PhysOrg has an article on an ingenious technique known as N-fix that could enable us to reduce our dependency on ammonia based fertilisers - World changing technology enables crops to take nitrogen from the air.

A major new technology has been developed by The University of Nottingham, which enables all of the world's crops to take nitrogen from the air rather than expensive and environmentally damaging fertilisers.

Nitrogen fixation, the process by which nitrogen is converted to ammonia, is vital for plants to survive and grow. However, only a very small number of plants, most notably legumes (such as peas, beans and lentils) have the ability to fix nitrogen from the atmosphere with the help of nitrogen fixing bacteria. The vast majority of plants have to obtain nitrogen from the soil, and for most crops currently being grown across the world, this also means a reliance on synthetic nitrogen fertiliser.

Professor Edward Cocking, Director of The University of Nottingham's Centre for Crop Nitrogen Fixation, has developed a unique method of putting nitrogen-fixing bacteria into the cells of plant roots. His major breakthrough came when he found a specific strain of nitrogen-fixing bacteria in sugar-cane which he discovered could intracellularly colonise all major crop plants. This ground-breaking development potentially provides every cell in the plant with the ability to fix atmospheric nitrogen. The implications for agriculture are enormous as this new technology can provide much of the plant's nitrogen needs.

TreeHugger notes that "China's "Dead Lakes" Keep Reappearing" - Big Water Trouble in Leaky China.

Two years ago, an algae outbreak in China's renowned Tai Lake sounded a global environmental alarm. Now, despite China spending billions of dollars on lake cleanup efforts, some algae has returned. And similar poisonous blue-green algal blooms that have been cropping up in other lakes across the country as well, according to Greenpeace. This is alarming news for both China's residents and its already imperiled ecosystems: the pollution can be deadly to wildlife and make drinking water hazardous.

Greenpeace thinks it's found the culprit, however—and it isn't just the smog-spewing factories or dumped garbage.

It's leaked fertilizer.

According to Greenpeace, the chemical fertilizers used for agriculture leak into nearby lakes and help spawn the algal blooms. And the use of such fertilizers only seems to be increasing:

"The government ran a nationwide program (2005 to 2007) to reduce fertilizer use, but Greenpeace has found that many farmers have in fact increased the amount of chemical fertilizers they use despite this initiative . . . farmers around the lake told us they were now using twice as much fertilizer as they were using 10 years ago."

The organization then tested Lake Tai's water quality (after the 14 billion dollar cleanup effort, remember), and found the following:

"Of the 25 water samples we examined, 20 of them had such high concentrations of nitrogen and nitrates (found in fertilizers) that they were not safe for human use. They were even too polluted to be used to water plants or in factories."

If Greenpeace is right, and a bulk of the blame lies in the fertilizers, it certainly presents a dire scenario for China's water resources—it's estimated that fertilizer use increases between 2 or 3 million tons every year. Something certainly needs to be done to spare China's water (just look at this picture of samples collected from various Chinese rivers and lakes), or the Chinese are going to end up with an unpleasantly colorful "natural" beverage selection.

Grain News has a report on the rising cost of fertiliser, in particular, and agricultural inputs in general, driven by rising oil and gas prices and rising demand from China and India - Nationwide Ag Production Costs On The Rise.

Much attention has focused lately on the run up in the production of agricultural commodities and its effect on food prices. Additionally, key crop input prices are also rising and show no sign of slowing, according to a new Rabobank report, "U.S. Crop Inputs."

"Farmers' use of key crop inputs is reaching record highs, while prices are also at record highs, which is putting the pinch on pocketbooks," said Associate Erin FitzPatrick with Rabobank's Food & Agribusiness Research and Advisory (FAR) department.

One reason for the increase in crop input usage is the economic growth in emerging markets where demand for food is driving the need for production. Additionally, the cost of inputs has increased because of higher price tags on transportation, labor, energy and raw materials as well as the weakened U.S. dollar and regulatory constraints.

During this planting season, farmers have seen a huge increase in the cost of fertilizer -- in some case as much as double. Demand has depleted reserves and strained supplies as 2007 global fertilizer consumption climbed more than 4 percent over 2006.

That may seem small, but individual countries, such as China and India, have increased their fertilizer use 38 percent and 54 percent respectively, putting pressure on prices around the world. "With demand for fertilizers expected to grow and no significant increase in short-term supplies, farmers are likely to continue paying high fertilizer prices," said FitzPatrick.

Jeff Vail also had a post on fertilser a few weeks ago - specifically "fertiliser mercantilism" in North Africa and the tension it is causing between Algeria and Morocco - Algeria & Morocco: Natural Gas Cartels, Fertilizer Mercantilism, and Rising Tensions.

Algeria is one of the world’s most important oil and gas exporters. Morocco has no significant oil and gas production, but has about 2/3 of the world’s rock phosphate reserves, a critical component in global fertilizer supply that increased 300% in price in the past year (.pdf) and may peak alongside global oil production. The two nations have historically been at odds, especially over the phosphate-rich territory of Western Sahara. Now, more than ever, their exports are critical to the energy and food supplies of the world. Alongside increasing importance, tensions between the two are on the rise as the US and Russia provoke the situation with massive opposing arms deals and bi-lateral trade agreements. This article will look at the forces behind these rising tensions and consider issues of fertilizer mercantilism, infrastructure vulnerability, and the potential formation of a natural gas cartel. ...

Recently, the fragile 1991 cease fire agreement with the Western Saharan Polisario Front has become increasingly unstable. Complicating the situation with Western Sahara, French President Sarkozy announced his support to Morocco's decision to postpone indefinitely the self-determination referendum promised in the 1991 accord, along with increased Algerian support to Polisario leadership. All this comes against a backdrop of rising military tensions between Morocco and Algeria. In 2008, the US doubled military aide to Morocco and announced arms deals worth billions of dollars. At the same time, various sources confirmed that Russian concluded a $7.5 billion deal to provide advanced arms to Algeria.

Is there any deeper meaning behind these moves? At least two possibilities must be considered. The first is proxy-mercantilism by the United States to secure control of phosphate supplies. In 2004, the US entered into a bi-lateral free trade agreement with Morocco. This can be explained as a natural extension of the long history of economic and military cooperation between the US and Morocco, but in light of proposed biofuel programs, skyrocketing rock phosphate prices, potentially peaking phosphate production, and mercantilist moves by other great powers, the more nefarious possibilities must be considered. The second possibility is that Russia hopes to leverage increased influence with Algeria to exert greater influence in global natural gas markets. Because Algeria is one of Western Europe's few true alternatives to Russian natural gas supplies, especially given the prospect of sharp increases in Algerian natural gas exports, Algeria represents either a threat to Russian natural gas leverage, or a great enhancement of that leverage by entering a defacto gas cartel. At a minimum, we know that Russia and Algeria are actively engaged in talks on this topic. Also, a recent offer by Gazprom to buy all of Libya's additional oil and gas production supports this suggestions that Russia hopes to control Europe's alternative sources of natural gas.

Both notions of phosphate mercantilism and a gas cartel are merely informed speculation at this point, but the stakes are so high that these possibilities must be considered. While there may be no deeper motive behind recent moves with Morocco and Algeria, at a minimum the stakes and tensions are increasing. Because both Algeria and Morocco are fragile Nation-States, with active Islamist separatist movements, significant internal terrorist threats, and complicated ethnic/territorial problems, the potential for interruption in critical exports of phosphate, oil, and gas is increasing.

The Australian has a report on competition between BHP and Rio Tinto to exploit an Argentinean potash deposit - Rio and BHP upstaging each other in global potash dash.

RIO Tinto and BHP Billiton are both eyeing big investments to tap growing global food and biofuel demand, with Rio yesterday revealing plans to spend $US3.5 billion ($3.6 billion) developing an Argentine potash deposit. The announcement comes less than a month after BHP chief executive Marius Kloppers said his company could spend $US10 billion on its Canadian potash assets. Rio is looking to tap growing Brazilian demand for fertilisers, which are the main market for the high-margin potash.

A second operation, in Canada, could start two years later and if all goes to plan the company could be producing 10 per cent of the world's potash, Rio's energy and minerals boss Preston Chiaro said in Sydney yesterday. "The market is poised for strong growth," Mr Chiaro said.

Potasio Rio Colorado is currently undergoing a feasibility study and its capacity has been increased to 4.3 million tonnes of potash a year when it moves into full production, which would not be until 2020. Initial production would be about 1 million tonnes a year.

Mr Chiaro later told investors that Brazilian potash consumption was expected to grow at about 4.1 per cent a year to 2015 and that Brazil consumed about 14 per cent of the world's potash.

There were no other significant planned projects in South America and the country's significant production of biofuels was adding to growing demand, Mr Chiaro said. Operating costs at the project would be between $US50 and $US60 a tonne, Mr Chiaro said, illustrating the huge margins that were possible.

