This is the first in a series of READ ME! articles: recent information on Y2K that indicate we are in big trouble. Because of its length, I have split it into two parts. This is part 1.

Below is the most disturbing article I have yet read on Y2K. One of the participants in the discussion forum below, DD Reed, is a consultant to the oil industry with over 30 years experience. She sees widespread problems for domestic oil production because of embedded chip problems. Her OPTIMISTIC forecast is for a 55% drop in domestic production. Other analysts have stated that overseas oil production problems are also severe. Add to these estimates likely embedded chip problems with shipping, pipelines, and refineries, and the prospects are dim at best. With even a 20-30% drop in oil availability, the economy could be stopped dead in its tracks.

I have seen several other insider comments from people in the oil industry that point to the same situation. Other industries are also in serious trouble. The government made the decision, two years ago or so, that if everyone tried to prepare for Y2K there would not be enough food and other supplies to go around. In addition, they were afraid of bank runs and a stock market collapse. What they decided to do was to aggressively deny the problem. Thus all the happy face announcements that everything is going to be fine. There are plenty of indications that the government on all levels and major corporations are making contingency plans for drastic circumstances. They have decided that you are not entitled to do the same. Believe them at your peril.

At this point in time, you should be doing two things if you havent already. 1) Learn about Y2K as quickly as you can. 2) Make all the preparations you can. This means alternative sources of food, water, heat, light, communications, prescriptions and medical supplies, etc. I will be sending out in the next few days sources of information for both of these things. In the meantime, for information on Y2K go to www.garynorth.com, and www.y2kchaos.com. For preparations go to www.cassandraproject.org., see especially the Individual Preparations for Y2K category. See the y2kchaos site for preparations also, it has both.

The third thing to do is to send these READ ME! postings to as many of your friends as you can, both e-mail and hard copy. Give them to your church members. Pass them out at work. If your friends are not prepared, you are not either. The fourth thing is to pray like you have never prayed in your life for individual guidance and for mercy on us all. You have no idea how bad its going to be.

I have spent hundreds of hours over the last year studying this subject. I know personally over one hundred people all over the country who have done the same. Almost all agree that the disruptions are going to be severe. You owe it to yourself and your family to get educated as quickly as possible so you can make your own informed decisions. There is not much time left.

Please give me any feedback you wish on this and the other postings I will send, and let me know what you are doing. Feedback will get you more.

This is from the Yourdon bulletin board (www.yourdon.com).

Alan

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OIL CHAT

greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread

Date: Fri, 29 Oct 1999 17:18:55 -0700 From: "Rich" Subject: Oil Chat - very long post

This is an edited version of the chat Jon Hylands participated in Oct 26 regarding Y2K and Oil. It's still very long but worth the read. There is real difficulty getting to read or download from the original URL but here it is in text form. Understand I did the best I could to keep out the noise while maintaining the signal but some may argue what's what. If you print this out in 12 point Times New Roman it should come to 12 pages. If you don't get the bejeebers scared out of you from this, you must already be living a self sufficient life in the wilderness. Jon Hylands has had private conversations with DD and can vouch that she is for real. A private conversation I had with Greg Caton (who had a two hour phone conversation with her last night) agrees with this. Read it and weep.

Rich _______

(Allaha) DD, tell us about your background.

(DD1stLight) I am a top problem solver/facilitator in the oil/gas industry so have a broader picture than most in my industry. Have been working with some large independents (none of the 'public' companies will admit or do much) that are doing what they can to ensure as large an output as they can.

(Ryker) How's things in the oil industry?

(DD1stLight) Actually I am working on a job that is geared to propane, so it feels good to be doing things that will actually aid these problems. I am in Corpus Christi right now. None of the work I am doing is close enough to my home to help us out, but it will aid some.

(Ryker) I've heard conflicting reports on oil supply. One person says there's a 6 month supply stored up in US. Other reports I've heard say about 30 days. Which is right?

