Many of you have noted that my diaries persistently focus on bad economic or financial news, and often announce more to come. A few complain that I'm gloating over other people's misfortunes; some point out that it's too easy to be systematically negative, as I'll eventually be right, if temporarily (in a "broken clock" kind of way), but that means little; and many more are seriously scared by all my doom'n'gloom.

I'd like to note, for the record, that bringing up such bad news (the real estate crash, the increasing energy prices, the financial crisis, etc...) has a very real political purpose and is at the heart of what this website is about.

I've been mulling for a while the idea of doing a grand tour of the USA with my family, over a number of weeks (or months), staying over at kossacks' across the country, and visiting their favorite places all over the country.

This would not take place before next summer, or the following year, but I wanted to test the interest of kossacks for such an endeavor, and your willingness to offer me your hospitality for a day or more, given that I would not quite travel alone, bringing alone my wife and 3 kids (currently 9, 8 and 5), and that the whole trip would be liveblogged here on dKos, to see how long such a trip could be stretched.

so - take the poll, and tell me about the things worth visiting near your place!

New York Times, 14 October 2001
''If bin Laden takes over and becomes king of Saudi Arabia, he'd turn off the tap,'' said Roger Diwan, a managing director of the Petroleum Finance Company, a consulting firm in Washington. ''He said at one point that he wants oil to be $144 a barrel'' -- about six times what it sells for now.

As you may have heard, oil prices went above $144 this week.

City of Houston Gives Wind Power a Turn

HOUSTON -- The heart of the U.S. oil patch on Tuesday began using wind-powered electricity for about a fourth of its municipal power needs at a lower price than it is paying for power produced from coal and natural gas, city officials said.

The move shows how renewable energy's prospects are improving at a time of soaring fossil-fuel prices. Long derided as an expensive niche, wind power now is moving closer to the mainstream.

Yes, wind is cheap enough to be competitive head on with coal and gas - even as they aren't taxed for the pollution they cause or the carbon emissions they generate.

Another of my wind diaries.

It is oddly fitting that we touched $100 oil on 31 December and got halfway from $100 to $200 oil on 30 June - so we're on track to reach $200 oil by 31 December this year (in case you're wondering: +42% and again +42% from that level = +100% from the initial level).

It is also fitting that on that same date, the International Energy Agency published one of its gloomiest ever analyses of the oil markets, asserting that oil prices are justified by fundamentals

It said: “Like alchemists looking for a way to turn basic elements into gold, everyone wants a simplistic explanation for high prices,” bluntly adding: “Often it is a case of political expediency to find a scapegoat for higher prices rather than undertake serious analysis or perhaps confront difficult decisions.”

With gas topping $4 per gallon, and oil prices seemingly reaching new highs every week, promising more pain at the pump in the foreseeable future, energy policy is rightfully claiming its place as a major topic of the 2008 election. Indeed, John McCain gave a major campaign speech last week in Houston specifically on energy (the full transcript can be found here), and addresses the issue again this week in Santa Barbara and it is worth looking in more detail at how he describes the current situation, and what he is proposing.

This was posted on Pajamas Media two days ago, with the following title: McCain’s Energy Plan: Correct Diagnosis, Killer Prescription - John McCain seems to have identified our energy problems accurately. But are his solutions equally laudable? It is copied here below in full with their kind authorisation. This article was requested through the Oil Drum.

As you may have heard, oil prices have reached a new high above $140. I can already hear the outcry against speculators and their out-of-control games to enrich themselves at our expense.

Never mind that speculators have been caught shortselling oil (ie betting on a fall in prices) more than a few times in recent months. Never mind that spot oil prices, which require actual physical deliveries of oil at the end of each month, have behaved the same way as paper futures. Never mind that oil storage seems to not be increasing.

Nope, it is just too convenient, too irresistible and, let's say it, too comfortable an excuse that speculators are to blame. It's not our fault, we have our scapegoat. Our price increases are temporary, we'll soon be back to "normal" lows, as soon as (take your pick) speculators have been punished/oil companies are taxed for their profiteering/"fundamentals" are left toset prices.

This is just denial

There are A LOT of reasons why oil prices are going up. Let me show you just a few.

A Countdown to $200 oil diary

This is a re-run of a post written at the end of last year, with a few added comments (in italics).

An argument that has been regularly put to use on my doom-n-gloom diaries about the economy, the dollar or the oil situation is that I've been predicting some of these things (like a recession, or a housing slowdown) for so long that they are bound to happen at some point and thus my prognoses have little value. As the old joke goes, "economists have predicted 9 of the last 4 recessions"...

I went through some of my earlier diaries - those from early 2005 - as well as others from other bloggers, to look at what I had written then, and (pat, pat on the shoulder) I'm pleased to say that they were quite on target, and provide a decent explanation of what's been happening in recent months.

So to those that say: "who could have predicted this?", I'll respond quite directly: we did, on the blogs; and quite well, including the 'what' AND the 'how', if not quite the 'when.'

Saudi Arabia has announced, once again, that it was increasing production:

Saudi Arabia confirmed it would pump 9.7m barrels a day next month, an increase of 200,000 and the highest level in nearly 30 years, as it repeated its standard offer of extra barrels if customers demanded them.

The kingdom also reiterated its promise to expand production capacity, noting that it expects to achieve 12.5m b/d next year and could add an additional 2.5m barrels – if needed – after that with a massive investment programme.