Spot prices into Brazil have recently hit $US1000 a tonne.

The Australian has an article on plans to expand Australian production of phosphate rock for the Indian market, noting recent price rises have finally made exploiting reserves in northern Queensland economical - Gutnick phosphate operation to fertilise Indian economy. Interesting to note that George Soros is getting in on the act.

FORMER diamond tsar Joe Gutnick has teamed up with India's largest fertiliser supplier and investment icon George Soros in a proposed phosphate operation in northwest Queensland. Under a deal announced yesterday in Brisbane, the Indian Farmers Fertiliser Cooperative, or IFFCO, will inject slightly over $100 million into Mr Gutnick's plan to ship phosphate from the company's four holdings around Mt Isa. Reserves total a billion tonnes. ...

Dr Awasthi said India had a growing need for fertiliser, and the project should be able to supply 5 million tonnes of rock phosphate annually. ...

He said that at this stage the plan was to export the phosphate from the port of Karumba at the bottom of the Gulf of Carpentaria, but the company was still looking at "other transports which involve other ports".

The phosphate deposits in the northwest of Queensland have been known since the 1970s, and a pilot plant was built in 1974. But the project has only recently become viable because of a lift in phosphate prices. Last year world prices hovered around $US50 a tonne, the level it had been at for most of the past 30 years. Since then, decisions by the US and China not to export phosphate rock have pushed prices up to $US300 a tonne, with spot prices up to $US400.

The Australian also has an article on the ever-expanding Queensland coal industry and the intense interest in remaining high quality deposits - Deal signals BHP confidence in energy.

BHP Billiton's decision to outlay a premium price for an undeveloped coal asset in Queensland's prolific Bowen Basin has been interpreted as a sign of the mining giant's mounting confidence in the outlook for the sector. It is believed that as many as 60 parties initially showed interest in either buying or financing New Hope Corporation's New Saraji project, which BHP and alliance partner Mitsubishi plan to acquire for $US2.40 billion ($2.46 billion). While some analysts described the price tag as expensive, industry observers agreed that it further demonstrated the feverish demand for a diminishing supply of high-quality coal assets in the region.

Tom Philpott at Grist notes that of the 3 major inputs for industrial agriculture, 2 are controlled by cartels and one is produced using natural gas. Get used to high prices - Industrial ag-onistes (subtitled "The WSJ on fertilizer markets so manipulated, they might make a Saudi prince blush").

For all the misery it has caused, the global food-price crisis has at least forced people to think more seriously about food production.

I can think of few things more taken for granted in modern post-industrial society than fertilizer. Few people know people know what fertilizes the fields that produce the food they eat -- fewer, I'd bet, than know the source of their drinking water or electricity. To modern consumers, all of these things appear as if by magic.

But with food prices hovering at elevated levels and hunger protests simmering in the global south, stuff like fertilizer is suddenly front-page news. The Wall Street Journal uncorked a doozy the other day. Did you know that dominant fertilizer giants like Mosaic and Potash Corp. of Saskatchewan -- the ones I'm always writing about -- are organized into OPEC-style cartels and legally allowed to collude on price? I didn't.

Prices have rocketed for all the major inputs of industrial farming, the Journal reports, but fertilizer takes the cake.

In April, farmers paid 65 percent more for fertilizer than they did a year earlier, according to the U.S. Department of Agriculture. That compares with price increases of 43 percent for fuel, 30 percent for seeds and 3.8 percent for chemicals such as weedkillers and insecticides over the same period ...

As a result, farmers and fertilizer-importing nations are furious and beginning to look at the structure of fertilizer markets. What they've found is jaw-dropping.

In several countries, obscure laws shield makers of potash and phosphate from certain antitrust rules. In the U.S., for example, phosphate makers are among a handful of industries empowered by the 1918 Webb-Pomerene Act to talk with competitors about pricing and other issues.

It gets weirder.

In the U.S., Potash Corp. and Mosaic are the sole surviving members of a phosphate export cartel called the Phosphate Chemicals Association. Under a 90-year-old law designed to promote American exports, the companies are allowed to legally market and sell their product overseas as a single entity at a price set in consultation with one another. Similarly, Canada has Canpotex, and Russia has Belarus Potash Co., another export cartel.

So a Canadian and a Russian cartel dominate the global potash market, and a U.S. cartel controls phosphorous. These groups have a literally dominant grip on the world's serving spoon -- at least the vast swath of the earth that relies on industrial-scale agriculture for sustenance. And they're using their market power to jack up prices and reap enormous profits.

Helped by soaring potash prices, Potash Corp. of Saskatchewan Inc., one of the companies that make up Canpotex along with Minnesota-based Mosaic Co. and a smaller Canadian producer called Agrium Inc., posted first-quarter net income of $566 million, or $1.74 a diluted share, nearly triple the year-earlier figure. The company's stock has risen nearly eightfold to around $200 from about $25 three years ago. Mosaic's latest quarterly earnings came in at $520.8 million, up more than 10-fold from a year earlier.

No wonder a Wall Street analyst recently called Potash Corp. of Saskatchewan the "Saudi Arabia of Fertilizer." Actually, Saudi princes might look with envy on a Potash exec. According to the analyst:

Potash Corp. owns 22 percent of the world's potash production capacity, while Saudi Arabia accounts for roughly 13 percent of global oil production. ... The Middle East has more than 60 percent of the world's proven oil reserves, while Canada sits on about 57 percent of the world's potash reserve base.

It's jarring to reread those lines, now that I know that Canada's few potash producers are literally organized into a cartel.

Of course, the producers themselves -- sounding much like their Saudi counterparts -- say there's nothing to worry about: Just keep handing over the big bucks, and we'll supply the fertilizer. Here's the Journal again:

Potash Corp. said it can raise production to 15.7 million tons by 2015 from its current capacity of 10.2 million tons by improving the operation of its existing mines. Opening a new potash mine can cost more than $2.5 billion and take about seven years, the company said. "Developing new production takes a long time, a lot of money, and an expertise that few possess," Potash Corp.'s Mr. Doyle recently told investors.

As for phosphorous, an exec at Mosaic -- the dominant phosphorous producer, two-thirds owned by agribusiness giant Cargill -- says everyone should calm down:

Mosaic ... said it plans to "de-bottleneck" some of its Florida phosphate mines to boost supply.

Awesome. He forgot to add, though, that phosphate mining is environmentally ruinous. Among its depredations, it leaves behind radioactive waste that no one knows what to do with.

So industrial agricultures relies on three macronutrients: N, P, and K. Two are controlled by cartels, the third (nitrogen) is derived from natural gas. I ask yet again: Might there be other, less-dodgy ways to "feed the world"?

The New York Times reports that surging fertiliser prices have led to a revival of interest in guano - so much so that Peru Is Guarding Its Guano. Hopefully the spectre of new guano wars is not going to rear its head again. See here for a slideshow.

The worldwide boom in commodities has come to this: Even guano, the bird dung that was the focus of an imperialist scramble on the high seas in the 19th century, is in strong demand once again.

Surging prices for synthetic fertilizers and organic foods are shifting attention to guano, an organic fertilizer once found in abundance on this island and more than 20 others off the coast of Peru, where an exceptionally dry climate preserves the droppings of seabirds like the guanay cormorant and the Peruvian booby.

On the same islands where thousands of convicts, army deserters and Chinese indentured servants died collecting guano a century and a half ago, teams of Quechua-speaking laborers from the highlands now scrape the dung off the hard soil and place it on barges destined for the mainland.

“We are recovering some of the last guano remaining in Peru,” said Victor Ropón, 66, a supervisor from Ancash Province whose leathery skin reflects his years working on the guano islands since he was 17.

“There might be 10 years of supplies left, or perhaps 20, and then it will be completely exhausted,” said Mr. Ropón, referring to fears that the seabird population could be poised to fall sharply in the years ahead. It is a minor miracle that any guano at all is available here today, reflecting a century-old effort hailed by biologists as a rare example of sustainable exploitation of a resource once so coveted that the United States authorized its citizens to take possession of islands or keys where guano was found.

As a debate rages over whether global oil output has peaked, a parable may exist in the story of guano, with its seafaring treachery, the development of synthetic alternatives in Europe and a desperate effort here to prevent the deposits from being depleted.

“Before there was oil, there was guano, so of course we fought wars over it,” said Pablo Arriola, director of Proabonos, the state company that controls guano production, referring to conflicts like the Chincha Islands War, in which Peru prevented Spain from reasserting control over the guano islands. “Guano is a highly desirous enterprise.” ...

Peru’s guano trade quixotically soldiers on after almost being wiped out by overexploitation. The dung will probably never be the focus of a boom as intense as the one in the 19th century, when deposits were 150 feet high, with export proceeds accounting for most of the national budget.

