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DrumBeat: November 7, 2008
Posted by Leanan on November 7, 2008 - 9:22am
Barclays Capital Oil Sketches Monthly: Burning violins (PDF)
Like many other markets across commodities and elsewhere, the oil market is currently in a state of significant disequilibrium. Over a short period of time, the market has had to price in a very sharp reduction in expectations for global GDP growth next year in conditions of falling volumes, with trading activity being further subject to a sharp revaluation in the relative pricing of risk and liquidity. All in all, it is perhaps no great surprise that such a backdrop should lead to some significant short-run undershooting of prices. However, there are two other key features of the current price correction that seem to jar with any idea that prices are returning to some low business-as-usual level.The first new feature is the speed with which the supply side has made its initial reaction to falling prices and the repricing of liquidity. A sizeable chunk of incremental activity has been frozen, some significant projects have been delayed very early in the down cycle, and generally throughout the oil patch there is the sound of moving parts slowing down. The speed with which the supply side has screamed in pain this time is dramatically faster than in previous price cycles. Even in the 1998 to 1999 swing down to $10 per barrel there was less immediate and significant response in terms of the slowing of future projects. Likewise, soon after the 1986 crash, activity was buoyed by the combination of lower taxes, immediate application of technology and cost saving and new frontiers for development. This time industry costs will fall simply because there is less activity, but the previous scope for huge savings through greater efficiency is more restricted, and the new frontiers seem more limited and more challenging. In all, there are a lot of further reasons why cash is king for the oil industry right now.
EU global warming limit may not be possible - IEA
LONDON (Reuters) - A European Union target to limit warming of the planet to no more than 2 degrees Celsius may not be technically achievable, the International Energy Agency said in a report to be published next week."Even leaving aside any debate about the political feasibility ... it is uncertain whether the scale of the transformation envisaged is even technically achievable, as the scenario assumes broad development of technologies that have not yet been proven," said the IEA's World Energy Outlook. That analysis referred to a target to limit global warming to no more than 2 degrees.
The implication is that the world may have to accept higher warming limits than targeted at present, for example by the EU since 1996, and prepare for effects which scientists say will include more droughts, floods and rising seas.
Shell Canada president wants better co-ordination on climate change
Governments across the country need to get their act together on policies to address climate change, the president of one of Canada's major oil companies says.Brian Straub, president of Shell Canada, said Thursday that voluntary efforts to reduce greenhouse gas emission should be replaced by coherent and consistent government-mandated rules.
BP Withdraws From Carbon-Capture Project
LONDON -- The United Kingdom's hopes of becoming a world leader in the battle against global warming suffered a potential setback when British oil major BP PLC said it had pulled out of a competition to design the country's first carbon capture and storage project.The announcement came as BP said it would be concentrating its wind investments in the U.S., effectively exiting the U.K. wind power market.
U.S. Decides One Nuclear Dump Is Enough
WASHINGTON — The Bush administration will recommend that Congress give up the idea of a second nuclear waste dump, dropping a grand bargain struck in the 1980s, and instead vote to enlarge the repository now proposed in Nevada, the director of the Energy Department’s civilian radioactive waste management program said on Thursday.The director, Edward F. Sproat III, who is in charge of work on the proposed repository at Yucca Mountain, 100 miles northwest of Las Vegas, said that the process of trying to open one repository had been so slow and expensive that this was not a good time to start looking for another.
Starving and penniless, Ethiopian farmers rue biofuel choice
SODO, Ethiopia (AFP) — With a slight reeling in his gait, Ashenafi Chote ventures into his small plot of land and shakes his head, his eyes full of regret: "I made a mistake".For the last 10 years, his plot in southern Ethiopia had kept his family of four alive by supplying enough food to eat and even surplus to sell, in a region often ravaged by drought and food shortages.
But since swapping from a subsistence to a biofuel crop several months ago, his once treasured source of income has dried up and, worse still, he and his family are now dependent on relief from aid agencies.
"I used to get four quintals (100 kilograms, 220 pounds) of maize from my land from every harvest and earn more than 2,400 birr (240 dollars). But now, I have lost my precious source," the 25-year-old father of two said.
Brazil sees subsalt oil reserves at 80 bln boe
RIO DE JANEIRO (Reuters) - Brazil's subsalt oil reserves already under concession could reach as much as 80 billion barrels of oil equivalent, said the head of Brazil's National Petroleum Agency (ANP), Haroldo Lima, on Friday."Recently, prognosis indicate at least 50 billion (boe) and a maximum... of 70, 80 billion barrels," he told reporters, adding that this would include only licensed blocks.
Asked if reserves could surpass 100 billion boe if unlicensed areas were included, he said: "Yes, they could."
Poor gasoline demand will see refiners cut, close
LONDON (Reuters) - A golden age of profits for western oil refining companies has ended and many are likely to face cutbacks and even possible closures, analysts said on Friday.Falling demand for gasoline globally has come just as more refinery capacity comes on stream, piling on the pressure.
The global economic crisis allied with record high oil prices earlier this year have slashed gasoline demand and curbed future growth projections, forcing refining margins for motor fuel deep into negative territory.
European refiners such as Total and Petroplus have already started planning to cut back runs on unprofitable products like gasoline and its blending component naphtha. Analysts said it could be the beginning of a longer-term trend and margins could collapse over the next 2 years.
NEW YORK (CNNMoney.com) -- General Motors shook an already embattled auto industry Friday as it reported a huge loss that was much worse than expected and warned it is in danger of running out of cash in the coming months.GM, the nation's largest automaker, reported it lost $4.2 billion, or $7.35 a share, excluding special items. That's up from the loss $1.6 billion or $2.86 a share it reported a year earlier and was far worse than the forecast of analysts surveyed by earnings tracker Thomson Reuters, which had forecast a loss of $3.70 a share.
But the most shocking news came in its statements about its cash position. GM said it had burned through $6.9 billion during the quarter and warned that it "will approach the minimum amount necessary to operate its business" during the current quarter.
Record number of oil companies bid for Norwegian offshore licenses
OSLO, Norway (AP) - Norway said the number of oil companies bidding for exploration licenses off its coasts soared to a record 46 in its latest licensing round, more than twice the 19 bids received in the previous round in 2005.
New breed of inspector goes after energy leaks
Traditional home inspectors check to see if everything works in a house, with an emphasis on safety. But eco-inspectors check energy efficiency and provide reports on how much cost savings upgrades will offer. “The report is rating your energy usage, not your lifestyle,” said Trujillo.The number of eco-inspectors is rising nationwide, as homeowners search for ways to save.
UBS Says Mexico May Have Hedged 90% of Oil Exports for 2009
(Bloomberg) -- Mexico, the third-largest supplier of crude to the U.S., may have hedged 90 percent of its 2009 oil exports at $70 a barrel to protect its budget against falling prices, UBS AG said.Mexico, which funds about 40 percent of its budget with oil revenue, hedged an estimated 432 million barrels, Tomas Lajous, an analyst at UBS in Mexico City, wrote today in a note to clients. Oil has fallen more than 57 percent since reaching a record $147.27 a barrel on July 11.
Brazil's Hopes for Home-Grown Offshore Rigs Hits Credit Snag
The fledgling Brazilian deepwater rig industry is running up against the realities of the tight credit market. Several of the contract winners haven't been able to borrow money needed to finish construction on the rigs they promised, which can cost more than $600 million each. Should their struggles continue, Petrobras will be forced into a difficult choice. The rising energy giant would need to add billions of dollars to a long-term budget already in jeopardy over concerns about the future availability of credit to ensure the rigs get built on time, or risk delaying Santos Basin production for lack of equipment. With Brazil hoping to increase production by 2 million barrels of oil equivalent a day by 2015, Petrobras' options may be limited.
Pemex can 'triple' drilling program says official
Petroleos Mexicanos could triple the amount of its exploratory drilling to an average of 1,800 wells/year from the current 600 as the result of new contracting arrangements approved under reform legislation, according to a senior company official.
Calderon claims Mexico will be an oil power again
Mexican President Felipe Calderon recently affirmed that, with the energy reform “everybody wins,” because all Mexicans reached an agreement when the world economy is so adverse; and with all these changes Mexico will regain its rightful position as a petroleum power.
Economic Turmoil Unlikely to Affect Saudia Aramco's Mega-Projects
The current global economic downturn will not impede Saudi Aramco mega-projects, Khalid G. Al-Buainain told a group of 300 energy industry professionals.In fact, a slowdown may actually have benefits from the standpoint of easing tight construction supplies.
Oil Service Firms Warn of Dangers of Lower Prices
Oil and gas service contractors have warned big oil firms that using the financial crisis to force down contract prices could risk future project delays and cause supply bottlenecks.The global economic slowdown and the falling price of oil and other commodities have turned the tide against the service industry that ramped up charges as oil rallied to its July peak of $147. Since then, the price has fallen over $80 to around $61.
Ghana: Artificial Shortage of Fuel?
Following persistent calls on the government to review the prices of petroleum products, due to the slump in world prices of the commodity, the former decided to reduce the ex-pump price of petrol, diesel and kerosene among other crude oil products, last week Friday.Unfortunately, the downward review of the prices did not go down well with those who retail the commodity. Since Friday, some of the fuel stations have refused to sell petrol to consumers, claiming that they have run out of stock.
Sri Lanka: Tough actions against Sri Lankan fuel station owners who sell for old prices
Colombo: Minister of Petroleum and Petroleum Development A.H.M. Fowzie said that he will take tough action against the petrol station owners who are not selling fuel at the reduced prices.Speaking at a special press briefing in Colombo this morning the Minister pointed out that all the outlets must reduce the fuel prices with effect from mid night yesterday.
New Zealand: Gas-fired power plants provide fuel for heated debate
The third dry winter in a decade has thrown the spotlight on the security of electricity supply this election, where the key difference between the parties is where they stand on allowing new gas-fired power stations.
Zero immigration and sustainable populations
This is not a report by some racist group that wants to limit immigration to keep Australia white. This is not a report by some deep green environmental group that wants everybody to live in communes and wear jute shirts. This is the Productivity Commission. The Productivity Commission - primarily an economic research organisation.If the economic case only benefits the capital owners and makes the average citizen worse off economically, without even considering environmental and sustainability impacts, why is it being done?
The Last Recession? Or Our Best Opportunity for Hope?
As the drama of the bursting bubble of Wall St. gives way to a slower, but steady and painful, economic decline, the first and most important question we should ask is "Should we try to blow another bubble, or should we reject bubble culture values for something entirely different?"
Why Obama’s ‘Green Jobs’ Plan Won’t Work
If Obama’s energy promises rely on questionable science, they rely on even more questionable economics. We are to believe that replacing conventional energy sources (especially coal) with renewables (especially wind) will create five million new “green jobs.” The hope is that armies of workers will be enlisted to build tens of thousands of windmills; to manufacture and deploy solar-power installations; to harvest, transport, and process huge amounts of biofuel feedstock; and to string the power lines that will allow the U.S. power grid to incorporate a major expansion of intermittent energy.Unfortunately, the idea of government “job creation” is a classic example of the broken window fallacy, which was explained by French economist Frédéric Bastiat way back in 1850. It is discouraging to think that, nearly 160 years later, politicians still do not understood Bastiat’s basic economic insight.
Nicklaus Golf Courses Keep Green Drinking Spanish Farms' Water
(Bloomberg) -- Manuel Vicente Piriz has turned farming on its head.After tilling corn for 20 years on the banks of the Tagus River in central Spain, he didn't plant this spring. Piriz instead sold his water to arid towns in the south for 216,000 euros ($275,000), more than he would have earned on the crop.
The hottest places for green jobs in the U.S.
Although the home of the 10-gallon hat is hardly a modern ecotopia, Houston has the third-largest green job market in the country. Like it or not, the green economy is not about making the world a better place — it's about making money on making the world a better place. And Houston, which encompasses two of the most polluted counties in the country and leads the nation in carbon dioxide emissions, is good at making money off of energy. One reason the wind power sector has grown so rapidly in Texas is that the state's oil industry has decades of experience building big projects like wind farms.
David Suzuki: Renewable energy requires strength of will
Energy underpins everything we do. Human societies have become increasingly complex, requiring ever larger-scale sources of continuous energy. Now, energy fuels not only our activities but our economies as well. If we don’t choose our energy sources wisely, we can do more harm than good.Non-renewable energy sources such as fossil and nuclear fuels are not sustainable and have also taught us that technological advances often come at great cost. These fuels can never be a long-term solution because they will run out. They also create emissions that pollute our air, water, and soil, and contribute to global warming or long-term radioactive-waste problems.
National oil firms warn $60 oil threatens supplies
BEIJING (Reuters) - The world's biggest state-owned oil companies are weathering the global financial crisis and the dive in crude prices for now, top executives said on Friday, but they warned that $60 oil could soon begin to stymie their investment.Oil majors and public energy firms that have ventured into higher-cost frontiers to grow their production are already beginning to pull back on projects as credit grows scarce and oil's steep retreat in recent months threatens their profits.
But for now national oil firms -- backed by political will and, in many cases, government coffers overflowing after a five-year oil boom -- are holding the line, even though they say prices are nearing unprofitable levels.
It's an unsettled time for energy producers
A new president, a weak economy and volatile oil markets give oil and natural gas producers some real challenges as they consider new and expensive projects in an uncertain environment, a retired top Chevron executive said Thursday.
CMS Cameron McKenna: Crisis Hinders Energy Investments
The global financial crisis has also affected the energy market because of price volatility and the limitations on investment lending. Ben Holland, a Partner with CMS Cameron McKenna - London told a seminar organized in partnership with the Associated Energy Suppliers in Romania (AFEER) that the European energy market had already had problems because of the crisis. Companies are no longer sure of the banks" capacity to ensure financing of investments in production capacity planned for the following years. Investments in the energy business are highly expensive, require substantial implementation time and can be recovered over even greater period. The volatility of the international price of oil has impacted also the natural gas market, the electricity market and the coal market, rendering producers incapable of calculating their profit rates.
Energy agency sounds warnings on oil
NEW YORK: In a stark warning, the International Energy Agency said Thursday that the world's energy systems would need extensive new investment to meet growing demand, while warning at the same time that urgent action was required to curb carbon emissions that cause global warming.
Help Wanted: Data Center Energy Experts
Data center energy consumption is attracting all sorts of unwanted attention these days, but the expertise necessary to to make these facilities more energy efficient appears to be in very short supply.Within the data center itself, capital expenditures are increasing so quickly that they are threatening the viability of information technology. Outside the corporate walls, government interest is rising because IT is adding an estimated 1 million servers each year. As a result, two new major power plants need to be built annually to handle the growing number of servers. But the plants aren't getting built, and this is raising some very serious national energy-security concerns.
Blackouts fuel protests in Dominican Republic
SANTO DOMINGO, Dominican Republic (AP) Protests over an energy crisis are growing violent across the Dominican Republic as residents face nearly 24-hour blackouts that have snarled traffic and forced businesses to close.Power companies on average are supplying less than half of the 1,960 megawatts the country demands daily.
