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.

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