In this week's report: (click this link to access an online copy of the PDF)

What does energy consumption say about the recession? (page 1 )

Jet fuel prices and the airlines. (page 2 )

Mexico's credit rating. (page 3 )

Moore's Law does not apply to oil. (page 4 )

Two very good video interviews by ASPO-USA on petroleum supplies. (page 5 )

EIA gasoline supply data.

On Wednesday the EIA released its weekly petroleum report which includes data on gasoline and distillate supplied to the market. Gasoline continues to remain flat at 8.9 million barrels per day, holding steady around the apparent demand floor of the last five years of 9 million barrels per day. Distillate is also flat over the last few weeks but importantly is down from the depressed levels of a year ago.

There is more in this week's report on the trends over this decade in industrial and commercial consumption of petroleum products. While gasoline consumption appears to have hit a floor that goes back to 2004, distillate, jet fuel and natural gas which have high industrial use components in their demand are all down from 2004 levels.

Did you know that corn production requires propane?

A good example of the dependence of agricultural production on fossil fuels is being demonstrated by events involving propane during the current corn harvest. Again Peak Oil will impact far more than the price you pay at the gasoline pump.

"Gov. Jim Doyle [Wisconsin]has declared a state of emergency to help alleviate a shortage of propane. Doug Caruso of the Wisconsin Farmers Union says the demand for the fuel is higher than normal because it's needed to help dry a high-moisture corn crop."

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, through KMS Financial Services, Inc. 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: (click this link to access an online copy of the attached PDF)

The IEA's forecast for 2030 oil supply, is it believable? (page 1 )

FedEx and fuel. (page 2 )

Is $80 per barrel oil the critical level? (page 3 )

Brazil's 5 billion barrels of oil. (page 4 )

Wave and Tidal Power - continued progress. (page 4 )

Long distance transportation choices in 1952. (page 5 )

The 50 Worst Cars of All Time.

Time – "On the 50th anniversary of the Ford Edsel, TIME and Dan Neil, Pulitzer Prize-winning automotive critic and syndicated columnist for the Los Angeles Times, look at the greatest lemons of the automotive industry." This is really something. For sure at least some people will find at least one of their favorite cars on the list. But that is the fun of a list like this, to disagree with it. Yes the 1958 Ford Edsel is on the list!!

So how is that jet fuel hedging program working out?

Financial Times (Nov. 17^th) – "Although the price of oil has fallen from a high of $147.27 in July 2008 to about $80 a barrel this month, EasyJet had hedged its fuel prices at higher rates than the average spot price over the year." This was followed on Nov 18^th with this news on Air France. "Air France-KLM, Europe's largest airline, on Wednesday unveiled a net loss of €147m ($219.8m) in its second quarter after suffering a further drop in revenues from its cargo operations and large losses on its fuel hedges."

At best fuel hedging is a short-term bet on price and only provides relief from fuel price escalation for a brief period of time. Hedging is not a solution to the chronic long-term nature of Peak Oil driven fuel increases that the air transport industry must face in the decade ahead. In this week's report the approach that FedEx uses of fuel surcharges instead of using a hedging program are looked at. That approach will also prove largely ineffective over the long-term in protecting the companies in the industry.

So is Peak Oil destine solely to crisis management mode by governments?

Tom Whipple -- "Not many years from now, there will be a huge uproar over who missed the coming of peak oil. There will be Congressional hearings and much finger pointing and protestations that the peaking of world oil production was impossible to predict." Recently much has been made of the U.S. lack of ability to foresee crisis and its tremendous ability to respond and manage them. The Peak Oil scenario ahead will soon put that thesis to the ultimate test. I hope all the pundits are right on that count.

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, through KMS Financial Services, Inc. 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: (click this link to access an online copy of the PDF)

Were the IEA's world oil reserve figures influenced by the U.S.? (page 1 )

So which is it "Peak Supply" or "Peak Demand"? (page 2 )

Mexico tackles budget problems? (page 3 )

Who controls the reserves? (page 3 )

What was the prediction for future oil supplies 60 years ago? (page 4 )

Could Peak Oil play out like the recent Financial Crisis did?

Guardian (Nov. 10^th ) – "Remember the Queen's question – that uncannily accurate and strikingly obvious question she put to economists at the London School of Economics a year ago after the financial crisis: did no one see it coming? Apply that question to peak oil and the answer is that many people did see it coming but they were marginalized, bullied into silence and the evidence was buried in the small print." This was in a follow-up article run by the Guardian after the primary article discussed in this week's report.

EIA data for gasoline and distillate demand don't support views of economic recovery?