(DD1stLight) Neither. The 'strategic petroleum reserve' is a bit of a myth. It is very poor grade and the ability to pump it out and then refine it is very limited. There is about a 3 1/4 day supply of refined product available in the system in normal times.

(Hylands) Since the SPR is stored in caverns, I would suspect contamination problems.

(Ryker) So, the claim of 6 month supply stored up is WAY off base?

(DD1stLight) Well, it is MAYBE 6 months of very limited basic usage, but it would take a couple of years to get it out, transport, refine, etc. so it is basically a myth. We have deep problems some of which are not fixable  period

(Ryker) The reserve is not for public use, just for military, power plants, and distribution of essential goods?

(DD1stLight) Generally but even that would be improbable at best. After January, public use - even rationed - is out of the question given the short supply.

(Hylands) That would spiral into an economic collapse so fast it wouldn't be funny

(Ryker) I know... Think we're headed for that anyway...

(DD1stLight) I see absolutely no way that economy will not fall very flat on its face. Remember, that at the very worst in the 70's "oil crisis" we were dealing with a 7% reduction in availability. I will be jumping up and down if my industry can supply 45% of today's refined product, (and remember that is only about 40% at best of our daily usage at present) (jcollins) How would this affect the local production of oil? Booming times for local crude?

(DD1stLight) Local crude is in deep trouble, problems down hole not possible to fix, then have to get to refineries (which are band-aided to pieces as it is) then distribution etc. But some of the biggest problems are that we have few 1 for 1 replacement chips. So we have to re-blueprint DAB's etc. and that takes many long months most times

(Ryker) And chip plants are overseas which involves other problems (y2kworried) So, it sounds like it will take a long time to get oil production back.

(DD1stLight) That's right. There are no quick fixes for lots of things

(Hylands) If it takes more than a few weeks to get it back, I don't think it's going to happen at all

(DD1stLight) Lots of power companies are stocking 2 to 4 weeks of fuel so we don't expect most problems to become critical until 3rd week of January. For the first time in my life I find myself agreeing with the Dept of Defense. They are figuring contingencies on 30% availability of today's supply of oil and gas.

(Hylands) Susie, any new news on the Fed Reserve dude?

(susie0884) The guy, who retired from the Fed, was planning to spend the winter in the Northern mountains. Will be there before Nov. and to get out of DC where he is presently. Who goes to MT or ID for the winter?

(DD1stLight) People for the most part are so terrified of it crashing that they will and are doing lots in hopes they can keep it afloat etc. Remember that half of all American households are invested in the stock market or commodities and most of them are hip deep in debt to boot. Amazing the number who have taken out home equity loans and used all or part to invest in the market. Scary

(GregCaton) I have been getting reports this week about likely disruptions in oil supply, mostly foreign. I got a call this morning from a good friend in San Antonio who has a business associate (retired full-bird colonel from Navy) who has been overseas recently and confirms that very little remediation is being done where it needs to be in oil.

(DD1stLight) Well, foreign has big troubles but not much worse than our own, I am sorry to say

(TymeNTide) My company in Alabama has about 1000 employees, in my case. not more than 10 compliant computers in the entire biz..... still "working on it".....

(DD1stLight) sounds about right from what I am getting from buddies who arestill overseas (most of which have come on home already). The best we can figure is 26% to 34% of today's availability, sorry wish it was better news.If oil production is over 40% I will be dancing in the street. I am looking for a minimum 60% drop in availability. Anyone want to hear a true story?

(Hylands) Sure, DD1

(DD1stLight) The 3rd week of July last year Mobil Oil got their 'analysis' for remediation. It was $460 Million + and over 3 1/2 years. They came back 2 weeks later and asked for a new analysis with differing base criteria. About 6 weeks later they did a 'merger' with Exxon, remember? 11 majors have since done similar things and the number of filings to reorganize into limited liability companies and partnerships is amazing. The majors are joining and the front companies will fold under and the back up companies will reestablish when they can. Why would an industry let itself start the big problems now when they can cash in for however many months they can? Like Exxon front, Mobil back etc. The back up companies are taking the cash and will start again under new names when they can.

