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Who’s Ready For $30 Oil?

Who’s Ready For $30 Oil? thumbnail

How low can and will oil prices go, and what will the effects of those prices be? I bet you’ll have a hard time finding even just two people who have the same opinion on that. Not that it’s merely a matter of opinion, mind you, there are a great number of real life factors that come into play. It’s not an easy game.

OPEC gets together next week, and it’s a cartel divided. Many if not most of its members are suffering some kind of losses at present prices, and the obvious choice seems to be to cut output in order to raise prices again. But that’s not easy either, because at lower prices they need more output, not less, to minimize the damage. Besides, is non-OPEC producers don’t cut their output, OPWC cuts may do very little to lift prices.

After the recent plunge in prices, WTI is in the $75 per barrel range, and Brent around $80, the playing field has already been altered significantly. Some producers are fine with oil at $60, others need $120. Many Middle East governments need high prices to keep domestic unrest at bay, even if they can produce relatively cheaply. Some, like Venezuela, are already very close to what looks like a collapse.

There doesn’t seem to be much doubt that Saudi Arabia’s decision to cut its prices has played a major role in bringing down prices. The reason why it’s done that, however, is not so clear. Weakening the economic and political power of Russia, Venezuela and ISIS is a very obvious underlying reason. That the House of Fahd would engage in some sort of battle with US shale seems less likely; the Saudi rulers don’t fight the US that has protected them militarily for decades in the volatile region they’re in.

These geopolitical reasons behind the price drop are interesting, but perhaps the purely economic background plays a far greater role than we tend to think. We know that most large economies are not doing well at all, and we also know that their leaders and central bankers do whatever they can to make us think that pig was born with lipstick on. But perhaps we lose something in the translation, perhaps things are worse than we realize.

An article at MarketWatch by ‘investment specialist’ Ivan Martchev suggests that the impact on the price of oil of the economic slowdown in China could be far greater, in the recent past as well as going forward, than most wish to acknowledge. Since a lot of demand growth comes from China, as Europeans and Americans drive less miles per capita, a significant slowing of that growth demand could be a major factor in where oil prices go in 2015. Martchev:

Cheap Oil May Be A Sign Of Bigger Problems

One thing that strikes me about this oil-price decline is how persistent and methodical it has been. Commodities trend much differently than stocks as strong trends sometimes seem almost linear in nature with very shallow countertrend moves. I have used the analogy that the zigs and zags of stocks are typically much better defined than those for key commodities in strong trends.

 

The other asset class that tends to show such “zagless” strong trends at times is currencies. This can easily be seen in the Japanese yen’s USD/JPY [..] The euro is also showing a weakening trend [..] Strong declines in commodity prices signify a supply-demand imbalance. You can’t quickly shut off supply, as there are many already-spent budgets and projects that need to be completed, so weakening demand can carry the oil price much further.

 

I think this oil situation has little to do with the U.S. and much more to do with Europe and China, much the same way in which commodity-price weakness in 1997-1998 was due to the Asian Crisis and not U.S. demand.

 

How low can the oil price go? [..] we know that the cash cost of shale oil is about $60 per barrel, varying among different producers, and that historically, commodity producers have been known to produce their respective commodities at a loss to keep personnel and equipment going, as well a service debts that have financed their recent expansion.

 

In that regard, it would be interesting to note that energy junk bonds comprise 16% of the junk-bond market, and their issuance is up 148% to $211 billion according to Fitch. So, yes, I think the oil price can decline below $60.

 

As to how low the oil prices can go, that depends on how much China will slow down as the number-one consumer of oil. China’s financial system is operating on record leverage at the moment. Record leverage in the financial system and a sharply weakening real-estate market suggest that their economic slowdown has the potential to carry far below Beijing’s GDP growth target of 7%.

 

Yes, China has had three real-estate downturns in the past seven years, but the latest one is coming at a time of debt-driven boom, which means the consequences this time can be quite different. I used to think that China was a classic savings-and-investment economic-growth model, and it was, but that was 10 years ago.

