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Drumbeat: November 9, 2010
Posted by Leanan on November 9, 2010 - 10:27am
E.P.A. Subpoenas Halliburton on Fracking
The Environmental Protection Agency said Tuesday it had subpoenaed Halliburton for information on the chemicals it uses for hydraulic fracturing, a natural gas drilling technique involving the high-pressure injection of water, sand and chemicals deep underground to break up rock formations.In a statement, the E.P.A. said it had made a voluntary request for the information from eight other major drilling companies, all of which had either provided the information or pledged full cooperation by early December.
Has the World Already Passed “Peak Oil”?
The year 2006 may be remembered for civil strife in Iraq, the nuclear weapon testing threat by North Korea, and the genocide in Darfur, but now it appears that another world event was occurring at the same time—without headlines, but with far-reaching consequence for all nations.That’s the year that the world’s conventional oil production likely reached its peak, the International Energy Agency (IEA) in Vienna, Austria, said Tuesday.
According to the 25-year forecast in the IEA's latest annual World Energy Outlook, the most likely scenario is for crude oil production to stay on a plateau at about 68 to 69 million barrels per day.
In this scenario, crude oil production "never regains its all-time peak of 70 million barrels per day reached in 2006," said IEA’s World Energy Outlook 2010.
Gas glut threatens investment in renewables sector, IEA warns
A global gas glut which could last a decade will act as a "major barrier" to the development of renewable energy, cleaner coal plants and nuclear power, according to the International Energy Agency (IEA)."The golden age of gas" will lead to cheaper gas prices for consumers, particularly in Europe. But the IEA added that it is also likely to result in a rush to build gas-fired power plants at the expense of much cleaner forms of electricity generation.
In the early 1990’s I watched areas of Guangdong Province begin the slide from lush 3-crop-per-year productive farmland into what is now toxic (perhaps irreversibly so) industrial swamp. The factories I visited were makings what the retail business calls “Trim-a-Tree,” a product category that is the very epitome of “Stuff.” You know what I mean; those holiday and licensed character-themed mantel figures, cookie jars, door decorations; those objects devoid of artistry that spend a few weeks in service, and a few centuries if not millennia decomposing in landfill. Thanks to the recession, among the things that Americans can no longer afford to order from Chinese factories is a large volume of “Stuff.”The economic paradigm I’m putting out here is that when the American consumer moves permanently beyond “Peak Stuff” it’ll be a moment of great opportunity for the US-China economic relationship.
Sustainable Growth Is An Oxymoron
One of the most unnerving aspects of global climate change for the human psyche to absorb is that it drives home with absolute finality the notion that Earth is finite. I know, that sounds obvious, but people have never behaved as if Earth were finite. They have behaved as if Earth and its resources, the environment itself, were infinite.
Qatar Oil Minister Doesn't See OPEC Changing Quotas Next Meet
DOHA (Zawya Dow Jones)--Production quotas are unlikely to be changed when the Organization of Petroleum Exporting Countries meets next month, Qatar Oil Minister Abdullah bin Hamad Al Attiyah said Tuesday.When asked whether OPEC would alter production levels he said: "I don't think so, so far."
Petrobras Says Drill-Ships Contracts Aren't Behind Schedule- Estado
RIO DE JANEIRO (Dow Jones) -- Brazilian oil giant Petroleo Brasileiro SA, or Petrobras, denied reports that the process for contracting oil-well drilling ships in Brazil is behind schedule, local Estado newswire said Tuesday.Contracting will proceed in line with planned delivery schedules which can still be met, Estado said, citing Chief Executive Officer Jose Sergio Gabrielli. Gabrielli was speaking during an event in Rio de Janeiro.
Spill Panel Says Rig Culture Failed on Safety
WASHINGTON—A federal panel probing the Gulf of Mexico oil spill on Tuesday put the spotlight on the safety culture at companies drilling the well, seeking to move beyond findings a day earlier that rig workers didn't consciously put costs ahead of safety."The problem here is that there was a culture that did not promote safety and that culture failed," said Bob Graham, co-chairman of the panel created by U.S. President Barack Obama. "Leaders did not take serious risks seriously enough; did not identify a risk that proved to be a failure."
Experts say BP increased risk of blowout in Gulf
WASHINGTON -- BP too often operated on the fly in the closing days of work on its doomed Gulf oil well, adding needless risk of a blowout, investigators, experts and panel members said at the presidential oil spill commission Tuesday.They said the company was hurried and made confusing, last-minute changes to plans that were unusual in the complex environment of deep water. They said BP could have operated more safely if the company took the time to get the necessary equipment and materials.
As boomers age, 1 in 5 drivers will be oldsters
Within 15 years more than one in five licensed drivers will be 65 or older, the safety board said. Their number will nearly double, from 30 million today to about 57 million in 2030, according to the Government Accountability Office.Smarter cars and better designed roads may help keep them stay behind the wheel longer.
But eventually most people will outlive their driving ability — men by an average of six years and women by an average of 10 years. And since fewer Americans relocate when they retire, many of them probably will continue to live in suburban homes.
The result is a "mobility gap," said Joseph Coughlin, head of the Massachusetts Institute of Technology's AgeLab, which develops technologies aimed at keeping older people active.
"For many, our homes will not be just a place to age, it will also be house arrest," said Coughlin.
Oil near $90. Thanks a lot, Fed.
NEW YORK (CNNMoney.com) -- Don't look now. But oil prices are getting close to $90 again.Crude is currently trading around $87 a barrel. Prices have not topped $90 in more than two years. But now that the Federal Reserve has made its latest round of quantitative easing official, some fear that crude at $90 is likely in the not-so-distant future.
Saudi oil policy still $70 to $80/barrel
RIYADH: Saudi Arabia’s view that $70 to $80 a barrel is a good price range for consumers and producers is still unchanged, and the country is not worried about a weaker US dollar, a senior oil official said Monday.
Baby, it'll be cold outside, but the Michigan Public Service Commission predicts there will be no shortage of electrical or natural gas heat to keep Michiganders warm.In its annual winter energy appraisal, the MPSC projected natural gas prices to be slightly lower this winter, although that could vary across the state. Electricity sales will increase by 7.6% this year after two years of decline, and natural gas sales will increase by 6% over 2009.
EDF fixes household energy bills over winter
(Reuters) - EDF said it would not raise gas or electricity prices for its British residential customers over the winter, with standard tariffs fixed until at least March 2011.
EU's Oettinger Confident on Gas Supply
BERLIN — European Union Energy Commissioner Guenther Oettinger said in an interview after a Moscow trip that close ties with supplier Russia would avert any new winter gas supply crisis.Preparations have been taken to avoid a gas transit crisis as seen in January 2009, he said.
Shah field is wide open for IOCs
The opportunity for an IOC to participate in the Middle East’s premier upstream gas project came back on the table in March. Oil & Gas Middle East investigates which companies are on the grid, and who is destined for pole position in the bid to net Abu Dhabi’s giant sour gas project.Abu Dhabi is thought to still be on the lookout for a major partner for its colossal, multi-billion dollar sour gas recovery project at the Shah Field, following the withdrawal of ConocoPhillips earlier this year.
Private oil cos to get first Mexico deals by summer
MEXICO CITY (Reuters) - Mexico will award private firms its first contracts to redevelop mature oil fields by the summer of 2011, a senior Mexican oil official said on Monday.
Serious errors and complacency preceded U.S. spill: panel
(Reuters) - BP and its partners all made serious mistakes in the run-up to the largest offshore oil spill in the U.S. history, illustrating the need for a better safety culture in the oil drilling sector, White House oil spill commission co-chair Bill Reilly said on Tuesday.Complacency at BP, as well as Transocean Ltd and Halliburton, led to serious missteps prior to the rig explosion that unleashed millions of barrels of oil into the Gulf of Mexico over the summer.
Brazil's Petrobras says to borrow $32 bln by 2014
(Reuters) - Brazilian state oil company Petrobras will raise $32 billion by 2014, CEO Jose Sergio Gabrielli said on Tuesday, as part of a five-year investment plan focused on developing offshore crude reserves.The company previously said it would borrow $40 billion during the period and $60 billion over the next five years, though Gabrielli said those figures were based on rough estimates.
Energy crisis: Power-loom owners hoist black flags
FAISALABAD: Power-loom owners of Faisalabad on Tuesday hoisted black flags to register their protest against the ongoing energy and yarn crises in Punjab.They said two-day weekly blockage of gas had pushed the industry to the verge of destruction.
Unipec mulls import of high sulfur gasoil into China: source
Unipec, the trading arm of China's Sinopec, is mulling the import of high sulfur gasoil following a dramatic shortage of diesel in the country, which is an exporter of gasoil, a source familiar with the matter said Tuesday."It's still under consideration ... Not sure when, but it's pending," the source said.
Gasoline Shortage Persists in Uzbekistan
The gasoline shortage that began worsening in Uzbekistan in September is persisting, causing long lines at the gas pump and inducing people to switch to methane gas fuel systems, ferghana.ru reports.Gas stations have already closed Sundays due to the shortages, and while there is gasoline available on Mondays, within a few days it begins to run short, causing lines to form early in the morning. Some people have already spent from $670-900 adapting their cars to take methane gas for fuel, which is cheaper than gasoline.
Gates: US open to request from Iraq to stay
KUALA LUMPUR, Malaysia – The United States is open to the idea of keeping troops in Iraq past a deadline to leave next year if Iraq asks for it, U.S. Defense Secretary Robert Gates said Tuesday."We'll stand by," Gates said. "We're ready to have that discussion if and when they want to raise it with us."
Green luxury? Mercedes-Benz to offer 4-cyl. in top-line S-Class
Mercedes-Benz will offer a small, four-cylinder diesel engine in Europe for its top-line, typically V-8-powered S-Class sedan, the first four-banger in 60 years of the model.To meet Euro carbon rules and sell cars to rich folks with a green bent, makes like M-B, Audi and BMW are looking for ways to put an eco spin on even their conspicuous consumption models. No word on whether the small diesel will be offered in the U.S.
Solar shield to protect power grids from sun storms
NASA has devised a new tool in the battle against massive eruptions from the sun: an early warning system to protect electrical grids on Earth from extremely powerful solar storms.The new project, called Solar Shield, is designed to predict the severity of powerful sun storms at specific locations on Earth to help power companies plan responses and limit the potential damage to their equipment.
Lester R. Brown: Reducing Urban Water Use
U.S. President Theodore Roosevelt once noted that “civilized people ought to know how to dispose of the sewage in some other way than putting it into the drinking water.”The one-time use of water to disperse human and industrial wastes is an outmoded practice, made obsolete by new technologies and water shortages. Yet it is still common around much of the world. Water enters a city, becomes contaminated with human and industrial wastes, and leaves the city dangerously polluted. Toxic industrial wastes discharged into rivers and lakes or into wells also permeate aquifers, making water—both surface and underground—unsafe for drinking.