Food pantries mobilize as ranks of hungry grow
As the economy falters and food prices seemingly rise as fast as the unemployment rolls, the face of hunger is evolving.When Jennifer McLean, vice president of operations of New York's City Harvest, sees those lining up for help, she notices the schoolteacher standing in line at the food pantry. The cab driver calling his church for help. And more children whose families do not have enough to eat.
"The third and fourth ripple of a Lehman Bros. closing is the dry cleaner, the car service employee … who may have never turned to a soup kitchen or food pantry (before) who may turn to it for the first time in their lives," McLean says.
Call for car makers stay in green lane
THE current financial crunch should not slow car makers' investment in fuel efficient and eco-friendly vehicles, which are key for the sustained development of the auto industry, analysts said at an auto forum in Shanghai yesterday.
Forget Corn: Mushrooms May Hold Key to Energy Crisis
(Bloomberg) -- A solution to the world's energy problems may lie in a Chinese mushroom growing in Novozymes A/S laboratories.The Danish company's scientists in China, Brazil, Denmark and the U.S. are testing mushrooms and lichen to find one that will turn corn cobs and sugarcane stalks into biofuel. An affordable alternative to gasoline made from plant waste would end concerns that global hunger for energy is driving up food prices worldwide.
Chinese cash in on new land opportunities
As part of a sweeping land reform package announced last month, Mo and 700 million other Chinese farmers can now pay to farm other people's land, or consolidate their plots into larger, more productive operations.That was a big step toward undoing decades of Communist laws that forbid private land ownership. Technically, land is still owned by a collective, such as a village. But Mo says the reform will allow him and his neighbors to combine their land into one operation — and lead better lives as a result.
Energy advice for President-elect Barack Obama
I’ve been covering energy related issues for a long time and I know most of the immediate problems we have now are solely political. We shouldn’t be having an energy crisis, failing economy, or facing severe climate problems. In fact the solutions to all three are connected to a hand full of simple solutions that could be implemented by simply drawing attention to them. We don’t have to actually pass any new laws or create expensive governmental institutions to force them out of the dark closets on Capitol Hill they’re hidden in. All we need is to know what they are so the people who stand between our understanding the truth about their possibilities become transparent and vulnerable to the winds of change our new President promises.
Europe's Arctic adventure - The new cold rush for resources
With recent months in particular seeing both a cascade of truly alarming news on how fast the Arctic is changing and pronouncements from the European Union and other circumpolar powers on plans for exploitation of newly accessible resources, the EUobserver decided to visit Europe's patch of the Arctic, the northernmost tip of mainland Norway - still outside the EU, but very much Brussels' advance guard up in the high north - to find out the reality behind the headlines about the coming "scramble for the Arctic", and look at all sides in the debate over the Arctic's future.
Al Gore group urges Obama to create U.S. power grid
WASHINGTON (Reuters) - Al Gore's Alliance for Climate Protection has some environmental advice for the incoming Obama administration: focus on energy efficiency and renewable resources, and create a unified U.S. power grid.On Thursday, the group Gore founded rolled out a new media campaign to push for immediate investments in three energy areas it maintains would help meet Gore's previously announced challenge to produce 100 percent clean electricity in the United States in a decade.
...The plan advocates immediate investment in energy efficiency, renewable power generation -- including public investment in wind, solar and geothermal technology -- and the creation of a unified national smart grid.
"Modernize transmission infrastructure so that clean electricity generated anywhere in America can power homes and businesses across the nation," the alliance said in a statement.
The alliance favors "national electricity 'interstates' that move power quickly and cheaply to where it needs to be (and) local smart grids that buy and sell power from households and support clean plug-in cars."
Oil rises, but analysts see $50 coming
SINGAPORE (AP) -- Oil prices rose in Asia after a two-day plunge, but they were vulnerable to another steep fall as evidence of a severe U.S. recession continues to mount.Light, sweet crude for December delivery was up $1.50 cents at $62.27 a barrel in electronic trading on the New York Mercantile Exchange by late afternoon in Singapore. Oil prices overnight fell $4.53 to settle at $60.77 after dropping $5.23 the previous day.
Oil Supplies Will Tighten And Prices Jump, IEA Warns
The world faces mounting uncertainty and escalating costs on the energy front in the years ahead, as companies scramble to find new pockets of oil and squeeze more production from aging fields, the International Energy Agency says in a largely gloomy annual report.More investment will be needed in oil exploration, production and power generation, the IEA says in a report released on Thursday.
The agency says the recent slump in oil prices won't last and "current global trends in energy supply and consumption are patently unsustainable."
Energy agency forecasts oil reaching $200
Global oil production is set to sputter by 2010, with a lack of fresh investment and the depletion of oil fields likely to trigger another big spike in prices, the International Energy Agency said yesterday.In its 2008 World Energy Outlook, the Paris-based IEA predicted a 45 per cent increase in global primary energy demand by 2030, with about half of the total coming from China and India. But despite this surging demand, it said that production of crude oil would struggle “as almost all the additional capacity from new fields is offset by declines at existing fields”.
Energy agency sees oil price rising to $200 a barrel
The summary, published yesterday, to the IEA's annual World Energy Outlook says the rise in oil prices is largely because companies will struggle to pump enough new oil to offset the production declines of the world's older fields. But the organisation refuses to accept that what is known as "peak oil" has yet been reached.
Lukoil to halve 2009 spending if oil low
Russia's second biggest oil producer Lukoil could halve its 2009 capital spending programme to $4 billion if the global oil price falls below $45, chief executive Vagit Alekperov said today.
Iran cuts oil output by 200,000 bpd
BEIJING (Reuters) - Iran has cut oil production by 200,000 barrels per day (bpd) from 4.04 million bpd, in line with an OPEC agreement to find ways to support declining crude prices, a director of the state oil company said on Friday."We are obeying the OPEC quota. We have cut by 200,000 bpd," Mohammad Ali Emadi, director of National Iranian Oil Co (NIOC), told Reuters in Beijing, where he is attending a forum of national oil companies.
Petrobras' Argentine Unit Income More Than Triples on Oil Price
(Bloomberg) -- Petrobras Energia Participaciones SA, the Argentine unit of Brazil's state-controlled oil company Petroleo Brasileiro SA, said third-quarter income more than tripled because of higher oil and gas prices.
Yemen: Armed tribesmen close 13 oil blocks in Mareb
A group of tribes in Mareb have by force closed a number of oil wells in province, local sources in Mareb said.The sources said that armed tribes locked Thursday 10 wells in Raidan block and three wells in Monkem block. They said ten security vehicles were immediately sent to unlock the wells.
Gunmen attack Nigerian army at Chevron oil facility
PORT HARCOURT, Nigeria (Reuters) - Gunmen in speedboats attacked the Nigerian military at an oil flow station operated by U.S. energy firm Chevron late on Thursday but the facility was not affected, the military said on Friday."Last night, some men in speedboats attacked our men at Robert-Kiri flow station. In the shoot-out there were fatalities. We lost one man, a naval personnel," said Lieutenant Colonel Sagir Musa, a military spokesman in the Niger Delta.
Sudan sets '09 oil production target at 600,000 bpd
BEIJING (Reuters) - Sudan has set its oil production target for 2009 at 600,000 barrels per day (bpd), an increase of 20 percent from 500,000 bpd this year, the country's mining and energy minister said on Friday.
Pickens Plan: Boon or Boondoggle?
The Pickens Plan, which oil billionaire T. Boone Pickens released in July 2008, has recently received a great deal of press and is the focus of a multi-pronged, multimillion dollar ad campaign. The plan aims to dramatically intensify wind energy production throughout the Great Plains corridor, and build out an electric grid to feed this power to urban centers. This part of the plan is vital to our urgent need for alternative, sustainable energy production. But the plan will only trade dependence on one fossil fuel for another instead of proving a viable solution to the peak oil crisis: one major piece of the Pickens Plan is to power cars with natural gas, which though cleaner than gasoline, still emits CO2, is finite, and exists in larger quantities outside of the United States. One important question we need to be asking is, How long will it be before we reach peak natural gas? Or worse, Have we already reached it?
There have been few reasons to smile at the pump lately, but Jim Corcoran was sporting a huge grin as he filled up his tank Thursday at the Hess station in Quakertown.“Happy days are here again,” the Sellersville resident said.
Why so happy? Gas prices at the station on West End and Park avenues had fallen overnight to a price not seen in about three years — $1.99 for a gallon of regular. It was the only station in Bucks County Thursday selling gas for below $2, according to AAA Mid-Atlantic.
By lunchtime, customers were waiting in lines three or more cars deep for their chance at the pumps.
NEW YORK (CNNMoney.com) -- Ford Motor reported a $3 billion operating loss in the latest quarter, and said Friday it would reduce staff and capital spending in order to preserve its dwindling cash....Ford's loss came to $1.31 a share, excluding special items, far worse than the penny a share loss it reported on that basis a year earlier. Analysts surveyed by earnings tracker Thomson Reuters had forecast a loss of 93 cents a share.
Chrysler cash drains away as crisis deepens: sources
DETROIT (Reuters) - Chrysler LLC is rapidly burning through cash and being driven to prepare for a possible break-up if it can't clinch a merger with General Motors Corp or get government funding needed to ride out the economic crisis, people with knowledge of the situation said.Without new funding or a wrenching restructuring, executives have raised concern about the automaker's ability to finance its operations from existing cash beyond the first half of 2009, said the sources, who were not authorized to discuss Chrysler's performance.
China tests its mettle in Syria
Solidifying the People's Republic of China's burgeoning relationships with the countries of the Middle East remains a top priority for Beijing. The impetus behind China's resurgent efforts to extend its influence within the Middle East stemmed from Beijing's pursuit of energy resources to sustain its rapidly expanding economy.
Africa: Powering Up the Continent's Economies
A poor neighbourhood in Cape Town, South Africa, in the shadow of a high-tension power line: Africa's poor need access to affordable, reliable electricity to improve their lives.People in Zanzibar danced in the streets in June to celebrate the resumption of power after a month-long blackout. Zanzibar, part of the United Republic of Tanzania, gets its electricity from the grid on the Tanzanian mainland, through underwater cables. The blackout occurred after cable lines supplying Zanzibar failed following a surge in demand. For a month, residents paid about $10 daily to fuel diesel generators for power. Small businesses requiring refrigeration or welding had to close because they could not afford the extra cost.
While Zanzibar has suffered the most prolonged recent blackout, its plight is not unique. In April 2008, the International Monetary Fund (IMF) reported that some 30 of the 48 countries in sub-Saharan Africa have "suffered acute energy crises" in recent years.
Eight nations warn EU over biofuel barriers
BRUSSELS (Reuters) - Eight developing nations warned the European Union on Thursday they could file a World Trade Organisation complaint over what they see as unfair barriers being raised against their biofuels.
"60 Minutes" crew attacked by angry Chinese
NEW YORK (Hollywood Reporter) – A "60 Minutes" crew including correspondent Scott Pelley were jumped by a group of Chinese men who were upset that cameras were investigating toxic waste at a recycling plant for computer and other electronic waste, CBS News disclosed Thursday.
The time is ripe to change the climate of fear
We can create green-collar jobs, cut fuel bills and boost small businesses if we reject science fiction and accept real science.
Scientists say peridotite rock can soak up CO2
NEW YORK (Reuters) – A rock found mostly in Oman can be harnessed to soak up the main greenhouse gas carbon dioxide at a rate that could help slow global warming, scientists say.When carbon dioxide comes in contact with the rock, peridotite, the gas is converted into solid minerals such as calcite.
Geologist Peter Kelemen and geochemist Juerg Matter said the naturally occurring process can be supercharged 1 million times to grow underground minerals that can permanently store 2 billion or more of the 30 billion tons of carbon dioxide emitted by human activity every year.
Climate tops meeting of religious leaders
Stockholm - Climate issues including how to tackle global warming were to top discussions at a gathering of some 30 religious leaders and policy-makers from various faiths of the world, Swedish Archbishop Anders Wejryd said Friday. The two-day meeting was to adopt a manifesto that contains "demands and commitments," Wejryd said of the envisaged document to be signed November 28 in Uppsala, north of Stockholm.
92% - Brazil Most Concerned about Global Warming
Majorities in 14 of 24 countries rate global warming as a very serious problem, with Brazil (92% say it is a serious problem) the most concerned of any country surveyed. Anxiety about global warming in America (42%) is among the lowest registered; only in Jordan, Egypt and China do smaller numbers call it a serious problem. When asked which country is "hurting the world’s environment the most," majorities or pluralities in most countries surveyed cite the United States. But people are increasingly pointing fingers at China as well.
Rich nations should ditch 'unsustainable' lifestyles: China's Wen
BEIJING (AFP) – Chinese Premier Wen Jiabao and a top UN official urged industrialised nations Friday to alter their lifestyles and investment modes as part of efforts to tackle global warming."The developed countries have a responsibility and an obligation to respond to global climate change by altering their unsustainable way of life," Wen was quoted as saying by Xinhua news agency.
'Unprecedented' Warming Drives Dramatic Ecosystem Shifts In North Atlantic, Study Finds
ScienceDaily — While Earth has experienced numerous changes in climate over the past 65 million years, recent decades have experienced the most significant climate change since the beginning of human civilized societies about 5,000 years ago, says a new Cornell University study.The paleo-climate record shows very rapid periods of cooling in the past, when temperatures have dropped by as much as 18 degrees Fahrenheit (10 degrees Celsius) in a matter of years to decades, "the rate of warming we are seeing [now] is unprecedented in human history," said Cornell oceanographer Charles Greene, the lead author of the paper appearing in the November 2008 issue of the journal Ecology, which is published by the Ecological Society of America.
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Hurricane Paloma heads for Cuba
Yep, a hurricane, in the gulf, this late in the season.
I thought November was part of hurricane season. In fact, a few years ago, we were on vacation in FL in mid-November and our flight left Orlando the day before a 'cane hit.
November is unusual, but not unheard of. There have even been Atlantic hurricanes in December and January.
Late hurricanes are rare. But a bit of trivia: there has been a hurrican in the Gulf of Mexico in every month over the last century.
Blizzard in S. Dakota, Hurricane in Cuba. Interesting contrast.
And in Korea, not one "wintry" day yet. And that to follow a mild summer. My first time in Korea in the early 90's there was a set schedule to the seasons such that there were nationally known/adhered to days for turning on and off heating boilers, etc., and a monsoon season that was pretty accurately predicted. Those winters were bone chilling - on a good day. Summers? No way to sleep from the heat and humidity. Forget about feeling dry till fall arrived. Now?
Now... this summer was mild, last winter was mild... every winter since 2002 has been. Well, except for the three weeks of record snow two winters ago...
I feel for the deniers. I have never understood how people get lost in their dogmas and their politics. You look at the evidence and listen to what it tells you.
Best Hopes for Opened Eyes,
Cheers
Hi Leanan,
I didn't see this article anywhere in the Drumbeat recently, so I thought I'd provide a link.
http://www.eurekalert.org/pub_releases/2008-11/teia-rc110508.php
The article talks about how to store CO2 underground in rocks that react with CO2 and create carbonite. I'd be interested to see what TOD crowd thinks of it.