 

I no longer think that, since GDP growth in the past five years has come from ever-increasing leverage ratios in the banking system. No debt-driven boom is permanent by definition, so the decline in the Chinese real-estate market has the potential to create a domino effect there in 2015. If China does decelerate well below 7% in 2015, an oil price target in the $30 to $40 range is completely realistic.

I have to agree wit that conclusion. And I think China is doing far worse than it lets on. Even if official Beijing numbers fail to reflect this, the amount of oil imported should reflect it. recently, China, has stockpiled large quantities, but it has no limitless storage facilities. One would presume its demand on global oil markets may diminish quite a bit soon.

It’s interesting to see Martchev note that both the China economy and the US shale industry are extremely leveraged, i.e. both are in dangerously deep debt positions. The kind that a slowdown can hurt badly, if not murder outright.

Back in July, Wolf Richter pointed to the Ponzi that US shale has turned into:

[..] the Energy Department’s EIA has checked into it and after crunching some numbers found:

Based on data compiled from quarterly reports, for the year ending March 31, 2014, cash from operations for 127 major oil and natural gas companies totaled $568 billion, and major uses of cash totaled $677 billion, a difference of almost $110 billion.

To fill this $110 billion hole that they’d dug in just one year, these 127 oil and gas companies went out and increased their net debt by $106 billion. But that wasn’t enough. To raise more cash, they also sold $73 billion in assets. It left them with more cash (borrowed cash, that is) on the balance sheet than before, which pleased analysts, and it left them with a pile of additional debt and fewer assets to generate revenues with in order to service this debt.

 

It has been going on for years. During each of the last three years, the gap was over $100 billion.

If oil prices sink further on the lack of Chinese demand, perhaps even to $30-$40, what will be left of US shale? And I’m not even talking about the 75% or so output decline rates per well, which makes shale a questionable undertaking in the first place. I’ve said repeatedly that US shale is about money, not energy, that it’s a land speculation wager and not much else.

And even at $75 per barrel, that industry is already in big trouble. Not long ago, we saw indications that shale companies would keep drilling and producing full blast with their profit margins being strangled, out of fear that investors would walk away if they showed any sign of weakness. Now, that is no longer their biggest worry:

Drilling Slowdown on Sub-$80 Oil Creeps Into Biggest US Fields

The slowdown in the U.S. oil-drilling boom spread to two of the nation’s largest fields this week. The Permian Basin of Texas and New Mexico, the country’s biggest oil play, lost four rigs targeting crude, dropping to 558, Baker Hughes aid on its website today. Those in North Dakota’s Williston Basin, the third-largest and home to the Bakken shale formation, slid to the lowest level since August, according to the Houston-based field services company’s website.

 

It was the first time in four weeks that oil rigs dropped in the Williston. “We’ll start to see really big drops early next year if oil prices stay the same,” James Williams, president of WTRG Economics in London, Arkansas, said. Nineteen shale regions in the U.S. are no longer profitable with oil at $75 a barrel, data compiled by Bloomberg show.

 

Those areas, including parts of the Eaglebine and Eagle Ford in Texas, pumped about 413,000 barrels a day, according to the latest data available from Drillinginfo and company presentations. Domestic oil output slipped 59,000 barrels a day in the week ended Nov. 14 [..] Hess said in a conference call Nov. 10 that it’ll cut its rig count to 14 next year in response to the lower oil prices. Apache, with headquarters in Houston, will reduce spending in North America by 25% next year, a company statement issued yesterday shows.

And that’s just a Bloomberg account. You need salt with that. What is clear is that even at $75, angst is setting in, if not yet panic. If China demand falls substantially in 2015, and prices move south of $70, $60 etc., that panic will be there. In US shale, in Venezuela, in Russia, and all across producing nations. Even if OPEC on November 27 decides on an output cut, there’s no guarantee members will stick to it. Let alone non-members.