The guano on most islands, including Isla de Asia, south of the capital, Lima, now reaches less than a foot or so. But the guano that remains here is coveted when viewed in the context of the frenzy in Peru and abroad around synthetic fertilizers like urea, which has doubled in price to more than $600 a ton in the last year.

The SMH reports that the biggest local sharemarket float of the year will be north west WA based ammonia producer Burrup Holdings - taking advantage of rising fertiliser prices and a nearby large source of gas.

Burrup Holdings, operator of one of the world's biggest ammonia plants, has launched an initial public offering for 20% of the company, looking to raise up to $502 million. ...

Burrup's 760,000 tonnes a year liquid ammonia plant in Western Australia began production in 2006 and accounts for about 6% of the world's total output of tradeable ammonia. Ammonia is a key ingredient in the production of urea, a nitrogen-based fertiliser which is widely used in the agricultural industry.

Yara, the world's biggest ammonia trader, has a 20 year offtake agreement with Burrup to market, distribute and sell its ammonia in domestic and interntional markets. Earlier this month, Yara and Burrup entered an agreement to look into the feasibility of a new 350,000 tonnes a year technical ammonium nitrate plant, used to produce explosives, also on the Burrup peninsula.

The Australian newspaper reported on Monday the planned float had been scaled down after Burrup decided not to sell excess gas from a long-term contract, which would have increased the total offering to up to $608 million. The newspaper said initial plans for the float were put on ice in February because of market turbulence.

Burrup said in a statement it was well positioned to capitalise on favourable global conditions for the sale of ammonia, with prices trading above $500 a tonne. It added it expects the strong price performance to continue.

The Australian's "Pure Speculation" column has more on phosphate production (not to mention potash) along with some sniping at bolshie readers (it kicks off looking at conspiracy theories about the silver market, for those with a liking for shiny metals).

THIS in from reader Geoff Griffiths via Optusnet: "Do some better research before you go shooting your gob off." Nice one, Geoff. This angry reader was appalled by Pure Speculation suggesting investors should be a little discerning about which phosphate plays they back.

Another -- more moderate but no less welcome -- response came from "John B" who argues that the food demand in China and India will put pressure on world fertiliser supplies. Moreover, he continues, phosphate resembles iron ore as the process and economics of mining are similar.

This column was not suggesting otherwise; rather, the point being made is that, yes, phosphate (and potash) are going to become more pricey but, also yes, a bubble was forming in the sector with investors buying stock with the most greenfield of greenfield prospects. A parallel would be the choice 18 months ago between investing in an advanced uranium explorer such as Summit Resources (SMM) or the latest $3 million float based on some moose pasture in the west.

We saw the bounce last week when Korab Resources (KOR) reported it had been approached about developing phosphate at its uranium project in the Northern Territory. Traders went in boots and all, pushing up Korab's price -- but, by Friday, the shares were on the way down again. ...

Saudi Arabia's Maadan Phosphate Co will bring its new fertiliser plant into production in just over two years' time. It will use local phosphate and cheap natural gas.

This first phase will add 2.9 million tonnes a year to the supply of diammonium phosphate (DAP) and will, by itself, tip the DAP global market into surplus, according to Barrie Bain, of the British-based fertiliser consultancy Fertecon.

The second phase will bring production up to 6million tonnes a year, equivalent to half the DAP produced around the world in 2006, according to Middle East Business Intelligence.

Morocco will remain the world's largest exporter of phosphate overall and another fertiliser, monoammonium phosphate. And last week the Moroccans signed a deal with PetroVietnam Fertiliser to build a new DAP plant in the North African country to supply Vietnam and surrounding countries with fertiliser from 2011.

One of Europe's largest producers of phosphate-based chemicals, Nilefos Minerals, is reported to be investing $US535 million to develop a 230 million tonne phosphate deposit in Uganda.

Again, all this doesn't mean that phosphate prices will fail to rise further, that phosphate won't be in deficit at times, and companies producing phosphate won't make good profits. But nor does it mean that every junior who tries to join the phosphate bandwagon is a sure-fire investment.

Frogblog points to an article in The Guardian, noting a strange side effect of the rise in fertiliser (and thus grain) prices - wheat is now a more competitive crop in Afghanistan against opium.

It seems some combination of the price falling out of the heroin market and rapidly rising world food prices means that Afghan farmer are converting from poppy growing to wheat. Poor old United States with its multi billion dollar ‘war on drugs’ - all it had to do the whole time was raise the price of food!

Haji Dawood, a farmer who used to cultivate poppy but now farms wheat in the Daman district, near Kandahar in the south, said his family had benefited from the wheat boom. “It’s the first time since I planted wheat that I can afford to feed my family … it’s going well because the price of opium has come down, and the price for my wheat has gone up. Each new season we get more money from the crop than from the previous one,” he said.

The ironic thing here is that grain and wheat farms here are either converting to dairy or growing crop to feed dairy cows. If we were in the same situation as Afghanistan we’d now have cows eating opium poppies as feed stock.

Following on from my Potash Potluck post during the week, I found this article at Grist interesting - The Saudi Arabia of fertiliser - which looks at the strong position Potash Corp has in all 3 major industrial agriculture nutrients.

Industrial agriculture currently stands as humanity's big plan for "feeding the world" as global population moves toward 10 billion and the earth warms. Increasingly, as oil supplies tighten and prices rise, we're looking to industrial ag to fill our gas tanks, too.

Unhappily, this relatively new form of farming relies utterly on three elements -- two mined (potassium and phosphorus) and one synthesized from natural gas (nitrogen) -- to maintain the productivity of soil.

In other words, unless we quickly move toward other agriculture models, we're likely to see increased geopolitical competition for these fertilizer resources, outsized power for the entities that control them -- and diminishing efforts to minimize the ecological effects of extracting them.

I've written before about Mosaic, the world's largest phosphorus supplier, and the devastations of its Florida mining operations. Two-thirds owned by agribusiness conglomerate Cargill, Mosaic has seen its share price rise seven-fold since the fall of 2006 (roughly when corn prices began to jump).

Now let's look at Canada's Potash Corporation of Saskatchewan, whose shareholders, like Mosaic's, have enjoyed an ecstatic run of late. The company so dominates potash (potassium) production that one stock analyst has hailed it as "the Saudi Arabia of Fertilizer."

The analyst, Ben Johnson of Morningstar, has this to say about Potash's market position:

PCS is the world's largest potash producer, with 22% of world capacity. ... PCS is also the world's second-largest nitrogen producer by volume (with 2% of world capacity). ... PCS is the world's third-largest phosphate producer (with 6% of world capacity).

Wow, so in the big-three macronutrients, the company ranks one, two, and three. But it's the company's position in the potash market that really has investors licking their chops. Get this:

I feel [an] apt analogy would be to call [Potash Corporation of Saskatchewan] the Saudi Arabia of the "other OPEC" -- Organization of Potash Exporting Countries! ... PCS owns 22% of the world's potash production capacity, while Saudi Arabia accounts for roughly 13% of global oil production. Both enjoy low-cost positions in their particular markets, thanks to scale and the attractive natural resources they control. The Middle East has more than 60% of the world's proven oil reserves, while Canada sits on about 57% of the world's potash reserve base, according to the U.S. Geological Survey.

The analyst says that the company's dominant potash position has made it extraordinarily profitable as fertilizer prices have surged recently, pushed up by the biofuel boom and rising demand from Brazil and China. He writes that "gross profit per metric ton of potash sold nearly doubled to $97 in 2007 from $51 in 2004." He adds:

And there will be more to come. Given recent price announcements for potash, average selling prices will easily double from 2007 levels in the coming quarters.

Similar trends are playing out with nitrogen and phosphorous:

Unit gross profit in nitrogen has more than doubled from $45 to $94 over this same span, and phosphate unit margins have compounded an eye-popping 14 times from $4 in 2004 to $57 in 2007.

Several questions arise here. Is it really sustainable to "feed the world" -- much less move its cars -- using technologies that require ravenous doses of finite resources?

The rising price of oil (and thus fertiliser) is being blamed for rising crime rates in rural areas.

The cost of fuel, grain and fertiliser are on the rise, and so too is the rate of rural crime in Queensland. Police say fuel and stock theft on farms has escalated.

Detective Sergeant Mark Ferling, from the North Coast region's stock and rural crime squad, says the pressure of rising costs is leading to more crime. "I do believe it has got worse because of commodity prices and again we just need to be a bit more vigilant in working together with the people in the rural side," he said. "At the end of the day, they're the ones out there, and there's only a handful of police serving that area, so we need their help to help them and also for them to help us."

ABC also reports there will be a Senate inquiry into hear about extreme fertiliser price rises

A Queensland MP says the price of fertiliser in his electorate is simply a rip-off, after the price of urea rose by $250 dollars a tonne this month. The Member for Lockyer, Ian Rickuss, says it's a point that must be raised at the Senate Committee inquiry into fertiliser pricing and supply arrangements, which begins today.