EIA (Nov. 12^th) – The EIA (Energy Information Administration: Official Energy Statistics from the U.S. Government) released its weekly petroleum report on Thursday. The report showed that distillate demand was still down and remains below the depressed levels of last year. Gasoline consumption is holding steady just under 9 mb/d which has proven to be a very sticky level of consumption. If gasoline consumption begins to slip further significantly below the 9 mb/d level it will not be a good sign at all. The lack of demand for distillates which are better measures of industrial and commercial demand than gasoline clearly shows that the U.S. economy has not made a major change in direction.

Peak Gold???

Telegraph (Nov. 11^th) -- "Global gold production is in terminal decline despite record prices and Herculean efforts by mining companies to discover fresh sources of ore in remote spots, according to the world's top producer Barrick Gold."

The reason is simple and no different than the situation for oil; "It is increasingly difficult to find ore."

High Speed Rail: A No-Brainer -- The Transformation of Transportation

Chris Nelder has some interesting observations and prescriptions for high speed rail in the U.S. The biggest obvious advantage – it can be done without a dependence on liquid fuels.

"Calling the U.S. "a developing country in terms of rail," a Siemens representative told the New York Times last week that his company was a candidate for a proposed high speed link between San Francisco and Los Angeles, along with Bombardier and Japanese bullet train manufacturer Hitachi." So where are the U.S. companies on that list?

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, through KMS Financial Services, Inc. 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.

Special News:

This is a follow-up to the article in today's Master Resource Report and the news this week on events at World Oil concerning Art Berman and shale gas. Read this posting on Art's blog concerning his leaving and the firing of his editor over his work on shale gas. Petroleum Truth Report

In this week's report: (click this link to access an online copy of the PDF)

Railroads & Peak Oil. (page 1 )

The shale gas question heats up? (page 1 )

Why wasn't this in the paper? (page 3 )

4-5 trillion barrels of oil, really? (page 3 )

Spain hit 45% of electric power from wind. (page 4 )

Ok, Warren Buffett bought a freight railroad. What about passenger rail?

James Kunstler has some thoughts on passenger rail that he wrote in a forward to a new book "Waiting on a Train: The Embattled Future of Passenger Rail Service" by James McCommons. "Rebuilding the nation's passenger railroad has got to be put at the top of our priority list. We had a system not so long ago that was the envy of the world; now we have service that the Bulgarians would be ashamed of."

Fans of James Kunstler will be happy to hear that his new book is almost out. It is a follow-on to "World Made by Hand". I will try to give it a review when I get a copy.

Mexico?

Bloomberg (Nov. 3^rd) – "Mexico's Congress on Nov. 1 passed a watered-down version of President Felipe Calderon's 2010 budget that Fox [former President Vicente Fox] says is not enough to reverse a "desperate" budget situation brought on by falling oil revenue, which funds 38 percent of spending." Mexico is in a very bad way caught between falling production and lower oil prices.

CNN Money on six electric car companies and their plans for success.

"Each of these carmakers is gearing up to be the next big thing in electric automobiles. Here is how they're charting success." They range from the $30,000 Wheego & Aptera to the $88,000 Fisker. How many will be standing in 3 or 4 years? My guess is not many. Scale will prove to be the issue for most.

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, through KMS Financial Services, Inc. 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: (click this link to access an online copy of the attached PDF)

Jet fuel and distillate fuel demand trends. (page 1 )

Is $80 oil a problem for the economy? (page 3 )

Ten years of US gasoline and distillate fuel consumption. (page 4 )

Chinese investing in wind power in Texas???

Dallas Morning News (Oct. 29^th) – "A Chinese-American joint venture has agreed to build the next massive wind farm on the plains of West Texas." Texas would never let China own their oil wells, but the wind, no problem? I wonder why they couldn't get T. Boone in on this one.

Will the Saudi's intervene to keep oil prices down?

Khaleej Times [Reuters] (Oct. 29^th) – "Saudi Arabia might seek to brake any new oil price spike, mainly to protect a fragile global economy and prolong its own role as the world's top oil producer — and if that hurts regional rival Iran, it will shed no tears." The Saudi Arabian government does not want the world economy to slip backwards into recession when it may just be moving out of one. The spector of demand falling and prices slipping back to the $30/barrel levels of last December will keep their minds focused.

The question is how long can they provide that supply when global demand returns to the levels of 2007-08?