And sure, yes, eventually production will sink so much that prices stop falling. But with all major economies in the doldrums, it may not hit a bottom until $40 or even lower. Oil was last- and briefly – at $40 exactly 6 years ago, but today is a very different situation.

All the stimulus, all $50 trillion or so globally, has been thrown into the fire, and look at where we are. There’s nothing left, and there won’t be another $50 trillion. Sure, stock markets set records. But who cares with oil at $40?

Calling for more QE, from Japan and/or Europe or even grandma Yellen, is either entirely useless or will work only to prop up stock markets for a very short time. Diminishing returns.

The one word that comes to mind here is bloodbath. Well, unless China miraculously recovers. But who believes in that?

The Automatic Earth blog



42 Comments on "Who’s Ready For $30 Oil?"

  1. Plantagenet on Mon, 24th Nov 2014 7:42 pm 

    Yes, shale oil is uneconomic at $30/bbl.

    But so is offshore oil, most deep oil, and even production from many existing fields. Much of OPEC can’t produce at $30.

    At $30 bbl there is a good chance that Venezuela and Nigeria will go bankrupt right along with some US shale companies.

  2. Makati1 on Mon, 24th Nov 2014 7:54 pm 

    At $30/bbl for much more than a year, ALL oil will stop. The example of costs increasing, as drilling decreased, was demonstrated in Ayn Rand’s book, “Atlas Shrugged” when someone complained about the sudden 500% increase in the cost of drill bits. They were $100 each when there were dozens of companys drilling but went to $500 when the demand dropped 500% because the drilling companys dropped to a few. Economy of scale is lost quickly.

    We live in an extremely integrated economy. When there is one major change, say $30 oil, it could bring down ALL of the economy overnight. And this time there will be no ‘recovery’. It will be barter and trade locally, maybe forever.

  3. wildbourgman on Mon, 24th Nov 2014 11:15 pm 

    No way it gets below $50 unless there’s some other economic catalyst. Drilling would shut down well before 50 and then production would fall soon after at least in shale plays. Then prices spike back up after production collapses.

  4. dmtk on Tue, 25th Nov 2014 2:39 am 

    There is another trend that is not mentioned:

    efficiency and the change of consumer behavior

    According to BNEF efficiency and the change of consumer behavior decreased US oil imports twice as much as the shale boom.

    Electric vehicles, people driving less and more efficient cars or don’t want to drive at all.

    This is the long term that will keep the oil cheap, a.k.a. Carbon Bubble, oil demand peak.

    There is oil in the ground, we can extract it – but no one wants to burn it. Oil companies worst nightmare

  5. Davy on Tue, 25th Nov 2014 5:45 am 

    DM, efficiency while still important has reached diminishing returns IOW we are running out of money to implement increasingly costly efforts. If you dig into the numbers the reduction of economic activity was the primary factor in reduction of oil use with other reasons secondary. I still say plow ahead with efficiency and AltE wherever there is cost effective possibilities. The last thing we need now is costly sunk costs for energy intensive lifestyles and activities with no future and do not contribute to descent mitigation efforts. These discretionary lifestyles and activities abandonment in itself will be a danger to the global economy by disrupting commerce and economies of scale. Yet, a last ditch effort at efficiency and AltE is needed before a collapse of complexity and energy intensity to allow a degree and duration of descent that will maintain some complexity. We need a hybrid economy to mitigate descent of population and energy intensity.

  6. shortonoil on Tue, 25th Nov 2014 6:21 am 

    Short has made it abundantly clear the cost of these oil efforts are thermodynamically a retirement party.