Look up. :-)
You're good Leanan. I scanned the article list and obviously missed the link. Sorry 'bout that.
the doe has a publication on sequestering co2 in the basalt flows of the colombia river basin. and i think it was referenced on tod a few months ago. maybe a good idea, but at what cost ? and will power plants, for example, actually do so, or just talk about it ?
It's been talked of for quite some time, the link I posted a while back:
http://www.inlander.com/topstory/290133035477934.php
The main impetus behind it anymore seems to enable coal generation plants there, making the area an energy hub-nuke, hydro and coal.
The more I learn, the more I'd prefer the wind farms of Horse Heaven Hills, also talked about, and the ag and sagebrush.
Interesting article zero. But disposing of CO2 underground has never suffered from a lack of suitable reservoirs. There are numerous potential disposal formations in almost every area of the USA. Most would be sandstone formations containing salt water. CO2 would be trapped in these formations for millions of years with no potential harm to aquifers or any other human interests. The difficulty, as the article mentions, has always been the energy requirements. Besides the effort to separate the CO2 it requires a significant (and costly) amount of compression to raise the pressure sufficiently for injection regardless of the target reservoir. There has never been significant technical difficulties sequestering CO2…it’s really all about the expense.
Hello Rockman,
I'm aware of the cost problems around sequestration, but this article claims the costs would be greatly reduced (although it doesn't really talk about why that's the case). I'm wondering if anyone has any specific knowledge as to whether this technique really would be cheap, or if it's just hype.
I'm skeptical because you would still have dissolve the CO2 in the water, trasport it to the burial location, and then pump it down, which seems comparable to simply pumping the CO2 into underground reservoirs.
The most important fact I found missing was exactly how they would inject any amount of liquid or gas into a rather impermeable formation as they describe. The reaction might produce a solid but as I mentioned that's not any big advantage. As far as finding that same type of rock in the USA it would cost 100's of million of dollars to just drill one well deep enough in most areas of the country. But there already many coal-fired plants sitting over potential injection reservoirs.
As far as transport goes, every analysis I've seen of proposed CO2 sequestering projects requires the injection site to be adjacent to the source. Even then the economics seemed questionable without a gov't mandate. IMO, as coal becomes increasing more important in electrical generation in the US we'll see mandated sequestration required and rolled into the rate base. It's the only way I can see future energy needs being met while still minimizing green house gas emissions
My 2¢:
As ROCKMAN points out, the problem isn't reservoirs for the storage sites, nor is it stripping the CO2 from the emission source, it's that you have to pressurize the CO2. In order to pressurize that CO2 enough to that you can inject it deeply enough in the subsurface so that it will stay there, you have to liquify it, which means something like at least 1000 psi. The number I was told IIRC was that this will effectively double the cost of coal if you want to strip and pressurize the CO2 coming off the smokestack.
One possible solution is to react the CO2 with something at the surface to make a carbonate mineral precipitate, thereby effectively sequestering your CO2 as a solid phase and don't have to pressurize it as much. I haven't looked into it as much as I should have, but you basically want a Mg or Ca rich mineral that will dissolve in the presence of the acidic CO2 solution and cause MgCO3 or CaCO3 to precipitate thermodynamically favorably. Thus far, that I know of, most people have been looking at serpentinite Mg3Si2O6.8(OH)0.4 and some others like Brucite Mg(OH)2 and the olivenes Fayalite and Forsterite (Mg,Fe)2SiO4. You also want the rock to be cheap cheap cheap.
Peridot = olivene rich igneous rock.
I wonder about the possibility of simply pulverizing the rocks, and just letting them absorb the CO2 from the free air over time. I saw an article a few years back, that claimed that an examination of old hard rock mines, showed that they had absorbed about as much CO2, as had been released during their active lifetimes. Perhaps we don't need do anything fancy, just find the right rock formations in desert areas, and break them up enough that they absorb CO2 over say the next century. Perhaps we cab absorb at least a few percent of current emissions by such deliberate geo-engineering?
Yeah that's right. It's not just newly exposed rocks from mines that are absorbing CO2 but all silicate soil and rock minerals will weather faster as you increase CO2 in the atmosphere. What happens is the increased CO2 dissolves in water and converts to carbonic acid or bicarbonate and lowers the pH in rainwater. The lower pH rainwater then dissolves the silicates it comes in contact with. Finally, the water makes it's way to the oceans where it eventually precipitates calcite (e.g., in coral reefs or in the little critters whose skeletons eventually form limestone). Here's the sequence of reactions from my former office mate's dissertation:
The difficulty is the natural rate at which it's happening is too slow to keep up with the rate at which we're increasing our emissions. So for example, minerals like olivene that they're looking at as a sequestration possibility will respond to the increased CO2 concentration relatively rapidly, say in some decades. So the active sequestration schemes increase the CO2 pressure locally by trapping the CO2 emissions from a coal-fired power plant to get that reaction to go much faster. More common minerals like feldspars and quartz won't react under natural conditions for 10k to millions of years though, so they won't start dissolving fast enough to save us from the permafrost or ice sheets melting. On the rough scale, net mineral weathering rates controls CO2 levels in the atmosphere on the million year cycle.
Thats why I was asking if mechanical disturbance of the right sort of surface deposits would be sufficient to make a dent in the problem. It might be somewhat affordable to break up the deposits, as in current open pit mining, but simply leave the material in place. Would the increased surface area from being busted up be sufficient to increase the overall rate of absorption enough to be interesting. The timespan for emissions to double CO2 is roughly a century. A century timescale for absorption, if it can be engineered would be a decent match.
This was discussed on realclimate:
"In order to reach a new balance, we must speed up the weathering of olivine by a factor of 10. This can be done by opening new olivine mines in tropical countries, where weathering is fastest. There the olivine rock must be ground and spread in the wider surroundings of these mines. These new olivine mines will be larger than existing olivine mines, so the economy of scale will drive the price down. Transportation cost will be low, because the material will not be transported more than a few hundred kilometer from each mine. Calculations show that the price will be around 10 to 15 US$ per ton of captured CO2, say 5 to 10 times cheaper than other proposals like carbon capture and storage. Moreover, this approach will bring new employment to developing countries.
The reaction is often misunderstood. The products are not solids, but dissolved Mg- and bicarbonate ions, that will find their way by passing through groundwaters and rivers. They will help the oceans to counteract the ongoing acidification. We are developing now a simple technology to keep fine-grained olivine floating on the surface of the sea. A large field test with olivine has started this week in the Netherlands. The theory behind the enhanced weathering concept can be found in:Schuiling, R.D.and Krijgsman (2006) Enhanced weathering; an effective and cheap tool to sequester CO2 . Climatic Change, 74, nrs 1-3, p.349-354."
Some mine tailings have the potential to absorb CO2:
http://lablemminglounge.blogspot.com/2007/06/carbon-sequestration-in-min...
It won't solve the problem, but it might help.
Desert areas are not good - these processes only happen in the presence of liquid water (that is, in solution). Dry olivine and dry (gaseous) carbon dioxide can be left together essentially forever without reacting. As mentioned by other posters, kinetics is the key to this sort of process, and the kinetics are generally poor (slow).
Rockman,
Why are you projecting that it would cost "100's of millions to drill just one well deep enough in most areas of the country" ? Is this an estimate for the total outlay for all of the wells, or each well? If each well, why so much?
Also, not being familiar with the mineral itself, I would ask why is it so impermeable?
Sorry for the density, just do not understand.
woody,
I actually just pulled that number out out my butt. The reality is that the type of rock they're talking about is many 100's of thousands of feet below most portions of the US. There isn't even drilling technology to reach those depths. I was just making a short-hand point that such an effort isn't feasable. But drilling the shallower wells to sandstone formations underlying much (but not all) of the country wouldn't be cheap either but are doable.
I'm not a geochemist but I have to guess that and solid rock, crushed or not, would absorb CO2 at such a slow rate that there's really no practical application. Planting a few hundreds trees might accomplish more than a mountain of powdered serpentinite.
And planting a few hundred trees on top of a mountain of powdered serpentinite might be best of all from a kinetic standpoint - carbonate nodules commonly grow in the soil around tree roots. Many weathering processes are sped up immensely by biological agents. This fact is utilized in, e.g., having "bugs" clean up after leaking underground storage tanks, and in leach mining of metals.
Better yet, inject it in Cantarell, or even better Ghawar, and kill two birds with one stone... Prop up oil production and get rid of CO2 at the same time.
/sarcasm
Actually CO2 injection is a popular method of secondary recovery for older fields. The limiting factor is a nearby supply of cheap CO2. Denbury oil company is one of the leaders in using CO2 injection in older fields.
Puhkawn - The problem arises when the CO2 is not PURE CO2, but has some oxygen in with it. The most effective CO2 floods actually compress the CO2 to a liquid form before injection, typically 2000 PSI plus, where it will go into solution with oil and force the oil out of the pore spaces. It is not practical to use oxygen due to the need for the liquid CO2 and due to corrosion created by any oxygen with which it might be mixed.
Flue gas from you local, neighborhood, coal fired electric generating plant will not work without purification. Such purification is the next problem, using both BTU's and equipment. CCS is a very complicated process, and will take a long time to get it right.
It is of course possible to use old, FULLY DEPLETED reservoirs, preferable next to somebody else's production (and not mine) to simply inject the CO2 directly into the ground, at whatever level of purity, but that reservoir would for all practical purposes, be totally ruined with respect to further production.
CO2 is easy to get in an impure state, but hell to get rid of in the best of circumstances.
Thanks, but I am on top of CO2 injection in old reservoirs. As far as CO2 injection just to get rid of it; my humble opinion is it is something not even remotely ready for prime time.
The fact remains that the easiest way to sequester CO2 is to grow hemp and bury it.
Do it in a sinking polder and you also get the benefit of landfill.
(Hybrid poplar or jute would also work.)
The problem with growing hemp is that someone might steal it to smoke. ;) Then the CO2 benefit disappears.
Unemployment just got announced at 6.5% which is the highest in 14 years (depending on what statistics you believe). I now personally know several people out of work in their prime working years.
Mostly they are making do with less - no vacations, no weekend trips, making dinner themselves instead of going out or ordering out. They are still looking for the high paying jobs, but starting to look for more downscale opportunities. It's a bit of a status / ego hit, but those jobs would have less long hours, less travel, less stress and more job security.
I think a lot of people will be making these choices in the years to come. Even as GDP contracts we might find people happier to be out of the rat race, have more time to spend with family, friends and neighbors. Less money to spend on traveling the globe and taking exotic vacations, and more time to make dinner themselves.
They made that argument on CNBC this morning. Sort of. One of their talking heads said high gas prices had forced many retirees to go back to work. Now that gas prices are lower, they may be happy to go back to retirement.
That reminds me of many of my friends in high school that got cars to gain their "freedom" and then needed jobs to pay for insurance, gas, repairs, etc. This is the classic teenage suburban trap. No freedom without a car, and then you find the job you need to pay for the car reduces your freedom in a different way.
Suburban/exurban Teens and Retired folks have a lot in common trapped in their homes and cars with most of their disposable income going to transportation costs. My Metrocard is only $80 a month
Does our government have the guts to mandate a shorter work week?
Ask France how well that worked out.
What is the work week in the US? Americans work 400 hours more than the average European in a year. That is a lot of extra time. Look at the Netherlands. Low unemployment and good economic growth. And much more spare time for family and friends. You can't just point to France all the time and paint the brush on all of the more than 40 European countries.
The much-anticipated jobs report is out. It was expected to be bad. It's even worse than expected.
Job losses mount: 1.2 million in '08
I think we all should be expecting things to be worse than expected by now.
Well, they're expecting the stock market to rise today.
More economic sunshine:
States try to stem losses in public pension funds
States face unemployment cash crisis
What bailed-out banks spend on lobbying
I expect that we will soon be seeing significant news about financial failures at the municipal level. We've already seen the states starting to have budget issues, especially New York and California. Next step are local governments and commissions. The problem surrounds the inability to float bonds.
I have a friend who writes these bonds for a living and he reports not being able to complete one in more than two months. That means, highway work doesn't get done, water plants don't get upgraded, building projects are put on hold. And with tax receipts shrinking due to economic shrinkage and the fall in property values, we're going to see some of these institutions unable to maintain their day to day operations and no means of obtaining bond funds to hold them through to better times. (Which may never come anyway).
OK, simple algebra. How does the government get money?
Bonds Issued + Taxes Collected = Government IncomeAnd what happens if the credit market freezes up?
Less Bonds Issued + Taxes Collected = Government IncomeAnd what happens if the economy tanks?
Less Bonds Issued + Less Taxes Collected = Government IncomeAnd, by extension...
Less Bonds Issued + Less Taxes Collected = Less Government IncomeIt sounds like 'Big Government' might be going away...
well, i think your algebra is missing the all important money from thin air term, m(ta).
Yeah, I forgot about all that Imaginary number stuff too that the government is so good at creating...
The equation gets worse if you also subtract repayment of debt on old bonds issued. This needs to continue, whether or not any new bonds are issued.
Oh, Gail, now you've struck on the Expense side... (Excellent link, BTW)
Entitlements + Interest On Debt + Defense Costs + Misc = Government ExpensesThe 'Misc' counts for around 10% of government spending, so we'll drop it out of the equation for simplicity... and, with Baby Boomers coming of age as well as exploding unemployment, entitlements have nowhere to go but up...
More Entitlements + Interest On Debt + Defense Costs = Government ExpensesAdd in the ongong (and increasing) budget deficit (think $700 Billion bailout for starters), the interest on said debt MUST go up...
More Entitlements + More Interest On Debt + Defense Costs = Government ExpensesBut, Defense spending is projected to go down though...
More Entitlements + More Interest On Debt + Less Defense Costs = Government ExpensesSo we end up with upward pressure on Government spending from just about everything, but downward pressure from the income side. This is the end result:
Government Income = Government ExpensesBut...
Less Bonds Issued + Less Taxes Collected = Less Government IncomeAnd
More Entitlements + More Interest On Debt + Less Defense Costs = More(?)Government ExpensesSo something must break.
No, nothing has to break.
1. The Fed and the Treasury work together to print more money.
2. The Federal Government gives tons of money to the states.
3. The states bail out municipalities and school districts.
Never underestimate the power of the printing press. There is no limit to the amount that the U.S. Treasury can borrow if the Fed creates money out of thin air to purchase bonds, notes, and bills issued by the federal government.
Inflation? You bet. Down the road I don't think deflation is going to be a problem, but increasing inflation will cause a lot pain, just as it did in the seventies and early nineteen eighties.
Of course, none of this addresses the fundamental problem of Peak Oil.
I'll rebut... But, I do agree that your solution will be attempted, if only because there's no other choice.
In an inflationary environment, what you are doing is increasing government income. In essence, you are performing something like the following:
Inflation * Government Income = Government ExpensesBut, Inflation starts biting both sides as follows:
Inflation * Government Income = Inflation * Government ExpensesAnd we end up with the following...
Inflation * (Less Bonds Issued + Less Taxes Collected) = Inflation * (Less Government Income)And
Inflation * (More Entitlements + More Interest On Debt + Less Defense Costs) = Inflation * (More(?)Government Expenses)I won't disagree that this won't be attempted, but the endgame will probably be the same regardless of what inflation does (either up or down).
