In this week's report:

Tidal power comes to Puget Sound.

What uses 4% of household energy in a Japanese home? You will be surprised.

Build your own jackup-rig.

Solar power and biofuels.

What would happen if ExxonMobil mentioned peak production?

Bloomberg (July 30) – "Meeting Chief Executive Officer Rex Tillerson's target of 2 percent growth in oil and natural-gas production will require Exxon Mobil to boost output by the equivalent of 390,000 barrels of crude a day in this year's second half. That exceeds the output of Alaska's Prudhoe Bay, the biggest U.S. oil field." This is one more example of the scale of what is ahead for the International Oil Companies as demand grows with economic recovery.

Of course the company doesn't think they are facing any problems. "Company spokesman David Rosenthal commented on production prospects today on a conference call with investors after Irving, Texas-based Exxon Mobil reported its lowest quarterly profit in more than five years. The company didn't change its forecast for a 2 percent increase in full-year production after output fell 3.3 percent in the second quarter."

ExxonMobil cannot express Peak Oil anymore than Pemex can.

Pemex cut its production estimates again.

Bloomberg (July 31) – "Last year, Pemex's output fell at the fastest rate since World War II, costing it more than $20 billion in potential sales amid record crude prices. Pemex cut its forecast three times last year as its then-largest field, Cantarell, dropped more than twice as fast as government predictions." Note that nowhere in any of the Pemex announcements does the term Peak Oil get mentioned. Remember it wasn't mentioned in the U.S. as it was peaking in the early 1970's either.

Imagine what would happen to Pemex's ability to borrow money (remember it is a government piggy bank) if it was to publicly acknowledge production had peaked. For that matter just think what it would do to the Mexican Peso?

One more reason Carbon Capture and Storage (CCS) isn't going to work.

Bloomberg (July 31) – "Technology to remove and bury carbon dioxide emissions from coal-fired power plants will require at least a decade of government subsidies before becoming economically viable, a Harvard University researcher." Forget the subsidies; just let the price of electric power go up. The cut in usage by consumers finally shifting from acting as if electricity is free would accomplish more than CCS without the distortions of government subsidies. Best of all it won't take decades of government subsidies to have an impact.

Disclaimer

This publication is dedicated to the education of readers and is an information service only. While the editor is licensed to offer investments and investment advice, the information provided herein is not to be construed as an offer to buy or sell securities of any kind, is the opinion of the author and not endorsed by KMS Financial Services, Inc. It is possible at this or some subsequent date, the editor and/or affiliated parties may own, buy or sell securities discussed in this newsletter, or based upon information provided in the newsletter, or contrary to information provided in this newsletter. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. We make every effort to provide timely information, but cannot guarantee specific delivery times due to factors beyond our control.

In this week's report:

What is the breakeven price of jet fuel for the airlines?

San Francisco's Peak Oil Report.

Could how people respond to water shortages be a model for the response to Peak Oil?

Could electric cars replace fossil fuel based cars in California?

San Francisco Peak Oil Report – "Even if the City were willing to spend the necessary funds to build and maintain citywide electric-car-charging infrastructure, San Francisco does not have access to the significant electrical power that would be necessary to charge more than a fraction of the vehicles on the road: A recent study estimates that, given current capacity, California's electric grid would be unable to handle the conversion of more than 15% of the current automobile stock to electric vehicles." (page 54)

"Hybrid vehicles lessen, but do not eliminate the need, for fossil fuels. Even hybrids that manage to get 50 to 60 miles per gallon will be costly to fuel if the price of gasoline rises to $8, $10, or $15 per gallon (or beyond)." How many hybrid buyers really think of it this way? At $8 gasoline the car's fuel bill will be higher than when gas was $3 and the car was getting 30 mpg. The impact on discretionary spending and lifestyle will still be extreme. It is time everyone gets a reality check. Business as usual with transportation is not the future.

Canadian airlines are dependent on railroads for fuel????

National Post – "With oil refineries across Canada increasingly shifting their attention away from jet fuel to more lucrative end products, such as diesel, airlines across the country have been forced to enlist the help of the nation's railways to help them access competitively priced fuel." The article indicates that jet fuel is imported from the Middle East by ship and then transported by rail. "In the past eight years alone, the percentage of imported jet fuel used in Canada has tripled to about a third of what is required."