    All the low energy, high cost hydrocarbons will be gone in five years. That includes Arctic, Shale, Bitumen, Ultra Deep Water, and high sulfur Extra Heavy. Conventional has been carrying these low-energy sources for many years, but Conventional no longer packs the punch it once did. The economy can no longer afford hydrocarbons that do no supply energy.
    That is why the price of oil is declining, and it will continue to decline until the low energy non-conventional sources are priced out of the market.

    http://www.thehillsgroup.org/depletion2_022.htm

    The price of oil is not controlled by its production cost, it is controlled by what the economy can afford to pay for it; and that is going down!

    http://www.thehillsgroup.org/

  7. rockman on Tue, 25th Nov 2014 6:56 am 

    “No way it gets below $50 unless there’s some other economic catalyst”. As happened just 5 years ago in early 2009. Adjusting for inflation it dropped below $40/bbl. And although it rebounded quickly the average price for all of 2009 was $58.20…down from $99.06 for 2008. The average yearly oil price thru 2013 is still about $7/bbl less than the peak yearly average of 2008.

    And I’m again I need to point out the confusion some folks have regarding a reduction in energy consumption as a result of efficiency improvements and demand destruction. Efficiency will keep those reductions in place. Demand destruction will not once prices have decreased enough to spur consumption. If oil prices stay low enough long enough we’ll see the spread between efficiency and demand destruction.

  8. Davy on Tue, 25th Nov 2014 7:17 am 

    I agree Rock but it is possible the traditional demand response to lower oil prices is over IOW this time is different. I realize this is more of the typical doomer crying wolf but times are changing. At some point a bumpy descent will start. It may have already start in the past few months.

  9. pinkdotR on Tue, 25th Nov 2014 7:48 am 

    The present problem with too low oil price is a “no problem at all”. We have an unbalance because of production > demand but there is an easy way out – reduction of production. No one wants to be the first to do that but some have to be the first because of their business becoming uneconomic – that has already started happening in the US. Other major producers (OPEC, Russia) can wait a bit longer to kill more shale businesses but eventually will have to adjust production to demand to stop the price falling.

    There will be some new balance. I do not want to guess if it is going to be at $70, $90 or $110. One thing is sure – it can not be under the fracking cost of the minimal number of plays/rigs needed to keep the equation production = demand so rather not at $30. We have to remember that without shale oil production we would already have an opposite kind of unbalance: production < demand. This will come (back?) to us. At first rising price will allow to (re)start some more production with higher costs but what will be next? Constantly rising price or reducing demand which basically mean the same if we do not reduce the demand before the price forces us to do that. This will be our REAL problem and this is what this site is all about.

  10. wildbourgman on Tue, 25th Nov 2014 8:53 am 

    Rock, I just don’t see the people I work for drilling under $50 much less $30. Remember, I said “unless there’s some other economic catalyst”, 2009 had another major economic catalyst.

    If we have another 2008-09 economic catalyst then the floor is unpredictable.

    I do know some operators who are looking at contracting rigs at the bottom, but those are the few companies with cash. How much of the shale boom is being done with finance and how much is with cash on hand?

  11. Northwest Resident on Tue, 25th Nov 2014 9:21 am 

    Oil Seen Dropping Another $30 by ICAP on Commodity, Dollar Cycle

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    New York-traded crude oil will probably drop another $30 in the next two years as long-term cycles in commodities and currencies converge, no matter what happens at this week’s OPEC meeting and Iran nuclear talks, according to brokerage United-ICAP.

    West Texas Intermediate crude, the U.S. benchmark, has collapsed five times since the contract’s introduction in 1983, said Walter Zimmerman, chief technical strategist for United-ICAP in Jersey City, New Jersey.

    The plunges in 1986, 1991, 1998, 2001 and 2008 coincided with an OPEC price war, recessions and financial crises, and were also tied to cycles in commodities or the dollar, said Zimmerman, who was calling for a drop in oil prices as early as April. “This time we have both.”