When it comes to books on energy challenges, what do the experts recommend? We asked two. Here is their list of their 10 most highly recommended books.
NEW YORK - The Nation Institute announced today that Planned Parenthood president, Cecile Richards, and author, educator, and environmentalist Bill McKibben have both been chosen to receive the annual $100,000 Puffin/Nation Prize for Creative Citizenship. This is the first year the prize has been awarded to two winners. McKibben and Richards will receive the award on December 6, 2010 at The Nation Institute Annual Dinner Gala in New York City.
China's rare earth embargo triggers price hikes
A Chinese embargo on rare earth elements is causing a dramatic spike in the price of materials, which is expected to lead to a jump in high-tech product prices before settling back down in a few years, according to report released today.
Six worst pollutants? Study says they pose global threat
The world's six worst pollutants, including lead and mercury, threaten the health of tens of millions of people, primarily children, says a report today by two environmental groups.
Deformed bird beaks trigger environmental hunt
ANCHORAGE, Alaska — The highest rate of beak abnormalities ever recorded in wild bird populations has been detected in Alaska and the Northwest, according to a new study."The prevalence of these strange deformities is more than 10 times what is normally expected in a wild bird population," said co-author and research biologist Colleen Handel.
PARIS/LONDON — Global oil supplies will come close to a peak by 2035 when oil prices will exceed US$200 a barrel, the International Energy Agency said on Tuesday, as China and other emerging economies drive demand higher.The IEA, in its 2010 World Energy Outlook, said it expected conventional crude oil output to flatten out in the next 10 years.
“Production in total does not peak before 2035, though it comes close to doing so,” the Paris-based IEA said in the executive summary of the report. That projection was according to the central scenario of the report.
More needs to be done to avoid oil spike, IEA says
LONDON—Governments need to do more to increase efficiency and boost green technologies to avoid a spike in oil prices as energy demand is expected to jump 36 percent through 2035, the International Energy Agency warned Tuesday.
China to Drive Energy Surge Through 2035, Warming Planet, IEA Outlook Says
China will drive a surge in world energy demand over the next quarter century, as straining supply enhances OPEC’s oil market share and growing coal use undermines efforts to contain global warming, according to a report.Chinese demand will jump 75 percent, accounting for more than a third of an increase in energy use that will bring global consumption to 16.7 billion metric tons of oil equivalent by 2035, the International Energy Agency forecasts in its annual World Energy Outlook. Oil supplies will be pushed near their peak, thwarting government pledges to limit the increase in global temperature to 2 degrees Celsius.
China’s thirst to keep oil prices booming: IEA
China’s voracious appetite for fuel will push up oil prices substantially over the next two decades and will ensure that unconventional oil, notably Canada’s oil sands, will play an increasingly important role in the global energy mix, the International Energy Agency said its flagship World Energy Outlook report.
Energy in 2035: China and oil dominate
Internationally, the use of renewable energy sources -- hydro, wind, solar, geothermal, biomass and marine energy -- is expected to triple between 2008 and 2035, according to the report. Governments are expected to feed this effort by ramping up investment in renewable energy sources such as biofuels to $205 billion in 2035 from $57 billion in 2009.Use of nuclear power is also expected to increase, the report said.
But despite all the investment in cleaner alternatives, the overall mix of energy use is expected to be little changed, with oil remaining the most popular energy use in 2035, followed by coal, the report said.
World should eradicate fossil fuel subsidies-IEA
LONDON (Reuters) - Eradicating fossil fuel subsidies would boost the global economy, environment and energy security, the International Energy Agency said on Tuesday, referring to a pledge made by G20 countries.G20 leaders committed in Pittsburgh in 2009 to phase out, over the medium-term, inefficient fossil fuel subsidies which encouraged wasteful consumption.
IEA says gas glut likely to 2020
Global oversupply of gas is set to rise above 200 billion cubic metres next year and capacity is likely to exceed demand for another 10 years, despite rising gas use, the International Energy Agency said today.
Oil Drops From Two-Year High Amid Forecasts U.S. Stockpiles of Crude Rose
Oil surged to a two-year high as advancing equities and a weakening dollar tempered concern of rising excess crude supplies in the U.S., the world’s largest oil consumer.Futures advanced for a seventh day as the dollar retreated from a one-week high against the euro. An Energy Department report tomorrow may show that crude stockpiles in the U.S. increased 1.75 million barrels last week from 368.2 million, according to a Bloomberg News survey of analysts. That would take it to the largest amount since May 2009.
Gas prices remain steady in the past two weeks
CAMARILLO, Calif. — A new survey finds the average price of regular gasoline is remaining steady in the United States, with regular grade retailing at an average of $2.83.The Lundberg Survey of fuel prices released Sunday says the price of a gallon of regular has fluctuated less than half a cent over the last two weeks.
Sinopec to hike oil processing to ease shortages
BEIJING - China's major oil refiner, Sinopec, has taken measures, including boosting crude oil processing and importing diesel, to alleviate the severe diesel shortage currently plaguing some Chinese cities.Daily processing of crude oil will increase to 4.27 million barrels per day in November, up 9.9 percent from last November or one percent increase from October, the company said in a statement.
In the U.S., Sticker Shock in Reverse
While exact rates vary from country to country, gas sells for the equivalent of about $6 to $8 per gallon in the European Union. About three-quarters of that is government-imposed tax.Gas prices are high enough in Europe that it becomes a significant cost and discourages driving, at least to some extent.
BP's Dudley Shrinks Trading as Stagnant Oil Prices Crimp Profit
BP Plc’s Robert Dudley said he’s shrinking oil trading after the least volatile prices in seven years made buying and selling commodities less profitable.
BP May Pay Billions for `Missed Signals' That Led to Disaster
BP Plc remains at risk for billions of dollars in fines and legal costs even after a U.S. commission said safety wasn’t sacrificed for profit in the weeks and days leading up to the worst U.S. offshore oil spill.
Chevron to acquire Atlas Energy for $4.3B
NEW YORK — Chevron will buy natural producer Atlas Energy Inc. in a cash-and-stock deal worth $3.2 billion, the companies said Tuesday.Including debt of about $1.1 billion, the deal is worth $4.3 billion in all.
Kazakh Oil Fund May Cut Holdings of U.S. Treasuries, Add Emerging Markets
Kazakhstan’s National Oil Fund may reduce holdings of U.S. Treasuries and invest in Brazilian and South Korean debt, central bank Chairman Grigori Marchenko said.“There won’t be a radical cut in the share of National Oil Fund assets invested in U.S. debt,” Marchenko said during a Nov. 2 interview in the financial capital, Almaty. “In theory, the share could be cut to 35 percent from 40 percent, but this must be a considered, step-by-step decision.”
The significant worldwide growth in energy demand (expected to rise by some 57% by 2025), has put Africa firmly on the industry’s radar. According to BP’s Statistical Review of World Energy Report (June 2010), in 2009 (the BP 2009 Statistics) Africa consumed only 3.7% of the global commercial energy supply but its share of global energy production was some 12%. But is Africa’s potential one of the short to medium term answers to supply tightening?An increasing import dependence from the western world coupled with significant and accelerating new demand from emerging economies, such as China and India, has placed pressure on Africa's 38 net oil exporting countries to develop their reserves and increase production for further export. George W Bush's strategy of reducing oil imports from the Middle East in 2006 increased the importance of Africa in the supply mix, and industry commentators predicted that Africa's growth as an energy region had become a long term trend.
China, Brazil May Expand Oil-for-Loans Program, Deepening Ties, CBN Says
China and Brazil may expand an oil- for-loans program to intensify energy cooperation, China Business News reported, citing an unidentified official at the National Energy Administration in Beijing.Energy officials from the two nations may meet in Beijing in the fourth quarter “to discuss many topics,” the Chinese- language newspaper said today, citing the official.
General Electric Plans to Invest $2 Billion in China
“China and India will lead future growth in energy demand,” Zhang Shun, a Beijing-based analyst with Ping An Securities Co., said by phone today. “They will need more roads, more power plants and more railways to meet the needs of their soaring economies, generating opportunities for equipment manufacturers and technology providers like GE.”
Indian Point Reactor Shut Down After Transformer Blast
A transformer exploded on Sunday evening at the Indian Point 2 nuclear plant in northern Westchester County, N.Y., causing a fire and an automatic shutdown of the reactor, the Nuclear Regulatory Commission said Monday. No one was injured and no radiation was released, the commission said.
Investing For The End Of The 28-Year Bull Market In Bonds
In July of 2008 commodities in general and oil in particular were on a seemingly unstoppable trajectory higher. The PowerShares DB Commodity Index Tracking Fund (DBC) peaked at $46.42 at the beginning of July before bottoming at $19.11 in February of 2009. In May of 2008 it was reported that Goldman Sachs analysts had called for $200 per barrel crude and noted oil guru and “Peak Oil” theorist, Matt Simmons, opined at the Offshore Technology Conference held in Houston that oil was on its way to $300. Goldman turned bearish later that year. I remember well the day oil peaked. It was mid-July and the euphoria around oil was ubiquitous. It seemed there were no more pessimists on the asset class, and when the last pessimist becomes an optimist it is time to sell.
Alternative Energy and Climate Change Mutual Funds, Part II
The Alternative Energy sector is not yet well understood by most investors. On one hand, a large portion of the population still denies the reality of Climate Change and is blithely unaware of Peak Oil. On the other hand, we have a contingent of true believers, who understand both Climate Change and Peak Oil, but who are blinded by the unrealistic hope that Alternative Energy will allow us to replace fossil fuels without fundamentally changing the way we live.
The gold standard and the doomed U.S. dollar
The idea of a global minimum wage is reminiscent of Henry Ford’s introduction of a $5/hour wage which first brought the American consumer to prominence in the first place. The irony is that while Detroit is a shadow of its former self, the emerging Chinese middle class are buying new cars — some made by General Motors — at a rate of 1,500 a day.However, America and its rivals grew by feasting on cheap oil. Read the new revised paperback edition of Jeff Rubin’s bestselling Why Your World is About to Get a Whole Lot Smaller (Vantage Canada) and you’ll be convinced the combination of peak oil and rising demand means oil is just as likely to soar in price as the greenback is likely to fall.
If We Followed Through With "The Right Moves" For Our Economy, We'd End Up In Another Crisis
The level of private debt is 1.7 times what it was back in the 1930s, which implies that the deleveraging pressure will last much longer than it did back then; on the other hand, the larger government sector and it rapid response to this crisis works in the opposite direction. This however implies a Japanese-like outcome: decades of sub-par growth. I expect instead that the other major forces of our time—Peak Oil and Global Warming—will kick in and force significant changes in human behavior long before the politicians confront the financial sector.