He says the price rises will affect food prices. "That is just ridiculous, it has gone up 40 per cent in virtually two weeks, I just cannot believe that those kind of price rises are justified", he said.

"I ask all farmers in the area that are concerned about prices and even distributors if they're concerned about prices get in contact with their local Senators and ask them to represent them at the Senate inquiry".

The Australian reports today that BHP has bought a Canadian potash company.

MINING giant BHP Billiton said today it had agreed to buy Anglo Potash for $C284 million ($A300 million). BHP Billiton said Anglo Potash's only asset was its 25 per cent interest in the Canadian potash joint venture development project in which BHP Billiton holds a 75 per cent stake. If the deal is approved, BHP Billiton would take 100 per cent control of the joint venture, which is focused on developing the first new potash mine in almost 40 years in the western Canadian province of Saskatchewan.

The world's largest potash producer is North American company Potash Corp. Energy Bulletin recently pointed to a presentation by William Doyle to Potash shareholders (pdf) quoting Norman Borlaug on the importance of fertiliser.

The company has a great Flash based app showing major fertiliser consumers and producers (the World agriculture and fertiliser map), along with various other pieces of information - have a play with it.

Good morning. Welcome to this annual meeting of PotashCorp shareholders. We appreciate this opportunity to discuss the performance and potential of your company – and to share our views on the global conditions that are shaping our industry. ...

Our potash, phosphate and nitrogen are essential to growing healthy, nutritious crops and to maximizing yields. Today, we are the world’s largest fertilizer producer by capacity – and our efforts are increasingly important to global food production. ...

The good news is that farmers have the ability to meet this everincreasing food demand – but it’s going to take time and a longterm commitment to intensive farming and proper fertilization. In the words of Nobel Prize winner Norman Borlaug, “This is a basic problem...without fertilizer, forget it. The game is over.”

Potash producers are currently thriving, courtesy of soaring fertiliser prices.

Across the board, the price of synthetic fertilizer has gone through the roof. Dealers are reporting farmers are paying double or even triple the amount they paid last year for the same amount of fertilizer.

Brian Fulmer, a corn and soybean farmer from Northhampton County, just got finished planting his soybeans this week. Liquid nitrogen, which he said he paid $175 a ton for last year, cost him $335 a ton this year.

He locked in starter fertilizer at $350 a ton, only to find out it had jumped to $700 a ton within a matter of weeks. “In the last two years, fertilizer prices have doubled. I hope the commodity prices don’t go back down, because I don’t know what’s going to happen,” Fulmer said.

The USDA’s National Agricultural Statistics Service (NASS) index of fertilizer prices paid by farmers, which is derived from information from fertilizer dealers, has gone up nearly 200 percent since January of 2000. Much of the increase has been within the last year.

What’s to blame? According to Penn State ag economist Jayson Harper, high fuel prices and increasing demand are the culprits. “I wouldn’t be expecting any kind of price relief for the farmer anytime in the near future,” Harper said.

According to The Fertilizer Institute (TFI) based in Washington, D.C., worldwide demand for nitrogen is up 14 percent, while demand for phosphorus has increased by 12 percent and demand for potassium has jumped 17 percent.

The Australian's "Pure Speculation" column for punters is a little cautious about the potential for further phosphate price rises - Phosphate latest craze for investors.

There was the uranium craziness, followed by mini-manias for various specialty metals and iron ore juniors. Millions of dollars was thrown at them all, but it appears that punters want to roll the dice one more time.

This time it's phosphate. Look what happened with Uramet Minerals (URM) and Krucible Metals (KRM) in the past few days. The former's stock shot up to an intraday gain of 250 per cent after it announced finding phosphate in grab samples at its Thorntonia project north of Mt Isa and -- more importantly -- next to the Lady Annie deposit controlled by Joseph Gutnick.

Krucible is also in the same neck of the woods and all it needed was for the mob to belatedly read the company's quarterly report and be reminded that it is sitting on land close to Phosphate Hill, the mine owned by Incitec Pivot (IPL). Krucible still has to get site clearances before it can drill, so it is very early days.

Yes, phosphate is going to be big. But, also yes, this has all the smell of the early uranium mania. Just as, 18 months ago, half the languishing juniors suddenly found potential for uranium on their gold (or base metals, or iron ore) tenements, now suddenly previously unsuspected phosphate indicators are being announced.

How many years is it going to take these greenfields projects to get into operation? Who knows, but investors buying for a long-term position should heed the words from New Zealand on Friday.

Peter Mourits of NZ's largest fertiliser supplier, Ballance Agri-Nutrients, made two points. One, there is no shortage of raw materials reserves and, two, new projects are well into the planning stages.

He didn't cite examples, but we can. Morocco and Western Sahara have enough known phosphate to meet the world's demand at present levels for 300 years. And big money is going into new production, including a new mine in Morocco (the so-called Saudi Arabia of phosphate). An Indian company is to spend $US1.5 billion ($1.6 billion) to build a fertiliser plant in Mozambique, a country with large known resources of phosphate. And another Indian company has teamed up with Singapore money to develop new mines.

It is true that phosphate is going to be in huge demand to meet world food needs. But it's a long way from grab samples to bagging the end product.

One final point: there may be pauses in demand growth as fertiliser use is hit by price resistance. In the past few days, there have been reports that farmers in The Philippines may no longer be able to afford it, and that NZ farmers may use less superphosphate due to cost blow-outs.

Bart at Energy Bulletin isn't so sure about this, noting:

The figure of "300 years" worth of phosphate seems strange. Most references in the literature are far less than that.

Professor Richard Schrock from MIT has an article on research into replacing the Haber Bosch process for producing ammonia (and thus fertiliser).

Molecular nitrogen (dinitrogen, N=N) makes up about 78 percent of the atmosphere. It is the most unreactive diatomic species known. Interestingly, however, nitrogen is required for all life; it is used to build proteins and DNA. Therefore, dinitrogen must be turned into a molecule that can be assimilated readily by plants. That molecule is ammonia, NH3.

Prior to World War I, the iron-catalyzed Haber-Bosch process for ammonia synthesis at high temperatures (350 to 550 °C) and pressures (150 to 350 atmospheres) from dinitrogen and dihydrogen (H2) was discovered. It is perhaps the most important industrial process ever developed and responsible for a dramatic increase in the population of the earth during the 20th century, because it supplies a reliable source of nitrogen for fertilizers. But because the Haber-Bosch process requires high temperatures and pressures, it consumes tremendous amounts of energy; it is estimated that as much as 1 percent of the world's total energy consumption is devoted to the process.

Nature also reduces dinitrogen using metalloenzymes in bacteria and blue-green algae, but at only one atmosphere of pressure and mild temperatures. The metalloenzymes, called nitrogenases, contain iron and usually molybdenum. Ever since their discovery more than 40 years ago, chemists have speculated about how reduction of dinitrogen occurs and whether an "artificial" nitrogenase could be developed that would lead to a more energy-efficient process than Haber-Bosch. Perhaps a thousand man-years and billions of dollars have been spent studying how nitrogenases work and trying to make artificial ones.

In 2003, my group showed that it is possible to make ammonia catalytically from dinitrogen, protons, and electrons. This is accomplished at a single molybdenum metal center. In the presence of protons and electrons in a non-aqueous medium, dinitrogen is reduced to ammonia with an efficiency in electrons of around 65 percent; the remaining electrons are used to make dihydrogen, which is in this context a wasteful and undesirable product. Our catalyst is not great, but it is a start.

Nature has developed a highly optimized version of the nitrogen reduction process over a period of a few billion years. Ours is an "artificial" nitrogenase that is barely catalytic. We are trying to identify the key problem or problems that prevent it from working well. Perhaps then we can improve its efficiency.

Can we design catalysts that will be as efficient as natural nitrogenases? Possibly. Will the Haber-Bosch process ever be replaced by catalysts that do not operate at high pressures and temperatures? Unknown. Only time, money, and ingenuity will reveal the answer.

Alexis at Wired Science mentions the Schrock team in an article on "How to Make Fertilizer Appear Out of Thin Air", part of a new series on "The Future Of Fertiliser".

Combine air and natural gas over an iron oxide catalyst under high pressure and intense heat and what do you get? The answer, surprisingly, is plant food: ammonia, the chemical precursor to nitrogen fertilizers.

Ammonia gets converted into nitrites and nitrates, which when sprinkled onto plants, allow them to grow larger. This is the basic idea behind the huge increases in agricultural yields, doubling between 1950 and 1990, seen in the 20th century. (Caveats about the "quality" of this growth and the environmental impacts of nitrogen are noted, but left aside for a later post in this continuing series).