And, this is directly related to Peak Oil because less government spending means less investment in other technologies that can alleviate oil consumption, via conservation or replacing oil with another energy source.
I do not think we are going to see less government spending. Through inflation (a hidden tax) government can spend much more than it now spends. With luck, an Obama administration will spend a great deal on the investments needed to transition away from fossil fuels. I do not expect such spending to be financed by increased taxes. Instead I foresee deficits for the federal government in the multitrillion dollar range as far in the future as the eye can see.
The 2008 deficit of a trillion dollars (more or less, depending on what you count) will not be enough to stimulate the economy. Hence I expect a 2009 deficit in the two trillion dollar range--and yet bigger deficits in the years after 2009.
One can only hope that Obama will follow through with his pledge to create five million jobs in renewable energy, because I expect unemployment to increase every year for the next four years, and as declining oil production really begins to bite I think we will go into a Greater Depression with 25% to 40% of the labor force unemployed. In other words, I expect real GDP to decline a few percent per year for the next fifteen years.
I agree that government spending will need to increase, but I don't see how that will be possible under the current conditions. The government can't sell bonds, and tax receipts are going down due to the recession.
But, short term, inflation will increase government income, but this is at the expense of the economy; eventually, inflation will hit everyone and it won't matter.
I myself am preparing for the coming inflation (oh, and it will come), but expect that it will not affect the long term outcome very much.
Well, we got away with staggering deficits during World War 2, when half the economy was war-related. The question is, what did we do then that no longer is possible?
1. We got away with it because most of our economic competition was destroyed in the war.
2. We got away with it because we borrowed the money from ourselves, in the form of low-rate War Bonds - but Americans were good savers back then.
3. We got away with it because currency markets didn't operate during wartime and the dollar wasn't punished.
4. We got away with it because oil was dirt cheap.
5. We got away with it because the rich were too patriotic (or afraid) to sabotage the economy when hit with a 90% wartime top tax rate.
I'm not seeing things in this list that are currently reproduceable.
6. We got away with it because we were on the early part of resource depletion curve; there was lots of low hanging, low entropy fruit.
7. We got away with it because the war we were involved in had clear, acheivable objectives (unlike Iraq and Aghanistan)
8. We got away with it because the ratio of retirees to workers was much higher in the 1940's (somewhere around 40 to 1) vs. now (about 3 to 1), therefore allowing a larger ratio of the population to be productive and less of the population to require Social Security
9. We got away with it because we did not run a significant trade deficit, and were not dependant on foreign powers for oil
Geckolizard -- good points.
Oddly, the wars in Iraq and Afghanistan seem to me to be part of a much longer war that started decades ago, and that TPTB do not intend to end until they get control of the oil in the Middle East and Caspian.
This war for resources is disguised in whatever terms are convenient, but is carried on continually and relentlessly with a very specific goal in mind.
However, the people cannot be told -- yet -- that the military-industrial complex has only one solution for the problems that beset us. Nor can they be told that many of these problems are of our own making, and not that of shady bad-guy bogeymen evildoers somewhere out there.
The answer to our problems coming from the military-industrial complex is War. Put another way, it is a slow process of Kill Off which moves around as needed. Brutal. But that's the solution offered at this time, and there is no indication that the Kill Off policy will change.
Well its actually called Resource War and it started a long time ago. I'd say the modern resource war really fired up with the discover of the America's and has been going ever sense.
The reason I peg then is thats when technology really played a big role in the ability to take resource from the natives. I think you can readily argue its been fought ever sense. Sometimes in power struggles between the takers most often between the takers and those with natural resources.
This has also allowed us to fuel close to 500 years of continuous growth. And easy way to understand is to simply consider Nigerians living to the same standards as Americans. Or Chinese etc.
One reason I'm not optimistic about changes is how do you beat 500 years of successful exploitation ?
The biggest thing that most people forget about our post peak world is that certain situations work in reverse you can carpool with your neighbor and share the cost of expensive oil or you can beggar thy neighbor and force them to lose their job so you don't have to change.
This is a world run by winners for winners not one for sharing and thoughts about the common good.
To admit we need to change is to recognize the error of 500 years of world domination.
I don't think so.
Members of the current culture can recognize the error and decide to change and create a new culture but our culture is dead you can not evolve it.
super390 -- I think the Neocons expect to get away with this through brute force.
Can we say "Global War on Terror"? Can we say "Police State"?
The new administration seems to me to be much more deeply connected to the NeoCon path -- as are the Clintons --than they let on.
The sideshow fight over giving US citizens who make less than $250,000 annually a teensy break is just that: a distraction, albeit one with real consequences for a significant number of people.
It may be that we can create a new consensus of "Reality Based Economics" and "Reality Based Foreign and Domestic Policy" but so far it looks like much more of the same.
The reality is that our species is ungovernable and increasingly prone to violence,our habitat is increasingly degraded and hostile, and so our policies may very well be reduced down to the inevitable outcome of a species dominated by Stone Age emotions, medieval self understanding, and godlike weapons.
Boom .... "The Road."
I think your views are too bleak.
Why bother getting up in the morning if there is only the "inevitable outcome" that you foresee?
What about the Age of Aquarius, already upon us?
People may come all of us to understand that growth cannot continue forever in a finite system.
They may face this prospect sadly but also balanced with cheerfulness, I know I do.
"Increasingly prone to violence"?? I agree that wars are depressing but the USA just elected someone who has promised to get them out of Iraq. Maybe that will help.
There has to be some evolution beyond the "Stone Age" for us as a species. It may be hard to put one's finger on it but don't you think it's there?? I hope it is.
Oh yeah, I'd forgotten about rising sea level due to global warming and all it's consequences...
Thanks for the reminder of one more thing to be cheerful about ;-)
Then again it may be good for the ark builders association.
"There has to be some evolution beyond the "Stone Age" for us as a species."
but isnt it the advertising's goal to appeal to our stone age emotions ?
tax policies of late(i.e.reproduction tax credits) appeal to the same emotions.
We talked some about this a few days ago. And I still believe what you say is theoretically possible. In practice, I doubt it can happen. Indeed, I doubt that it will be attempted as it is just too much against our perception of how things should work. But even if it is attempted, it only creates other problems, if only because of what would happen to confidence in the dollar.
Sailorman - What effect does the global reserve currency status have on any attempt to inflate? Aren’t all other examples of hyperinflation confined to national ?
Shaman - I second your doubts.
IMO even the slightest shift to inflation of the dollar will send commodities, particularly oil & gas skyrocketing and put even more pressure on ending the dollar as global reserve currency.
They may try but it seems to me it will be very short lived.
I expect global inflation, not just in the U.S.
The dollar will probably continue to be the global reserve currency, so long as it hangs on to at least half its current value. After that, I don't know. The euro is in worse shape than the dollar. I don't think we'll go back to a gold standard.
What inflation will do is to reduce the pressure of old debts. Enough inflation will also make homes worth more than the old mortgages against them. Thus I think the political pressure to increase inflation rates will be too great to resist.
The monetary and fiscal policies that are now being used to combat deflation operate with a time lag of six to thirty-six months. Thus I expect the impact of current expansionary macropolicy to be felt next year, the year after that, and perhaps longer. I do not believe that the Fed has it in its power to fine tune the economy with monetary policy.
Politicians love to spend but hate to raise taxes. Democracy has an inflationary bias built in, as we have seen in the U.S. since 1913. Compared to 1913 the current dollar is only worth what four or five cents would buy early in the twentieth century. At some point we'll have a "new dollar" and knock a zero off the old one.
To a large extent, monetary history is the history of inflations. Deflation, such as happened during the Great Depression, is rare.
I tend to agree, but of course I don't see how all this can possibly bode well for alt-energy or anything else. I'd expect the effect to be to reinforce the lessons of the 1970s - consume faster than possible, live larger as possible, don't bother investing even a nickel because you will simply be looted.
Among other things, allowing people renege on their mortgages via inflation (or any other means) amounts to a massive subsidy of houses, the bigger the better. In the domain of real goods and services, this doesn't come from thin air, it comes at the expense of everything else. One 'else' is that pesky little matter of supplying the energy required to operate those same giant, far-flung houses, bringing goods and services to them, and transporting the so-called "owners" vast distances to and from them. And I see that sort of unbalance as a big part of how we've already dug our energy and financial holes so deeply so quickly.
Without sky-high interest rates (or investment returns), all earnings will simply be consumed immediately; people will find ways. And neither sky-high interest rates nor nonexistent savings will help make non-fossil-fuel energy affordable or even possible. If it is to be ramped up to a meaningful scale (we indeed will not run things on surplus used french-fry oil), then it looks to be very capital-intensive. Rates of return commensurate with high inflation will front-load that to the point of making it impracticable and policies meant to 'soak the rich' will front-load it even more. That may be a difference from the 1970s, when energy went away after a while as an issue, enabling the societal "we" to get away with the great house giveaway of that time. At least people back then could afford (or at least pretend to afford) to operate the houses they had received as gifts at roughly half-price.
So, this time around, I somehow just don't quite see how the societal "we" will get to repeat the 1970s by inflating our way out with few immediate consequences, even though I think "we" certainly will try. No, this doesn't look good, and it doesn't look any better when one contemplates the bipartisan campaign promises to continue the giveaways on the consumption side - especially cars and houses - while doing nothing commensurate in scale on the production side.
BTW, with the dollar worth so little already, why can't we get rid of the penny? A lot of the smaller stores where I live have penny cups, and those seem to be gradually getting heavier.
We should get rid of both pennies and nickels. The dime buys less than a penny used to, but we can keep dimes as our smallest denomination coin. We already have dollar coins; we could do well with a $2.50 and $5.00 coins. Then we could get rid of one and five dollar bills that just clutter up the wallet.
The ten dollar bill buys less than a one dollar bill used to, and I carry as many twenties as I used to carry ones. For grocery shopping a fifty dollar bill is seldom enough, and of course the hundred dollar bill buys about what a five dollar gold coin would purchase during the first thirty years of the twentieth century.
I can still remember when movies cost a dime; then for World War II a two cent war tax was added, which we expected to be removed after the war was over. Hah! Now it costs me $5 for a matinee, which is fifty times as much as it used to cost--and for a dime you got not only a feature film but also a short (usually a travelogue), a cartoon, and a newsreel. And do not tell me that the quality of movies has improved, because most popular films are worse trash than the B movies of the thirties and forties. Grump.
"There is no limit to the amount that the U.S. Treasury can borrow if the Fed creates money out of thin air to purchase bonds, notes, and bills issued by the federal government." Here again is the popular idea that the Fed creates money out of thin air. I don't see it that way. The Fed creates Fed paper out of Treasury paper. The government, after all, does have something to sell: its power to tax. Is there a limit to that?
There is indeed a limit to how much government can tax. It is a limit of political toleration more than a strictly economic limit. For example, Europeans have much higher taxes than do Americans, because U.S. citizens simply will not tolerate taxes at levels found in Europe (with the exception of a special situation, such as World War II).
There is, for practical purposes, no limit to the amount that the U.S. government can inflate. We have no need for foreigners to buy U.S. Treasury securities if the Fed will buy them without limit. And the only limit on the Fed's "printing" of money is the wisdom and prudence of the Board of Governors of the Federal Reserve System. Thus, any deficit the U.S. government decides to run can be financed.
True, the Chinese and others will not like the U.S. inflating its currency, but there is nothing that foreigners can do to stop it. Any U.S. Treasuries the Chinese care to sell can also be purchased by the Fed. There is nothing whatsoever in politics or economics to prevent the Fed balance sheet from expanding by a factor of ten.
I don't think the Fed and the U.S. government are going to inflate on purpose. Rather, I think they will be forced into major inflation by high and rising rates of unemployment that will lead to bigger and bigger deficits. Sooner or later, these deficits will be financed by the "printing" of money. Note that all of this can happen no matter how bad the credit crunch gets.
Of course I do not advocate these policies, but I think major and long-term inflation is in our future.
Surely a limit is posed to the ability of the Fed to pump out currency by the exchange rate?
Certainly this would be the case in the UK, where the peril must be that the rapid rate cutting and projected loss of revenue may lead to a run on the pound, and imports particularly of oil and gas being impossible to finance.
The US is in a stronger position of course, as it is the major trading currency, but that surely can only postpone the problem, not solve it.
In practical terms the limit is likely to be reached when great difficulty is experienced in selling bonds other than to itself.
At that point a refusal to reign in the deficit would be likely to lead to a collapse in the currency.
The hole in the balance of payments can only be sustained whilst others buy dollars and US bonds.
I don't think the dollar will collapse as the U.S. inflates, because I expect other countries to be inflating as fast (or faster) than the U.S. Take a look at, say the British pound versus the U.S. dollar since 1945. The dollar has inflated away most of its value, but the pound (which used to be worth $5) has inflated faster. A few currencies, such as Swiss francs and Japanese yen may hold their value, but I expect the Euro to inflate faster than the dollar until the Euro literally collapses as European counties go back to their own currencies.
Thus I don't worry about the balance of payments. I expect the U.S. to continue exporting dollars and importing more goods than it exports. Oil exporting countries will continue to export oil to the U.S., but they will demand far more dollars per barrel.
I'm not predicting hyperinflation for the dollar, but I think double digit inflation is baked into the cake at this point, because the Fed's effort to fight deflation will way overshoot the target.
We're going to be looking at a rapidly rising misery index--the percent unemployed added to the percent of inflation. Bad as things are today, they are going to be a heckuva lot worse in two or three years.
And rest assured, Obama will get the blame.
Enjoy yourself, we're living in relatively good times now--relative to what is coming.
I think Obama will become the most hated and reviled president since Herbert Hoover, and for the same reason. The Republicans may nominate Palin in 2012, and if they do I expect her to win. There is going to be a whole lot more drilling for oil when she is president. Of course it won't stop our supply of oil from diminishing, but it will be a great campaign rallying cry.
Cheer up: Unemployment and inflation are going to get far worse than they are now, so carpe diem. Enjoy what luxuries you can this year, because you won't be able to have them in the future. I'm spending all the money I can on wine, women, and song, because in the future I'll be spending everything I have on food, medicine, and home heating bills. Investments may go sour, but good memories never do.
I would agree on the pound, except that it seems possible that that will actually collapse, which would then cast a further adverse light on other countries with similar issues.
The yen seems likely to remain strong, as does the renminbi, but I would disagree with you about the Euro.
Although it does seem likely to split apart, the German fear of inflation is profound, and until it does they will not tolerate inflation getting too strong.
After it splits you would then again have the Deutchmark, a low inflation currency.
In short it seems to me that not all currencies will in fact inflate, and so a dollar collapse is more likely than in the scenario you draw as alternatives will exist.
I tend to disagree about the Euro for two reasons.
First not that Don's incorrect but that the Euro will beat the dollar down.
The EU is still a coalition not a country changes that are simple here are difficult there. The Euro simply because its a coalition currency acts more like a store of value than a sovereign fiat currency. This is by design because of the disparity of economies in the Eurozone and closely related currencies. Don 100% correct that they will inflate but I think the structural roadblocks will make it difficult for them. Germany would leave the EU before it allow the EU to inflate as fast as the US so
Next the EU is in general more efficient with oil usage and as oil prices go up in dollars and I assume the Euro does not keep up oil is relatively cheaper in terms of Euros. Not to mention the high taxes insulate the EU from the price swings in oil. And they can lower the fuel taxes at some point.