What Energy Collapse Might Look Like (Video)
When I interviewed my friend Tim Toben, he argued that one of the most important things we can do is to "tell the story about the transformation from a world powered by fossil fuels to a world powered by renewable energy -- in poetry, music, art, dance. Make it real for people who can't imagine their way out of the hole we find ourselves in." I've just come across a fascinating multimedia (or transmedia, apparently) project that aims to do just that. The only trouble is, it makes for some pretty bleak viewing.Collapsus, which was directed by Tommy Pallotta—the producer of Scanner Darkly and Waking Life—is described by its makers as "a new experience in transmedia storytelling". Combining traditional documentary footage with animation, mini-games and movie fragments, the audience is invited to participate by making decisions to try to avoid future blackouts and create a more livable future.
America Has Less Than 10 Years To Build An Entirely New Transportation Network
Anthony Perl at Simon Fraser University says America has less than 10 years to undergo a transportation revolution. He made this argument in an excellent presentation at the recent ASPO-USA conference.
Biden unveils plan to score homes for energy efficiency
U.S. homeowners will be able to get low-cost energy audits that rank a home's efficiency on a scale of one to 10 and get federally insured loans for upgrades, under an Obama administration plan to be announced today.
DOE's Jeffrey Baker: Building green, saving green
Jeffrey Baker has been the driving force behind the Department of Energy's (DOE) construction of the largest net-zero energy office building in the world, creating a ground-breaking approach for industry to improve energy performance and environmental quality, as well as save money.
Cyclists Condemn Prosecutor’s Decision
Last week The Vail Daily News reported that an Eagle County, Colo., prosecutor had declined to press felony charges against Martin Joel Erzinger, a financial manager who fled the site of a crash with a cyclist in July.“Felony convictions have some pretty serious job implications for someone in Mr. Erzinger’s profession, and that entered into it,” Mark Hurlbert, the prosecutor, said of the manager, told the paper. “When you’re talking about restitution, you don’t want to take away his ability to pay.”
Japan 2009/10 emissions likely meet Kyoto goal
(Reuters) - Japan seems to have met its goal to cut greenhouse gas emissions under the Kyoto Protocol in the past two years, helped by a slumping economy and buying carbon offsets from abroad.But an expected recovery from its worst recession in decades means Japan, the world's fifth-biggest greenhouse gas emitter, is facing a more difficult road ahead, analysts said.
For Canada, climate file is unfolding as it should
At his post-shellacking press conference last week, U.S. President Barack Obama acknowledged that, in light of the mid-term election results, he’d not have the votes in Congress “this year or next year or the year after that” to pass comprehensive climate change legislation. Without such legislation, the international negotiations that foundered in Copenhagen will continue to go nowhere. And Kyoto will die a natural death in 2012.The good news in this for Canada is that we’ll not now be subject to the huge financial penalties that would have accrued from having signed an agreement that successive governments made no effort to implement after the United States – our most important trading partner – failed to ratify it.
Alberta carbon capture bill in controversy
Alberta's energy minister says proposed rules that could put the province on the hook should anything go wrong with carbon capture projects are the best way to the launch the technology, but opponents say taxpayers are paying a high price.
Making Climate Change Cool in the Classroom
That's what ACE was launched to do. Al Gore opened the door on climate education with his venerable slideshow, and later with the documentary An Inconvenient Truth. But while Gore's cerebral, stat-heavy style might work for science wonks, there was also a need for something that had what Williams calls "the cool factor."
A Novel Tactic in Climate Fight Gains Some Traction
WASHINGTON — With energy legislation shelved in the United States and little hope for a global climate change agreement this year, some policy experts are proposing a novel approach to curbing global warming: including greenhouse gases under an existing and highly successful international treaty ratified more than 20 years ago.The treaty, the Montreal Protocol, was adopted in 1987 for a completely different purpose, to eliminate aerosols and other chemicals that were blowing a hole in the Earth’s protective ozone layer.
But as the signers of the protocol convened the 22nd annual meeting in Bangkok on Monday, negotiators are considering a proposed expansion in the ozone treaty to phase out the production and use of the industrial chemicals known as hydrofluorocarbons or HFCs The chemicals have thousands of times the global warming potential of carbon dioxide, the most prevalent greenhouse gas.
To environmentalists, “clean coal” is an insulting oxymoron. But for now, the only way to meet the world’s energy needs, and to arrest climate change before it produces irreversible cataclysm, is to use coal—dirty, sooty, toxic coal—in more-sustainable ways. The good news is that new technologies are making this possible. China is now the leader in this area, the Google and Intel of the energy world. If we are serious about global warming, America needs to work with China to build a greener future on a foundation of coal. Otherwise, the clean-energy revolution will leave us behind, with grave costs for the world’s climate and our economy.
The view from beneath the waves: climate change in the Solomon Islands
Climate change and rising sea levels are devouring the low-lying lands of the Solomon Islands, with crops failing and lands disappearing. The time to act is now.
New York Considering Erecting Storm Barriers For Future Flooding
MANHATTAN -- The city is seriously considering a proposal to erect huge storm surge barriers as part of a comprehensive waterfront plan meant to protect New York from rising sea levels, officials told DNAinfo.
Glaciers shrink despite more snow falling
More snow fell on the top of key South Island glaciers than melted last summer, the National Institute of Water and Atmospheric Research's (Niwa) annual end-of-summer survey showed. P> But, there was still a general shrinking of some of the South Island's largest glaciers, snow and ice scientist Jordy Hendrikx said.
It was believed that whoever feeds on seed opens doors to poverty,’ says Abraham Okatsio, a 72-year-old farmer from western Kenya. ‘It was a shame for one to beg, or even to buy common seed from the neighbourhood. However, farmers could borrow particular seed types, or varieties that they wished to introduce for the first time on their farms.’He has witnessed traditions change over the years, to the point where some African farmers now depend entirely on hybrid seeds, which he refers to as ‘barren seeds’.
But, as hybrid seeds take centre stage on large-scale farms, most smallholders still embrace the indigenous knowledge of seed banking, which has seen crop varieties survive for centuries, despite changing environmental conditions.
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The IEA is probably the most influential voice in the energy industry, and it’s telling the world that global oil production can rise until at least 2035! This is not only ridiculous, but also extremely dangerous.
Why should governments, businesses or individuals be concerned about Peak Oil?
And how can the IEA oil scenario be so different than the one used by the EIA (i.e. Glen Sweetnam)?
There is something wrong at the IEA… IEA officials are not stupid, they know there’s a problem but for some reasons they prefer to mislead their members states and the public. This is unacceptable.
People at TOD and the Peak Oil community in general should focus their critics on the work of the IEA (just like Uppsala University or Global Witness did last year). Matt Simmons and other members of the PO community had a good opinion of the current IEA leadership; the 2010 WEO indicates that like their predecessors, the current leadership is unwilling to tell the truth.
The IEA needs to be held accountable.
Unless I missed something the quote in the article makes it sound like the IEA said oil production peaked in 2006.
"CRUDE oil production", that's a big difference...
It is a good thing that they have admitted crude oil has peaked. It is much easier to argue against unconventional crude estimates because of the lower EROI. It used to be that you could not get anyone to admit that crude oil was anywhere near a peak. Now they are basically forced into admitting that oil shale and tar sands are the only thing propping up oil production. It is easy to show how and why shale and tar sands can not replace crude oil. In reality a barrel of shale oil is only worth what, 2/3 of a barrel of crude after you subtract production costs? So it takes 3 mbpd of shale oil to replace 2 mbpd of crude.
I bet its even worse than that, but the numbers get murky. The point is unconventional crude cannot scale the same way as crude due to the lower net energy. So we have to look at peak oil in terms of net energy.
They do the same thing with ethanol. Everyone knows that a barrel of ethanol isnt worth nearly as much as a barrel of light sweet. But they all count the same when looking at total liquids. There could come a day when they are adding 50% impurities, maybe even sand and water lol, to make the total liquids charts continue upwards. It could even get as bad as the mortgage fraud we're seeing now.
Ico - You make some good points. But one statement confuses me: “a barrel of shale oil is only worth what, 2/3 of a barrel of crude”. AFAIK no one has ever sold a commercially produced bbl of shale oil. Shell is the dominant developer of SO and from what I’ve read they suspended plans for their first pilot project until 2114 (?). Since no one currently has a proven method to commercially produce SO how did you figure the cost factor?
Yes they show CRUDE oil, or conventional oil, peaking in 2006. And on this page, World Energy Outlook 2010, (23 page PDF), slice 8, they show conventional oil on a flat plateau from now until 2035. Now how many people, including oil professionals, expect crude oil production to neither increase or decline for the next 25 years? Not many I would wager.
Ron P.
Quick look suggests that they have scaled back their 2030 prediction by about 10 million barrels per day.
From 2009: http://endofcapitalism.files.wordpress.com/2009/11/ieadistortion.gif
I put up a thread, too, quoting some of the things the IEA says.
We hope to have a series of articles related to this report, once we have a chance to look at it in more depth.
Their "central scenario" (as one of the articles calls it), really reflects a significant cutback in demand by itself. BAU is really the important one in my view, because it is hard to see countries voluntarily doing very much cut back.
I see Chevron just spent $3.2 billion to buy into the Marcellus shale calling it a "compelling investment". I guess they don't read TOD, where Art Berman has convinced almost everyone that Marcellus shale acreage is nearly worthless at gas prices below $8 mcf.
Remember, "compelling investment" is measured only in dollars.
$3.2 billion cash and $1.1 assumed debt. that works out to about $5/mcf proven reserves. that could be interpreted as valuing the acerage at nearly worthless - just kidding there is a lot more to it than that !
End of the first inning: Catman 1, Berman 0.
What odds Berman was co-ordinating to push price down?
It could be that Chevron, along with Exxon, CNOOC and the other big players with deep pockets who are snatching up shale acreage from the independent gas drillers, believe $4 gas won't last long (you'd have to have a pretty short memory to think it would) and can afford to hold onto the leases for a couple of years while prices recover. Perhaps an Exxon or a Chevron, with a diverse asset portfolio, finds it has an easier time convincing its shareholders to continue to underwrite these plays than the smaller companies that have been leading the unconventional gas brigade prior to this year. Maybe they are drilling for shale gas because there isn't much else left to drill for, rather than because they think it will be especially profitable in the short run. I don't find one press release to be a very convincing rebuttal of Art's analysis. But if you have actual evidence to the contrary, showing anyone is actually making money off unconventional plays at these prices, that would certainly be interesting to see. Until then, I'll consider any proclamations of "____ 1, Berman 0" to be premature.
Nat Gas futures are up quite a bit lately. Could they have reached a bottom? Could this also be related to this Chevron play? Could be a perfectly logical time to buy or to invest.
WE - One adjustment to your observations: all the undrilled acres Exxon or Chevron acquire will expire several years after the initial lease signing. Additionally many leases require the payment of a "rental fee" on each anniversory of the original lease signing. And from what I've read many of the rentals amounts are equal to the hige original signing bonus. Pay the rental or lose the lease. So any new owners of those leases either drill them up completely in the next sevral years or their value goes to zero.