Back around 1915, the world produced almost no nitrogen fertilizer, largely because there was no usable nitrogen supply. Now, the world produces about 87 million tons of N-based fertilizers. This increase is primarily due to the Haber-Bosch process for pulling nitrogen out of the air. (The development of new plant varieties that are able to soak in excess nitrogen will also be the subject of a separate post).

Clearly, the Haber-Bosch process has been successful. As we've noted before, at least one professor has estimated that 40 percent of the world's food can be traced back to the process. But the process is encountering major problems in the increasingly resource-constrained world.

Here's why: the main reaction in the process is cooking N2 and H2 together at 500 degrees Celsius and 200 atmospheres of pressure. You need all that heat and pressure because breaking apart an N2 molecule turns out to be incredibly difficult. A nitrogen atom has five electrons in its outer shell (valence electrons), so it has a tendency to share three electrons with another nitrogen atom to reach its stable (octet rule) state. That's what generates dinitrogen's triple covalent bond, one of the strongest in nature. The energy required to break the bond is 946 kilojoules of energy per mole of nitrogen, or twice the energy required to bust an O2 molecule.

Luckily, or so we thought, fossil fuels were cheap, widely available, and incredibly energy dense: 1 cubic foot of natural gas contains 1.055 gigajoules of energy. That's enough energy to convert a lot of moles of nitrogen into ammonia. So, once the Haber-Bosch process established it could be done, chemists across the world began to burn a lot of natural gas to get dinitrogen to react with hydrogen. And where do we get the hydrogen? Why, we use the natural gas for that too, naturally: it is CH4 after all.

Taken together, there's a lot of natural gas going into the production of nitrogen fertilizer. So much so that when I tweeted about my fertilizer investigation, my friend Celeste LeCompte, managing editor at the Sustainable Industries Journal, tweeted back, "Think: natural gas."

In effect, we've been pumping fossil energy into our food supply, and eating it. While diminishing fossil fuel supplies and climate concerns have given us perfect hindsight into why this could be a dubious path for the future, at the time, it must have seemed like an excellent idea, given that the alternative--not producing enough food--was both real and horrific.

Until relatively recently, the price of natural gas, which tracks the price of oil very closely, was relatively low. Now, with oil over $120 a barrel and natural gas prices having doubled since the mid-90s to over $11 per thousand cubic feet of the stuff, the cost of ammonia has tripled. As in biofuels or alternative energy, the rising cost of oil is driving innovation.

As we've noted before, legumes developed symbiotic relationships with bacteria who can pull nitrogen out of the air at room temperature and standard atmospheric pressure. They use a specialized enzyme known as a nitrogenase that consists of iron and the metal molybdenum. In fact, scientists estimate that 200 million tons of nitrogen are fixed via natural processes, or more than twice human production.

Now teams of scientists across the world from Richard Schrock at MIT to David Tyler at the University of Oregon are racing to find just the right catalyst to recreate the natural nitrogen fixation process. While they wouldn't eliminate the use of natural gas as a feedstock, they would reduce the amount of energy used in the creation of ammonia. How much? Eliminating the Haber-Bosch process, which uses an estimated one percent of the world's total 15 terawatts of energy consumption (xls) would mean 150 gigawatts of energy savings for the world. That's about as much coal generating capacity as the US is planning to add between now and 2030.

The New York Times has an article on the difficulties US farmers are having obtaining fertiliser (via Cryptogon).

The squeeze on the supply of fertilizer has been building for roughly five years. Rising demand for food and biofuels prompted farmers everywhere to plant more crops. As demand grew, the fertilizer mines and factories of the world proved unable to keep up.

Some dealers in the Midwest ran out of fertilizer last fall, and they continue to restrict sales this spring because of a limited supply. “If you want 10,000 tons, they’ll sell you 5,000 today, maybe 3,000,” said W. Scott Tinsman Jr., a fertilizer dealer in Davenport, Iowa. “The rubber band is stretched really far.”

The ABC reports that a Chinese export tax on fertiliser is set to send prices soaring.

The latest National Australia Bank agribusiness survey shows a skewed picture in rural Australia, with farmers feeling better about the future, but agribusiness not so sure. A facade of confidence is emerging as world commodity prices stay high, masking the pain being felt from rising input costs, such as fertiliser, fuel and chemicals.

The situation hasn't been helped by a decision from China to impose a 100 per cent tariff on exports of fertiliser. Former head of the Australian Fertiliser Services Association, Shane Dellavedova, says while Australia has some carry-over stocks following several poor seasons, farmers need to get ready for a big price rise.

Stuart Staniford (often known simply as "Staniford") has another one of his excellent "2050" series of posts up at The Oil Drum, this one looking at trends in global food production (one of my favourite topics).

In Powering Civilization to 2050 I argued it was potentially feasible to transition to power civilization with a mix of solar, wind, and nuclear energy, with the transition well on the way to completion by 2050. (Luis de Sousa made a broadly similar argument in Olduvai Revisited 2008). This would require a period of belt tightening and conservation in the next couple of decades, but once the transition had overcome the critical threshold (as solar energy in particular became cheap), I suggested energy in general would get cheap again. I adopted the UN medium population projection which has population at about 9 billion by 2050, with growth slowing sharply. Making plausible assumptions for economic growth between now and 2050 if energy was available, we got to a world GDP of about $350 trillion in 2050 (in 2006 purchasing power parity dollars), versus about $70 trillion in 2007

If the average global citizen was significantly wealthier in 2050, they would undoubtedly want to drive more. The switch to primarily electrical energy sources for civilization would preclude doing this with all liquid fuels. In Four Billion Cars in 2050? I argued that, given that the average citizen will be living in a dense third world city by 2050, we can assume rates of ownership typical of the most car-free corners of western Europe at the moment (Holland), which gives rise to a few billion cars in 2050. I further argued that it seems feasible that this many plugin-hybrids could be built - there appears to be enough lithium for the batteries - and run on less than 10mbd of liquid fuels.

In this piece I want to look at another area that many people think is likely to be a critical bottleneck to civilization continuing - the area of food, agriculture, and soil. I am of course not an expert in these areas, but happily there is a lot of excellent scholarship and scenario building that I can lean on. My task is reduced to reporting of the existing science, with some modest adjustments to reflect where my assumptions differ from those of published scenarios (most especially the assumption of a near-term peak in oil supply, and a full-speed effort to convert society to carbon-free energy sources.)

Let's begin with two very helpful UN Food and Agriculture Organization reports: World agriculture: towards 2015/2030, and the sequel World Agriculture: Towards 2030/2050. What these reports do is basically look at projections for population and economic growth and then estimate how much food people would want in the future, and what quantity of agricultural commodities would be required to fulfill that demand. The first report focuses a lot more on the supply-side factors of how this could be done, while the second report extends the analysis out further in time but confines itself much more to demand side considerations.

The input assumptions about population and world GDP are slightly different than mine, but close enough that I am just going to adopt their food scenario wholesale, rather than trying to construct my own from first principles. The differences would be small - much smaller than the other uncertainties in the problem. Let me first summarize their scenario, and then we will start to explore the potential bottlenecks that might prevent achievement of this much food production. (However, I strongly encourage readers that care about where their food is going to be coming from in the future to take the time and read the FAO reports themselves.)

Let's start with a look at what the FAO scenario has for average nutrition. This next graph shows both history and projections to 2050 for daily dietary energy (in Kilocalories/day/person) in various regions of the world, as well as the global average. ...

Another way to try to get at the issue is to look at how current yields compare to the theoretical potential of photosynthesis. This is generally expressed as net primary productivity (NPP) - the amount of carbon that plants can fix, exclusive of that used to power their own respiration. The net primary productivity is the photosynthetic product that is available to be eaten by people and other animals, rot into the soil, etc. Here is a map of the fraction of net primary productivity appropriated by humans published by Haberl et al last year in the Proceedings of the National Academy of Sciences, which I take to be a decent representative of the state-of-the-art in this kind of calculation:

You might look at the red - 60%-80% appropriation of NPP in many of the world's key crop growing areas, and think there wasn't enough head room for another 50%+ increase in yield in those areas. However, it's important to understand exactly how the accounting in these calculations is done. Let's consider a piece of the US midwest that used to be tall-grass prairie and is now under corn. What Haberl et al would do is first use a vegetation model (specifically, this one) to establish that it would be a prairie there absent human intervention, and figure out how much carbon the prairie would have fixed as NPP. ...

The key things to note are these:

* Rates of soil production and erosion under native vegetation are roughly similar, suggesting soil depths are naturally in equilibrium.
* Rates of "agricultural" erosion are a couple of orders of magnitude higher, suggesting that ploughing is not a long-term proposition.
* Rates of "Conservation" erosion are roughly comparable to to natural erosion rates under native vegetation. This covers more sustainable management regimes such as terracing and no-till agriculture.

This suggests that the long-term sustainability of industrial agriculture requires the use of no-till farming systems in which ploughing is not done, crop residues are left on the field, and weeds are managed another way (primarily via herbicides today).