All of this gives them a lot of leeway in bolstering their economy before the make it to outright printing. Social services can be reduced across the board.
And finally I think the EU has been fairly truthful about its situation its hurt them in the short run but I think we will see next year that by being upfront their banking systems will recover.
I'm not saying they are telling the full truth but that compared to the US they have aired most of their dirty laundry. I'll add that Britain could well be in worse shape than the US.
You can continue with this sort of analysis but the probability is that the dollar will decline faster than the Euro and worse and what most people don't realize is that the Pound will probably lead them all down.
I would agree with some of your comments regarding the transparency of the banking system. This should not obscure the fact that leveraging is far worse than in the US though.
There is no way that I can see countries such as Greece and Spain keeping up with the pace that Germany and maybe France will set.
There are simply not the controls and shared tax-base needed to maintain the system of the Euro.
In Greece's case there is a massive balance of payments deficit, much larger debt as a proportion of GDP than the US, and dependency on the tourist industry.
This is not going to work for them to stay in the Euro, if Germany will not bail them out.
Here is a good overview of the structural imbalances in the Euro:
http://eurowatch.blogspot.com/
So we are in agreement, that at least the largest economy in the EU, Germany, will experience lower inflation than the US, but the currency will not survive in it's current form.
Oddly, although I agree with all your remarks about the UK. inflation here is also likely to be lower than in the US, simply because the currency markets will not allow the degree of inflation that the US might be able to get away with.
This means that the fall in the pound which in my view you correctly predict will lead to a real impact on incomes with less disguise by inflation.
The banking bail-out will prove inadequate as the recession has barely hit, and in my view house prices are still over-priced by 50%
There may not be a limit to tax rate but there is a limit to the amount of dollars the government can vacuum up.
Maybe in your dreams is only the way "big government" is going away. The Democrats have dug up Keynes and now will outspend Bush to jump start the economy, only this time it will be different. The difference being the money will be spent on typical Democratic agenda programs. Government and the deficit will grow even more than before.
There was no need to dig up Keynes. The book was open on the table when Obama visited W the other day.
Tell us, Pukey, were there two useful things on which the police-staters (repugnants)increased spending these past 8 years?
It is amazing how people read politics into a simple statement.
True the current administration is working on exhuming Keynes, however if you follow Democratic leaning economic blogs Keynes is certainly all the rage. All the current talk will, in fact, result in the largest deficit ever. And as a matter of fact the typical Democratic agenda is and has been different than than the typical Republican agenda. My statement was rather simple and I believe right on: The government and the deficit are going to get bigger. I would be all ears for someone to offer a rational theory on how that might be wrong for the next couple of years.
tax and spend is way more responsible than borrow and waste.
Since Reagan, the Republicans have been the party of deficits, lower growth and financial irresponsibility. It is remarkable that some people can still call on the "responsible" branding that has been untrue for so long. Like calling it the party of Lincoln.
Leanan, you're right on the money for the first few minutes of trading. DOW is up 148 points ten minutes into the day.
From what you're hearing, why this expectation of better returns? Is this not a bit like the Stockholm syndrome, except a bizarre Wall Street version, where investors held captive start to have affection for their bad news companions?
With all the bad news, you would think the markets would be recoiling. Or is unemployment and/or public state level financing necessarily bad news for the money changers?
Indeed, a very strange world we live in.
It's sell the rumor buy the news today. The Dow just sold off 1000 pts over 3 days after a 1600 point runup. This bear had a sharp runup and a long fade last time. There was a bunch of noise about 300,000 jobs being lost and when the 'number' came up less relief was the result.
I think the trading cycles sometime run counter to the news cycle. Corp. failures, jobs numbers, frozen credit, and lack of commerce just background. /sac Do agree this trading is rooted in faith that there is light at the end of the tunnel and it's not the oncoming train while simultaneously acknowledging that possibility. The new favorite justification to buy eventual growth is "If it's not the end of the world then these stocks are cheap".
We'll probably see similar action around the Nov. 15th hedge fund redemtion deadline even though it'll be attributed to ongoing concern about X-Y-Z. A new wave of selling ahead of that may mean investors are still pessimistic at these levels. Folks are trying to figure out if anything has value other than just goin' for the matress with their dough. I liken it to throwing everything overboard and see what pops back up.
Las Vegas and Orlando were always the obvious poster children for debt driven discretionary spending in the US. Yesterday, there was an item about the very difficult situation that the Sands casino operation is facing. In the WSJ today, there is an article about the poor outlook for Disney. So far, theme park attendance is only down slightly, but they have bad feelings about next year. They are seeing big drops in advertising spending.
A lot more cascading of the economic cards is in store before American Thanksgiving. This November will be cooler, damper, and crueler than usual and I'm not talking weather.
Illargi yesterday spent some time talking turkey on the car industry at the Automatic Earth. The headline today, "Ford announces $129M 3Q loss, burns $7.7B in cash", speaks volumes of the trauma of the automobile industry. http://money.aol.com/news/articles/_a/bbdp/ford-announces-129m-3q-loss-b...
Will there even be a car industry in 2009?
Meanwhile, suburbia continues to divest in value. CNN money line announces, "7.5 million homeowners 'underwater': Nearly a fifth of U.S. borrowers owe more on their mortgages than their homes are currently worth - and that number is growing."
http://money.cnn.com/2008/10/30/real_estate/underwater_borrowers/index.h...
Without work, without equity, without means to afford transportation, expect the beginnings of massive internal migration and dislocation. The big question will be, to where? The family farms are long gone. City cores, in general, are not capable of absorbing an influx of new residents without massive infrastructure remodeling. All of which requires money which is non-existent.
The Dow begins today with the floor at 8700. With all the doom and gloom figures emerging and much worse than anticipated, I expect another traumatic Friday. Fewer investors chasing fewer safe havens all the way around.
The end of suburbia will be a painful process. Who would have thunk it? Well, besides Kunstler, Matt Simmons, most contributors to TOD, and a host of other maverick voices crying in the wilderness? Yet the speed to which events are unraveling are mind boggling to even the most doomerish among us.
As another post says below, not all the oil may see the light of day. Not for a very long time anyway.
The key question is whether or not the government should bail out a dying industry. In any event, laws should be put in place that any industry that emerges from this will build only vehicles that get at least 40 mpg. In addition, incentives and disincentives should be put in place that will ensure a market for a highly efficient vehicles even in the case of declining gas prices. This is not the time to let the market encourage people to return to SUVs and heavy trucks.
Obama needs to step up to the plate. But will he whiff it? Radical times call for radical solutions. My guess is that he will stir a course that it is too conservative and too mindful of the short term political ramifications.
Further, consideration should be given to encouraging the auto industry to retool for the purpose of manufacturing equipment for the alternative energy and transportation industry. Turbine blades? Solar panels? Bicycles? Electric scooters?
I voted enthusiastically for Obama but my fear is that he will just prop up the status quo --- which is doomed. Of course, most of the money will have already been flushed down the rat hole by the time he assumes office.
The doom of automakers failing is perhaps worse than some realize. For every job at GM or Ford is approximatley 7 more (in the supply chain) that rely on the business from Automakers. So not only will Ford or GM need to "retool" so will all their suppliers.
I think Obama will probably bail them out. He won partly due to union support, and now it's time to repay them.
And GM denied the rumors about cutting the Volt. They said they would actually be increasing funding for it.
I think the bailout (or not) will be finished long before Obama's inauguration. I'm not saying he won't have a say in it, but he won't have veto power, yet, if it comes to that.
Share of $700-billion bailout ruled out for Detroit 3
I'm guessing Congress will manage some kind of short-term life support, until Obama takes over. I just can't see them allowing GM to fail.
Lets not forget the custodian or Janitor at GM/Ford.etc, Why do they make $2-4 behind production workers, while the same essential people make minimum wage else where? Really now, making 25 buck an hour vs 8.75 is just not right. And they get benefits too. Sure some may already have sub contracted them out like our grocery store chains did to lower labour costs several years ago.
oilcan
Maybe the automakers should try to turn all their factories and huge parking lots into many little sustainable farms and hand them out to their employees.
Sell all the buildings for scrap and hand out the proceeds to the employees to get started on other means of earning a living.
Completely liquidate it all and go on with life.
If they can make bicycles or rickshaws too that would be helpful!
Why dwell on the past?
It is already quite common for conventional expectations to be bad and the end result to be "worse than feared." I see this in the Miami Herald, my hometown paper, practically everyday. I think we can expect this phenomenon to proliferate for quite some time to come, until it gradually dawns on people that growth is over and unrelenting contraction is the name of the game.
Goes to show just how good tax cuts for the rich and deregulation have been at creating jobs.
I'm starting to think this "no new investment in oil production post credit crunch crisis deal" is a good thing...
I think we are going to f**k up more than I first thought and I prefer the oil was left in the ground for now
sort of silver linning to the increase in my doomer level thingyamebob
lets leave it in the ground
Boris
London
I agree - it's a very good thing. It will be painful, but the sooner we get off the merry-go-round of growth economics the better.
Start honing your homesteading skills!
From the Drumbeat:
I found a very detailed analysis of Sudan in this PDF slideshow report:
PFC Strategic Studies August, 2002 SUDAN Projected Oil Production and Revenues Summary, Michael Rodgers
I will spend some more time looking at this report as it has details on field size distribution and projected reserve growth, a couple of topics I have been interested in recently. My interest in oil field size distribution is very keen right now as I think I have a first principles, and what turns out to be a very simple first order, model of how to derive the field sizes that we observe (Dispersive Aggregation model) As an example, these are preliminary curves that essentially a one parameter DA model can fit to, look at the overlays to the Sudan data in red. The report uses the traditional log-normal heuristic to fit the data:
As always, I want to try to understand how the numbers come about. This ain't the stock market where we have no clue on how to proceed. Oil depletion is basic bean counting with a modicum of intuitive models tossed in. All that log-normal crap is due to geologists and others that apply the BAU heuristics since that's what they were told to do. I see absolutely no insight, and the same old finger in the wind prognostications. We can really change this because the math and statistics behind oil depletion is no more difficult to understand than deriving and then applying a set of first principles models that are the equivalent of Kirchoff's Laws in simplicity, IMO.
"Oil depletion is basic bean counting with a modicum of intuitive models tossed in."
Not really in my opinion. How about a bit of historical perspective.
About 1961 Texaco's reservoir engineers concluded that a large field near where I lived at the then current rate of production would be depleted in about 10 years. In the early 70's, maybe 73 they again estimated the remaining oil which again equaled about the same amount as the 61 estimate and estimated that in about 10 years the field would be depleted. They sold the field when Texaco pulled out of S. Louisiana after the Arab oil embargo. I haven't a clue as to what the current estimate is, however the field is still producing and the typical well is not a stripper well.
Over the years how one counts beans has a habit of changing.
You know, I really can't help it if they didn't have the right models (or brains) in 1961. I wonder if this is why they call them rockheads? Google "The Enigma of Oil Reserves". The establishment still hasn't figured out an explanation, yet it is such a simple statistical bean-counting model to show reserve growth.
So yes, the reason this counting has changed over the years is that they have consistently used the WRONG models and came up with the WRONG conclusion. I wasn't around back then and so can't account for their lack of perspective.
and by how much did this field delay peak oil production in the US?
Again and again it seems to need to be reiterated, yes, we will find more fields, yes, we will use new techniques to recover a bit more oil from older fields, and yes, no matter what we do, oil production will peak (sooner rather than later) - and we will have a serious problem on our hands that we do not seem to be preparing for properly.
Oh my God. Did I say anything at all about delaying peak oil production? I didn't even mention peak oil did I? I was trying to point out that determining the size of a reservoir and what is recoverable is not "simple bean counting." The example I gave to illustrate this was one I have first hand experience with. I thought it was a pretty good example.
Yes a pretty good example and one that is statistically explainable, as the aggregate of the US oil fields show such a pattern. This post explains the model:
http://www.theoildrum.com/node/4311
I disagree.
The lognormal distribution is strongly correlated to the 'concentration' of the basic elements; it typically is used for normal type distributions with concentrations in the tails.
The geologists actually have a 'dispersive model' based on concentration.
(Hint: combine lognormal and Pareto demand and your model might be getting somewhere.)
This seems to be very good news. I was worried that state-owned companies would continue to invest in expensive-to-produce oil even if we manage to get the oil price down near $20/barrel through reduced consumption. Hopefully we can get them to forego any new investment in that kind of oil. Let's aim for $50/barrel next month and keep going down from there.
Chris
Chris,
I like your insights on solar, but this thought of reducing total oil consumption through low prices is foolish.
I recall a little before the turn of the century, when oil was around 15, a bunch of neighbors got together to convince all on the road to form a RID and pave our road. Cost per landowner this, and any new owner would be prorated, etc. Thankfully oil started back up while folks were arguing how to get it cheaper and the idea was abandoned. Mostly put forth by some folks who wanted to subdivide and others with only shiny cars to drive.
I thought back then, cripe, take oil to 2 and lets just burn it all up. Flare it off and be done with the problem. No one will ever learn its value. The only way this world will appreciate energy, oil or solar, is through price.
Hi Doug,
My thinking is not to use less because the price is lower but to lower the price by using less. We need some kind of discipline to do this. We might add a steep gasoline tax once the current economically driven demand reduction has ended or, more easily to my mind, because it only takes an executive order, start rationing gasoline as soon as demand starts to pick up again. The main thing is to have a global mechanism to discourage investing in expensive-to-produce oil so that the bulk of the oil supply remains cheap-to-produce as it is now. Those expensive sources of oil don't really buy us much time in the face of depletion of the good stuff and we'll go broke trying to pay for $200/barrel oil from 2 miles under the ocean or tar sands or cooking shale. Better to keep the oil supply price down by anticipating depletion and reducing demand ahead of the depletion curve.
Chris
I've read your arguments for some time now, I just don't buy them. A global mechanism? We couldn't get a national gas tax.
I see price as the best global mechanism. There is no need to negociate treaties and such. The question is: who has the leverage on price? OPEC is not all that likely to want lower prices right away and it also looks as though they might not have a way to produce more oil cheaply in any case. So, they don't really have much control of the market. They can try to put the price up, but they can't bring it down that much even if they wanted to. Those who have contol of the market than are the consumers. And, one consumer in particular is large enough and has enough room for efficiency to strongly affect the price. That is the US. A 20 to 25% cut in US consumption gives Saudi Arabia more than 5 million barrels a day of spare capacity. When they have that much spare capacity, the price is around $20/barrel.
That is a price that does not encourage exploration for or development of expensive-to-produce oil. And, that is the aim I think we should have. We really don't want that difficult-to-obtain oil on the market because putting that much effort into getting oil is counter-productive. We need to switch to aternatives before we need that stuff. So, lets make sure that stuff stays in the ground by cutting the price of oil as far down as we can. The era of cheap oil has about a decade left to it if we are willing to cut our use down to near zero in that amount of time. If we have some help, we can keep oil cheap for about 15 years.