If someone wants to offer ExxonMobil or Chevron as the new big players in the SG plays they have but one thing to back up that assertion: tell us the current rig count of SG wells being drilled by these companies. Otherwise their claims are worthless at this time IMHO.
Cat - I haven't seen the report. Did they just buy undrilled acreage or was it all production acquisition or a combination of both? There are big chunks of SG PRODUCTION for sale at bargain prices all over the country. But these are cash flow purchases and not drilling opportunities for the most part. There are thousands of acres in the SG plays that will expire every month for the next several years. You can go buy them for $1 tomorrow if you want. But then you have to drill before it expires or you just lost your money.
From what I can tell of the press releases it looks like a big part of the acquisition is the acreage position that Atlas has.
Thanks Jim. In that case they better start moving drill rigs in fast before the acreage expires and they lose all of the investment. That's the one thing about any play whuch companies are hyping: It takes months to drill each well and if you have millions tied up in leases that turn to zero value if undrilled the companies have to start throwing big drilling budgets into game today. Given that I've seen no one offer any optimism that NG will rise to any significant degree for the few years companies have to justify drilling economics based on today's price. Remember the great bulk of a SG well's value comes out of the ground in the first 3 years or so. You can't justify drilling such a well today based upon expected prices in 4 or 5 years. And you can't wait 4 or 5 years to start drilling those lease you just bought...they'll be expiring just as start drilling.
A logical solution, for a company with billions lying around, is drill today and produce just a trickle till prices rise.
Alan
Maybe a few might try that. But look how many SG producers are still selling as much NG as possible today. Spending many millions on drilling wells and then cutting cash flow down intentionally is an angle I've never seen played in 35 years. Remember those same lease are going to expire and could be picked up for a fraction of the original bonuses since the boom has passed. And if a company wants to play NG on a price swing it's much easier to just buy NG futures. That's one reason we’re not buying NG production if they angle is just a price increase. Producing a field even at a minimal level still requires a fixed overhead. And drilling wells ties up even more capex.
Taylor Energy of New Orleans shut in production when they thought the price too low. But kept drilling leases. No debt service, no shareholders.
Alan
Alan - Exactly. Small independent companies with no debt burdens and a big capex (like us) are in a great position today. Remember our biz plan: put reserves in the ground and sell the company out when we hit another peak in 4 or 5 years. Since we won't need the cash flow there's little point in us dumping NG during a low price period. But companies in our position are a very small minority. Just consider Chesapeake: they just traded away 1/3 of their position in the hottest play in the country today: the Eagleford Shale. Even Devon, which has been all but been destroyed by the efforts in the SG plays, continues to drill the remaining sweets spots they have in the east Texas SG play.
Rockman - I did not have a chance to get back on this site earlier, so it might be to late to keep the post running but I will reply anyway.
I understand the lease issues and agree with you about the fact they will have to get running immediately or they could loose a lot of value on their $3.2 billion investment. I think the upside for them is that most leases have some kind of continuous development provision, and if it is not too aggressive then Chevron may be able to spend the next decade or so fully developing the acreage and that might end up looking pretty good.
The main skepticism I have is if Chevron is the kind of company that can execute this successfully? I actually worked for Chevron for a couple of years (and I thought they were a pretty good company to work for considering how huge they are), but they simply operate much differently than small companies and even the large independents. With all their bureaucracy and the "processes" they have to use I just wonder if they can keep up the pace of development to move the project along.
It should be interesting to see. It definitely shows a shift in their business and I think it also shows that there just is not much easy "more conventional" oil fields left to find and develop around the world anymore.
Commodities skying again this morning. It appears the Ben Bernanke commodity bubble express has left the station. I think there is still time to climb on board as this may run for some months to come. There may not be many opportunities for good investment returns in the future so catching this one may be important. I had been in cash since end 2008 but have climbed on board the express. This is the most fun since 2007 - 2008 when I was short everything, except oil of course.
Note - this is not investment advice. I am long silver, gold and ag commodities. Good luck to all. Earnings will be useful in preparing for the (extremely) challenging times to come.
You're not long oil? To me, oil makes more sense because within a few years production is likely to decline. Also, oil has few substitutes. I'm not brave enough for futures - rather oil majors, oil sands, coal-to-liquids, and oil shale investments.
Brad - oil is tempting. I made a bundle during the run up to $140. Unfortunately, I was late in recognizing the rapid and massive pullback and lost 90% of what I had made. The problem I think is that oil is more closely tied to the state of the economy than some of the other commodities. Westexas may be right that higher highs and higher lows are likely to persist. Still, I am gunshy about oil. If there is a major economic collapse, something I believe is quite possible, oil may collapse as well, at least for a time. OTOH, commodities like gold and silver may skyrocket if financial turmoil deepens.
As for futures, I understand their benefits but also stay away. I am strictly in ETFs, gold- (GLD). silver - (SLV) and ag - (DBA). I understand their limitations and risks but I think they are useful. Definitely NOT buy and hold investments and check results once per month. Commodity reversals can be sudden and violent. You must watch closely and have a quick trigger finger.
Oil, unlike gold, has a vital economic use. I like to buy investments for the long haul. I believe any oil producer (such as oil sands and oil shale) who will be able to increase production will be at a advantage in times of deceasing oil production. I'm not going to try to time the market - tho if oil goes over $200 I'll probably take some money off the table. I'm convinced that within a few years the great oil production decline will begin - as predicted on these forums. I also believe that the oil market is seeing a paradigm shift - that the belief in peak oil is taking hold. This could mean higher prices well before any oil production decline.
You might also be wary of you equity holdings by mid December. There are increased capital gains taxes in 2011. Christmas rally could be very volatile. Good luck.
Best of luck but you guys are still just accumulating more fiat money. To what end, I ask? Is the dollar, or the U.S., still going to be around in 20 to 30 years?
But yes, the argument can be made to just make as much as you can and have a good time spending it. Life is short. You won't get any beef from me on that. In fact that's what everybody has been doing for the past 30 years, and it's what we all continue to do.
But I've looked deeply into the situation and I don't like what I see. That's why I prefer physical gold and silver, which will outlast all current currencies, and will always be convertible in the future to new currencies, and, when push comes to shove, exchanged directly for goods.
Congratulations! You have keen insight.
Never mind...
The 2009 to 2010 rate of increase in the annual oil price will be quite similar to the 1998 to 2008 average rate of increase (about 20%/year). But I think that the most interesting oil price pattern is the progression in annual year over year price declines, from $14 in 1998, to $26 in 2001, to $62 in 2008--with each successive price decline falling to a level that is about twice the level of the previous decline. If this pattern holds, the next year over year decline in annual oil prices will bring us down to the $120 range (average annual price).
If you are long gold and silver, I suggest that you study carefully what happened in 1978 after a speculative runup much bigger than the current one. Both gold and silver are driven by speculation now, and the silver market is thin, quite susceptible to manipulation as the Hunt brothers did in 1978. I do not know how long the speculative bubbles in gold and silver will last, but I put the odds of a deflationary depression within the next two years at 50%.
Don, I have studied the Hunt brothers episode, both in earning an economics degree and in law school. This could well be a manipulated speculative bubble. Two factors suggest maybe otherwise. First, the Fed is engaging in monetizing the US debt. One result, for various reasons, is skyrocketing commodity prices. Second, a suit has been brought against JPM and HSBC alleging manipulation of the silver market. The alleged manipulation was price suppression. A GS trader has reportedly corroborated the manipulation allegation. If the allegation is true, price suppression is off the table for the foreseeable future. Even if the allegation is untrue, the perception that suppression is off will propel the upward move. I am agnostic on the allegations. I am merely trying to ride a wave and get off before it crests.
I agree with your assessment of the odds of a depression. In fact I believe we may be already in one but the effects have been masked, for now, by the multiple trillions of dollars spent by sovereigns to substitute for private debt which has evaporated. That game can't last long and may exacerbate the eventual collapse.
Regardless of whether or not there is manipulation in the silver market, both gold and especially silver are in bubbles probably now financed mostly with money borrowed at low interest rates. This scenario has to end with a big crash, and it might be sooner rather than later. I think oil prices probably won't go down much until the stock market crashes. Stock market could crash at any time; much of the money flowing into stocks lately is borrowed money by speculatiors, including hedge funds. Note that a stock market crash is often a forerunner of recesion or depression.
My eldest daughter bought silver coins about two years ago; she is not buying anymore now. She has a master's degee in economics. (Indeed, three of my four children majored in economics; they all have good jobs now.)
I usually agree with your posts, Don. But probably not this one. I've been following gold and silver for years (and have been buying for almost five years). Neither of these PMs is in a bubble yet, in my view. Silver is experiencing a sharp upward spike consistent with spikes in early '04, early '06 and early '08. It will correct, for sure, but not crash. Gold will also correct, but not crash.
I would not urge anyone to buy either metal at current prices today. But it still makes sense to buy gold on corrections. We are basically at "Peak Gold". Production hasn't been able to increase for years now in spite of steadily increasing price for nearly ten years.
My best guess is that we will see a real panic at some point, into gold especially. There is a lot of global wealth which will seek protection once things get really dicy economically. The gold market is tiny. When trillions in wealth tries to cram itself into the tiny gold market the price will go parabolic; we're not there yet, no where near.
Right now there is concern about; QE2, European sovereign debt, etc.; concern is not the same thing as panic;-)
i've been following gold and silver since 1962. Indeed, in 1962 I made 29% on my investment in Pato Consolodated Gold Dredging Limited--enough to buy a nice new airplane, which I then did after I learned to fly.
What is your guestimate for the amount of borrowed money that has flowed into gold and silver over the past few months? My guess is that most of the money going into precious metals recently is borrowed money. So then what happens? Precious metals dip a little bit, maybe 10% and you get margin calls which creates fast selling into a declining market which creates more margin calls . . . and then everybody panics and dumps the metals, as happened in 1978.
My advice is to sell precious metals now and put the money into TIPs, Treasury Inflation Protected Securities. The Fed is trying to increase the rate of inflation with QE2; maybe they won't succeed, and we'll have a deflationary depression, but in the long run inflation will come back with a vengeance. Look at the history of the declining value of the dollar since 1913, when the Fed took control of the money supply. In particular, look at the history of the dollar since 1945, when Keynesian macroeconomics came to dominate the thinking of economists on the Federal Reserve Board.
Note that physical ownership of gold may do you no good during times to come. In 1933 Roosevelt banned the private ownership of gold and forced gold owners to sell to the government at a government dictated price. Such an action could easily occur again. Or read about the brutal gold purges in Stalin's Russia. Note that during the war in Lebanon, anybody who was even suspected of owning was likely to be tortured by criminals until the location of the gold was was revealed.
I don't like gold either, but I hate long term treasuries and believe they are a bubble.
If you believe inflation is coming back:
1. buy puts on 30 year treasuries (One way is to buy put options on the obvious play, the iShares Lehman 20+ Year Treasury Bond. )
Putting some % into hydroelectric utilities in Brazil, Canada, Switzerland and/or Austria creates a claim on real, energy producing (and dividend paying) assets with some geographic/ political diversification.