    “Crude is heading lower, with the high $40s or low $50s being touched by 2017,” Zimmerman said. The long-term cycle points to the dollar moving higher and the euro declining into 2016, while commodities move lower through 2016 and 2017, he said.

    http://www.bloomberg.com/news/2014-11-24/oil-seen-dropping-another-30-by-icap-on-commodity-dollar-cycle.html?cmpid=yhoo

  12. Northwest Resident on Tue, 25th Nov 2014 9:24 am 

    Also, from the link in that botched post above:

    “No matter what OPEC does the result will only be a bear-market correction, if not a speed bump,” Zimmerman said. “They really can’t do anything to counter an uptrend in dollar and downtrend in commodities. When the dollar is declining and economies are growing they look like geniuses, but when the dollar is up and economies are slowing they look like the Three Stooges beating up on each other.”

  13. Davy on Tue, 25th Nov 2014 10:09 am 

    Very important information thanks NR

  14. Northwest Resident on Tue, 25th Nov 2014 10:23 am 

    Davy — Just scanning lots of articles on Yahoo, Google and other internet sources. There does seem to be a generalized groundswell of recognition that the price of oil is going lower, maybe even to the $40-$50 range cited in that article I linked to in my above post. That’s a lot of junk bonds getting ready to disintegrate into nothingness. A lot of “wealth” getting ready to disappear. A lot of retirement accounts about to get gutted. And a lot of oil industry service workers getting ready for their pink slip deliveries — Merrrry Christmas.

    So, it looks like a big time BUST has descended into the oil patch. My question is, where will the next BOOM come from? And my guess is, there will not be another BOOM. There only untapped sources of oil left to fuel a BOOM are the high cost unconventional sources. The economies of the world can’t BOOM on that “crap” — too low energy, too high cost, too much energy in for too little energy out. That’s why I think this is IT — The Last Bust. And it is shaping up to be a real doozy!

  15. JuanP on Tue, 25th Nov 2014 10:39 am 

    NWR, This link is to a great video series on Youtube on how to build your own beehives. A great father-son project. The beehive design he builds is exactly like the ones I will be building. I made two with a farmer friend years ago and they work great. Ideal for beginners.

    http://youtu.be/__32kOaKq7w

  16. Davy on Tue, 25th Nov 2014 10:50 am 

    NR, in context of 2008 I think you are making a good judgment. We shot our wad in 2008. What is left but martial law to combat economic collapse? The markets cannot feed people in a collapse. Markets will not keep the lights on or supply fuel to gas stations if credit turns off. We are talking the digital credit stuff which is even more troubling if the grid destabilizes. There is not enough cash in circulation to matter. We will have to have military rule if this deteriorates beyond a certain point which is entirely possible.

    We know folks it almost happened in 2008. One wrong move at that point and we were toast. The whole system came close to a shut down. Debt saved us. This is a finite world and there is a limit to debt. After debt what is there? There is nothing that TPTB have left to deploy. This may play out over more years but we appear to be in descent I is no real growth at this point.

    I beg of you all as friends to prep at least for a short time. The most dangerous time is the first few weeks until authority reestablishes control. Do you want to be scrambling for food or do you want to be waiting and watching to choose the best plan B that may present itself. Sure you may be doomed but what if you had a chance and blew it because you were lazy or cynical.

  17. Northwest Resident on Tue, 25th Nov 2014 11:00 am 

    JuanP — Thanks for that link! I watched the first video skipping through it (since I’m at work). It looks like a real handyman do-it-yourself type project — right up my alley. I’ve got enough left over wood just laying around from my other projects to build at least one of those. Hey! Thanks for keeping me in mind!!

  18. JuanP on Tue, 25th Nov 2014 11:21 am 

    “recently, China, has stockpiled large quantities, but it has no limitless storage facilities. One would presume its demand on global oil markets may diminish quite a bit soon.”

    This statement shows deep ignorance of the Chinese plans to continue Increasing their oil reserves.
    http://en.m.wikipedia.org/wiki/Strategic_Petroleum_Reserve_(China)

    The Chinese have been building oil tanks nonstop for years and continue to do so. They increased their strategic oil reserves at the rate of 1 mbd in the past few months according to a report I read. They have a multiphase plan and are behind schedule, but catching up.