(GregCaton) Is this to avoid the effects of litigation? Distinguish between front and back companies.

(Dean--DuhMoyn) Do they think deflation will cause all prices to drop, so a long is a big gamble?

(DD1stLight) To take a "long" you have to figure there will be enough to go around somehow. This move is for litigation and the surety that they will fail on supply contracts. Remember they have had experience at being made the "bad-guy" to the American public. They learned well.

(GregCaton) But with something like this, no one can believe that there is a basis to single out oil companies and make them a whipping boy. Want a whipping boy for Y2K? Microsoft is a far more likely candidate. From asupply / demand situation... what is the basis for thinking that there will be a deflation in oil anytime soon?

(DD1stLight) Supply has deep problems. Our refineries are some of the oldest and nastiest there are and we have been unable to build new ones in this country for many years now. They are band-aided to the max now. Remediation for most is next to impossible. It is MUCH cheaper to build new when they can.

(GregCaton) Yes, DD, but you are assuming that the laws of supply and demand will go out the window

(DD1stLight) Nope, supply and demand are basic but when the supply falls so far below even the minimal demand, people will get very angry. We had this situation in the past.

(Hylands) So, does the govt know this, or are the oil companies lying to them?

(DD1stLight) Read the Senate 100 day Y2K report, go to the utilities section. http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=001eAu and look at the part about oil/gas, and pay close attention to how they got their numbers

(GregCaton) Explain.

(DD1stLight) 8000+ letters sent to producers and only got back 450+ answers. Not many, so they just decided to use the 66 companies that they saw as most major and still their scenarios are a bit daunting. They tried to put a good face on it even then. (underpaid) I'm working on a holiday story - "The Glitch that stole Christmas" All through the house, not a creature was stirring, not even a two button mouse!

(GregCaton) When will the problem get out of control?

(DD1stLight) Expecting things to get sticky big time around the 3rd week of January.

(GregCaton) Is there a probability curve here? Or are you speaking with surety?

(DD1stLight) I have spent a good bit of time for the last 10 years gathering solid date, good math from my industry where possible. I like good numbers and want them to be verifiable in at least 2 ways; 3 is better. I would say this is real. The best I can come up with is 26 to 34% of current supply, optimistically 46%

(GregCaton) Is there anyone here who doesn't believe that if we had 60% drop in oil for 30 days, than we wouldn't be (a la Howard Ruff) at 2,000 Dow in 2000 ?

(Hylands) If it lasts for 30 days, it's all over

(Ryker`) Greg, if we have a 60% drop in oil for 30 days, the stock market won't be around any more...

(GregCaton) it will be around. Dormant, perhaps. Even under 2,000 points... but still around

(DD1stLight) I am trying to be optimistic, am hoping for 40% availability of today's supplies being available (underpaid) Loss of oil flow - candling of pipelines - problems with tankers/ports - VERRRRY SERIOUS - End of economy PERIOD.

(Tulladew) Gasoline might be expensive, even if rationed

(DD1stLight) Rationed assumes there will be enough for basic services with some left over. These amounts are not sufficient for basic services etc. I expect nationalization at the least

(DD1stLight) Can anyone here think of a single industry that is not wholly or secondarily reliant upon the oil/gas industry? Refineries take several years to build even at critical speed, pipelines the same, wells take a while too etc.

(GregCaton) How long have you held these convictions, as to percentages, time line, etc ?

(DD1stLight) Greg, the first time I jumped up and down in a corporate board room about Y2K was in 1976. I started gathering serious data about 8 years ago as I saw little being done still about my industry specifically

(GregCaton) What caused you to be so concerned in 76 ?

(DD1stLight) I needed to input 1800's info into the computers and could not.

(GregCaton) 1800's info? Why?