Alan
The Fed is trying to increase the rate of inflation with QE2; maybe they won't succeed, ...
That is just such a remarkable statement.
Savor it for a moment.
For my entire adult life, Washington has been trying to fight inflation. For thirty years, the Fed's raison d'être was to keep inflation low so that investments would cause the economy to grow. And now, we have a Fed fighting like mad for two years running to try to prevent deflation and now even attempting to jump-start the economy through inflation. And there is a real chance (although I think slim - mostly due to a lack of imagination and expertise) that they will fail to cause inflation ... the world has certainly changed.
wow - your right. Reality has changed
My guess is that most of the money going into precious metals recently is borrowed money.
Instead of guessing why don't you present us with data? The amount of money invested in precious metals is a small fraction of what is invested in stocks and bonds.
Precious metals dip a little bit, maybe 10% and you get margin calls which creates fast selling into a declining market which creates more margin calls . . . and then everybody panics and dumps the metals, as happened in 1978.
The last bull market in gold peaked in Jan 1980 (not 1978) at $850/oz. The bulk of the gain came in the last 12-18 months in a parabolic blow off top.
A 10% decline could easily bring in new buyers which puts a floor under the price. Gold has declined by 10% or more plenty of times in the last 10 years. We are still in a bull market.
My advice is to sell precious metals now and put the money into TIPs, Treasury Inflation Protected Securities.
Are you looking for a bubble? Then look no further than the bond market. The bond market has been going up for 30 years now. That bull is dead. If you invest in bonds today you will be wiped out. Who in his right mind would lend money to a bankrupt and spendthrift government at ultra low interest rates? Treasury bonds like most paper assets and currencies are worthless since the Fed can and will create as much money as they want and keep buying bonds to keep interest rates low.
As long as QE (money printing) continues, hard assets including precious metals will go up. This is common sense. Mark my words: if you buy fixed income paper assets or stay in cash you will be wiped out.
Of course I am not an economist or a financial adviser. I am just an ordinary person who tries to see and think clearly.
TIPs go up when expectations of inflation increase. They are going up now. Their yield is also linked to the Consumer Price Index. They will hold their value so long as the U.S. exists as an entity, which I think will be thirty years or more. Over the past ten or fifteen years TIPs have performed far better than the Standard and Poors index of 500 stocks.
Nobody knows how much physical gold and gold futures and gold stocks are being bought on margin. That data does not exist. Where you see hedge funds involved, then you know it is borrowed money. And are the hedge funds putting money--lots of it--into precious metals? You bet they are.
Don-
Follow my advice. Cash out and head to the liquor store...Think rum, brandy, whiskey, vodka... It holds its value no matter what happens... Try not to drink away your profits like me.
I just went to the liquor store and bought a 4-pak of Guinness Stout. I buy my beverages for consumption, not for hoarding.
If you want to hoard beverages, I recommond the finest French champagne. Why? Because the rich will always be with us, even after GDP is one-tenth its current level. Hang out with the rich. Sell or barter to them the very most expensive French champagne after the collapse. My guess is that the trading ratio will be from half an ounce of gold to one ounce for a bottle of the best champagne after we have ceased importing it.
Also, if there is no collapse, you can always drink the champagne. It is really good. John Maynard Keynes said not long before his death: "I have but one regret--that I did not drink more champagne." He always drank the best because he could afford it.
I'll keep that in mind. My mother-in-law (the REAL hot one) is a wine fanatic. I picked up some bad habits from her. About right now the best i can afford is an $8 bottle of "French Maid".
Well, it worked for me. When the economy crashed, I had my money in liquor store chains. I figured, "It'll never get so bad that people stop drinking", and I was right.
It's like a Telecom stock that my friends were investing in during the dot com boom. It was over $100/share, and I said, "When it becomes a penny stock, THEN I'll put some money into it." And a few years later, when the price was less that $1/share, I did buy a few thousand shares. Hey, a good joke is worth a few bucks. I mean, how low can it go? zero is the absolute bottom, so what's the risk?
And I quadrupled my money. My financial advisor made me sign a form saying I was a "high risk" investor because I had so much money in "high risk" investments. The company eventually went bankrupt, but by that time I had moved my money into liquor stores. Pretty low risk in a financial crash.
Unfortunately, when I do this kind of thing, my friends think I am some kind of financial genius. No, I'm just a guy who enjoys a good joke.
My broker did not want me to buy Pato Consolodated Gold Dredging, Ltd. in 1962. Nobody had ever heard of it. Of course, that was the main reason it was greatly undervalued. I bought the stock on the basis of my education in social psychology. At the time I had had no clases in economics or business administration.
After I got my MBA in finance, my returns were less than before.
Stick to what you know.
I don't think bonds are a bubble.
A bubble happens when people invest expecting to make ridiculous profits. They buy houses or tulips or shares of Pets.com expecting the price to double by next year, maybe even next month.
That's not the case with bonds. Rather, people buy those to preserve wealth, without any expectation of big profits.
Whether it's a good investment is another question, but it's not a bubble.
Also, bonds are generally not being purchased with borrowed money--unless some idiots are buying junk bonds with borrowed money.
IMO long-term bonds are about the worst possible investment now. Cash in a safe deposit box would make a lot more sense.
I'm surprised there is not more interest in TIPs, considering how they have out-performed the Standard & Poors 500 index over the past dozen years. Also, they are as safe as any asset can be.
There are some who trade them in the hopes of making a quick profit. I am struck by the price history of some Ford bonds I've had in my 401K for the last nine years. I bought (and hold them) for the staedy income, not as a capital play. But the past year is pretty amazing. Ford offered to buy them back for 30 cents on the dollar. They got $10billion worth retired. Now this junk has been soaring ever since, in my lasted statement they are now priced above par (because they carry a yield above 7% I presume). So if it had been possible to buy them then (I was told you could only sell them not buy them), you could have much more than tripled your money in under a year. So yes, unfortunately or fortunately depending upon your point of view bonds do fluctuate in price, you can lose or gain bigtime.
I'm not saying bonds don't fluctuate in price. Nor that you can't make or lose money.
I'm saying that the psychology behind the runup in bonds now is not a bubble. What's driving it is fear of other investment types, not the belief that they're going to be unrealistically profitable.
OK, maybe bonds are not in a bubble; just grossly overvalued and a very poor investment. I expect precious metals stocks to skyrocket over the next 12 months as EU joins the Fed in "quantitative easing" (QE). The fact remains that the economies of the western world are insolvent. QE is not a good solution but there is no other solution. The central banks don't have a choice. In the absence of QE, banks and the stock markets will shut down and a you will have a Mad Max scenario.
Let us revisit this thread a year from now. Right now gold mining stocks are an even better investment than bullion. I like RGLD, NEM, GG, GDX, GDXJ, SLW.
As far as natural gas is concerned it is probably today where oil was in 1998/1999. In the late nineties everyone "knew" that there was a "oil glut" and oil was going to stay cheap for a long time. We know what happened next. I expect NG prices to go up even faster than oil over the next few years but with a lot more volatility.
Good luck to you all.
That's exactly how I remember it also. Thanks for saving me the effort.
I also might point out the difference in bubble and spike. I'll sell when it skyrockets for a week. Until then, it will remain an insurance policy against the US government acting in my interest. Sounds like a hold to me.
Virtually everybody in the U.S., and quite possibly the entire world, who has their financial wealth in fiat currency will be wiped out eventually.
And this is because fiat currency is not stored wealth, but rather a claim on future wealth, wealth which quite literally is not going to be there.
It's just that we don't know when this will happen - could be quite sudden and dramatic, or could be a very gradual process.
In the meantime, it makes perfect sense to steadily accumulate, store, and protect physical gold and silver, and continue to use cash to spend.
In my humble opinion, it's nothing less than a guerilla war.
Either the government provides me with sound money, and rewards me for saving, or I will reject their money and all financial instruments.
Ball is in their court.
Believe me when I say that no authority is getting their filthy paws on my gold and silver. I'll leave it up to your imagination what will happen when they try.
Live free or die.
That wasn't really the problem. A lot of people kept their gold and silver. They simply couldn't use it.
The real dilemma for someone who has bought gold and silver at low prices (1999-2001 was when I bought heavily) is what to do with any cash from selling it now. I don't much trust banks, even for just storing cash, and there aren't any conventional investment 'opportunities' that I trust either. My strategy so far has been to sell some as the price rises and hold on to about half, trying to hedge against an unpredictable future. Then there is possible investment in stuff like PV system for my house, durable tools, etc.
The toss up is whether cash will be better or worse than Au/Ag in the future. If we do get hyperinflation, Au/Ag would probably be a good place to store some wealth.
http://www.cnbc.com/id/15840232/?video=1638166520&play=1
Mark Fisher on CNBC: Are we in a commodity bubble?
Let's see, the US is looking at about a $1,300 billion deficit for 2010. If we had to repay this one year's worth of debt with oil, we would have to deliver to creditors 14 billion barrels of oil (at $90 per barrel)--basically what one Prudhoe Bay size field would produce over its entire life.
Reminds me of Nate's chart:
US Treasury Debt (11/05/2010): $13,723,330,060,510.52
Private debt exceeds public debt by several times but doesn't get as much attention. In a contracting economy, they are both disasters waiting to happen.
Keen further makes the point that since aggregate demand is GDP PLUS the change in debt (this is not commonly accepted but I think he's absolutely correct), the public sector is taking over the job that the private sector once had (i.e. growth or at least slowing contraction).
As the private sector continues its deleveraging governmental leadership will continue to feel pressure to make up for the loss of economic activity.
This all ends when one of two things happen:
1. the world economy grows its way out of the problem
2. investors lose trust in one element of the house of cards, which then brings the whole thing down
Since declining oil supply equals a contracting world economy, I assert that #2 is going to happen.
Both private and public curves hide the notion of unfunded commitments, though....which are far higher on the public side.
Paleocon said:
I keep hearing this "unfunded government liability" song-and-dance from the right-wing economics types, and it makes me wonder.... are they advocating that public pension comminments should be funded, or that they should be eliminated? Only a Wall Street Bankster would want to see them fully funded (so they could then cream off 3% / year in management fees for loosing only small amounts in adjusted values of the completely unwieldy huge pools of capital laying about, too large to do anything rational with except increase the sizes of large corporate entities). The other choice, elimination, is simply unconsionable greedy self-interest (let the janitors, gardeners and hairdressers die of starvation in their old age, I got mine. That attitude was supposed to have gone away with the overthrow of feudalism and aristocracies).
So which are you?
Keen is wrong about aggregate demand being GDP plus the change in debt. He forgets that a lot of the increase in debt goes to foreigners due to our large and growing balance of trade deficit.
Sorry, but you're showing your blind spot, Don.