    This will not end quite soon as the article implies unless global BAU collapses first leading to its end.

  19. GregT on Tue, 25th Nov 2014 11:24 am 

    “The most dangerous time is the first few weeks until authority reestablishes control.”

    Assuming that authority is able to establish control Davy. I suspect that this would be very site specific.

    Here in the Lower Mainland of BC, our police force is already grossly under-manned, and underfunded. We no longer even have enough budget for traffic control, let alone a financial crisis. Our food supplies mostly come from far away places, especially during the winter months. We have no military to speak of, and even if we did like those of you stateside, I would guess that most would be more concerned with the well beings of their own families and communities, and would rapidly lose interest in attempting to maintain control over others at the end of a gun barrel.

    IMO, most large cities would rapidly plunge into chaos. People are animals first, and animals don’t react pleasantly to being hungry.

    I agree with NWR. This certainly appears to be shaping up to be the ‘One’. If ‘they’ do somehow manage to pull another rabbit out of the hat, we can all thank our lucky stars. We may get a second chance to get our lifeboats prepared, but I don’t see any possibility of a third one.

    Fasten your seat belts people, the seas will be stormy.

  20. JuanP on Tue, 25th Nov 2014 11:30 am 

    NWR, My pleasure. Anyone considering getting started into beekeeping should check it out. It is a very easy low cost DIY woodworking idea. Remember to avoid using chemically treated woods.

  21. JuanP on Tue, 25th Nov 2014 11:36 am 

    Rock “As happened just 5 years ago in early 2009. Adjusting for inflation it dropped below $40/bbl. And although it rebounded quickly the average price for all of 2009 was $58.20…down from $99.06 for 2008.”

    I followed that price drop every day, from an instant all time high of $147.27 in 2008 to a low of $32.42, IIRC. I was amazed at both the high and low peaks and the difference between them.

  22. Davy on Tue, 25th Nov 2014 11:42 am 

    Very true Greg and also an issue will that authority be worse than no authority.

  23. GregT on Tue, 25th Nov 2014 11:44 am 

    Agreed Davy,

    Mexico comes immediately to mind.

  24. Davy on Tue, 25th Nov 2014 11:45 am 

    NR/Juan, I am going to invest in one of these hives:

    http://www.ozarkcedarhives.com

  25. JuanP on Tue, 25th Nov 2014 11:55 am 

    As NWR and others have wondered above, I, too, have been wondering whether we will have another boom after the next bust, or not.

    Davy is right that being prepared to make it through a few weeks or a couple of months is highly advisable. Things are likely to stop working at some point.

    Command economies will become necessary in some places, IMO, democracy and capitalism may remain in more localized expressions, like a town council and local markets, at the state level, or smaller nations. I can’t imagine any easy ways out at this point in time.

  26. GregT on Tue, 25th Nov 2014 11:56 am 

    Davy,

    Those hives are what everyone here uses. As a matter of fact, I personally have never seen any others in use anywhere. I built mine out of pine though. The smell of the wood is similar to propolis. Pine smells somewhat sweet.

  27. Northwest Resident on Tue, 25th Nov 2014 11:59 am 

    Davy — Looks like only $200-or-so for a completely assembled top of the line bee hive. Heck, at that price I’ll take two!

    Most likely, all things considered, I’ll be taking the 30 minute drive to the main bee store in Portland metro area — Ruhl Bee.

    http://www.urbanbee.com/archives/tag/portland-oregon/

    Click on the nav bar “Top Bar Hives” link and you’ll see a picture of the exact bee hive design that JuanP posted a link to, along with some text that explains why it is THE superior design.

    Buying bees and bee materials/supplies locally has big advantages — for one, you don’t want to try to raise bees that have adapted to weather conditions in one area of the country when the weather in your own area might be quite a bit different. Not that I know anything about raising bees — but I did read that fact, and it makes a lot of sense.