(DD1stLight) My industry pays people who own the land/mineral interests according to the % the own so is very important, also for getting the rights by lease to explore for oil/gas etc. Deeds and court suits from the 1800's are many times still in effect today.

(Ryker`) Can I try to summarize to see if I got all this? You're saying that there may be a 60% drop in oil supply that will become evident about the 3rd week of January. And this drop may last years due to Y2K computer problems at everything from oil wells to refineries?

(DD1stLight) Yes. Add to that problems when/if a system that is down-hole is noncompliant. A system that is physically located several hundred or thousand feet below the surface and is totally not accessible, and therefore cannot easily be fixed.

(GregCaton) Were they really that stupid ????

(DD1stLight) give him a cigar, yes. Redrill IF you can, but it is not possible to redrill many and get production again.

(Hylands) Greg, some of the natural gas wells up here in Alberta are dug 20,000 feet down

(GregCaton) DD1 ) And these deep wells do NOT have manual overrides?

(DD1stLight) not stupid, maybe ignorant - scariest thing i am seeing is some of the simplified assumptions that so many are making in remediation analysis

(Ryker`) It comes down to short term profits. If they can drill the well and start making money immediately, that's all they were worried about... Didn't want to spend time to redesign systems to make them compliant for an event that was years in the future...

(DD1stLight) EPA requires that the wells have RAMS - that is a great big snap valve that closes shut if there is a problem with the well that would/could make it unsafe/blowout etc. EPA required immediate response and actually very few people ever really gave it much thought

(GregCaton) I know this will sound eerie. There is talk about the incredible accuracy of the Mayan calendar, and how the year 2012 is supposed to be the end of a technical area. Maybe it's coming 12 years early. If even half of this about oil is true... you're painting a picture of Gary North / Paul Milne as dim-witted pollys. This is the most incredible thing that anyone has told me in the year and a half I've been looking into Y2K.

(y2kworried) The implications are staggering, our whole economy is based on automobile and truck transportation, and planes, and ships, and locomotives

(DD1stLight) Even hydro electric is totally reliant upon large amounts of very specific lubricant

(GregCaton) How many in upper management fully grasp / accept what you are now saying ?

(DD1stLight) Some. Most are like most people. They really do not want tolook at the possibilities. Can't say I blame them. It's not like one guy knows the ins and outs of how his product is drilled, pumped, refined, distributed, etc.

(GregCaton) Is there the slightest doubt in your mind that this all equates to a depression more serious than the 30's ?

(DD1stLight) NONE. I am in a very unique position in that I am consultant to most majors and many minors and have been around so long I can get info

(GregCaton) How is it then that you would have a broad interdisciplinary overview... but few others in the board room would ???

(DD1stLight) Because I am a mean old lady who is more likely to kick someone on IT than kiss IT so I work strictly on contract. Also have more degrees than carter has pills and am known in the industry. I do everything from facilitate the sales of major companies to figure out how to get around a bottleneck at a refinery.

(GregCaton) Alright. (WIPING THE BLACKBOARD CLEAN..) Let's start fresh and talk about how this impacts the Inflation vs. Deflation arguments. Where do you stand on this issue? Inflationary Depression? Deflationary Depression? A complete economic collapse?

(DD1stLight) most of the old stripper wells have been plugged, few left really but no the refineries are in worse shape than the wells

(Hylands) No commercial airplanes. Think about that for a minute.

(DD1stLight) we need to remember that $ is only worth anything because we all agree it is, when we stop agreeing we call it inflation or deflation. Most workers I talk to think it is only this plant that has problems. Another example of ostrich syndrome which is very understandable from a psychological viewpoint.

(GregCaton) DD .... feeling like we really ARE the first people in the first Titanic lifeboat.

(Hylands) Exactly my point.

(GregCaton) Amazing when you consider than 99.8% of the people in society reading this would think we're all psychotic.