Fertilizer

The three major fertilizer nutrients applied in industrial agriculture are Nitrogen (N), Phosphorus (P), and Potassium (K). None appear to be a critical constraint on agriculture to the 2050 timeframe, though there are significant issues with nitrogen in the short term.

Nitrogen fertilizer is manufactured via the Haber-Bosch process in which nitrogen gas (which forms almost 80% of the atmosphere) is heated with hydrogen over an iron catalyst at high temperatures and pressures to form ammonia (NH3) which is subsequently reacted with other compounds to form urea, ammonium sulphate, and other compounds used as fertilizer. Presently, almost all the hydrogen input to this process is produced by steam reformation of natural gas, and this is the cause of the short term problem since natural gas supplies are problematic, and likely to worsen with both Europe and North America probably at or past peak natural gas. Fertilizer manufacture is exiting these regions and moving to the Middle East, Trinidad, and other places with more natural gas.

However, in the long term, there's no reason nitrogen fertilizer has to be made from natural gas. In my scenario in which energy production is dominated by renewable/nuclear electricity by 2050, the natural source of hydrogen for Haber-Bosch is by electrolyzing water. Producing nitrogen fertilizer is unproblematic as long as society has ample energy.

The reserves and reserve-base for phosphorus are enormous. According to the USGS, 2006 global production of phosphate rock was 145 million tons, while reserves were 18 billion tons, and the reserve base was 50 billion tons. For the 2050 timeframe, I consider reserve base to be the more appropriate number for the same reasons discussed under lithium. The reserve base for phosphate rock is 350 times larger than 2006 production, so there is no evidence of a problem at present.

Some bloggers are concerned that the Hubbert linearization suggests peak phosphorus has already past. However, Hubbert linearization is not very reliable if there is no independent evidence to suggest peak is at hand, due to the problem of dual peak structures giving rise to misleading linear regions (eg see the UK oil linearization). In this case, with enormous reserves, and stable phosphorus prices (they haven't varied outside the range of $27-$28/ton from 2002-2006), it seems very unlikely that phosphorus is in trouble. JD has made a similar point (snark warning).

Potassium comes from the mining of potash. The USGS estimates the global reserve base to be 550 times larger than current usage. So potassium is unlikely to limit civilization any time soon. ...

Shipping is extremely energy efficient - two orders of magnitude better per ton-mile than air freight. Thus, long-haul shipping of food will be cost effective long after oil has peaked. Ships can also be run on nuclear power, as the US navy has been demonstrating for decades.

In Conclusion

There seems to be reason for cautious optimism that if other global problems can be solved, food production will not be a critical constraint on civilization to 2050. If industrial agricultural yields maintain their historical trajectory, there will be enough food without needing much more land. In case yields fail to continue increasing, more land is potentially available globally, though likely of poor quality. Soil erosion is an important problem, but not a critical emergency, and can seemingly be solved permanently with no-till farming methods. Fertilizer does not appear to be seriously constrained in the long-term, though nitrogen fertilizer needs to be transitioned away from reliance on natural gas. Agriculture only needs a tiny fraction of global liquid fuel use to operate, and this can be maintained for a long time, since food production is a critical infrastructure.

However, if we were to keep growing the conversion of food into biofuels, all bets would be off.

The Australian has a report on the upcoming summit of the WTO - no, not the World Trade Organisation: the World Toilet Organisation - and their plans to start making use of the resources that flow through their systems.

A CHEAP system to recycle human waste into bio-gas and fertiliser may allow 2.6 billion people in the world access to toilets and reduce global warming, an Indian environmental expert says.

Bindeshwar Pathak, founder of the Sulabh International Social Service Organisation, said his group planned to push the system at the seventh annual World Toilet Summit, to be held in New Delhi at the end of October. The organisation is dedicated to providing toilets to nearly 730 million people in India who lack them. "The Millennium Development Goals set in South Africa in 2002 aim by 2015 to cut by half the 2.6 billion people worldwide who lack toilets and provide them to all by 2025,'' Mr Pathak said at a briefing ahead of the summit.

He said India's contribution would be a toilet system that organically breaks down faeces into trapped bio-gas that could be burned to provide cooking fuel and electricity, and convert urine into fertiliser. "Now we want others to know about this technology which was recently installed at Kabul, Afghanistan, because it can help meet the Millennium Development Goals and reduce global warming.''

Founded in 2001 as a non-profit organisation, the World Toilet Organisation aims to make sanitation a key global issue and now says it has 55 member groups from 42 countries.

The Wall Street journal has a look at the progress of Tesla Motors and their forthcoming electric car. I like their proposed tesla slogan - "You can't kill an electric car you can't catch".

Tesla Motors is a car company that's both decades ahead of its time, and a year behind schedule. Soon, it will become clear which is more important to Tesla's long-term future, and the future of the disruptive ideas the company represents.

For those who somehow missed the blizzard of publicity that has swirled around this company for the past 18 months or so, Tesla (www.teslamotors.com) is a Silicon Valley start-up, bankrolled by some of the same people who brought you the Internet boom of the late 1990s. The company's stated ambition is to develop over the next several years a full array of electric cars. Tesla's fans -- many of them influential leaders of Silicon Valley's "clean tech" green-technology movement -- see Tesla as an icon of the broader effort to make big money by unshackling the U.S. economy from petroleum.

Tesla's first model will be a $98,000 electric roadster, developed around the architecture of a Lotus Elise, that uses 6,831 lithium-ion batteries similar to those used in laptop computers, a patented electric-motor system, and a highly sophisticated package of controllers and software to deliver an exotically attractive car that zaps from standstill to 60 miles per hour in under four seconds and can travel up to 245 miles on a single charge.

Tesla isn't planning any traditional advertising, but if it did, one slogan could be: "You can't kill an electric car you can't catch."

Tesla and its approach to electrifying the automobile may well redefine the car industry. But first, Tesla needs to actually deliver the car. That was once supposed to have happened by early this year. Now, company co-founder Martin Eberhard says, the first Roadsters should come off the Lotus assembly line in Britain sometime during the first quarter of 2008.

"Our plan is to ramp up very gently," he says. The run of cars produced during the first quarter of 2008 could be only about 50 vehicles, with a goal of building a total of about 600 cars in the 2008 model year. Tesla recently told potential customers that it can no longer guarantee delivery of 2008 models. Newcomers to the waiting list might well get 2009s. ...

The logistics of getting components produced in Thailand, Taiwan, and the U.S. to arrive at the right time at the assembly plant in England have proven challenging. To manage this effort, Tesla in September hired Michael Marks, former chief executive officer of contract manufacturing giant Flextronics International Ltd. to become its CEO, replacing Mr. Eberhard, who remained as president of technology.

"Silicon Valley engineers find it easy to think they know everything and Rust Belt companies don't know anything," Mr. Eberhard says. "More often than not the knee jerk reaction, that these guys (in Detroit) don't know what they are doing, is wrong."

That said, Mr. Eberhard says conventional car makers did get it wrong on electric vehicle technology in the 1990s and early years of this decade.

Big car makers, led by General Motors Corp. and Toyota Motor Corp., responded to a California mandate in the late '90s by producing vehicles that were supposed to prove that electric vehicles could be affordable and oh-so-politically correct. Unfortunately, the GM EV1 and the electric Toyota RAV4 struck mainstream customers as geeky, slow and impractical.

"Electric cars had a terrible black eye," Mr. Eberhard says. As far as the general public was concerned, "they sucked and they were dead."

Tesla's Big Idea was to start with an electric car that appeals to the id, not the superego. From the start, Mr. Eberhard says he wanted a car that could outrun a Porsche in a 0-60 trial, and would go 250 miles on a charge. He says the production Roadster will hit the under four-second target for the 0-60 dash, and will get very close to the original goal on range.

More fundamentally, the Tesla Roadster is designed to ride the technology curve from the high end of the price ladder down -- the direction that has worked for most other forms of technological innovation from the VCR to the laptop.

But after the Roadster is launched, and the high-tech elite have shown off their status-defining 2008 models at Silicon Valley's finest restaurants and clubs, what can Tesla become?

Tesla so far has raised $105 million from venture-capital firms and Chairman Elon Musk, the PayPal founder who was a ground floor investor. That's a lot for a tech startup, but it's chump change in the auto industry, where car programs with century-old, conventional technology can easily cost $500 million to $1 billion.

"Our ambition is, one step at a time, to become a real car company," Mr. Eberhard says. Tesla plans to develop more practical and more affordable electric vehicles, expanding its potential revenue. But the time frame for that is now 2010, not 2009 as once proposed.

Last May, Mr. Eberhard told a Senate committee that the company's second model would be a $50,000 sedan built in New Mexico, followed by an even more affordable car. Now, Mr. Eberhard is cagier about exactly what Tesla's "White Star" model line will be, and exactly when it will appear. "We are deep, deep into that," he says. "We are planning on building (cars) in Albuquerque. It's possible we might want to do something different."