Debt has largely fueled the growth we've experienced over the last few decades. We are in a global debt bubble. You can quibble a bit here and there but that's like quibbling over the exact year of peak oil: it completely misses the larger picture.
Individuals bought more than they would have if they had not had access to credit.
Businesses and governments did the same thing.
Our balance of payments deficit is roughly equal to the U.S. government deficit. This rough equality is no accident.
Of course people buy more when they have access to easy credit than when money is tight. I never said or implied anything to the contrary.
Keen is still wrong. I suspect he does not actually know how GDP is defined.
Let's get clear on what you are saying is wrong.
He is saying that "aggregate demand is GDP plus the change in debt."
Why is that wrong?
He's wrong because aggregate demand is another way of saying total spending which is another way of saying GDP.
I'm claiming that aggregate demand cannot be greater than GDP because it is GDP, or more technically, one measure of GDP which can also be looked at as Wages + Rent + Interest + Profits from the supply side.
This is all Economics 101 stuff.
Let's switch to the other thread.
I'm turning in for tonight. See you on tomorrow's Drumbeat.
G'night. I have a few more slides to get ready for a talk I'm giving tomorrow.
Note that we can rewrite the equation (actually an identity) for real GDP as follows:
GDP = Consumption (including consumption financed by debt) + Investment (including investment financed by debt) + Government (including government spending at all levels financed by debt) + Exports (including exports financed by debt).
Thus it would be double counting to add on the increase in debt; it has already been counted into the GDP numbers.
Hope this clears up the issue.
No, see codemonkey's discussion.
I think Keen is not being rigorous in his presentations because he is trying to get an idea across. I believe you are looking at the tree but missing the forest.
I disagree. Without rigor in economics you have mortis.
No coherent economic research or theory can be done unless there is strict agreement on definitions. One thing I'll say for economics--as opposed to sociology--is that economics does have clear and nonambiguous definitions of its concepts.
In other words, I think it is folly, and just plain confusing and counterproductive to make up your own definitions when all the well-defined concepts you need are right there in the textbooks and the academic journals.
Don, you're still missing the point. Remember that I haven't gone back to determine which terms Keen is actually using in his definition of aggregate demand and until I do that we're discussing a fiction.
In the meantime, try to get what he is pointing to rather than getting hung up on the definitions.
What he is pointing to is likely of importance and significance. What I am saying is that when you are talking about economic concepts you should use the universally accepted definitions. Making up one's own definitions is counterproductive and leads to incoherent numbers.
You CANNOT just add a stock concept to a flow concept. The result is meaningless. Is it a stock? Is it a flow? It cannot be both. In fact it is just nonsense. There is no doubt at all that GDP is a flow concept. There is no doubt at all that change in debt is a stock concept.
A bit confusing to me.
Debt is a stock concept. But wouldn't the change in debt over time (i.e rate of change) be a flow ?
Another POV is debt is balance sheet. But Income statements impact balance sheets.
Alan
Change in amount of debt refers to a stock at a particular point of time. You can change this into a flow concept; that concept is credit.
This stuff is going over my head a bit, but in my own field (physics), I'm quite accustomed to fringe people redefining well-known agreed-upon terminology to suit themselves, in order to obfuscate and mystify their way into the discussion when they have nothing useful to say. It's usually an utter waste of time to deal with them, even if public universities sometimes feel obliged to do so up to a point in the interest of "community relations". You don't have to go very far down that road before you've got people deluding themselves into perpetual motion, "zero point energy", and "hydrinos" (scare quotes most definitely intended), and other such rubbish. That goes double now that it has become so easy to use the intertubes to ensconce oneself in an impervious echo chamber.
Or: just because it gives someone that powerful feeling of overturning the established order, doesn't mean it's any good at all, or worth anyone's time. Actually, in the real world, more often than not, it's simply a crock. (And Americans, with their anti-intellectualism, are easily baited into such crocks.)
Or: for the moment I suspect my sympathies belong more with Don on this matter.
Don,
On this point I'm afraid you've been fooled by your own mathematical symbols.
The equal sign (=) does not always mean an identity.
In some instances, including in this one, it can indicate "a desired balance" (but not one that is guaranteed to happen).
GDP (Gross Domestic Production) is a flow rate thing.
It is how much Goods and Services we produce in a year.
The equal sign (=) in your equation is stating a basic common sense idea, namely, that IF we want to stay out of trouble we should make sure every year that we produce enough (our GDP is large enough) to cover:
1. All that we consume that year,
2. All that we export out of our domestic area that year, and
3. What ever additional uses we make (i.e. Investment) for what is left over from that year's production.
However, not withstanding the EQUAL sign (=), we can indeed consume more this year than we produce this year.
How?
Easy. Let's say we have some savings left over from last year's production (i.e. in a grain silo) and we consume that as well as all that we produced that year.
In such a case GDP < Total Consumption for the same year
Absolutely true, AD = GDP.
However if lenders and borrowers know what they are doing (big if) then their expectations aggregated into delta Debt may have predictive power when plugged into a formula like GDP1 = GDP0 + delta Debt0.
Here GDP1 corresponds to Keen's AD.
Precisely.
I believe delta Debt0 should actually be the delta in Debt over the interval t=0 to t=1 which would kind of negate the 'predictive power' I mentioned since the delta over this time period is not known until the time period has already elapsed. Intuitively though, if you consider that people would rather consume/invest now than later and probably will if things seem likely to go well ( why scrimp to avoid charging $1000 on your credit card if you know you will be getting a huge tax return at the end of the month? ) then delta Debt would seem capable of capturing perceptions of 'facts on the ground'. An earthquake would probably negatively effect GDP, but would be taken into account by delta Debt would it not?
If you have an investment nestegg of 10 dollars, you can treat it as 'reserves' and leverage it making hedged bets much as a bank does when it underwrites loans. Your effort in research to invest 10 dollars is the same as that required to invest 100 dollars. Why not get the most bang for the buck? Of course the means to leverage is basically a loan. If you can package your hedged bets into something that can get a decent credit rating, you can then depend on short term credit from commercial banks to finance those bets no?
Debt is the money supply. Even every physical paper dollar (M0) is non interest bearing debt ala Frederick Soddy.
Assuming a constant money supply, this means GDP always stays constant though there is constant deflation or inflation depending on circumstances i.e. a wheat blight might cause inflation wrt wheat and new technology might cause deflation wrt flat screen tvs. With a constant money supply peak <insert resource here> would tend to be inflationary.
In practice the money supply (debt) grows and shrinks according to expectations for the future, and this growing and shrinking is decided by borrowers and lenders.
At this point, I go back and read that GDP reported 'is already adjusted for inflation'.
So maybe AD != GDP after all... If AD were not adjusted for inflation. then AD1 = AD0 + delta Debt0-1 ?
Keen uses GDP on the RHS here, and maybe there was a reason.. 'Inflation' at time 0 encompasses expectations at time 0 which do not hold throughout the time interval 0-1. Therefore if they were to be included in the formula, they would bias it in favor of expectations at time=0. Also some of those very expectations may be encompassed in delta Debt0-1 since the interval includes time = 0.
The above is not rigorous. It IS arbitrary justification after the fact on my part. My intuition likes what Keen is saying and maybe he explains it more rigorously ( I haven't looked ) but if it isn't explained, it REALLY needs to be with lots of proof. If I were to bet though, I would bet that the formula is correct, and can be justified.
I enjoy the luxury here of being a lay person. I'm allowed to be uninformed, as long as I'm willing to correct a mistake. Of course that is the way to think even if you're an expert if you want to remain mentally nimble, but it probably won't do much for a career...
What Keen is doing is not only nonrigorous--it is wrong. GDP is a flow concept. The money supply is a stock concept and changes in the supply of credit (another flow concept) do influence the money supply.
Note that it is not just borrowers and lenders who determine the money supply and changes in the amount of credit. The Fed has a great deal of influence on the money supply. By tightening up, as Volker did in the early 1980s the Fed can always decrease the supply of both money and credit (which are NOT the same thing) as far as it wants. It is harder to expand the supply of money with expansionary monetary policy because it is like pushing on a string. The Fed does not control the velocity of money. Nor does it control innovations in financial markets such as derivatives. Nevertheless, the Feds monetary policy is strong, though it operates with long and unpredictable time lags.
Money is credit toward payment of taxes. It is government debt which earns 0% interest for it's holder when the government holds a physical dollar as an asset, then it's also being a liability makes it worth only the paper it's printed on. Inflation, when it exists, makes money's real interest rate negative. Deflation makes the real interest on money positive. Because the Fed can via various means, control the interest rate, Gresham's law applies. I guess that means that if they printed money with an expiry date printed on each note, then it would circulate even faster than normal money.
If I am going to hold some money for a long time, I'll exchange it for something that earns more interest or generates some return. The longer I'm intending to hold the money, the longer view I'm willing to take. Velocity of exchange of credit instruments ( or anything else ) seems to be related to it's real rate of return. As the prevailing interest rate rises it takes a higher and higher interest rate to make me hold a form of credit.
QE by printing money to buy government debt leaves former debtholders with money and a lousy real interest rate. They've got to do something with that money.
Paying interest on government debt decreases the supply of credit by decreasing it's velocity of exchange. Buying bonds with zero interest money leaves the supply of credit marked to market unchanged, but increase it's velocity of exchange since proportionately more of the credit is money which earns zero interest.
Credit flows to government bondholders. When those bondholders are bought out, then the credit flows into the private sector and abroad, neither of which are bad things.
Credit flow ( delta Debt ) and GDP are both flow concepts.
Money is not credit. Credit is a flow concept. Money is a stock concept. Besides, money includes cash.
Don,
Money IS credit/debt.
The creditor is the person holding the money.
The debtor is society in general which promises to --IN THE FUTURE-- deliver comparable value in exchange for that money.
Each time a new wad of dollar bills is created (out of thin air as it always has been created) --a new debtor/creditor relation is created.
Oh? What about coins. Note that the intrinsic metal value of a penny is now about two cents, and that of a nickel is about eight or ten cents. Stock up on pennies and nickels, that's what I say. I think they will hold their value even in a hyperinflation.
Anyway, money is a stock and credit is a flow. See any introductory text in economics. I recommend the cheap out of print ones by Heilbroner and Thurow, two socialist economists.
The metal part of a coin is not the "money" part but rather merely the carrier on which is embossed the monetary function just as is the paper part of a $100 bill or a $10Million cashier's check.
I'm disappointed that you, as a professed economics expert, do not see it that way.
Of course you do know that US pennies are no longer made out of copper but rather out of a zinc alloy.
As for introductory texts to economics, I've seen plenty of those in my college days and back then, because I did not know any better; and more so because I wanted to get an A in the course (which I did), I bought into the BS along with its hook, line and sinker.
The funny thing about life (for most people) is that by the time you know any better, you're too old to do much about it.
That may explain why it is mostly old geezers (like you and me) who hang out on these TOD pages.
What young man would waste his time with esoteric theories about peaking of oil when there are chicks to be chased and fast cars to be raced?