  28. Northwest Resident on Tue, 25th Nov 2014 12:01 pm 

    Wrong link posted. Here’s the real one I was referring to:

    http://www.ruhlbeesupply.com/

  29. GregT on Tue, 25th Nov 2014 12:06 pm 

    Juan,

    Our local ‘authorities’ have been telling people to prepare themselves for decades. Two weeks of food and water, a bug out bag, and a means to cook food and keep warm. We live on the Pacific Ring of Fire, and are about 150 years past due for the ‘Big One’. Very few people have taken the initiative however. Every time we get a small earthquake here everyone panics, for about a week. After that, all is forgotten.

    Everything will be just fine, until it isn’t. That’s when all hell will break loose.

  30. JuanP on Tue, 25th Nov 2014 12:09 pm 

    Great hive choice, Davy. You should get one AND build one of the style I recommend, too, because they are very different, smaller, with vertical combs, and much easier to use, and then you can compare the two systems side by side. The ones I recommend are ideal for beginners and house gardens. In your farm, you have enough space for several.

    Check the videos. You have all the tools and materials you need in the farm already and, as my grandpa liked to say, an hour of woodcrafting a day keeps the devil away.

  31. GregT on Tue, 25th Nov 2014 12:09 pm 

    NWR,

    Those are ‘exactly’ what we use here. There is a bee supply place very close to my home. They sell hive kits unassembled. Like I said before, stock up on foundation and wire.

  32. JuanP on Tue, 25th Nov 2014 12:18 pm 

    Greg, I live in an oceanfront condo on a barrier island in Miami Beach in a First Priority Mandatory Evacuation Area. The same advice here, my wife and I are ready. I never met anyone in Miami prepared for a hurricane. Three day kits? When I mention this I get laughed at like I’m crazy. My friends and family all have their kits as my gifts, including the kids.

  33. GregT on Tue, 25th Nov 2014 12:26 pm 

    Oops,

    I’m guessing that you guys are referring to the ‘Kenya’ hives? I was referring to the ‘Langstroth’ type. The large boxes, or supers, are brood boxes, and the smaller boxes on top are the honey boxes. When the honey is processed in the fall, the honey boxes are removed and the brood boxes are sealed up. Honey boxes can be added as needed, depending on how much honey the bees gather.

    Not sure about the ‘Kenya’ type, as I have never seen one in use, but the ‘Langstrom’ I have seen all around the world, and are what I have used myself. They work very well.

  34. JuanP on Tue, 25th Nov 2014 12:31 pm 

    Guys, The hive Davy suggested is a classical traditional beehive design. I call it the stacked box design in my mind and they are a time proven design.

    The hive design I suggested is a very different system. This top bar hive design is a newer modern alternative hive design. They are very good for bees and people with small gardens or disabilities, and a great first hive. This design is for personal, not commercial beekeepers. It is smaller, lighter, and MUCH easier to use, but in a smaller scale.

    Both systems have advantages and disadvantages.

    Greg, bees in pinewoods make a lot more propolis than bees elsewhere. In Uruguay, people put lots of bees in pine forests to collect the propoleum which is more valuable than honey and used as a popular skin med.

  35. Davy on Tue, 25th Nov 2014 2:10 pm 

    Guys, I am so busy I am not sure when I will actually get the bees. While I have the money I wanted to invest in the equipment. This place is local so I can make friends and have a local source. I also want to buy local when I can. I am a Amazon junkie but only when the technicals dictate buying online. I have much to learn and appreciate all your inputs. Often I copy and paste your ideas in my notes.

  36. Northwest Resident on Tue, 25th Nov 2014 4:31 pm 

    Now might be a good time to reacquaint oneself with low-key efforts the US and British Militaries are engaged in to prepare for social/civil crises.