Jeff Rubin clearly thinks not for long and said so on James Cramer's show Thursday. He thinks oil will scale triple digit levels within 12 months and put an end to the recovery. If you watch this video it is like all "Mad Money" clips, only with adult supervision and definitely no children should be present. (Cramer thinks we have 200 years worth of natural gas, enough said) Note: I only knew about this interview thanks to a friend, I am proud to say I normally avoid Mr. Cramer.

North Dakota passes Louisiana in oil production.

Associated Press (Oct. 28^th) – "The agency's Energy Information Administration said North Dakota produced 6.38 million barrels of crude in May, edging Louisiana, which had 6.34 million barrels for the month. Oklahoma was ranked fifth, at 5.7 million barrels for that month, according to the most recent figures." Don't get too excited though, North Dakota's total monthly production would only meet about one-third of a single day's demand for oil in the U.S. In addition number five ranked Oklahoma is now producing less oil than in 1913 (page 2). Never forget SCALE when reading oil production statistics.

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, through KMS Financial Services, Inc. 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: (click this link to access an online copy of the attached PDF)

The Economics of Peak Oil from Denver & more. (page 1 )

Oil prices and the economy. (page 2 )

US oil pipelines are huge storage tanks. (page 3 )

Distillate demand still isn't showing any signs of life.

Financial Times (Oct. 20^th) – "A quarterly statement from CSX, the US railway operator seen as a bellwether of the country's industrial and trade activity, points to weak distillates demand. CSX locomotives used 18 per cent less fuel in the most recent quarter than in the same period a year ago." This is not a sign of a robust economy.

Through August US airline jet fuel consumption is down an average of 12.75% year-over-year according to the US Bureau of Transport Statistics report. This drop is on top of a more than 4% decline in 2008 from 2007 levels.

These two fuels are the number two and three uses of oil behind gasoline in the US. If they were not down as much as they are US oil consumption would not have nearly the magnitude of decline given the consistent 9 million barrels per day of gasoline demand.

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, through KMS Financial Services, Inc. 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: (click this link to access online copy of PDF)

ASPO in Denver. (page 1 )

Russia goes into the lead in oil production. (page 2 )

Gasoline and distillate consumption. (page 2 )

Kevin and the Chicken Little's. (page 2 )

Financial Times Must Read – Lunch with the FT: David Swensen

Financial Times (Oct. 10^th) – "…you should invest only in things that you understand. That should be the starting point and the finishing point." He then went on with to make one of the best statements I have heard in a very long-time. "The investment community is hopeful – hopeful's probably too weak a word – wildly optimistic about their particular chances ... Never underestimate the gullibility of large pools of money."

One little surprise from the ASPO Conference.

In Denver at the ASPO conference Jeffrey Brown (aka westexas on The Oil Drum) and I discussed this situation he had found. So on Thursday when I found this posted on The Oil Drum I had to share it.

I recently ran some numbers that surprised me. A recent study put the total cost of driving a Honda Civic at $0.50 per mile, assuming 10,000 miles per year. If we assume $2.50 per gallon and 30 miles per gallon, then 333 gallons per year would be consumed, at about 8¢ per mile, leaving the non-fuel costs at $0.42 per mile.

Let's assume the $20 per gallon number, pursuant to the recent book. The fuel cost per mile would increase by a factor of 8, to about $0.64 per mile, so the total cost per mile would be $1.06 per mile (assuming no other changes, which may or may not be the case).

So, if fuel prices went up eight-fold, total driving costs, pursuant to above assumptions for a Civic, would be only about twice as much. Of course, not everyone drives a Civic, and other costs would ripple through the economy, especially food related costs.

However, if our driver cut his miles driven by half, based on the above assumptions, his total driving costs for 5,000 miles at $20 per gallon would be about the same as 10,000 miles at $2.50 per gallon.

It would be interesting to see what would happen if cars came with a cost per mile gauge instead of the rapidly spreading GPS displays. It might change many behaviors when driving your car started to look more like riding in a taxi and watching the meter run.

It will also surprise many people with much larger and more expensive vehicles how close they are to the magical $1/mile. But then again we all know a dollar isn't what it used to be.

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, through KMS Financial Services, Inc. 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: (click this link to access online copy of PDF)

My Peak Oil journey started six years ago. (page 1 )

I was wrong about potential airlines cost saving efforts. (page 1 )

Poor Boeing, they can't get out of their own way. (page 1 )

Gasoline and distillate consumption. (page 3 )

Shell plans to build the world's largest ship. (page 4 )

UKERC – Peak Oil before 2020.

The Daily Telegraph (Oct. 8^th) – "The most recent estimation from the International Energy Agency, that advises Governments around the world, said conventional oil would not peak until after 2030.