Speaking of money ... these recent cartoons should be of worthy monetary note:
[i.mage.+] =Ben and Bama give George Washington a face lift
[i.mage.+]= Young Ben before he got his Helicopter
[i.mage.+]= The most fortunate, Mrs. Bernanke
[i.mage.+]= Auld Lang Syne
____________________________
[i]= image [+]=more info
The drop in private debt in the last few years seems to be finanaced by Government debt.
Krugman and DeLong claim they are different sides of the same coin, by an accounting identity. So according to the claim for one to go down, the other must go up. I can understand that concerning the net balance sheet, net of assets minus liabilities. But, I'm not convinced that the net level of debt (rather than assets minus debt) is fixed. The total amount can be increased or decreased, and even though for any say increase in debt someone else is holding a shiny new bond for the same amount, the perception of risk differs between the debtor, and the creditor.
Exactly. In the real world, debt matters. Now, can someone tell Bernanke?
Which is one of the craziest things someone could say.
Yes, that's exactly what's happening because, despite what Don says, aggregate demand is both GDP and debt. The government is attempting to make up for the drop in private debt.
http://www.debtdeflation.com/blogs/2010/10/19/deleveraging-deceleration-...
You are mistaken. Check the definitions of "aggregate demand" and "GDP" on Wikipedia if you do not believe me.
Aggregate Demand is Consumption + Investment + Government Spending. That is also a definition of GDP. (Let's forget about imports and exports for a moment.)
Yes, but his point is that the way people are currently looking at the situation is not accurate. He is resetting some definitions by purposefully including debt in the equation.
In other words, you think it is all right to make up your own definitions for words rather than use the definitions in dictionaries and textbooks and government publications.
That is seriously muddled thinking.
Yes, that's close to what I'm saying. I want to be careful that I don't overreach in my interpretation of his work.
What I've gotten from studying his work is that the model that most economists use does not adequately reflect reality. In Keen's view it might get right down to the definition of aggregate demand, I'm not sure because I haven't seen which terms he would put in the equation.
But the larger issue is that the words (and in this case, the equations) we choose to describe the world allow us to see some things and hide others. Words and equations are like windows in a building. Standing from within the building I am able to see some things outside and others are hidden by the wall.
That is in the nature of contexts and why one person can see something that is hidden from another's view, so called "blind spots." Here is Greenspan openly (and I would say admirably) acknowledging one of his blind spots — in this case, a key element of human nature (greed/ambition and its pull to ignore prudence):
"I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms." - Greenspan
The current framework of definitions does not model the world well enough and should be changed.
When enough people see the utility of the new world view eventually people look back and say, "Can you imagine people actually thought that way?" But of course when a new worldview is being introduced the people who know only the current one resist it at almost every opportunity.
I just make up new words/phrases when I need to.
Alan
I've been seeing this idea around a lot lately - that economics models are seriously wrong because they don't properly model debt.
I think the recent crackup shows that there's something important that mainstream economics just doesn't get, and I suspect it is indeed debt.
Leanan,
You are absolutely right. There are historical reasons for the economics discipline not paying much attention to debt. At the University of California, Berkeley, where I was a full-time graduate student for eleven years in a few departments I took all the Ph.D. seminars for economics and also all the seminars for a Ph.D. in Business Administration. There was little communication between the two department; they had different vocabularies and even different libraries.
I got my MBA in finance and continued in finance for some years in Business Administration. There I learned all about debt, stocks and bonds, international financing, economic forecasting, operations management, and a bunch of other good stuff. There was a lot on corporate finance and also quite a bit on the Federal Reserve System. Then I changed my major to economics and found a radical difference: We studied theory, econometrics, read a lot of economics journals (which are quite different from the journals in Business Administration) and so on. My point is that debt is primarily a topic of discussion in the finance specialization in the Business Administration. When I took economics seminars we rarely discussed debt or financing, though in looking at macroeconomic policy we did discuss whether government debt-financing had a multiplier effect on GDP and questions like this.
I do not know how far back the split between economics and business admiministration goes. Economics has a history going back to Adam Smith, who was a professor of moral philosophy and logic. Then in the nineteenth century there was Political Economy as a department. Then roughly around 1900 Political Science split off from economics and created the discipline of economics as we now know it.
Keynes was educated by nineteenth century political economist Alfred Marshall, and also by his father, John Neville Keynes, who was a well-known economist of his day and one of whose articles is still read by students today. Keynes is well worth reading. He writes well, seldom uses graphs and never uses fancy math in his writings.
[Keynes] seldom uses graphs and never uses fancy math in his writings.
How then can he be worth reading !?
Alan
Yet Keynes was a pioneer in applying probability theory. Go figure.
Keynes was a great mathematician and statistician. He was also a great writer of prose. He was the greatest economist of the twentieth century. In terms of his influence on the world he is right up there with Freud and Einstein. Fortunately he did not make as many mistakes in economics as Freud made in psychology. When Keynes did make mistakes, he corrected them, e.g. compare his earlier "Treatise on Money" with what he wrote in 1936 book, the famous "General Theory . . ."
Interestingly enough, the first graph in "The General Theory . . ." has a mistake in it. Keynes wrote and published the book hastily; it is not his best writing. Two of my favorite Keynes books are "Essays in Biography" and "Essays in Persuasion."
"There are historical reasons for the economics discipline not paying much attention to debt."
Computers, communications and the internet have increased the velocity of debt, and money in general, far beyond what Keynes or any economist prior to the 80's could have allowed for. Present day systems not only speed things up, they compress debt in time, like any other form of information. Todays level of debt saturation would have been physically impossible 50 years ago. Another reason this time is different.
I would add that theories from the first half of the 20th century and earlier are likely completely inadequate for the global economy. My sister, an economist who became a lawyer, was really struck by that when she was in law school. Our financial laws date to the 1930s, and make little sense in today's global economy. It's as if we were using the "rules of the road" from horse and buggy days in the days of SUVs, 8-lane superhighways, and 75 mph speed limits.
This might make a good campfire subject. Are we adapting technology to our needs or are we adapting to technology? We are creating new, more 'efficient' ways to do things, mostly enabled by cheap energy, but it seems we never quite catch up to our technology. Where has that brought us? Where will it lead when the complexity of our systems exceeds our grasp, at the same time we find ourselves unable to support these systems, economically and energetically? How have modern financial systems altered the economics they were designed to support/enhance? Has our reach truly exceeded our grasp?
Methinks we are there.
You are so right. It is a classic example of what William Ogburn called "cultural lag," a valuable concept in sociology. Ogburn is well worth reading today.
Computers, communications and the internet have increased the velocity of debt, and money in general,
There is a model that uses something called eMergy (eMbedded energy) that values information and technology although I don't remember seeing the time variables (as the 1st-ist with information or technology usually can end up ahead of others).
Howard Odum wrote a book on the topic.
I think this would be a great topic for future discussion. I have to think that, had computers, etc. never been invented, we wouldn't have been able to get ourselves in so much trouble in such a short time.
Yet another genie out of the bottle?
Ghung,
Excellent points.
I think you meant to say "velocity of debt creation".
In days of old (when money was backed by gold) and a debtor/creditor relation had to be slowly inked out with quill and papyrus, the scrivener may have had time to pause and wonder out loud if the obligation can be properly paid off in realistic time.
But today, with transactions executing in nanoseconds in the backroom server farms of a computer plantation, there is no human being standing there to put a rational check on things.
We've become too fast for our own good.
We have outwitted ourselves.
"We have outwitted ourselves."
...or have we been outwitted? It certainly makes it easy for the well positioned to game the system.
(with apologies to Sir Winston) Never in the field of human
conflictcommerce was so much owed by so many to so few."We" built the machines of our own destruction.
_________________________________
This reminds one of the joke about the French Engineer who during the French Revolution is about to be beheaded except that 3 condemned men before him were let go due to the guillotine jamming, where this machine malfunction was taken as a sign by God that they were innocent; and as he steps up for his turn, the engineer proudly exclaims, "Wait, I think I see the problem in your machine!"
[ i.mage.+]
Besides all of the debt, there are all of the promises made by governments - Social Security and Medicare. They don't show up as debt, but they are hard to stop paying.
Not to worry about government promises. They can and probably will be broken by increasing rates of inflation. If memory serves, cost of living increases for Social Security recipients is capped at 3 1/2% per year.
But, SS is really a sideshow, the ball game will be determined by medical costs. SS could be fixed by a net change of taxation level or benefits cits of only one to two percent of GDP, so it is quite containable. Our current level of tax revenues has become ridiculously small (like maybe 15% of GDP), so the fact that we can't afford our current spending shouldn't be a surprise. So SS is easily containable, but medical costs, which presumably would scale with inflation are a different issue.
Taxes will have to double just to break even, given current borrowing levels, if borrowing ceases. Taxes aren't "ridiculously small" but spending is "ridiculously high" for what we as a society receive in return.
Really, quantitative easing is a tax against savers which supports borrowing by anybody, especially the gov't. It's only when other nations stop buying bonds and valuations shift that the true "tax level" can be realized.
SS and early retirement and pensions are a simple symptom of largess. Work until you die seems to be the historical norm, except for the privileged few. Life doesn't have to be quite that harsh in the US if resources were effectively managed, but they will probably be managed for the benefit of the few and so the many will revert to historical norms.
Medical costs will be just like every other rising bubble -- they'll rise until they can't, and then they'll crash and flatten out. Irrational expectations is as likely the root of medical spending growth as it is for any other bubble. If or when a person's family bears most of the cost versus society as a whole, a lot more people will quietly die with their ailment sooner rather than spending their life's equity to live another few months. It's probably not hard to build an actuarial table based on averages, and manage the "death panels" just as effectively as for Worker's Comp coverage today.
I'd argue that one. Private insurers is the most rational cause to pinpoint for the growth in medical spending IN THE USA. In Canada, the growth is nowhere near as high because the insurer is the government, and they have no PROFIT incentive to take eg. geriactric care costs to ridiculous extremes, even the patients don't want it. I know I'd rather die in peace and dignity, even if a few months sooner than an american, esp. given our overall life expectancy is nearly 10% higher. Better to spend money on prevention and early-life care if what you want is a longer USEFUL lifespan.
The real biggie at least at the federal level is Medicare&medicaid. But the cost of these depends upon the future course of medical costs. Its just another way to discovering that exponentially increasing cost of medical care (no matter how society chooses to pay it), is not sustainable. So its really just a matter of making major changes that impact the medical costs trajectory. Its really a do or die (pun unintentional) issue for the economy/government. But, our political system is terminally incompetant to deal with it. The temptations to make political hay by screaming death panels, and such are just too great. So we will let it go on until it breaks us.
That's the conundrum ET. I would also know what we're going to do with gold or dollars or any winning investment by 2025.
We are certainly at the point where we must make that committment now.