It is rather ironic that the Canadian airlines would be so dependent on old fashioned railroads for their fuel. The reality of Peak Oil however means that everyone will become more dependent on the railroads in the future. I think there is an investment idea here somewhere????

There is more to the troubles the airlines face with fuel in this week's report.

This is a much more upbeat report on wind power's potential than most.

Proceedings of the National Academy of Sciences (PNAS) – "The analysis indicates that a network of land-based 2.5-megawatt (MW) turbines restricted to nonforested, ice-free, nonurban areas operating at as little as20%of their rated capacity could supply >40 times current worldwide consumption of electricity, >5 times total global use of energy in all forms."

Like the Desertec project covered in last week's report this will only be practical when done on very large scale with the full integration of all renewable energy sources along with the grid infrastructure to support it. In the short run however it must be remembered that this will in itself not solve the immediate problem of liquid fuel supplies.

Today it is clear to anyone that is paying attention humans have the potential for all kinds of unintended consequences with global scope. So this from excerpt from the article should not be overlooked as trivial. "The potential impact of major wind electricity development on the circulation of the atmosphere has been investigated in a number of recent studies (22, 23). Those studies suggest that high levels of wind development as contemplated here could result in significant changes in atmospheric circulation even in regions remote from locations where the turbines are deployed."

Link to this week's Master Resource Report 2009-07-24

Disclaimer

This publication is dedicated to the education of readers and is an information service only. While the editor is licensed to offer investments and investment advice, the information provided herein is not to be construed as an offer to buy or sell securities of any kind, is the opinion of the author and not endorsed by KMS Financial Services, Inc. It is possible at this or some subsequent date, the editor and/or affiliated parties may own, buy or sell securities discussed in this newsletter, or based upon information provided in the newsletter, or contrary to information provided in this newsletter. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. We make every effort to provide timely information, but cannot guarantee specific delivery times due to factors beyond our control.

In this week's report:

What can local government do?

A local baker and wheat farmer work together.

Concentrated Solar Power gets a big lift.

Audio of Jeff Rubin's presentation in Seattle.

"Canadian economist Jeff Rubin says global oil consumption is unsustainable. And he thinks the world as we know it is in for a change. Some familiar sights he says will disappear: food that's been frozen and shipped around the world to your plate, and drivers commuting solo for long stretches along the nation's highways. Not because the world is running out of oil, but because all the cheap oil was burned in your parents' engines. He says the way forward is to sharply reduce demand for oil and return to localized economies. Jeff Rubin is former chief economist at Toronto investment firm CIBC World Markets. His new book is "Why Your World Is About to Get a Whole Lot Smaller: Oil and the End of Globalization." He spoke at Town Hall in Seattle on June 8, 2009."

If you haven't read Jeff's book or heard his presentation here is a chance thanks to KUOW in Seattle.

As Pemex goes so will Mexico.

Rigzone -- "Pemex's output has fallen by a fifth since peaking in 2004, and tumbled 7.9% during the first five months of 2009 from the year-ago period."… "With Cantarell, one of the largest oil fields ever discovered worldwide, declining at 35% a year, Pemex needs to spend more at smaller, less prolific oil fields to try to compensate." There is more on the mess that both Mexico and Venezuela are in after using their national oil companies as government piggy banks to raid.

Link to this week's Master Resource Report 2009-07-17

Disclaimer

This publication is dedicated to the education of readers and is an information service only. While the editor is licensed to offer investments and investment advice, the information provided herein is not to be construed as an offer to buy or sell securities of any kind, is the opinion of the author and not endorsed by KMS Financial Services, Inc. It is possible at this or some subsequent date, the editor and/or affiliated parties may own, buy or sell securities discussed in this newsletter, or based upon information provided in the newsletter, or contrary to information provided in this newsletter. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. We make every effort to provide timely information, but cannot guarantee specific delivery times due to factors beyond our control.

In this week's report:

Was it supply & demand or speculation last year?

Does Iran have an oil export problem?

Oil price forecasts? They never learn.

The land of the automobile is slipping further behind the new giant.

Bloomberg – "China's passenger-vehicle sales rose 48 percent in June, the biggest jump since February 2006, as tax cuts and government subsidies helped the nation extend its lead over the U.S. as the world's largest auto market this year." This illustrates why the world will see the same supply demand imbalances discussed in this week's report repeated many times in the future.