However an authoritative new study from the Government-funded UK Energy Research Council called this prediction "at best optimistic and at worst implausible". The peer-reviewed research looked at 500 studies from around the world and took into account the difficulty of accessing new oil fields as well as growing demand. It predicted oil will begin running out before 2030 and there is a "significant risk" peak oil will be reached before 2020."

It is difficult to reconcile the UKERC's report implications and those put forth in another report by Deutsche Bank which is also covered in this week's report. The boys at Deutsche appear to be in the optimistic camp.

More on the UKERC report and a link to the original in this week's Master Resource Report.

Batteries or Fuel-Cells?

Bloomberg (Oct. 9^th) – "General Motors Co., Toyota Motor Corp. and other automakers want to sell consumers electric cars powered by hydrogen within six years. Their plans clash with the U.S. government's infrastructure priorities." Since I have driven a fuel-cell car and an electric car I admit I prefer the fuel-cell. The issue will be which of these two systems can manage the infrastructure issues. Remember both hydrogen and batteries are just storage forms, they are not primary energy sources like fossil fuels or solar energy. They also have and energy density problem which continues to be improved. Stay tuned the outcome will be both interesting and critical to the transportation world ahead.

This is about the same relationship the U.S. has for oil consumption to reserves.

Economist (Oct. 3^rd) – "China has the busiest railways in the world, according to the World Bank. It carries a quarter of the world's traffic on 6% of its track." There is going to be plenty of tracked laid in China.

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, through KMS Financial Services, Inc. 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: (click this link to access PDF)

Norway's arctic potential, it won't be easy? (page 1 )

Mexico's production and exports. (page 1 )

What in the world is "Boomerang Trade"? (page 3 )

Water and Energy cannot be separated. (page 4 )

238 mph by train. (page 5 )

Saudi oil giant Aramco looks to Brazil.

Upstream (Sept. 29^th) – "Saudi Aramco is interested to explore for oil in Brazil's pre-salt basin, Brazilian Chief of Staff, Dilma Roussef said." They don't have enough of their own oil?

The action is in deep water.

Upstream (Sept. 29^th) – "There will be increasing reliance on deep-water drilling for supply," he said, adding that the company forecast around 12% of total global demand will be supplied by deep-water drilling by 2015." Remember that this is not cheap, easy flowing oil production.

Upstream also reported that Steve Robertson, the director of Douglas Westwood, told the Trends in the Offshore Drilling Industry conference in London that if "… China follows Korea's path - as it has largely to date - oil demand will more than double in the next decade".

Robertson questioned whether supply could meet this demand, with 66 out of 99 producing countries having reached their peak production by 2008. "Peak oil is not a myth or a scare tactic, in our view it is very much a reality…"

Lithium price drop announced.

SQM (Sept. 30^th) – "SQM announced that prices for lithium carbonate and lithium hydroxide will be reduced by approximately 20% from current levels for the renewal of all its supply contracts." Since SQM is the world's largest producer of lithium it by default sets the global price. So the concern is why with the prospect of rapidly expanding demand from the auto industry is the company compelled to lower its prices? Until more is know this probably should be viewed as a negative indicator of the demand for battery grade lithium carbonate. Lithium battery hype may be way ahead of reality, stay tuned.

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, through KMS Financial Services, Inc. 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: (click this link to access PDF)

Peak Oil is a supply issue, not the end of oil.

The Oil Tax.

Follow-up on the AMR airline miles sale.

Gold or Oil?

BBC video on Spain's high speed trains.

Industry hype is always a risk for consumers.

Bloomberg (Sept. 23^rd) – "Toyota Motor Corp., the biggest seller of hybrid autos, said carmakers risk damaging the long- term reputation of battery-powered vehicles by over-promising on what the technology can deliver." If the industry sells the first generation of electric cars as a straight across replacements for the current automobile the backlash will be huge. This is one case where the marketing guys had better have their feet firmly placed on the ground. Too much hype is a big risk.

Natural gas is the cleanest and for now the cheapest fossil fuel.

Reuters (Sept. 23^rd) – "The industry can cope with $4 gas. The industry can't grow or sustain production with $4 gas," Chesapeake CEO Aubrey McClendon told an IHS Herold energy conference." McClendon then went on to give his thoughts on where price will need to reach for production to be sustainable. "We at Chesapeake think that price has to be three times the finding costs, and that translates to $6 to $9 in the next 12 months."

It is only a few years late.