Chris
"Eight nations warn EU over biofuel barriers" from above.
Developing countries are upset again that the developed countries are dictating limits to their growth. As Europe and North America push ever harder to maintain their accustomed standards of living ("...life as we know it depends upon it..." - Chevron Ad for all out development of everything)and at the same time dictating environmental restrictions to others, the developing nations want to share. The biofuels revolution, so hopeful to poorer nations and 'necessary' for 'our way of life' bodes ever more badly for biodiversity.
An absolutely fantastic discussion on world financial crisis. Particularly Hernando de Soto's comments about the failure of rule of law and more specificly contracts as the key.
"Naomi Klein and Joseph Stiglitz on Economic Power"
http://fora.tv/2008/10/20/Naomi_Klein_and_Joseph_Stiglitz_on_Economic_Power
"Journalist Naomi Klein speaks with economists Joseph Stiglitz and Hernando de Soto in a conversation..."
"What is the role of the U.S. in the disposition of the world's economic and environmental resources? How are financial markets best defended from economic shock? Does liberalization ensure prosperity?"
Thanks for the link. I agree, absolutely fantastic discussion.
I think my favorite line was by Naomi Klein:
"We don't want another Wall Streeter for Treasury Secretary."
Souperman,
Excellent stuff indeed.
It is strange indeed that in this day and age of 'information technology' and 'knowledge economies', nobody knows exactly who owns all the toxic debt.
Most everywhere in the world is mapped and documented, but not the debt mountain,
BobE
"...nobody knows exactly who owns all the toxic debt"
From reading TAE it looks like we can't know either.
Multiple claims on what sometimes turns out to be non-existant.
Wow. What a great discussion. Thanks for the link.
Leanan,
Would it be appropriate to have a "sticky key post" with a link to change.gov"?
TODers could post their vision submissions to the Obama-Biden transition site.
Thanks,
Pete
RE: Why Obama’s ‘Green Jobs’ Plan Won’t Work
The author of this piece claims that government plans to support "green Jobs" won't result in an increase in jobs for the economy. He suggests that developing renewable energy sector jobs would result in a reduction in jobs for the other energy providers.
He notes:
What he misses is that the other energy sectors are constantly building new plants and stringing new wires, both to add capacity and to replace the older, obsolete plants and equipment. The author ignores the fact that money spent on renewables produces useful energy without the need to continually supply more fuel, unlike the systems which use fossil fuels. Once the renewables are built, there would be no need for lots of workers to continually work to shovel coal into the boilers, so to speak. Once built and paid for, the consumers' cost would decline, whereas, with fossil fuels, there would be a continual drain on the consumers' budgets, just to pay for the flow into the centralized power plants. As Peak Oil becomes a reality, the cost of the continued flow of fuel is likely to skyrocket. Of course, the power companies want to keep the flow of money thru their corporate bank accounts, so that they could siphon off enough to continue to live high on the hog.
Furthermore, given that the jobs in the renewable industry might be more labor intensive and require lower skill levels than, say, running a nuclear power plant, it's likely that shifting spending from the fossil fuel industry to "green jobs" would result in more jobs for the same overall level of expenditure in the economic system. The situation is indeed an either/or choice, but the choice really involves who gets the job providing the energy, not whether or not more or fewer jobs will be the result.
Sorry, Repugs, you lost this round.
E. Swanson
I got a chuckle out of this article too. And just imagine, the American Enterprise Institute bills this guy as a "resident scholar."
I read once, I think in Herman Scheer's Energy Autonomy, that for the same $ or kWh (I forget which), solar and wind produce about 17 jobs to coal's 4. Did he read that in his 1860 reference?
Agreed. I scanned the article and found it full of stupidity. Appears to be a reactionary piece from those politically connected to the fossil fuel industry.
The broken glass analogy was particularly bad...as if oil, gas and coal production isn't destructive itself!
Yep, "broken record" meet "Kenneth P. Green."
No sense that the landscape is shifting at all.
The author totally misses that cash spent building renewables or nuclear plants largely stays in the country.
Money spent on oil leaves the country.
Not if we "drill drill drill!" Oh wait, those guys lost on Tuesday.
The problem now versus the era of Hoover Dam and the TVA is that American citizens don't do hard labor anymore. We'd give these new jobs to unemployed construction men, but now many of those are Mexicans and many of those are illegal. They must send their wages out of the country to feed their families.
Of course, we do have hundreds of thousands of soldiers strung out around the world defending the status quo. They're expected to wield a shovel in a crisis, and they'd rather do it in Arizona than Iraq. I just don't want to hear the word "Halliburton".
I agree with you, Black_Dog. The article was completely wrong-headed in just about every way. Comparing new renewable-power projects to breaking windows just to make work for the glass-maker is a terrible analogy.
Let's look at a better analogy. The Hoover Dam created thousands of jobs when it was built in the 30's, still is creating jobs today and has provided a vast amount of energy in the meantime. And investments to keep it running have been comparatively modest. Properly conceived renewable-energy projects should be thought of in the same way. No, I'm not talking about corn based ethanol as it is currently produced. Wind, solar and upgrading the grid should provide jobs *and* a payback.
Dan
The same can be said of electrified rail; Urban and inter-city.
The tunnels carved by Chinese coolies in the 1870s and the Boston subway dug & blasted by the Irish in 1897 are still in service.
Best Hopes,
Alan
This is actually the way to think about it. We don't put much effort into keeping the dam going. Most of the jobs occured on the front end. But, the electricity is creating jobs in the rest of the economy all the time because it is so cheap. Similarly, with highway jobs, it is not the employment in the tollbooth that is the big deal, but the jobs building the road and the increased commerce that the road supports.
One should expect a reduction in energy sector jobs as we shift from fossil fuels to higher EROEI renewables in the long run. But, the new energy sources will support improved prosperity compared to the present so we won't miss the energy sector jobs. And, just like the big dam, there is a lot of work to do right now to obtain that new prosperity so that, for a while, energy sector employment should increase.
When I have died and the ages shall roll,
My body will blacken and turn into coal.
As I look from the door of my heavenly home,
I'll pity the miner that's digging my bones. --Merle Travis
That is an energy sector job we should not miss at all. Let's keep the mountains up so we can catch the wind.
Chris
Hi E. Swanson,
No job requires less skill level than running a nuc. I know, I worked in one. EVERYTHING is done by PROCEDURE. No thought allowed, follow the book or be escorted to the gate.
IMHO "green jobs" will allow for innovation; indeed they will probably require very high skill levels.
Irre
This right wing hack uses an old unproven argument that taxes on the rich for public works jobs does not create more customers for the private sector. His argument is basically an example of disaster capitalism. What they right wing won't address is why after years of lower tax rates and less regulation we now have jobs disappearing at a rate not seen in decades.
T stands for TARP...and Trouble: The Treasury Department's capital purchase program of banks is now underway but there is mounting criticism of the plan from legislators and banks.
Sure, now they complain.
Well, it's better than the "Correction for Yesterday's Assets" (CYA) title that the Oval Office had submitted after a naming brainstorm session at the Prez's 'Throne Room@1600' .. Apparently it was submitted on perforated facial tissue.
Mycelium driven cellulosic ethanol is an interesting new topic to me. I read about it first in Paul Stamet's book "Mycelium Running". There's an amazing picture of a corn cob consumed by oyster mushroom mycelium in his book. He said that the mushrooms break down the cellulose and then make it available for bacteria and yeasts to convert it to ethanol. Has Robert Rapier or anyone else seen this discussed or tried in larger production? Does it radically change the EROI for cellulosic ethanol?
I don't imagine many can speak for Rapier, but I think part of his reply would involve transport distance and cost for the biomass.
I hope he weighs in on this, does he envision see any possibility with the new or to be discovered enzymes in producing local fuel sources?
As I understand it, the biggest barrier is lignin, then scale. Biomass transport cuts scale to small volumes per plant. Would the new lignin enzyme costs be cheap enough for small plants (for local usage) to compete with traditional fuel?
If the fungi could break down urban waste products, like paper and discarded food, we would eliminate the transport cost because the resulting biodiesel would be consumed on the spot. Fungi don't use sunlight, so we could put the processing underground.
In short, you still have to grow and transport the biomass --with the limitations as before but also potentially others. Having the best enzyme to break down the cellulose into something yeast can turn into ethanol is great, but separating the alcohol from the water still accounts for the bulk of the energy inputs. And some of the energy in the original biomass is necessarily lost during the breakdown as heat to the ambient.
This is seemingly different from the Myco-diesel in the news a couple of days ago, which forms higher hydrocarbons directly. This is intriguing, but it will probably remain an academic project for a long time.
I did a riff on that a while back: http://mdsolar.blogspot.com/2007/07/toadstools.html
One of the best (most amusing) papers I found was on a mushroom that ferments itself: http://www.jstage.jst.go.jp/article/fstr/7/1/88/_pdf
I calculate about 1 ton per acre per year of carbohydrate from mushrooms grown on three cuttings of hay per year. Corns gives about 8 ton of carbohydrate per acre per year. A 40 foot tall silo with a 14 ft diameter can service 60 acres growing mushrooms on the hay that is grown on that land. The spent mushroom mash should make a good feed because of its high protein content.
On EROEI, it is hard to get away from the need to distill ethanol from a mash so you are going to have substantial energy input. Hope that helps.
Chris
I had and idea on this.
Most of the corn growing regions also have cold winters. A sort of cooling tower or better think of it as a natural orange juice concentrator would eliminate most of the energy needed to extract the ethanol. The process is simple instead of distilling you freeze the water out.
The other is pretty damned simple extract the ethanol into another water insoluable solvent.
And last and I think best freeze the water but in a closed container combined with a semi-permiable membrane or osmosis.
I'm pretty sure the pressure of the frozen water would drive out all the ethanol.
We used to make applejack when I was a kid. You can less than half the water out that way but that is a good start. http://en.wikipedia.org/wiki/Applejack_(beverage)
Robert Rapier (I think) has mentioned a membrane technology but he did not seem all that enthusiastic about it.
Ethanol is dried using desicants to get the last bit of water out. This is a little like your solvent idea. The desicants have to be regenerated which takes energy. If you try to draw off ethanol into a solvent, it is then even more dilute than when it was in the water so you still face a separation problem. However, you might find a solvent that seperates more easily with a membrane. If so, then this could be worth pursuing.
Chris
Breaking News: GM, world's largest carmaker, reports $4.2 billion loss and warns it is running out of money.
(CNN.COM)
And this as a news item too...
Ford: Massive loss, job cuts
I spend two weeks a month in the GM towers, and the mood here is quite sober, muted, and subdued. Most people here are quite worried, even if they don't work for GM directly.
Personally, I think that maybe GM should move to start selling covered motorcycles. They would be vehicles that people could afford to purchase due to lower sticker price, and also afford to own via lower fuel costs.
I think that Honda is a motor company that is much better suited to weather the storm as they produce motorcycles, power equipment, lawn equipment, etc in addition to cars. Niche markets can pay off very well in good times, but do horribly in bad times.
GM needs to do a lot of things that they won't be able to do until they go through bankruptcy. Their past obligations hobble any possibility of regaining profitability. They must get rid of the pension and health care anvils in order to survive. Any bailout just postpones this. They haven't made money in NA since 2004; this is not a new problem. One of their recent CEOs called GM "a health care company that happens to make cars".
Bankruptcy will not see GM disappear or even stop making cars. It might make it possible for them to produce small, fuel-efficient cars in quantities appropriate for a credit-constrained economy, and maybe even make money doing so. This is a good thing. It will suck for their retirees, but they're going to get the shaft anyway.
Why cannot GM, F, C and supplier UAW retirees rely on Medicare like everyone else does. They had a claim on the assets of shareholders (GM, F, C, Delphi Auto, Visteon Auto...) and shareholders in all those entities have essentially lost everything.
Should the country be providing additional Gold to UAW retirees from the pockets of those less fortunate?
Once Federal support stops the Unions will bankrupt what they touch. Why delay the inevitable by providing additional Gold to the UAW?
But it is a political decision; therefore the current Congress and President can provide stopgap funding to tide over the UAW until Jan 20th and then the new Congress and new President should be able to decide to continue, expand or eliminate the program.
I can't think of anything GM can make that the Chinese can't make cheaper, now that the rates for international shipping have collapsed.
I had an idea last year, but it might be too late for it now. The idea was that only China and India can make electric cars cheap enough, but Americans won't buy unfamiliar brand names. So:
1. The US & Europe sign a treaty with China & India whereby the poorer countries supply the doomed automakers of the richer countries with a standardized entry-level urban electric car.
2. The poorer countries in turn BAN gas engines in small cars, and especially scooters. No one in those countries yet feels entitled to a $3000 polluter; they can learn to live with it, and suddenly the car companies there have guaranteed markets both at home and in the rich countries.
3. The rich-country automakers sell the electrics under their own brand names and guarantee warranty support.
4. All these governments supply a subsidy of several thousand dollars per small car.
I think that an entry-level car with lead-acid batteries could be built over there for less than $5000, and sold here for about $8000. A $3001 subsidy takes that down to a very attractive $4999. People at least will be able to get to their jobs.
Lithium battery production will also have to occur over there and needs a similar guarantee so that this program can be moved into the compact car class.
The problem now, of course, is frozen credit. The Chinese alone have enough cash to get credit moving again but they'd be crazy to trust us with affordable loans unless they're assured of a huge future payoff. I'm afraid that this payoff must be their conquest of the US car market.
A lot of this would occur more easily if Tata and the Chinese companies simply bought out GM, Ford, and the big European companies. The only thing the governments would have to do is pass the ban on small gas engines over there, and the price subsidy. The fight would then be to convince Congress to allow the takeover in exchange for preventing 20% unemployment in the Midwest.
Next: my plan to have India and China make everything out of bamboo plywood.
Hello Durandal,
Your Quote: "Personally, I think that maybe GM should move to start selling covered motorcycles. They would be vehicles that people could afford to purchase due to lower sticker price, and also afford to own via lower fuel costs."
Here is an 8:00 minute Youtube video of a 'covered motorcycle', a Daihatsu Midget II 660cc 4-speed single-seat pickup [heating standard, but A/C and van-body versions are available too]:
http://www.youtube.com/watch?v=Z2hyWBqR1EE
IMO, these would sell like hotcakes if they were street-legal in the US. Unfortunately, you can currently only import them now for internal use on a farm, construction site, or a big resort. If you google around there are some cool versions where the owners have fancy paintjobs, blinged-out custom wheels & tires, and even aero-body kits.
I think GM is a part-owner of Daihatsu--they ought to start importing a lots of these different mini-car models, even the four-wheel drive versions, that are now manufactured overseas, or better yet manufacture them here in the states. Heck, I might even consider trading my scooter for a Midget II- the engines are almost the same size! For comparision: a big Harley or big Honda Goldwing is 1600cc-1800cc.
This would be an effective 'bridge' until we get Alan Drake's ideas ramped up because these minicars are cheap, cheap, cheap and high MPG.
Obama in private conversation, quoted in Newsweek:
I think the guy gets it.
http://www.newsweek.com/id/167582/page/2
This is the crucial difference between oil depletion and global warming. The first will be solved mostly by individual initiative in response to high prices. It's not that difficult for individuals to cut their oil use in half and they realize immediate savings by doing so. But global warming is very different. It doesn't matter what you do, if others are emitting more and more carbon.