Tesla is named for Nikola Tesla, the godfather of alternating current and radio who nonetheless died poor, in part because his weirdness wound up obscuring his genius. In recent years, Tesla has become a patron saint of Silicon Valley.

But there's another ghost hovering over Tesla Motors -- one whose name Mr. Eberhard brings up before a visitor can get around to it: John DeLorean.

Mr. DeLorean, who died in 2005, was the charismatic General Motors executive who left GM after clashing with its stolid hierarchy, and who later founded a company to build what he called the "ethical sports car." The DMC-12, with its stainless steel body panels and gull-wing doors, was designed to appeal to wealthy enthusiasts with a taste for the exotic. But Mr. DeLorean's company collapsed in 1982, and he spent several years fighting and beating charges of drug dealing and fraud. The DeLorean company's failure is one of several examples of how hard it has been for upstarts to challenge the automotive oligarchy since World War II.

"What problem was DeLorean solving?" Mr. Eberhard asks in response to the inevitable question about how Tesla avoids DeLorean's fate. The DeLorean car, when it appeared, was not any better, in some ways not as good, as a Chevrolet Corvette that GM was offering for less money, he says. By contrast, Tesla is offering a product unlike any other. "Nobody produces a real electric car," he says.

What will define success for Tesla? Big car makers have tools, capital and experience in dealing with the harsh environment of the global auto market that Silicon Valley doesn't possess, even with its abundance of rich, smart technology visionaries and venture-capital firms. Mr. Eberhard says selling out isn't the plan, even though "we've been approached by many, many car companies."

"We are rolling everything we can back into growing the company," he says. "If we wanted to be a fancy sports car company, we could do that next year."

After Gutenberg has an update on the Norwegian THINK City electric car - "Tesla Thinking versus Think Testing".

When last we looked in on Jan-Olaf, we surmised that a hybrid drive train might be in the works for Think. At the time, there was some mention of other battery options being explored, now we know what they were.

In direct competition with the Kewet for the Scandinavian market, the second generation TH!NK City vehicle is among several electric city cars targeting the European market. The Norwegian electric car manufacturer certainly has experience in making and selling Battery-powered all-Electric Vehicles. The TH!NK city launched in 1999. While part of Ford, Think produced one of the largest fleets of electric vehicles in the world.

Autoblog Green has some breaking news. Ener1 and Th!nk have signed what currently is the largest contract yet for lithium-ion batteries. Jan-Olaf Willums, President and Chief Executive Officer of Think Global stated:

We are confident in EnerDel’s capabilities to deliver this safe, reliable and high energy battery system that will power the electric vehicle of the future. While this is the largest Lithium ion battery contract in the automotive industry to date, we expect demand for our vehicle and the resulting battery supply requirements to increase substantially from these levels.

Ener1 will deliver production prototypes to Think in March 2008. The second milestone will be delivery of pre-production parts (valued at $1.4 M) the following July. The contract with Think is the first, commercial, automotive venture for EnerDel, which plans to offer battery products for each of the major electric vehicle categories — HEV, PHEV and EV. “With a deal like this,” opines ABG reporter Linton, “other car companies are sure to come looking at Ener1’s technology.”

With governmental agencies willing to convert HEVs to PHEVs and more vendors will to sell kits for converting a Toyota Prius to a Toyota Plug-in HV, EnerDel could have a ready market. “We already noticed they seem to be working on a Prius in the lab,” reports Linton.

After reading the New York Times, The Naib fretted that a $2,500 car could be The End Of Us ALL. On the other hand, such countries are less in the grip of Big Oil than the United States. They will use whatever propulsion is cheap and available. Engines that Americans put on riding lawn mowers could become fuel sipping range extenders. For such low cost electric drive, electricity storage must be done cheaply.

All such development is none too soon, given the rumblings of the dragon’s stomach. Industry observers forecast the Chinese buying four million car in the next six years and sales of two million cars over the same period in India.

“Next fall, the Indian automaker Tata Motors is scheduled to introduce its long-awaited People’s Car, with a sticker price of about $2,500. Hot on its tail may be as many as half a dozen new ultra-affordable vehicles — some from the world’s leading car makers, including Toyota and Renault-Nissan.”

If manufacturers in China and India can figure out how to make small, cheap cars, then “they are expected to start exporting them to other fast-growing markets where the proportion of car ownership remains small — places like Southeast Asia, Africa and the Middle East.”

This blog recently noted that the Korean Ministry of the Environment had placed an order for 3,390 hybrids from Kia and Hyundai. Chinese car makers have large stakes in South Korean car making. It is a position from which they can began to compete with the likes of Honda and Renault-Nissan. And, everyone remembers the history of the Bug.

Tom Konrad at Alt Energy Stocks has an article on the post peak transportation system - Investing in Mode-Shifting: Preparing for a Peak Oil World (lots of links at the post itself).

Technology cannot save us

Technology will not save us from peak oil, but the invisible hand of economics will. It's easy to get excited about all the amazing new vehicles the world's car-makers are promising us. Even if we believe manufacturers' hype, the Cadillac SRX your neighbor bought last week will be on the road for at least a couple decades, and all the fuel saved by your next plug-in hybrid will not make up for the amount it guzzles.

I, and many others, believe that the Western World will soon have to cope with much less oil than we are accustomed to, without the ability to increase the efficiency of our vehicle fleet significantly in the near term. Since the oil supply available will not be increased significantly at any price, the result will be demand destruction: people will drive less. Even alternative fuels are limited by available feedstocks, and can only moderate the crisis. Yes, Americans have shrugged off $3 gas and are still driving like it's 1999, but when supply is constrained, the question becomes not: "Will $5 gas make people drive less?" but: "What price will gas have to reach to force people to drive less?"

I frankly don't know what price it will take to reduce oil consumption significantly, but I do know that whatever that price is, that is how much it will cost when we are confronted with reduced supply. There's little doubt in my mind that fuel prices will be high, and headed higher.

Mode Shifting will save us

When it comes to drastically reducing oil use, the only short-term option is mode shifting: Carpooling, Biking, Public Transport, and Walking. Westerners, and especially North Americans are typically very resistant to mode shifting because our cities are designed for cars. Public transit is slow and unpleasant, and walking or biking are seen as downright dangerous. Ironically, even before oil prices rise, mode shifting has gigantic societal benefits in terms of cost, health, and safety [.pdf], and can be encouraged with market based fixes such as congestion pricing, parking cash outs, and Pay as You Drive auto insurance.

But it will be painful

In some places, these fixes are happening, but in far too many they are not or are too slow. This is because of a classic chicken-and-egg problem: public transit mostly slow and uncomfortable because most people who vote drive cars, while most people drive cars because public transit is slow and inconvenient. There certainly are exceptions, and far sighted cities like my own Denver are engaged in rapid build-outs of public transportation. When the majority of voters are forced out of their cars by higher fuel prices, the public will demand a massive increase in such investments everywhere, but not until the realization slowly dawns that gasoline prices are high and rising, and public transportation and biking and walking is not just for the poor. It can also be a virtuous cycle: Where levels of biking and walking are higher, bicycle and pedestrian safety is greater.

The sooner we realize that we are not going to be able to cling to our cars forever, the sooner we can start readying our cities for the transition, and the less painful that transition will be. It also means that investors with the foresight to invest in mode-shifting industries today will be able to benefit from the trend sooner.

Sectors to Consider

It is possible to invest directly in some of the market fixing strategies that encourage public transit, but the companies involved tend to be small and private (or both.) I prefer established companies which already have profitable businesses that will simply become more profitable when people take up new modes of transport. The three sectors which have drawn my attention are manufactures of bicycles, light rail, and busses, and component makers for each.

Californian activist Van Jones has been getting a lot of press lately - most recently featuring in Thomas Friedman's column in the NYT - "The Green Collar Solution".

Van Jones is a rare bird. He's a black social activist in Oakland, Calif., and as green an environmentalist as they come. He really gets passionate, and funny, when he talks about what it's like to be black and green:

"Try this experiment. Go knock on someone's door in West Oakland, Watts or Newark and say: 'We gotta really big problem!' They say: 'We do? We do?' 'Yeah, we gotta really big problem!' 'We do? We do?' 'Yeah, we gotta save the polar bears! You may not make it out of this neighborhood alive, but we gotta save the polar bears!' "

Mr. Jones then just shakes his head. You try that approach on people without jobs who live in neighborhoods where they've got a lot better chance of getting killed by a passing shooter than a melting glacier, you're going to get nowhere — and without bringing America's underclass into the green movement, it's going to get nowhere, too.

"We need a different on-ramp" for people from disadvantaged communities, says Mr. Jones. "The leaders of the climate establishment came in through one door and now they want to squeeze everyone through that same door. It's not going to work. If we want to have a broad-based environmental movement, we need more entry points."