(Hylands) Airplanes, trains, transport trucks, ships, electrical generation, you name it

(GregCaton) How much have the electric utilities done to stockpile gas, oil, coal, etc. (DD1stLight) best I can find is that most are attempting to store an average of 3 weeks supply Some, like TU in east Texas, have their own coal mines and rails to them, but only have the ability to store about 4 weeks of lubricants

(GregCaton) So then the SHTF in late January?

(DD1stLight) Yes

(y2kworried) What is even more important: that oil is the basis of food production

(Hylands) oil is the basis of electricity, thus it is the basis for just about everything

(GregCaton) I know this will sound eerie ) There is a lot of talk now about the incredible accuracy of the Mayan calendar, and how the year 2012 is supposed to be the end of a technical area. Maybe it's coming 12 years early. If even half of this about oil is true... you're painting a picture of Gary North / Paul Milne as dim-witted pollys.

(DD1stLight) most fertilizer is made from natural gas condensates. I have looked and looked for years now at every industry i can see becoming more dependant upon oil/gas and computers. NOT less. Tenneco and Chevron actually came clean on their last year's Q10 third quarter reports and stated they expect to have about 30% production available after Y2K

(DD1stLight) i keep hearing about the 'national grid system' which is a joke. texas has its own grid NO major AC connection to any other and only 2 main DC's for ballast

(Hylands) There are four main grids in North America

(Alwyn) San Onofre Nuclear Plant here sounded the all clear today...forty people, three years, $10 million and repaired or replaced over 300 components./

(DD1stLight) The Texas grid is totally integrated, all have it or none have it, not possible to 'island' anywhere in Texas

(GregCaton) DD1 ) So... let's define what "10" means. In your mind will this cause the collapse of the U.S. Government as we know it?

(DD1stLight) government as we now know it, may well be. Some form of government will remain though. It is why the very best minds I know have already stopped taking contracts or if employee just did not show up for work one day and left no forwarding address

(Ryker`) Greg? Have you risen your estimate to a 10 now?

(GregCaton) If you live in Watts... it will be a 10. But if you're a self-sufficient farmer living in Colorado... it might be a 3 as far as you're concerned. Don't know.

(DD1stLight) You got it, Greg. That's why I opt for 8.5 is a mean

(Hylands) Greg, how many people do you think depend on electricity, even rural farmers?

(GregCaton) Hylands - There are some farmers who have only had power since the '30's... I think that farmers, with or without oil, are steeped in a tradition of hardship and "having to make due". "A country boy can survive..."

(Hylands) Exactly, how many? I'll bet it's not many. Now, we're pretty smart, so we'll figure a lot of stuff out, but still...

(Hylands) How many farms can irrigate their crops with a hand well pump? How many farmers today can grow their crops without bought seeds, fertilizer, diesel tractors, etc?

(DD1stLight) Few, and mules and oxen are a lost art to most and not available or trained etc. not like a tractor you can't just build one you have to grow it . And those horses are for the most part "pets" LOL

(Alwyn) They are pets, in the sense that they don't pull a plow. But, they are a resource.

(GregCaton) I'd say enough farms for about 10% of the people to make it.

(Hylands) Greg, that's about my figure, 10% . Yep, can you be sustainable with water, food, heat, and sanitation. People, without clean drinking water, will die

(GregCaton) So that's the task: be one out of the ten. (New slogan for the Marine Corp): "We're looking for a few good one out of tens!"

(DD1stLight) for goodness sakes folks DO NOT just take my word for all this, do your own research, there is plenty available on the net for you tosee, just go to the real sites etc., check out the defense departments contingency plan figures for oil/gas. I think the biggest killers besides cholera, typhus, thyphoid and diptheria and dysentery. Will be pure old culture shock

(Hylands) This is why I think a 2 year food supply is a wise idea

(DD1stLight) I have to thank Hylander for inviting me to this room, it is good to be able to talk to people who have more than 2 brain cells to rub together and play with and are not caught into immobility by fear etc. * Hylands takes a bow

END OF PART 1 ----------------------------------------------------------------------------------------------------

-- Alan Jones (alandonnaj@aol.com), November 16, 1999