    “Such war-games are consistent with a raft of Pentagon planning documents which suggest that National Security Agency (NSA) mass surveillance is partially motivated to prepare for the destabilising impact of coming environmental, energy and economic shocks.”

    http://www.theguardian.com/environment/earth-insight/2014/jun/12/pentagon-mass-civil-breakdown

    “The ideological impetus behind this sort of research can be gleaned from a UK Ministy of Defence (MoD) report on global strategic trends published in 2010, updated in 2013, which contributed to the UK government’s Defence Green Paper. This is the first part of the process leading to the 2010 Strategic Defence Review, which met with the approval of Global Uncertainty chair Sir Mottram.

    The key theme of the report by the MoD’s Development, Concept and Doctrines Centre (DCDC) is that the world “is likely to face the reality of a changing climate, rapid population growth, resource scarcity, resurgence in ideology, and shifts in global power from West to East” out to 2040. Dependence on complex global systems, chiefly “global supply chains for resources” is likely to “increase the risk of systemic failures.”

    http://www.theguardian.com/environment/earth-insight/2014/jun/13/uk-defence-fight-poor-activists-minorities-marxists-commies

    Looks like the US and UK governments and their militaries are getting ready for mass civil disturbances, and have been for quite a while.

    What do you think? Are they doing this research and making their preparations “just in case”, or are they doing it “because they know”?

  37. Davy on Tue, 25th Nov 2014 6:27 pm 

    NR, I am glad someone is. Civilian leadership isn’t. It is not even on the radar screen. They are worried about a few terrorist and drugs for example. This instead of worrying how to keep food on the shelves

  38. Northwest Resident on Tue, 25th Nov 2014 7:50 pm 

    Davy — Yeah, I’m glad to know that somebody is planning for what’s coming, to be honest. And I think maybe civilian authorities are planning in tandem with military forces, they just aren’t making it public knowledge. Militarized police, for example. They damn well better be planning, because heavy stuff is heading our way and there just isn’t any realistic way to avoid it, imo.

  39. Davy on Tue, 25th Nov 2014 8:36 pm 

    NR; yea we are getting a taste of it in STL. My girlfriend lives three blocks from the lessor riots last night in St. Louis city. She could smell tear gas. The natives broke out windows in one of my favorite restaurants. A whole block was vandalized. It is a really nice area multi racial and multicultural. Many green types, farmers market types, and city renewal types, This was nothing like Furguson but still destructive.

    Anyways, this is a complexed societal problem with a segment of the population mainly black males 15-25 who are in a cycle of violence, criminality, and few skills. We cannot blame society for all of it. These animals are choosing gang banging over community. They want something for nothing instead of building a community. It is amazing in Furguson the locals destroyed there own community. That shows you the level of critical thinking.

  40. Northwest Resident on Tue, 25th Nov 2014 8:57 pm 

    Davy — That is definitely some crazy stuff going down in your geographical area. But just a taste of what’s to come, I’m afraid. Right now it is blind rage against a system that the perpetrators feel has victimized and brutalized them, and they may have a point. Add a dash of hunger, a heaping spoonful of terror and a sprinkling of no hope to the recipe, then we’ll see some real civil strife. Definitely not something I ever want to see or be exposed to — as if what I want or don’t want will make any difference.

  41. Davy on Wed, 26th Nov 2014 2:24 pm 

    Madness

    As the S&P 500 has now closed above it 5-day moving-average for 28 days (today will be 29)…
    This has never – ever – happened before in US equity markets.

    http://www.zerohedge.com/news/2014-11-26/madness

  42. Northwest Resident on Wed, 26th Nov 2014 3:10 pm 

    Davy — It seems like every day or two lately that something happens in the US equity markets that has never happened before. All kinds of records being set, with each new record an indication of just exactly how controlled and manipulated the stock market is. The stock market these days is nothing but a confidence building tool — as long as new stock market highs are being achieved, the Pavlovian-trained masses are conditioned to respond with glowing feelings of “all is well” and “things are good”. In the meantime, as the stock market soars to new heights daily, consumer confidence and business confidence is tanking, demand destruction is acting like an army of termites on the financial house of cards and the surreal world we live in seems to be spinning out of control. Truly bizarre stock market results recently, that is a fact.

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