Mr. Jones, who heads the Ella Baker Center for Human Rights in Oakland, which helps kids avoid jail and secure jobs, has an idea how to change that — a "green-collar" jobs program that focuses on underprivileged youth. I would not underestimate him. Mr. Jones, age 39 and a Yale Law School grad, exudes enough energy to light a few buildings on his own.

One thing spurring him in this project, he explained, was the way that the big oil companies bought ads in black-owned newspapers in California in 2006 showing an African-American woman filling her gas tank with a horrified look at the pump price. The ads were used to help bring out black votes to defeat Proposition 87. That ballot initiative proposed a tax on oil companies drilling in California, the money from which would have gone to develop alternative energy projects. The oil companies tried to scare African-Americans into thinking that the tax on the companies would be passed on at the pump.

"The polluters were able to stampede poor people into their camp," said Mr. Jones. "I never want to see an N.A.A.C.P. leader on the wrong side of an environment issue again."

Using his little center in Oakland, Mr. Jones has been on a crusade to help underprivileged African-Americans and other disadvantaged communities understand why they would be the biggest beneficiaries of a greener America. It's about jobs. The more government requires buildings to be more energy efficient, the more work there will be retrofitting buildings all across America with solar panels, insulation and other weatherizing materials. Those are manual-labor jobs that can't be outsourced.

"You can't take a building you want to weatherize, put it on a ship to China and then have them do it and send it back," said Mr. Jones. "So we are going to have to put people to work in this country — weatherizing millions of buildings, putting up solar panels, constructing wind farms. Those green-collar jobs can provide a pathway out of poverty for someone who has not gone to college."

Let's tell our disaffected youth: "You can make more money if you put down that handgun and pick up a caulk gun."

Remember, adds Mr. Jones, "a big chunk of the African-American community is economically stranded. The blue-collar, stepping-stone, manufacturing jobs are leaving. And they're not being replaced by anything. So you have this whole generation of young blacks who are basically in economic free fall." Green-collar retrofitting jobs are a great way to catch them.

To this end, Mr. Jones's group and the electrical union in Oakland created the Oakland Apollo Alliance. This year that coalition helped to raise $250,000 from the city government to create a union-supported training program that will teach young people in Oakland how to put up solar panels and weatherize buildings.

It is the beginning of a "Green for All" campaign (greenforall.org) that Mr. Jones — backed by other environmental activists like Majora Carter from Sustainable South Bronx — is launching to get Congress to allocate $125 million to train 30,000 young people a year in green trades.

"If we can get these youth in on the ground floor of the solar industry now, where they can be installers today, they'll become managers in five years and owners in 10. And then they become inventors," said Mr. Jones. "The green economy has the power to deliver new sources of work, wealth and health to low-income people — while honoring the Earth. If you can do that, you just wiped out a whole bunch of problems. We can make what is good for poor black kids good for the polar bears and good for the country."

Bruce Sterling's latest edition of "Arphid Watch" has a look at the "very spimey" Intelligent Sensor Network. This is the infrastructure you build the "internet of things" on which helps enable full cycle Cradle to Cradle manufacturing which in turn eliminates our dependency on digging up ever greater quantities of stuff to feed into our manufacturing systems (just in case you we were wondering if it was on topic).

Link: www.rfidwizards.com - RFID Middleware is Extinct. The Intelligent Sensor Network is Born..

Page 1 of 8 (((I just read all 8 pages; very spimey.)))

Written By Louis Sirico with brilliant contributions from Carlos Arteaga and Tony Woods

"RFID Middleware is not a long term solution".

It has taken me some time to muster the nerve to publicly proclaim what many experts in the RFID industry have whispered behind closed doors for years. This should be a little less surprising as several big name providers have recently dropped out of the market. Yet, now that I have published this bold announcement, I'm left with the enormous task of backing it up and describing the evolutionary process that has taken place.

"Let me start by clarifying what I mean by RFID middleware. Forrester Research defines RFID middleware as "Platforms for managing RFID data and routing it between tag readers or other auto identification devices and enterprise systems." What is unfortunate is that many RFID middleware applications were developed with a premise that the universe revolves around RFID data. These in-a-box applications were meant as quick fixes for encoding and printing a RFID label that's slapped on a pallet, and then reading tags as they pass through a portal.

"These applications are really Band-Aid-ware. If you have a small, pilot project fenced off in the corner of your warehouse they're fine to show a proof-of-concept, but once you enter the real world, RFID data must be integrated with all your other devices, not just routed to them. Once implementers tried to do more than a simple process, they started running into limitations that have slowed adoption of a technology that has incredible value when put into operation correctly.

"In order to understand why RFID middleware is dying off, the industry must change its perception of RFID altogether. Which leads to my second bold proclamation:

"A RFID reader is actually a sensor and it needs to be treated as one...."

(((This is the part I like best:)))

"Each sensor needs to be associated with a location. A sensor can be anywhere and its location can be stationary or moving. That’s why a Location Processing System or LPS is required. The location of a fixed position sensor can be determined simply by performing a look-up in the LPS (e.g., the bar code reader is at work area 12.)

"Here are some examples of how the location of a sensor can be determined:

• Real time location systems (RTLS) that use Wi-Fi (802.11 based), Ultra-Wide Band (UWB), or similar;
• Global Positioning Systems (GPS);
• Imaging – processes digital images from cameras;
• Acoustic – systems that use sound waves;
• Location markers – associate a RFID tag with a position. When the tag is read, you know the approximate position of the RFID reader

"Each of these methods of location has there own Position Engine (PE) for determining location. Some intelligent sensors even have one or more location engines built-in.

"Since the methods of determining location can vary, the LPS should not only be able to use position engines, but also be able to automatically switch between them. For Example, at a facility with an 802.11 based RTLS inside and GPS outside. This allows you to combine the location information from different areas or facilities and monitor them in a central location. Besides, if the LPS cannot support different position engines, then how will it support future technologies yet to come?"

The Australian reports that Russia now seems to be getting close to guaranteeing Iran's security, which if true would make a US attack unlikely unless someone was determined to kick off world war 3. In response, Bush says we may just get that war anyway. And that Putin is the new Hitler.

Russian President Vladimir Putin forged an alliance with Iran overnight against any military action by the West to destroy the country's nuclear ambitions. A summit of Caspian Sea nations in Tehran agreed to bar foreign states from using their territory for military strikes against a member country.

Mr Putin, the first Kremlin leader to visit Iran since the Second World War, insisted that the use of force was unacceptable. "It is important ... that we not only not use any kind of force but also do not even think about the possibility of using force," he told the leaders of Iran, Azerbaijan, Kazakhstan and Turkmenistan.

The declaration of the five states did not specify a particular threat. Rumours have long circulated, however, that the US is seeking Azerbaijan's permission to use airfields for possible military action to stop Iran developing a nuclear bomb. ...

The Tehran declaration strengthened Moscow's hostility to any attempt at a military solution. It also offered support for Iran by asserting the right of any country that has signed the Nuclear Non-Proliferation Treaty to develop peaceful nuclear energy "without discrimination". Tehran insists that its nuclear programme is purely for civil purposes to generate electricity.

The summit was called to try to settle the status of the Caspian among the five states that border the sea. Iran and the former Soviet Union shared it equally but there has been a 16-year dispute over mineral rights since the emergence of Azerbaijan, Kazakhstan and Turkmenistan as independent states in 1991.

The leaders failed to reach agreement on dividing the seabed, which is believed to hold the world's third-largest reserves of oil and gas. They agreed to meet again in Baku, the capital of Azerbaijan, next year.

Links:

* Always On - Where the Green VCs are Betting
* After Gutenberg - More BEVs and GO-HEVs in Norway?
* Tom Whipple - Peak Oil Review - October 15th, 2007
* Energy Bulletin - Russian Oil - a Depletion Rate Model estimate of the future Russian oil production and export
* The Australian - Oil prices head for $US100 a barrel
* WSJ Energy Roundup - White House 'Very Concerned' About High Energy Prices. Where is a good cartoon when I need one...
* Business Week - Fuel Worries Drag on Airlines
* The Australian - Woodside cuts oil production forecast
* The Australian - Santos hails move to lift share cap
* The Australian - ERA uranium output dips in Q3
* The Australian - Hope for uranium exports to India
* The Australian - Clean coal system for Chinese plant.
* The Times - China's rising living standard cranks up resource competition. Gets the award for the most disingenuous, short sighted and hypocritical article I've read this year.
* TomDispatch - The Coming Collision in Sudan
* WSJ Informed Reader -Not All Acts Of God Are Acts Of God/
* Beyond The Beyond - Mystery Electronic Warfare Scheme Blanks Israeli Satellite TV
* Cryptogon - David Kelly: Secret Knife Evidence Points to Murder