Remember all those reports about the huge Brazilian discoveries?

Reuters – "A consortium of companies failed to find oil in deep waters off Brazil's coast, officials said on Wednesday, a sign the South American nation's push to become an energy exporter is still fraught with risks…it is a wake-up call that there are plenty of technical challenges -- this is not a piece of cake," said Francois Moreau, a former oil executive and independent analyst based in Rio de Janeiro."

"A Deutsche Bank report released on Wednesday put the total cost of the well at $140 million." This is just one further example of why cheap and easy oil is gone. $140 million lost on a single well, Ouch!!!

The general public view is that all oil companies have to do is drill a hole in the ground and oil comes out. Until this view changes most people will never understand the energy predicament the world is in. [Thanks David for the note and the observation.]

To make matters worse our political leadership for the most part is ill-equipped to confront the mismatch between reality (scientific facts) and politics when establishing energy policy. In an article on U.S. Energy Secretary Steven Chu the Economist makes this comment in a comparison with Former Prime Minister Margaret Thatcher. "What matters is that both of them understand something that some politicians from softer intellectual backgrounds often seem to forget: you cannot negotiate with nature. Nor can you ignore it, for it will not go away" Nice choice of terms "… softer intellectual backgrounds…"!

This is not new news.

WSJ -- "More than any other fuel, diesel reflects the current state of the economy because it is used by truckers to deliver goods and by factories to make products. It's also a good gauge on the global economy: Unlike gasoline, the bulk of which is consumed in the U.S., diesel is used all over the world." Pay attention to consumption data not just price. U.S. demand is still falling year-over-year.

Link to this week's Master Resource Report 2009-07-10

Disclaimer

This publication is dedicated to the education of readers and is an information service only. While the editor is licensed to offer investments and investment advice, the information provided herein is not to be construed as an offer to buy or sell securities of any kind, is the opinion of the author and not endorsed by KMS Financial Services, Inc. It is possible at this or some subsequent date, the editor and/or affiliated parties may own, buy or sell securities discussed in this newsletter, or based upon information provided in the newsletter, or contrary to information provided in this newsletter. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. We make every effort to provide timely information, but cannot guarantee specific delivery times due to factors beyond our control.

In this week's report:

Is Central Asia the next energy hot spot?

Is diesel an economic indicator?

Aircraft efficiency increases won't balance fuel cost increases.

Off Shore Wind.

PhysOrg.com -- "At 80 meters above the ocean - the typical wind turbine height - more than 50 percent more power is available than at 10 meters, the height important to the shipping industry upon which previous wind estimates were made."

Don't give too much validity to any short-term data.

Guardian (UK) -- "The market is transfixed by the weekly inventory and consumption estimates for crude oil and products published by the U.S. Energy Information Administration (EIA). But the backward-looking nature of parts of the reporting system makes it liable to miss turning points. Consumption and exports numbers are especially vulnerable to errors." Remember if the objective it so generate trading activity in the markets being transfixed on the short-term is a prerequisite to drive it. Take a look at the longer term charts in this week's report to get a better sense of how U.S. demand for gasoline and diesel have trended over the last 6 years.

Natural gas and food.

(Bloomberg) – "India's demand for natural gas is set to increase as fertilizer makers spend as much as 50 billion rupees ($1 billion) in the next three years to boost capacity by 35 percent, an official said. Fertilizer companies may need an additional 24 million cubic meters a day of gas to feed new plants and existing ones that are switching from using naphtha and fuel oil, Satish Chander, director-general of the Fertilizer Association of India, said by telephone from New Delhi." Without natural gas the world won't eat.

Link to this week's Master Resource Report 2009-07-03

Disclaimer

This publication is dedicated to the education of readers and is an information service only. While the editor is licensed to offer investments and investment advice, the information provided herein is not to be construed as an offer to buy or sell securities of any kind, is the opinion of the author and not endorsed by KMS Financial Services, Inc. It is possible at this or some subsequent date, the editor and/or affiliated parties may own, buy or sell securities discussed in this newsletter, or based upon information provided in the newsletter, or contrary to information provided in this newsletter. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. We make every effort to provide timely information, but cannot guarantee specific delivery times due to factors beyond our control.