Upstreamonline (Sept. 24^th) – "The first phase of Kazakhstan's huge Kashagan oilfield in the Caspian Sea will be 72% complete by the end of this year, with first oil due in 2012, the project operator said today." The Kashagan Oil Field covers an area of over 5,500 sq km in the Caspian Sea, with annual temperature extremes ranging from -35°C to 40° (-31°F to 104°F). This is one of the best examples of why just because you find a huge oil resource it doesn't translate into quick, easy and cheap oil.

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, through KMS Financial Services, Inc. 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: (click this link to access PDF)

Response to Michael Lynch's NYT Op-Ed.

More on the economy and oil prices.

Hawaii, an experiment in Peak Oil.

Thai Airlines should try e-Bay.

Isn't this like eating the seed corn?

Wall Street Journal (Sept. 17^th) – "AMR turned to General Electric Co. with a $1.6 billion of aircraft sale-leaseback deal, plus a $280 million loan from the conglomerate. GE which makes aircraft engines and runs the world's second-largest aircraft leasing, has had a central role in bankrolling the airline sector during downturns." An associate of mine reminded me of Pan American World Airways strategy back in the 1980's of selling off its assets in real estate and equipment to keep it afloat. When it finally collapsed in 1991 we found how well that strategy worked out. For that matter consider all the jewels sold by General Motors to keep the automobile business struggling along.

I wonder if anyone at GE has considered the possibility that the leases on those planes may not be very reliable or the residual value of the planes may not be worth much (just ask Thai Airways). The last part of the quote above should rank high when looking at GE, "bankrolling" airlines just doesn't sound like a great long-term business to a Peak Oil aware investor.

"The parent of American Airlines said it had raised $2.9 billion in funding, repairing one of the sector's weakest balance sheets and potentially paving the way to buy a stake in Japan Airlines Corp." This is a great idea; invest the money in another money losing airline so you can accelerate losing the $2.9 billion just raised.

"The International Air Transport Association (IATA) today announced a revised global financial forecast predicting airline losses totaling US$11 billion in 2009. This is US$2 billion worse than the previously projected US$9 billion loss due to rising fuel prices and exceptionally weak yields." What they don't seem to get is that if the world's economies were not in a deep recession the fuel prices would be so high that the tickets prices needed would also have driven passengers away with the same resulting low yields.

So what did AMR do? They sold forward a block of frequent flyer miles to Citigroup which raised $1 billion bringing the total combined with the GE deal to $2.6 billion. Citigroup had better hope that AMR doesn't run into $100+ oil in the future or honoring those miles could be tough if the planes don't leave the ground.

I wonder if the folks at GE, AMR and C read the IATA announcement before they signed their deals???

Brazil's new oil fields will last 50 years.

Latin American Herald Tribune (Sept. 17^th) -- "Edison Lobão said that thanks to the vast potential of its pre-salt region, so-named because the estimated 50-80 billion barrels of oil equivalent it contains are located in the sea bed beneath an unstable salt formation, Brazil could produce some 3.8 million barrels per day within 10 years, or double its current output." Wow, that is great. Now all we need is 41.2 million barrels per day more to balance out just the depletion from existing fields over the next couple of decades according to the IEA's WEO 2008 released last year.

"Despite all the attention that is given to demand growth, decline rates are actually a far more important determinant of investment needs. Even if oil demand was to remain flat to 2030, 45 mb/d of gross capacity – roughly four times the current capacity of Saudi Arabia – would need to be built by 2030 just to offset the effect of oilfield decline"

Nobuo Tanaka, IEA Executive Director Nov. 2008

Then there is that other question of how much will be available for net export. Since the U.S. is a net importer that is all that matters. If it isn't exportable it doesn't matter.

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, through KMS Financial Services, Inc. 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: (click this link to access PDF)

ASPO-USA interview with Robert Hirsch.

Can the world scale its nuclear power fast enough?

Was Mexico the biggest oil speculator of them all last year?

A look at the newest and one of the oldest wind turbines for generating electricity.

Water, troubles in the Middle East and India.

Oil imports made up 58% of the July trade deficit announced this week.

Consider for a moment the impact oil imports have on the U.S. trade deficit which for July was $31.96 billion. That is up 16.3% or $4.47 billion from the June level of $27.49 billion. The press is full of hand wringing about cheap foreign goods washing over the American shores, but they made up less than half of the deficit in July. It was the July oil imports that came in at $18.5 billion up $1.9 billion from June that really move the needle on the trade deficit exclusive of auto-related items.

Oil imports therefore constituted approx. 58% of the U.S. trade deficit for July which was actually down from the 60% level in June. The reason is that imports related to autos shot up $2.4 billion as a result of the onetime (or at least we hope onetime) "cash for clunkers" stimulus program. If the $2.4 billion increase resulting from the auto-related imports is excluded from the July deficit oil imports would have climbed to over 62% of the trade deficit.