Datamunger, congratulations.
That's the best, plain-English explanation of the 'tragedy of the climate commons' I've come across ever.
Hi Datamunger,
Interesting quote.
re: "This is the crucial difference between oil depletion and global warming."
Here perhaps I differ, as it depends on how one invests the oil one uses, or towards what uses one puts it, so to speak. Cutting oil use in half may (or, "can", or, "sometimes does"?) result in less investment in a project that will pay off in the future. Present savings can translate into less capital investment, in other words.
This may be at the heart of Cliff's argument concerning the questionable nature of an investment in renewable energy technologies, given a near-term (present?) peak date.
We could take a number of examples as illustrations.
I would say an exploration of the usefulness of the generality depends on having more specific context for discussion.
Further, in an attempt to think about what a sustainable economy would look like, we'd have to think about whether this would involve an increase in oil use for some period of time...(the investment phase)...
Also, I'm not so sure that high prices can "solve" oil depletion, partly or mostly. When high prices are followed by very low prices (increased volatility as per Deffeyes), then we hatch a host of problems. Also, high prices can leave individuals with no way to make strategic moves.
Also, when we are talking about ever-increasing prices (or, the volatility scenario, either one), we logically, at some point arrive at a time of 1) rationing and/or 2) the oil market ceasing to function. I'm not so sure this is a "solves it" scenario, at least in the way we'd like it to be.
This statement means that conservation does not solve global warming. He is saying that personal actions like reducing your consumption of fossil fuels do not solve it. One must eliminate the emissions of anthropic greenhouse gases which requires a collective action. For example, replacing an incandescent light bulb that consumes 1,700 kW*hr over 20 years from a coal fired generator with a florescent bulb that is four times more efficient, releases the same amount of GHG's over a span of 80 years if we do not eliminate the coal fired generator. Slowing the rate of release of GHG's postpones, but does not stop, anthropic climate change. We need to eliminate the coal fired generator and leave the unburnt coal in the ground which requires a collective effort. He understands that personal actions based on conservation are ineffective in dealing with anthropic climate change. His statement in no way illustrates his comprehension, or lack thereof, of oil depletion.
This is a piece of mine, published by the Asia Times on Wednesday. It puts together financial mess, energy, and the economy:
Economics Can Open to New Realities
Economics can open to new realities. By gosh, gee whiz, wee willy wagons, looks like new realities are opening everywhere.
The Onion headline says it all, "Nation Finally Shi++y Enough To Make Social Progress".
http://www.theonion.com/content/news/nation_finally_shitty_enough_to
yes, not my title, why dont you read it
Sorry Joe, too tempting a lead in to pass up:-) No offense intended.
Your comments in the Asia times gives people much to think about. Well done.
If I may be so bold to add to your insights, human beings do their best thinking in conjunction with catastrophic events. If necessity is the mother of invention, crisis is the father of innovation. Biology has built in for us adaptabilities to our changing environments.
We are going to need the friendlier side to our biology to help off set our deficits.
Cheers!
Understood, unfortunate title, so it goes.
(Parody Alert)
From: The Onion headline says it all, "Nation Finally Shi++y Enough To Make Social Progress".
A great day indeed.
I read that. Great piece joe and thanks to Asia Times for publishing it and lots of other fine analysis.
Strong work Sir.
Curious what you think of Hernando de Soto's assertion that the crisis centers around the issue of how value is determined by ownership rights and right now nobody knows who owns what?
Water isn't worth anything until Nestle's takes ownership, for example. And then there is the whole intellectual property clusterf**k. Technology and trade are all about ownership. The VW incident comes to mind when you mention "nobody knows who owns what" - the whole planet sold short? Is that another name for "musical chairs"? Too much money and not enough real world to support it. I've read a couple of de Soto's books; he's sharp. This is a fantastic trio.
cfm in Gray, ME
Dryki - Which book do you like best?
I think this was the first I heard from him.
The only one I own is "The Mystery of Capital". There is a chapter or so on property title in Egypt (or lack thereof) that addresses the ownership issue. That he can make something like that readable is good testimony!
Ownership matters. A lot. Not only who, but the form. A closely held corporation - where the owner drinks the well water - is far better than a foreign or alien corporation; it's part of the community. Liability - or rather lack thereof- though, is still a problem.
EDIT after listening to program:
Wow! I finally had the time to listen to that while butchering a few chickens.
DeSoto is focusing on property rights. His argument works for NOLA, the West Bank and tsunami victims. But he hints - though I don't think he understands it - that the argument is bigger - that law is out of touch with reality. "Law is crucial if you want to govern anything," he says. Yes. There are several forks from that thought:
1) As outlined by Hornburg in "The Machine", how law is indistiguishable from culture and technology and therefore empire. Hornburg is a philosopher - but he's plenty conversant in energy and the thermodynamic economy.
2) Instrumentality of law. Jack Balkin and the crew at Balkinization write now and then about the "instrumentality" of law, eg who owns the law and who does it work for. That connects to "The Machine" in that law is an expression of social context and control. Joel Salatin's latest book: "Everything I Want To Do Is Illegal" - because Whole Foods and Nestle's own the law.
3) Justice - too many people think the law is about justice. That's only one of maybe half a dozen major understandings of "law".
4) Impeachment. Huh, you ask? We have a president who has proclaimed himself above the law. We have legislators at all levels - federal, state and local - as well as a military - that have ignored their oaths of office. The "authorities" won't enforce the law. [John Dean and Bob Altemeyer get into why.] It's not that the "system isn't perfect" as Stiglitz says, people understand that the system is rigged. And it's right out there in our faces. I witnessed DOJ lawyers claiming - in court - that there was no wiretapping even as the President boasted of it. And the court bought it because the State of Maine wanted to cave. A fish rots at the head: "the paper no longer reflect what is going on," deSoto says. The legal system that used to inform no longer informs. deSoto calls that a property problem, but it's way bigger, it's Gitmo. And it destroys the credibility of law itself. What's legal is what one can get away with.
Every one of our crises is a divorce between our values and what exists in real world, deSoto says. He's conflating the different aspects of our "legal" system. Stiglitz brought up our bankruptcy laws but didn't really complete the circle. The bankruptcy "reform", for which Joe Biden was such a torch-bearer, is another example of instrumentality of law. Not justice, but using law to extort. On behalf of his "constituency".
Stiglitz says this is the natural evolution of a system without regulation. Sure. He suggests regulation. As if regulation by the banana republic of its own activities is going to work. That's the same thing Greenspan suggested: that the businesses would regulate themselves. Sorry, that fish is too rotten.
Stiglitz says it's "bad corporate governance". Bullshit. It's *good* corporate governance; this is what corporations do. I'm going to withdraw my nomination of Stiglitz for Treasury Secretary. We don't need no steenkin' progressives. That meme is dead.
So there is no law, except perhaps among otherwise-equals; only the application of force. DeSoto doesn't quite connect the dots. We're a banana republic and banana republics don't have "law" in the sense of "justice", only in the sense of "instrumentality" - and even that is only as a fig leaf. That's what Naomi Klein means when she brings up "authoritarian capitalism". Instead of some dictator running a banana republic, it's Paulsen and his cronies dictating the terms through Sachs or the Federal Reserve Bank.
Authoritarian capitalism. Yup. "Them or us," Klein says. Yup. Power, not law or good sense.
When you circle around to resource depeletion and energy specifically, authoritarian capitalism is probably the worst "solution". The worst of all technological singularities.
cfm in Gray, ME
Thanks for this post Dryki !!
Dryki,
I'm sincerely happy you are starting to get it. Now what? Lots of people read/have read Crossing the Rubicon, The Shock Doctrine, Patriots: Surviving the Coming Collapse and lots of similar books. Yet, they sit on their hands and do nothing.
There are three choices: work within the system, fight the system or become invisible to the system.
Todd
Thanks for that Dryki.
I too thought, as De Soto talked, that this was all inclusive. You cant change the rules anywhere without blow-back effects elsewhere.
I also thought Stiglitz did not fare well there.
He seems to be talking about change in world currency and governence but doing it using the same tools we are using now.BS
Joe,
Excellent article.
It provoked many thoughts on my part, and I want to articualte a response. Much of what you write I agree with, especially your diagnosis of the problem:
We also agree on where we eventaully need to wind up:
Where we disagree is our analysis of how we got where we are, which would of course also make us disagree on how we need to get out of where we are.
I want to write a rebuttal, but it will take some time to formulate that response. I will, however, do so in the next week or so.
"Rich nations should ditch 'unsustainable' lifestyles: China's Wen"
Does this include having too many kids?
Well, you can't accuse China of not taking population control seriously.
We certainly aren't:
From Demographics of the United States (Wikipedia)
Typically birth-rates plummet in a depression in advanced economies, as happened in the 30's and recently in Eastern Europe.
Unfortunately in less developed regions a higher natal death rate due to privation and war often results in much higher fertility.
If you deduct the children of illegal immigrants what is the statistic for the US?
I don't have the figure but if you go here:
http://www.prb.org/
With a little work you should be able to tease out the figure you are looking for - the data sets available there include all the information required, such as the number of immigrants and birth rates.
If they don't specifically give the number of those immigrants who are illegal you should be able to get a guess at that from other sources an work out a figure from there.
Hope this helps.
The world has shown over and over again that the advancement of the status and opportunities for women in a population has resulted in a strong decrease in the population growth rate. Basically, raising children is difficult and thankless, and only a small minority of women will choose the option of raising a large family no matter how much they care about the kids they already have. The other side of the coin is the large and increasing number of older people around the world. Children are investments; productive adults are the engine of the world. Putting resources into caring for the unproductive elderly is charity on the part of a society. Thankfully, most people are taught that charity is good. But you could just as easily argue that Medicare should not provide statins or insulin -- thereby prolonging the life of the retired. So lets work on educating women, give them control over their sexuality and lives, and encourage them to do a really good job raising the children that result.
Hello TODers,
Have you hugged your bag of NPK today?
http://www.reuters.com/article/marketsNews/idCAN0640357320081106?rpc=44
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Canpotex signs higher-priced Japan potash contract
The new contract price, which is applicable for the first half of 2009, is about $200 to $220 per tonne higher than current contract prices, depending on potash grade.
"This contract settlement demonstrates that our customers understand that potash remains in tight supply and fundamentals are very strong, despite the recent volatility in markets," said Canpotex Chief Executive Steve Dechka in a statement.
"Longer term, I fully expect potash prices will ease from these historically high levels. But, in the near term, dislocations within the market are fully supportive of prices much higher than historical levels," he added.
--------------------
IMO, if highly volatile energy prices postPeak return to set ever higher highs and only temporarily slightly reduced lows, I would expect I-NPK prices to continue as mostly upward pricing trend too.
http://www.cbc.ca/canada/saskatchewan/story/2008/11/07/potash-strike.html
----------------
After three months, a strike involving 500 Saskatchewan potash mine workers could soon be over.
The Potash Corporation of Saskatchewan said Friday it has reached a tentative deal with the United Steelworkers.
"It's probably fair to say that the outlook in the world economy looks a little different today than it did three months ago, but you know, the two sides decided it was time to get back to work."
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http://www.plastemart.com/plasticnews_desc.asp?news_id=13505&P=P
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African Petrochemical Sector to have a bright future
As the petrochemical industry intensifies its global search for new chemical feedstock sources, a growing number of companies are looking closely at Africa's largely underdeveloped and potentially vast hydrocarbon and mineral resources as an alternative source of supply.
In fertilizers, the typical African farmer uses about one-tenth of the amount of fertilizer per acre that a typical U.S. farmer uses, offering considerable room for increased fertilizer demand.
---------------------
With the credit crisis and the looming Hubbert Downslope, I really don't see any way for an African farmer to ramp his I-NPK use ten times. But others much smarter than me might find a way for this to happen. As time goes on: I still think all countries need to ramp O-NPK recycling to help defray I-NPK price increases.
BTW Leanan: Thxs for posting the toplink on farm water going for pointless golf courses, swimming pools, and carwashes-->the Overshoot Madness continues...
http://www.bloomberg.com/apps/news?pid=20601109&refer=home&sid=a3vuPWZHmJ.o
--------------------
"It's all about money," Aranjuez environmental chief Olga Rincon said from her office by the town's main square. "Water that once nourished our land was sold to the south just to keep their unsustainable economies of golf courses and resorts going. It's plainly irresponsible."
--------------------
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
I specifically need to comment on the "Starving and penniless, Ethiopian.." link up top.
If you read the link it states that the farmer replaced his edible corn crop with an inedible Castor bean crop that now has little value.
This is exactly why the U.S. farmer has been focused on corn and soybeans as biofuel crops.
For the past two years I have made it my business to understand the biofuels business, especially biodiesel, at every level. This means the farmer, producer, consumer, fuel blender, additive manufacturer, policy maker, recreational user, local, state and national policy, and others. Almost the first thing you learn when working with biofuels is that they put a floor under production of the crop so that they minimize the boom and bust cycles. Fuel does not displace food unless no one has any money for the food use. Biofeuls maximize the food acre base.
My experience the last two years is that people are always willing to pay more for food than fuel when the budget is tight. Or put another way if people aren't willing to pay for biofuel you can always eat or feed the raw material. There are still price swings but nothing like in teh 1970's and 80's.
Now lets stop growing a lot of corn and soybeans and even palm oil and start growing Castor beans, or Jojoba, or Jatropha or any other inedible oil or cellulose plant because morally we shouldn't convert food to non food use. What happens when there is an over supply of those crops? What do you do with the spent meal of Castor beans and Jatropha after extracting the oil since those meals aren't edible? How is shifting away from growing food helping the food supply?
It sounds simple to say that we shouldn't use food for fuel but the reason food crops started going to fuel is because there was no market for the crop as food. I have stated this on TOD before: farmers do not grow food to give it away. If the world market can not afford to buy the surplus food that is out there, that is an economic problem not a food production problem. Farmers must be paid for their labor and inputs. If prices drop, due to too much supply, or too little demand, or both, farmers want a fall back position to recover their costs.
That is why biofuels are made from corn and soybeans and palm oil. Because as yields ramp up it is easy to get into an over supply situation based on price. It is irrelevant that there are starving people in Haiti or Ethiopia that need food. They can't buy it at any price because they have no money. Making more available at 1/2 the price does nothing at all for those people, they still can't afford it.
For decades now the U.S. farmer has been blamed for dumping corn and beans on the world market and driving local farmers out of business. But as soon as the U.S. farmer takes some of the crop off the market, via biofuels, they are accused of raising prices and horror upon horrors using food for fuel.
Now everyone reading TOD should put themselves in the U.S. farmers shoes. If he doesn't grow a lot of crop he makes no money and loses his farm. If he grows a lot of food it drives the price down worldwide and he makes no money and loses the farm. And now when farmers want to divert the excess (so they don't lose the farm) they are accused of making people starve via biofuels.
Maybe the link between poverty and food supply isn't as clear cut as many people posting here think it is.
