persistent prices above $120/bbl, making the fundamental market shift even more unsettling.
Sunshine is draped warmly on the lushly foliated trees and brightly-colored buildings outside, an inviting scene that reflects not at all my worry about the near future. I think, however, I need to take another break from following the energy situation so closely. The spectacle consumes me too much. However, it is hard to put it aside, especially with so much going on at the moment. CNBC had Hirsch and Pickens on this morning giving their thoughts about the crisis. Peak Oil is beginning to show up everywhere. I think there's a clear reason for this: The crisis is starting to bite, and awareness is really beginning to spread. In a steadily growing chorus, the voices of reason are being heard ever more frequently.
May 26, 2008: Monday
(Kelowna, BC) Last week, by the way, the price of WTI reached a record $135.06/bbl. I believe this was on Wednesday morning. The price then dropped to around $131-$133 and hovered around these values until close on Friday. I don't have an internet connection here, so I don't know what's going on today. The price of gas on my trip was as high as $1.36 CDN/liter for 87 octane, and up to $1.51/liter for 94 octane.
08:36 PDT: The wireless connection is working this morning. Oil's trading around $133/bbl right now.
(Vancouver, BC) Yesterday, in what I believe to be the third trading record in as many days, the price for WTI reached $123.93/bbl. Today, NYMEX trading settled on $123.69/bbl. In after-hours trading, WTI then climbed to $124.49/bbl. These are just amazing prices. And the duration of this new "rally" has been quite sustained, starting from $116/bbl on Monday. My gut feeling is that something in the market has changed. Prices are climbing faster. New record highs are being set quite often now. It's almost becoming commonplace. Many analysts, including Daniel Yergin of CERA fame, are now turning around and predicting oil in the $150 to $200 range in the relatively near term. It appears that a growing awareness of limited production is taking hold. Peak Oil is gaining much traction in the news now. It is being talked about more seriously. I have seen those two ominous words in the Vancouver Sun and other local papers on a number of occasions. I am becoming increasingly confident in the idea that 2008 will be the year in which Peak Oil becomes a central discussion world-wide. If not this year, no later than 2009. A sea-change is coming.
I filled up the tank yesterday at a local Chevron station. I paid $1.303/liter. That's Canadian dollars, of course, which are close to parity with the US dollar right now: $1 Can = $0.9831 US at this moment. At 3.875 liters per US gallon, that's $5.04 /gal in Canadian money, or $4.96 /gal in US dollars. Down in the States, prices are, of course, lower. However, a new record high average for the entire country was set today: $3.645/gal for regular unleaded. Diesel also climbed to match its recent record national-average high: $4.25 /gal.
Such is the backdrop for a summer season where I will likely be doing a fair amount of driving. I should be able to cover the costs, especially if I minimize other driving. I am seriously thinking about getting another bike. Might go back to a trike—something with a lot of utility. May place is 7.5 miles (12 km) from UBC. The exercise would be a good thing for me.
May 20, 2008: Tuesday
(Vancouver, BC) As things continue to unfold at a rapid pace, I am feeling ever more confident in using the term "crisis." Over the past few days, the futures market for oil has shifted from backwardation to contango. This has been a dramatic change, starting about a month ago, and is a different kind of contango that in previous circumstances (such as in parts of 2006). This time, the contracts are selling for ever higher prices as they go further into the future. Oil for 2016 delivery is now about $10/bbl higher than oil selling on the spot market! On The Oil Drum, this kind of potential market change has been discussed for many years now. To see it unfold is rather unnerving. It would seem that expectations were on the mark. Now, we will see if this shift holds. I suspect the contango will endure, and it could very well steepen. Contango is going to present all kinds of problems for businesses that are used to locking in lower prices for future oil deliveries. The airlines will feel this new reality bite strongly, I suspect.
The price of WTI reached another all-time high—yet again!—today: $129.60/bbl during intraday trading. At close, the price was $129.07/bbl. This is amazing. The shift to contango has occurred along with these persistent prices above $120/bbl, making the fundamental market shift even more unsettling.
Sunshine is draped warmly on the lushly foliated trees and brightly-colored buildings outside, an inviting scene that reflects not at all my worry about the near future. I think, however, I need to take another break from following the energy situation so closely. The spectacle consumes me too much. However, it is hard to put it aside, especially with so much going on at the moment. CNBC had Hirsch and Pickens on this morning giving their thoughts about the crisis. Peak Oil is beginning to show up everywhere. I think there's a clear reason for this: The crisis is starting to bite, and awareness is really beginning to spread. In a steadily growing chorus, the voices of reason are being heard ever more frequently.