Maybe it is time that the trade deficit should be rebranded to closer reflect reality, sort of an economics version of truth in advertising. How about the "Oil & Trade Deficit"?

US gasoline consumption is 9.2 million barrels per day.

According to the EIA U.S. gasoline consumption peaked on an annual basis in 2007 at an average of 9.29 million barrels per day. So the news from the EIA this week that both the one week and four-week average were over 9.2 million barrels per day is significant. This flies in the face of the commonly held view that U.S. gasoline consumption is down dramatically. It should be very clear at this point that expecting U.S. gasoline consumption to crack significantly from here is probably wishful thinking unless either the economy tanks or gasoline's price rises substantially.

It is very possible that expectations for liquid fuel consumption going forward may be set for a major adjustment. Over the last few months there have been a number of prognostications about how U.S. gasoline consumption has permanently peaked and will decline from here forward. Instead if consumption levels remain above 9.2 million barrels per day it should bring into question many assumptions about fuel prices in the near future. It will be very entertaining to watch the foot work of those paid to predict (guess!!!) what oil prices will be in the months ahead.

However, it should be remembered going forward from here that the year-over-year data will probably become very misleading due to the extreme volatility experienced during the fall of 2008 with all the financial market troubles. Also don't forget distillate it is still down dramatically from its previous high levels of consumption.

The Chinese are coming, well maybe not.

Upstreamonline (Sept. 10^th) "Angola has blocked the sale of Marathon Oil's 20% stake in Block 32 to China National Offshore Oil Corporation (CNOOC) and Sinopec." This news comes on the heels of a Libyan rejection of another deal this week by a Chinese company. "China National Petroleum Corporation (CNPC) has pulled out of its deal to buy Verenex, with the Canadian player saying the $462 million deal was scuttled after Libya refused to approve it." Maybe this is just "resource nationalism" or maybe the African nations are beginning to question the wisdom of getting too close with Chinese companies/government and are starting to look over their shoulder at the new elephant in the room.

So far CNPC hasn't had much success this week with putting the $30 billion loan it received from the government to work overseas. "China National Petroleum Corp., parent of the world's biggest company by market value, received a $30 billion loan to fund overseas expansion as the country's government stepped up its hunt for energy resources." Except of course for the $12 billion investment in the Canadian Tar Sands earlier which may prove to be a clinker for other reasons.

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, through KMS Financial Services, Inc. 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: (click this link to access PDF)

ASPO-USA response to NYT Op-Ed last week.

How dependent on China is a Toyota Prius?

U.S. gasoline demand, it just isn't going down!

So just how big was BP's "Big" discovery in the Gulf of Mexico?

Norway is the number 11 producer in the world and more importantly the number 4 net exporter (2007 data).

The Norwegian Petroleum Directorate reported this week that it expects production to fall annually through 2013 at a rate 10% faster than expected last year. The new estimate is for production to reach 1.6 million barrels per day in 2013, down nearly 50% from the 2000 peak of 3.1 million barrels per day.

The Directorate went on to indicate that Norway had produced approximately 50% of proven oil and gas reserves. This indicates that recoverable reserves of about 31.5 million BOE remain. Norway is clearly on the back side of Hubbert's Peak.

In a clear contrast to the remarks by Michael Lynch last week in the New York Times Op-Ed the Directorate said, "Much of our oil and gas production comes from discoveries made in the first 20 years, during the period between 1969 and 1989. Resource growth from discoveries made in the last decade is low." This is a careful way of describing Peak Oil.

Biofuels -

"This all boils down to something I have said on many occasions: You can't mandate technology. Just because you mandate that 36 billion gallons of biofuel are to be produced by 2022 doesn't mean that it has a remote chance of happening. This is not a hard concept to understand, but it seems to have eluded our government for many years. The government would probably understand that they couldn't create colonies on the moon in 10 years via mandate. They know they can't cure cancer via mandate. But in the area of biofuels, they seem to feel like they can just conjure up vast amounts of hydrogen, cellulosic ethanol, or algal biodiesel."

The above is from Robert Rapier's - R-Squared Energy Blog. Robert was on a panel with me at last year's conference in Sacramento, California. If you read his bio you will see that he has extensive experience in the petroleum industry relative to the systems and scale needed to allow biofuels to work. After he posted the comments on what he called "The Pretenders" he posted a second on "The Contenders".