And of course, we can believe them!

Saudi Arabia's oil production reaches 10.8 mln bpd

RIYADH, July 31 [2007] (Xinhua) -- Saudi Arabia's crude oil production capacity has reached 10.8 million barrels per day (bpd), the country's state oil company Saudi Aramco announced Monday.

(...)

Saudi Arabia is the world's largest oil producer and exporter and plans to raise its production capacity to 12.5 million bpd in 2009.

Climate Progress

The U.S. Energy Information Administration (EIA) recently did a detailed study of the likely outcome of offshore drilling for their Annual Energy Outlook 2007, “Impacts of Increased Access to Oil and Natural Gas Resources in the Lower 48 Federal Outer Continental Shelf (OCS).” The sobering conclusion:

The projections in the OCS access case indicate that access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030.

And the impact of the projected 7% (!) increase in lower-48 oil production that might result in 2030 thanks to opening the OCS is … wait for it …

… any impact on average wellhead prices is expected to be insignificant.

The CEO of BP, Tony Hayward, has published, on the occasion of the publication of BP's statistical yearbook, an Op-Ed in the Financial Times with a pretty self-explicit title: Let the markets solve the energy crisis. But it's also very devious, as his ode to markets allows him to mix reasonable arguments with highly toxic ones, and it's going to be very hard to make the distinction that he is correct on some respects but not in others...

Basically his arguments boil down to 3 points: there is no speculation (prices are justified by fundamentals, markets work fine), renewable energy is not serious (too small, mostly), and there is no peak oil (plenty of reserves around). and of course, his solution is simple: oil majors are ready to invest and let market forces solve the supply problem, but political obstacles prevent them, and governments must therefore help by removing these.

What is true is that speculation is not to blame, and that there are political obstacles to investment today. The rest is not quite so true. And that mix, which I expect is deliberate, has one main subtext: "don't worry" (and don't try to move off oil).

Oh this is momentous:

ECB shrugs off Fed concern on dollar

The fight against inflation in the 15-country eurozone will remain the European Central Bank’s top priority even if that clashes with US attempts to prevent a further slide in the dollar, a senior official at the bank made clear on Monday.

35 years after John Connally's famous phrase ("the dollar is our currency but your problem"), not only have the Europeans managed to eliminate the problem, by creating a currency able to largely protect their economies from currency fluctuations, but they have finally - finally! - realised that they have solved the problem.

One of the more interesting things about yesterday's economic news was the very obvious connexion between the unemployment number and oil prices. What links the two is debt, the defining feature of what I have called the Anglo Disease, ie the highly unequal economy whereby the rich and the financial sector (almost the same thing these days) capture most of the income but hide it by providing cheap debt to the middle classes so that they can continue to spend.

Oil has played a fascinating side role in my Anglo Disease series, allowing the debt bubble to go on for much longer than expected. But now, instead, it is accelerating the crash. Let me take you through the whole cycle.

Anglo Disease diaries
Countdown to $200 oil diaries

This is me in front of the windfarm which I helped finance two years ago. It's up and running, and will be generating clean energy for the next 20-25 years - at a price guaranteed not to increase for the whole period. It was inaugurated yesterday and christened Princess Amalia windfarm, after the young daughter of the Dutch crown prince.

All my wind diaries are now listed in this Windpower index story.

we're all suspect... and therefore guilty

US gives more details on new visa rules

Passengers travelling to the United States from countries whose citizens do not need visas must register online with the US government at least 72 hours before departure, in the latest measure to strengthen American security.

US accused of holding terror suspects on prison ships

The United States is operating "floating prisons" to house those arrested in its war on terror, according to human rights lawyers, who claim there has been an attempt to conceal the numbers and whereabouts of detainees.

The article below is a wonderful example of pundit cluelessness and or wanton incompetence, and I'm going to rip it to shreds in detail below.

Gordon Brown landed North Sea oil in choppy water

The Treasury is enjoying a windfall as oil soars but taxation policy may have knock-on effects

The rest of us may have been too busy partying like it was 1999, but on the eve of the millennium Britain was quietly, unwittingly, selling off the family silver on the cheap.

Gordon Brown's choice of that year to start selling off Britain's gold reserves with the precious metal's price close to an unprecedented low is well documented. What is less well known is that 1999 marked the peak for North Sea oil production and - by an unfortunate twist of fate - the very nadir of the oil price.

Not Sarkozy

my translation

"Demand for oil is stronger and stronger and supply is increasing very little, if at all." "One must have the courage to state that oil price increases will continue"

Not Gordon Brown:

The cause of rising prices is clear: growing demand and too little supply to meet it both now and - perhaps of even greater significance - in the future. Higher demand is one of the major results of the scope, speed and scale of globalisation as Asian economies, as well as Opec countries themselves, demand more oil. (...)

It is the market's belief that ever-growing demand will continue to outstrip supply that has pushed up the oil price. And we are becoming increasingly aware of the technical, financial and political barriers to the production of more oil.

With the usual 2-3 year gap on reality we've become increasingly used to when reading blogs, the corporate media is finally noticing that something is going on in the oil world. And, despite a lot of distraction about speculators or oil company profits, they are increasingly talking about the reality of booming demand outside of the West, and stagnant production.

Talk about $200 oil is no longer just the realm of doomers, survivalists or other assorted "unserious" people. So what are you doing to adapt to that?