May 26, 2008: Monday
(Kelowna, BC) Last week, by the way, the price of WTI reached a record $135.06/bbl. I believe this was on Wednesday morning. The price then dropped to around $131-$133 and hovered around these values until close on Friday. I don't have an internet connection here, so I don't know what's going on today. The price of gas on my trip was as high as $1.36 CDN/liter for 87 octane, and up to $1.51/liter for 94 octane.
08:36 PDT: The wireless connection is working this morning. Oil's trading around $133/bbl right now.
An Energy Crisis Journal: March and April 2008
March 11, 2008: Tuesday
(Vancouver, BC) Oil prices continue to climb, setting new records, and reached an intraday high of $109.72/barrel for WTI. Yesterday's close was at $108.21/bbl. With the knowledge I have, these prices are unnerving. When I last saw the prices at Washington gas stations, I couldn't help but get a sinking feeling. The US economy is certainly beginning to respond. It's slowing. People are spending less, traveling less. Yet prices in many sectors continue to climb. Stagflation. With each passing day, we're pushing further into Bakhtiari's "Transition 1". At some point, the world is going to seem a very strange, alien place.
April 15, 2008: Tuesday
(Seattle, WA) WTI reached at least $114.04/bbl today, the much-anticipated "triple-Yergin" on The Oil Drum. Some of this climb appears to be related to the shutdown of at least four Mexican oil terminals, supposedly due to inclement weather. Could be a cover story for rapidly diminishing oil production as Cantarell has been in decline for at least a year now. And, it appears that Russia's all-important oil production has now peaked and had gone into decline, news that appeared in many places, including the Wall Street Journal, I believe. Welcome to the Peak plateau. Peak oil now. Gas prices at the Shell station across the street jumped a dime a gallon today to $3.68/gallon. By far the highest level I've seen at this facility.
April 28, 2008: Monday
(Vancouver, BC) Average fuel prices in the United States climbed over $3.60/gal for regular unleaded today. This is still dirt cheap compared to, say here, where I paid $1.28 CAN/liter for 87 octane at a local Chevron (something like $4.85 CAN/gallon). Oil continued to trade between $118 and $119/bbl for WTI. Closure of the Grangemouth refinery in Scotland due to a strike and major pipeline disruptions in Nigeria seem to be contributing to the high prices. However, it is hard to ignore the steady, relentless climb in prices over recent years. Clearly the fundamentals are at work on the price of oil, too, and I am convinced that the supply and demand balance is the biggest part. We're on Peak Plateau. Production rates are not growing significantly, and have not since the summer of 2004. But the world's economy in total continues to grow, and it is ever-hungry for oil.
(Vancouver, BC) Oil prices continue to climb, setting new records, and reached an intraday high of $109.72/barrel for WTI. Yesterday's close was at $108.21/bbl. With the knowledge I have, these prices are unnerving. When I last saw the prices at Washington gas stations, I couldn't help but get a sinking feeling. The US economy is certainly beginning to respond. It's slowing. People are spending less, traveling less. Yet prices in many sectors continue to climb. Stagflation. With each passing day, we're pushing further into Bakhtiari's "Transition 1". At some point, the world is going to seem a very strange, alien place.
April 15, 2008: Tuesday
(Seattle, WA) WTI reached at least $114.04/bbl today, the much-anticipated "triple-Yergin" on The Oil Drum. Some of this climb appears to be related to the shutdown of at least four Mexican oil terminals, supposedly due to inclement weather. Could be a cover story for rapidly diminishing oil production as Cantarell has been in decline for at least a year now. And, it appears that Russia's all-important oil production has now peaked and had gone into decline, news that appeared in many places, including the Wall Street Journal, I believe. Welcome to the Peak plateau. Peak oil now. Gas prices at the Shell station across the street jumped a dime a gallon today to $3.68/gallon. By far the highest level I've seen at this facility.
April 28, 2008: Monday
(Vancouver, BC) Average fuel prices in the United States climbed over $3.60/gal for regular unleaded today. This is still dirt cheap compared to, say here, where I paid $1.28 CAN/liter for 87 octane at a local Chevron (something like $4.85 CAN/gallon). Oil continued to trade between $118 and $119/bbl for WTI. Closure of the Grangemouth refinery in Scotland due to a strike and major pipeline disruptions in Nigeria seem to be contributing to the high prices. However, it is hard to ignore the steady, relentless climb in prices over recent years. Clearly the fundamentals are at work on the price of oil, too, and I am convinced that the supply and demand balance is the biggest part. We're on Peak Plateau. Production rates are not growing significantly, and have not since the summer of 2004. But the world's economy in total continues to grow, and it is ever-hungry for oil.
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