I don't think anyone's so naive as to think it's good to displace food crops with nonedible biofuels. The point of using non-food crops is that they are supposed to grow where you cannot grow food, or be a by-product of food production (Dubya's "wood chips and stalks").
But this is why I find Biopact and its ilk appalling. It will end up taking food from the hungry.
Very interesting analysis. Adding the impact of food prices on foreign aid might be helpful, but you've definitely made an interesting point.
The link up top is interesting: Starving and penniless, Ethiopian farmers rue biofuel choice
And there are still a few people who say biofuels does not compete with food production. They say that we can have biofuels without a reduction in food production. What a crock of donkey doo that is. The more biofuels we produce the less food we will produce and more people will starve.
Ron Patterson
Had the plan worked and had he been able to get cash for his castor beans, he could have had a better life. (otherwise he wouldn't have made the decision to plant castor beans in the first place). The article doesn't say he is starving, but rather short on income.
He and his family would be starving without handouts from aid agencies. But that is not the point. The point is, land that once produced food is now producing biofuels and the farmers are far worse off than before. It simply cannot be denied any longer that the production of biofuels means less production of food. That should be obvious to any third grader.
"He and his family would be starving without handouts from aid agencies." It doesn't say that: "I used to get four quintals (100 kilograms, 220 pounds) of maize from my land from every harvest and earn more than 2,400 birr (240 dollars). But now, I have lost my precious source," the 25-year-old father of two said." So, he was selling his crop, not eating it. Now he is applying for aid just as the farmers in the US sometimes have to do if their crop doesn't pay enough.
Before he got paid, now he is not. That's the difference. Not food vs fuel. For instance: someone could have talked him into growing sweet potato instead of maize. If that sweet potato buyer didn't come through also and didn't pay for the sweet potato, Ashenafi would still be left without income.
"It simply cannot be denied any longer that the production of biofuels means less production of food. That should be obvious to any third grader."
And that same third grader can understand that if there is no shortage in food, you can do other things with your land.
Right! And if you have no land, or only a tiny parcel of land not even large enough to support one but you must support a family of five on that tiny parcel?
There is a desperate shortage of food in many parts of the world. When people resort to eating mud while others are saying "there are no shortage of food" someone is desperately wrong. And it is obvious who is wrong in this situation.
It just makes me fuc**** sick when people deny that there are children starving in the world today. It is just down in the dirt stupid to deny the obvious.
Ron Patterson
"There is a desperate shortage of food in many parts of the world. When people resort to eating mud while others are saying "there are no shortage of food" someone is desperately wrong. And it is obvious who is wrong in this situation.
It just makes me fuc**** sick when people deny that there are children starving in the world today. It is just down in the dirt stupid to deny the obvious. "
No one is denying (I think) that some are starving in this world. But it's not because there is not enough food in the world. Just bad management and distribution. Even if there was 10x more food in the world, there would still be some starving.
Ron, did you see the Price those poor people are paying? they're paying more for mud cookies than you'd pay for a "famous Amos" chocolate chip.
Their government, and the elite, are killing them. Not us. We'll sell them all the wheat, and corn they want, for a lot less than they're paying for "mud" cookies, but their government won't let us. We have to sell it to the government, then they mark it up six, or seven hundred percent. That's not OUR fault. In fact, there's NOTHING we can do about it. Period.
Ron, approx. 70% of the world's malnourished are "subsistence" farmers. They can raise a little corn, or rice, or cassava; but they don't have a "Cash Crop" to allow them to buy the other things they need (fruits, vegetables, meat, etc.)
The world is awash in grains, corn, beans, etc. BUT, it doesn't do those millions/billions of people any good because they DON'T HAVE ANY MONEY. We donate a little corn, wheat, etc. to make ourselves feel better; but, we, as likely as not, do as much harm as good.
They can raise some field corn, and cassava, but they don't have a system for selling any excess (or, more importantly, the ability to raise such.)
It's, really, much more a matter of Governance than anything else. See "Malawi" for an example of a Government that's breaking the "Chains the Bind." BTW, they did it by telling the U.S., the Eu, the FAO, and the IMF to go jump in the lake.
$240.00 for 4 Bushels of corn? I think the local buyer went broke.
Seriously, we finished the year with 1.4 Billion Bushels in storage. You can buy all you want for about $0.06/lb.
Poor people fall into bad business deals all over the world, every day. It's sad, but true. I'm sure (I hope) he'll get some help, and it'll work out.
By the way, it looks like in one case at least biofuels will lower the cost of a food commodity. Poet intends to pay the farmers (probably about $50.00/acre) for their corn cobs. This means they can, theoretically, at least, raise corn for less per bushel. This doesn't Have to lower the price of corn; but it could. Jes sayin.
The reasoning error here is that one data point (the African farmer) is not a valid sample for the case against biofuels. This lone tragic story can not be extrapolated to the whole of biofuels. The starving African farmer is the exception not the rule. He clearly should not have planted biofuel type crops in his situation.
His situation is not the situation of corn ethanol. Corn is both animal feed and biofuel. No choice to plant biofuel crops only is being made in American agriculture as far as I know. The surpluses of corn are so great that the price has dropped by 50% since July even as ethanol production increased. And contrary to the poor African farmer, American farmers are hardly starving because of biofuels. They are doing better than ever thank you.
In the meantime food prices have continued to increase putting the lie to the claim that corn used for ethanol causes rising food prices. If there were a causal linkage, corn related food items like eggs, milk and meat should be falling which they are not.
In any case, the idea that some land can only grow non food crops is bizarre. Any land that can grow non food crops like tobacco, cotton or timber can grow food crops, even if it is only scrub grass which can be turned to beef and milk by cattle.
Third graders are not very good reasoners. The idea that food is of higher economic value than fuel should be reflected in prices if it is valid. Corn and other biofuel base stocks should be priced such that the use for biofuels is uneconomic. If they are not, the market is saying the food use is a lower or equal priority than fuel use.
Replacing market prices with a personal bias against biofuels is as bad as a government policy bias favoring biofuels.
I think the root problem with this thesis is that my ability to afford corn for fuel may be higher than your ability to pay for corn for food, even if we both agree that food is more important. Relative value to you is moot if the valuation happens to be in currency you don't happen to have.
This doesn't mean your analysis is incorrect, just that monetary systems can be efficiently cruel.
Hello TODers,
Just to add some more info to this DB minithread discussion:
http://www.flex-news-food.com/pages/20351/Food/Global/food-riots-looming...
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Food Riots Looming Again in 2009 - UN FAO
The financial crisis gripping global markets could trigger a new wave of food riots across the developing world, the FAO has warned.
The twice-yearly FAO study said: “Under the current gloomy prospects for agricultural prices, high input costs and more difficult access to credit, farmers may cut their plantings, which might again result in a tightening of world food supplies.”
A senior FAO economist said yesterday further price increases could happen again during the 2009-10 harvesting season “unleashing even more severe food crises than those experienced recently”.
Even though commodity prices have slumped, the global food imports are predicted to pass US$1,000 billion for the first time ever in 2008 – an increase of 23% on 2007, and 64% higher than in 2006, the FAO revealed.
Developing nations will account for US$343 billion of food imports across the world in 2008, a jump of 35%, and many nations are trying to cut this bill in the midst of economic difficulties.
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As our Westexas has warned before: PostPeak will not be a good time to be both a food & energy importing country.
The next weblink highlights I-NPK company MOSAIC slamming the factory doors shut to help keep prices high:
http://www.heraldtribune.com/article/20081108/ARTICLE/811070228/-1/NEWSS...
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After soaring stock price gains earlier this year, the Mosaic Company is taking a financial hit that has crimped its plans to increase phosphate production in Southwest Florida.
With thousands of acres of phosphate strip mines and several processing plants in the Gulf Coast region, Mosaic Company is the world’s largest producer of phosphate, a key component of fertilizer.
In response to a lower stock value and a dip in phosphate’s price, Mosaic plans to cut production by as much as 20 percent.
Tighter credit is forcing farmers to spend less, the Goldman Sachs analysis stated...The price of phosphate, however, is still much higher than it was a year ago...Townsend said he expects the declining demand to be temporary.
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As posted before: the I-NPK companies appear to be much more nimble at inventory control than the IOCs & NOCs appear to be on crude inventory control.
from CNN.com... "The Dow jumps 258 points despite a devastating jobs report and news that GM is running out of cash."
Um, can we say 'herd mentality'?
Maybe they could get Exxon to buy GM with it's massive 'windfall' profit hoard. Vertical integration by making the appliance and the fuel. Completes the loop. When fuel's cheap they could make it on the cars until... you get the picture. Sort of a closed system except for the exhaust pipe.
I have never understood how higher unemployment and therefore fewer customers is good for business. I have seen this counter intuitive behavior in the past quite often.
Was it people covering shorts?
War and Piece reporting on "UPI's Ben Lando and Alaa Majeed exclusive(ly) report:
In yet another sign of the apocalypse, Honda has invented a device for people who CAN walk, but don't feel like it. At first I thought it was for paralytics or amputees, but no, it's just for lazy folks:
http://www.cnn.com/2008/TECH/11/07/robotic.walker.ap/index.html
"Honda has invented a device for people who CAN walk, but don't feel like it. "
A car ??
Triff ..
Priceless quote from the article...
Any Sci Fi buffs here know who HAL is...?
Or better yet, Cyberdyne...? (Hint: Think Ahnold)
OMG. WTF.
Hello Geckolizard,
Thxs for the telling Sci-Fi symbols. I now picture Big Brother sending out a universal broadcast code that will cpu compell these autolegs to jump off cliffs and/or high buildings or else make the helplessly strapped-in victim suddenly veer off course into the path of trains or big vehicles.
Aren't we fat and lazy enough? Do you ever wonder if animals shake their heads at us in disgust?
The latest EIA International Petroleum Monthly is out. July C+C production has been revised downward from 75,099 kb/d to 74,941 kb/d. That is still the record however. August's production took quite a hit. It is down to 73,800 kb/d. That is a drop of 1,299 kb/d before the revision and still a drop of 1,141 kb/d after revisions.
Biggest loser in August was Azerbaijan, down 411 kb/d. There must be some serious maintenance going on there, or some other problems. Other big losers in August were Norway, down 245 kb/d, US, Down 215 kb/d, UK down 207 kb/d, and Saudi down 100 kb/d. Much of the US shortfall was due to evacuation of GOM platforms in preperation for Gustov. Norway and the UK had a lot of maintenance but according to Norway's official website, their production did not recover in September.
Big gainers were Nigeria, up 96 kb/d, Russia, up 62 kb/d and Other, up 53 kb/d.
OPEC was down 91 kb/d and Non OPEC was down 1,050 kb/d.
Ron Patterson
bigger
One operator in the Haynesville Shale trend has reported initial well flow of 15 million cubic feet per day in the Bossier Parish, Louisiana:
http://uk.sys-con.com/node/737653
Man, it is weird out. There are a lot of happy drivers, given the price of gasoline today. I filled up my car for a price of $1.88 per gallon, and if I had the oil companies credit card it would have been a buck eighty.
But there are a lot of pissed off folks too. I have a friend who topped up his propane tanks earlier than ever a few months ago at over twice the price he would have paid today. He was terrified that propane would only get higher and higher, so he filled everything he could, his house, his childrens house, rental property, to the tune of thousands of dollars. He now knows that he gave the oil companies a free windfall. I know several people who made a similiar choice, both in purchases of propane and heating oil, and have suffered harsh financial losses because of it. But at the time, it seemed to be the most prudent financial move. I wonder how many people have lost thousands or even tens of thousands of dollars (if they own rental property, businesses, etc.) in the last half of a year or so based on their belief, now shown to have been false, that they would never be able to buy energy at a cheaper price.
A female friend of mine was barely a year into a 5 year loan for a large General Motors SUV. The price of gas was breaking her. So, even though she loved the truck, she traded it in for a small GM sedan (which she hates) to save fuel cost, and went downside in the deal. She is now essentially paying for two vehicles, the remaining of the truck debt and the debt on the little sedan, and watching gasoline prices fall. Needless to say she is furious, and confused. She had been a "true believer" that oil prices would never go down any more than marginal amounts if at all.
I don't think I have to tell you that I do not preach "peak oil" to these people. I would be risking at least a great deal of anger and possible physical injury to do so!
So, what now? The truth is, no one knows. We all love to make conjectures and projections and charts, but no one knows.
The error that some have made on both sides of the argument (cornucopian and peak) is to assume that they KNOW what is going to happen and more importantly when it will happen. Here's the breaking news: They don't. We don't.
For awhile people were planning their affairs based on the assumption that they KNEW where prices were headed: The prices of tech stocks, the prices of houses, and then the price of oil and other commodities. The assumption was the same in all of the above cases: Nowhere but up for the price! It's a "slam dunk", a done deal, you can make fortunes! It's not going down! People will always need {insert favorite bubble here-land, houses, technology, oil, grain, etc} so it will always go up, you can't lose!
Guess what. You can lose. Betting on the price of ANYTHING is a risky business, even the pros sometimes lose their shirts, as we have seen on a grand scale recently.
Now, the tide has turned. Now, it can go nowhere but DOWN, we are told. The recession that will be a depression that will end the modern world. You can pretty much short everything. The world does not need {insert your favorite villian here-technology, banks, entertainment, travel, even oil will be done without in the coming horse and ox cart age, and houses? You can live in a tent by the river, that's your future}
The human mind is a curious thing. The young can be forgiven for such hysterical overreaction, but the old have seen at least one of these cycles before, and the really old have seen several. But we humans react the same way EVERY TIME. It would be funny if it were not so sad.
There is a reason that every great culture has at least one philosophical or aesthetic school that preaches the middle way, the "golden mean", the path of balance, the path of moderation, whatever you want to call it. It sounds so obvious, so simple that the philosophers and thinkers of the school of the middle way are often dismissed, scorned as teachers of the obvious. The reason the philosophers, thinkers and practitioners of the middle way are valued is that despite their rather self obvious philosophy, they are so damn rare.
RC
...and sometimes you feel like a useful idiot.
I really enjoyed reading your comment with its sweeping view of history.
Yet I think you might be "sweeping" everything up together and generalizing too much.
With regard to oil and other commodities, it seems there might be a pattern afoot.
The stuff becomes harder to produce due to scarcity. The price goes up. The cost to produce it also goes up. The economy collapses and demand crumbles. The prices sink. The cost to produce doesn't sink that fast. So little by little, the supply lines are frayed.
For example, look at the retail sales results in the US last month. "Off a cliff" was what the NYT said. Some stores reported sales down by as much as 30% compared to last year, same month. So what will happen? Lots of stores will close, more people out of work, more bad sales results, etc.. The supply lines for retail products are becoming fragile and they'll even fail.
The same thing will happen with oil and gasoline. If the gas stations can't get you to pay enough to make it worth their while to get ahold of the oil, then they'll just shut their doors.
You can't invest by following what everyone is saying is a "sure thing" I agree. You may have to live in a tent by the river even. (That actually sounds like an attractive prospect to me, a house is so boring). But when energy availability decreases living organisms (after all, humans are living organisms and are no smarter than yeast) decrease all sorts of activity in response. Things s-l-o-w d-o-w-n......and that is a sure thing.