Whether you are a critic or a supporter of biofuels his thoughtful writing is worth reading. Ultimately Robert hits it on the head; it simply comes down to scale.

Will people really change without a crisis in energy or climate?

Reuters (Sept. 2^nd) – "People want to save the planet but are unwilling to make radical lifestyle changes like giving up air travel or red meat to reduce the effects of climate change, a straw poll by Reuters showed." This simply illustrates why energy demand will only fall when prices really bite or the climate evidence is overwhelming. The problem with this is that both will be rearview events at that point and all the really bad stuff from Peak Oil and climate will be unfolding before our children and grandchildren.

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, through KMS Financial Services, Inc. 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: (click this link to access PDF)

Does $70 present a problem for the economic recovery?

Brazil's offshore oil hits another dry hole.

New York Times Op-ed – Where are the facts?

Mexico's government is getting nervous about tax revenue.

ASPO 2009 International Peak Oil Conference

System Reset: Global Energy and the New Economy

October 11-13, 2009 Denver, Colorado

For all the details check out the ASPO-USA web site.

http://www.aspo-usa.org/

August 27, 1859 – The first commercial oil well in the U.S.

Javier Blas nailed this very important concept with his Short View article this week.

Financial Times (Aug. 25^th) – "The drop in global prices earlier this year has now revealed that China can only sustain high domestic production when global prices are near record highs. As raw materials prices declined in late 2008 and early 2009, output from Chinese mines plunged because their mines were uncompetitive. This forced the country to rely heavily on imports, mopping up global surpluses and boosting prices." This is not good news for others who must buy their commodities in the global market by bidding against China.

Another model of this same concept is domestic oil production in the U.S. The low oil prices touched in the last 12 months rapidly brought down U.S. domestic exploration and development along with production from marginal wells. Also don't forget the impact on that expensive deep water Gulf of Mexico oil everyone keeps talking up.

The electrification of our transportation system is not going to be easy.

Wall Street Journal (Aug. 26^th) – "Austin on Monday recorded its 64th day of 100-plus degree weather since June 1 -- has pushed electricity demand up to record levels, as air conditioners run overtime. To meet the demand, costlier electric generators have been pressed into service. As a result, electric rates and consumer bills have risen despite the lower price of natural gas, which is used to generate most of the electricity in Texas." So do you plug in the car or run the air conditioner so you can sleep? This is only one of the trade-offs that may need to be faced in the decades ahead. It just isn't going to be easy.

More trouble for biofuels.

Wall Street Journal (Aug. 27^th) – "Two-thirds of U.S. biodiesel production capacity now sits unused, reports the National Biodiesel Board. Biodiesel, a crucial part of government efforts to develop alternative fuels for trucks and factories, has been hit hard by the recession and falling oil prices."

The situation could get much worse given the risk to crop yields by the droughts and high temperatures mentioned above. "While crop yields depend on a variety of factors, extreme heat is the best predictor of yields," Roberts says." (North Carolina St. Univ. news release 2009-08-24) Feedstock prices and availability may have to be added to the recession and falling oil prices as major obstacles to biofuel producers. Why weather is never mentioned as a major concern with biofuels has always baffled me. Just ask a farmer if it is a risk.

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:

How at risk to an oil price spike are some states?

Mexico's Chicontepec oil field is not Cantarell.

Could natural gas production cause earthquakes?

What happened when a company moved 90% of its production back the U.S. from China?

ASPO 2009 International Peak Oil Conference

System Reset: Global Energy and the New Economy

October 11-13, 2009 Denver, Colorado

Special Note: Early Registration has been extended until Aug. 21^st

For all the details check out the ASPO-USA web site.

http://www.aspo-usa.org/

China passed the U.S. this year in auto sales, but hybrids have a long way to go.

Financial Times (Aug. 20^th) – "…only 899 Prius hybrid cars were sold in China last year." Clearly cost is going to be the biggest hurdle for all the alternatives to the internal combustion engine and not just in China. The Financial Times had a pragmatic report on carmakers switching to various incarnations of electric vehicles this week. It is going to be a long and difficult road if the shift doesn't match well with the timing on constrained liquid fuels in the near future.

Is small hydro an answer?

WSJ (Aug. 21^st) – "According to the U.S. Hydropower Resource Assessment for Washington state in 1997, more than 2,500 megawatts of power could be added by simply improving efficiencies at existing hydroelectric plants and adding hydro to non-generating dams, such as those used for reservoirs or agricultural irrigation. By contrast, the report estimated that developing all the state's potential hydro sites, including small ones, would add only 762 megawatts." It appears that even in hydro rich Washington State the scale in new dams isn't there. As is often the case the opportunities are in doing more with what is already there.

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:

Did China's oil imports really grow 42% from a year ago?

When will your UPS delivery arrive in an electric truck?

It seems they smuggle more than illegal drugs from Mexico to the U.S.

U.S. liquid fuel demand trends still don't look good.

ASPO 2009 International Peak Oil Conference

System Reset: Global Energy and the New Economy

October 11-13, 2009 Denver, Colorado

Special Note: Early Registration has been extended until Aug. 21^st

For all the details check out the ASPO-USA web site.

http://www.aspo-usa.org/

About those hyped "Green Bamboo Shoots" in China???

Reuters reported that Peabody Energy's CEO Greg Boyce said …China had built up stockpiles of steel and other products, and he was sceptical the country would maintain its pace of imports of metallurgical and thermal coal in the second half of the year. "We're seeing signs of both of those slowing down right now as China has kind of gone through their first stimulus, and their export economy has not recovered," Boyce told reporters during a visit to Australia.

This is consistent with the drop in the closely watched Baltic Dry Index which until recently was being held up as a clear sign of China's rebound. Bloomberg reported last week that "The Baltic Dry Index, a measure of shipping costs for commodities, had its worst week since October as Chinese demand for shipments of coal and iron ore slowed."

As if fuel price weren't enough of a problem for the airline industry.

Wall Street Journal (Aug. 14^th) -- "Boeing Co. has ordered work halted at a fuselage assembly plant in Italy working on its marquee 787 Dreamliner aircraft, according to a report on an aviation industry blog." This week's report has more on the problems faced by all global supply chains. Remember the future is often here, it is just not obvious or evenly distributed.

More on the Seattle Times web page. "Boeing stops work on 787 fuselages made in Italy to fix wrinkled skin."

For Boeing and the airline industry this is a short-term and most likely fixable problem. Fuel however is a chronic and terminal problem. From a Peak Oil perspective it is very difficult to see how it is fixable in the context of an industry dependent on cheap mass market air travel.

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:

The IEA continues to gradually confront Peak Oil.

U.S. gasoline demand compared to diesel demand.

China and India – A grand Tragedy of the Commons.

Brazil is still a net importer.

Is this Economist article describing the U.S. in a few years?

The Economist (Aug. 8^th) – "North Sea gas has served Britain well, but supply peaked in 1999. Since then the flow has fallen by half; by 2015 it will have dropped by two-thirds. By 2015 four of Britain's ten nuclear stations will have shut and no new ones could be ready for years after that. As for coal, it is fiendishly dirty: Britain will be breaking just about every green promise it has ever made if it is using anything like as much as it does today. Renewable energy sources will help, but even if the wind and waves can be harnessed (and Britain has plenty of both), these on-off forces cannot easily replace more predictable gas, nuclear and coal power. There will be a shortfall—perhaps of as much as 20GW—which, if nothing radical is done, will have to be met from imported gas."

Ten years ago the UK didn't realize or believe its natural gas and oil production had peaked. All looked good for the decades ahead. The reality of course has proven to be different. The UK went from being a top 10 exporter of oil in the world to a net importer in just six years. Now given the very long tail of energy policy and infrastructure decisions made a decade ago it finds itself on the verge of a crisis with time having essentially run out on mitigation choices.

I suggest reading the Economist article and interjecting the U.S. in place of the UK and examining the striking similarities of the current U.S. policy with what occurred in the UK. In many ways the U.S. is following the same road map just over slightly different terrain and on a much larger scale. The U.S. future therefore may be playing itself out in real time in the UK for us all to observe. The question is will we learn anything from it?

The infrastructure shift to electrified transportation is beginning.

Seattle Times (Aug. 6^th) – "The Seattle area will get millions of dollars from the federal government to equip streets and homes with charging stations for the electric cars due to arrive at area dealerships next October."

"Under the grant, which is part of the federal economic-stimulus package, people who buy a Nissan Leaf will get a 220-volt charging station in their home at no cost. In addition, eTec will put in a station network throughout the area for any electric vehicle. Zipcar is part of the deal, and will put electric cars on the streets for members of its car-sharing service."

The problem of course is that going forward as electric car penetration increases the installation of a 220-volt charging stations in car buyer's homes is not going to free; maybe subsidized but not free.

The use of the Leaf by Zipcar seems like a very attractive strategy for scaling the fleet of electric cars and introducing them to future owners. It also solves the initial problem of charging station locations and availability. The charging spot won't be taken up already when you drive up.

There is more on the Nissan Leaf electric car announcement in this week's report.

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:

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.