Our efforts now are merely attempted denial of the future. Oil, gold, bonds ? How will that help us when water shuts off or our bean crop fails ? Will buying solar panels be sensible ?
Will our wisdom provide us with future wealth ? If not, what good is our wisdom ?
This is essentially an explicit identification of yourself as a speculator, (eg. contributes nothing, simply profits from the usually small mis-steps of others). Though some have unsuccessfully IMHO tried to justify the activity on the grounds of "pointing out the errors of others", I'm an old(er) person, old enough to remember when that label was exactly equivalent to robber and horse-thief.
I note that international consensus has now finally discredited Chicago school / neo-con economics, thankfully, so "greed is good" is now finally dead, evidence that the economic solution imposed by World Bank on Indonesia in the early 1990's (deep recession coupled with deflation) is not being considered for the USA by any sane person.
"This is essentially an explicit identification of yourself as a speculator"
In this instance, yes. OTOH I have never stolen a horse.
If scientists have their way they may slow oil usage or speed up clean energy usage, because they are declaring a word war with climate change deniers:
(Carbon Dioxide & The Kooks). Heretofore scientists have had some sort of unspoken rule about speaking out. Go figure how that might effect peak oil considerations some.
This article provides some very interesting perspective on the issue. Most climate deniers seem to be ignorant kooks. But scientists have been treating everyone who deigns to question anything as ignorant kooks and has wound up hurting their own credibility in the process.
I believe in man made climate change, but don't trust the IPCC. It is fair and reasonable to ask questions and demand evidence. Putting mechanisms in place to address carbon emissions may well be one of the most important things we do. But it has to be based on something more than a bunch of elite scientists who mock anybody who asks them a tough question.
Scientific American: Climate Heretic: Judith Curry Turns on Her Colleagues
http://www.scientificamerican.com/article.cfm?id=climate-heretic&print=true
Most climate deniers seem to be ignorant kooks
VS the people who'd argue that because it's less than 1% of the investment bankers income that it's OK for them to take a unit of cash every time a unit is actually spent on the Carbon reduction in a Carbon reduction project?
Putting mechanisms in place to address carbon emissions may well be one of the most important things we do.
Important for the parasite class it seems.
New readers may not know this - but only 30% spent on Carbon reduction projects goes to actual Carbon reduction. 70% is "overhead" with 30% going to investment bankers alone.
http://www.environmentalleader.com/2009/12/08/uk-report-just-30-of-carbo...
The upside - some people are getting wise to the parasites. Seems a Carbon Exchange in Chicago is going bankrupt.
You are repeating propaganda that is shown by numerable commenter to be false over and over again.
I have never made the claim that you keep trying to call me out for.
Myself and others have repeatedly a that you just keep linking to the same discredited story from a company that is in a competing line of business despite your points being shot down and you never mustering and kind of counter argument.
I think it is time for the editorial board here to ban you from linking to the same false story now that the number of times must be over 100.
If not, I may just create a stock rebuttal and invite other to post a reply whenever you post this crap.
wall of text that does not refute the link
Hardly a rebuttal.
For others who don't want to go back to Oct 6th - here's samples of the "quality" of the "rebuttal"
'the study is from the competition'
And?
Oh its the 'you can't trust the source because of what they do logic'. Say - didn't you claim to work on Wall Street?
"If the 30% figure is true, which I doubt,"
helpful hint: If you are rebutting you should have actual facts, not your doubt.
"Investment banks look at carbon markets the way we might look at a single M&M. If it's in their hands, they'll eat it, but if not so what."
From their own web site:
http://www2.goldmansachs.com/services/advising/environmental-markets/bus...
On their very own web site Goldman Sachs is pointing out they are a market maker. Hardly the casual attitude as you, user Jack, claim is the case. For that matter - why are you even qualified to make ANY claim about how Investment Bankers look at a market/do not look at a market? Do you exchange services for federal reserve notes at an investment banker and are thusly qualified to comment on the %ages and how "they" think?
(for another's view of investment bankers http://www.rollingstone.com/politics/news/12697/64796 where they are called vampires.)
I may just create a stock rebuttal
Go ahead. (I at least mix up the text to the link every once in a while - I'm guessing yours won't change.)
If it is of the same quality as the wall of text non-rebuttal it will just go to strengthen the claim of the report.
So, the price of gold went over 1400 today. I became curious how much gold is there in the Central Bank of Russia vaults. After some data mining on its website, I made this chart:
It seem that the Central Bank has bought 150 tonnes of gold in the last 12 months. And I bet it's not the only central bank which does that. No wonder the price of gold is steadily rising.
A story about the Great Depression:
Kindness of a Stranger That Still Resonates
A man ran an ad in the paper, offering anonymous help to those in need. They just had to write him a letter telling him why they needed money. He promised he would never reveal their identities, and he kept the promise. The secret came out when one of his descendants found the letters after his death.
when I was in the boy scouts i had to interview my grandparents about living in the great depression. I am glad I did that in retrospect, since 3 of them are dead now and one is very very old. I learned that they saved and fixed everything they could. They saved energy. The produced robust gardens and built their own furniture when they could.
we all need to live like our grandparents again.
It also shows the wisdom of the scout movement.
I've always wondered what I missed not being in scouts. Still have a romantic notion about them.
Of course a true Republican would say "Well, why the heck is a single woman looking after a family in the first place? That's the problem?" LOL. It's all perception, just ask Karl Rove (or Goebels).
My review of "We had everything but money," a collection of first person accounts of the Thirties Depression:
http://graphoilogy.blogspot.com/2009/03/we-had-everything-but-money-sugg...
It's currently out of stock at the Country Store, but they should have additional copies in early December:
http://www.countrystorecatalog.com/itemdy00.asp?T1=C38730&usrsearch=we%2...
I happen to be re-reading it right now. Besides heart warming stories, it also provides "clues" as to how people will have to deal the future.
I got a used copy from Powells. http://www.powells.com
Todd
WT: Check Amazon.
http://www.amazon.com/Had-Everything-But-Money-Depression/dp/0517123932/...
The Country Store is the original publisher, and their price is half to one-fourth of what the Amazon affiliates are asking (for a new book).
Americans (and more than a few) did die of hunger during the early years of the Great Depression. At first, Herbert Hoover did not believe that could be happening; one of his senior staffers took him to see an actual whole family that was dying (Some had already died.) of hunger. Hoover was shaken, to say the least. Recall that Herbert Hoover had been in charge of food relief in Europe after World War I and was appointed by Truman to do food relief in Europe after World War II.
Herbert Hoover was an engineer, but like most engineers he did not know much about economics. He relied on the bad advice given to him by the most prestigeous American economists. FDR, by contrast, followed the advice of the British economist, John Maynard Keynes.
I was just reading some Keynes:
NATIONAL SELF-SUFFICIENCY
Keynes was the greatest economist of the twentieth century. I wish we had an economist of his stature now.
What about the likes of Mish Shedlock hating Keynesianism in all its forms?
Unfortunately, those economists called Keynesian now are mental midgets compared to John Maynard Keynes. JMK specifically stated that his theory and policy advice applied only to conditions of the Great Depression.
Krugman is a Keynesian. He wants the Fed to announce a goal of 25% inflation over the next five years, with the Fed using open market operations to keep the annual rate of inflation around 5%. I'm pretty sure that if JMK were alive today that he would recommend no such thing.
By the way, Keynesians come in several distinct varieties, as do Marxists and Freudians.
For myself, I'm an eclectic. I try to take what is good and still relevant in Keynes and put it together with the empirical findings of the monetarists and also I look at but do not agree with most of Austrian economics.
By the way, at The Automatic Earth, both Ilargi and Stoneleigh seem to have bought into Austrian economics. I do not know if either of them have had formal education in economics.
Mish is a financial journalist. He is entertaining to read and has some good insights, but my guess is that he has had little or no formal education in economics and does not know how to interpret the economic data as well as he thinks he does.
His being alive wouldn't matter.
"the plan" would not be followed in whole.
The 'spend to stimulate' portion of the model for which he is famous - the US government has that down cold.
The harder 'pay that borrowed money' back part - not so much.
Any plan that has a easy to do and hard part to do will result in the easy part being done and the hard part skipped over.
Given people who claim they are economists have shown up and claimed that peak oil is not a problem because higher prices will lead to more oil - what makes anyone think that 'a great economist' is going to get the energy part right?
Thanks for that link. I may print it out; it has been many years since I first read that passage, though I remember it well. Keynes was a great writer in addition to being a great economist.
-- Henry David Thoreau
I would rather people offer a bit of their own personal truths to their families, friends, or acquaintances when they are struggling.
Sometimes they may find they are not alone, and avert the (early?) grave mentioned by Thoreau.
With 600 bln Quant Easing anounced, the $US hits "a one-week high against the euro"? Does this smell of manipulation to anyone else besides me? Sucker rally?
Wonder how long they can keep them closed with the Hudson, Passaic and Hackensack rivers draining into upper New York bay? Especially with a Cat 3 hurricane dropping several inches of water on the drainage basin.
The ultimate insult to everyone of "lesser status". Here lies democracy.
That just boggles my mind. A felony conviction has "pretty serious job implications" for everyone. By that standard, no one should ever be charged with a felony, since it will affect their ability to make money and pay restitution.
And it wasn't the victim who wanted to preserve the guy's ability to pay. He wanted the book thrown at him.
OJ wasn't an exception to the law -- hire the best lawyers and get the best result. It has been about money for a long time now -- maybe as long as...
As George Orwell wrote in "Animal Farm," "All animals are created equal. But some are more equal than others."
Yuppers. Isn't the end of the Pledge to the flag "for liberty and justice for all who can afford it"?
The next time someone calls for Government working with business to 'get the economy out of the ditch', think of George Orwell and his comments on fascism. Ask that person if they understand that old man Bento was fond of pointing out how government power used to business ends was Fascism. Then ask 'em if they were not calling out for the use of the tow cables of fascism to haul that car outta the ditch.
That's pretty confused. Fascism is when the corporations run the government, whatever the government may do, tow the economy out of the ditch or not.
The thing is...it wasn't his lawyers who made that argument. It was the prosecutors. This is as if Marcia Clark announced that they weren't going to try OJ for murder, because it might affect his ability to make restitution. Instead, the charges will be misdemeanor trespassing.
Ain't no standard as good as the double standard. It is really a better standard to get as you end up with 2 standards...what with them being doubled and all.
Write up judicial conduct complaints and bar grievances for the parties who sure do look like they have been paid off. For added fun, contact the local Grand Jury members and let the Grand Jury look into the matter.
Here is an interesting article by National Inflation Association. http://inflation.us/foodpriceprojections.pdf
Even if half of what they project comes true, we will be in deep trouble. Worth checking out.
Contribution potential of glaciers to water availability in different climate regimes
Regarding yesterday's CLIMATE story ( http://www.denverpost.com/nationworld/ci_16552013?source=rss ) about Scientists working to dispel misinformation by Climate Skeptics, the American Geophysical Union issued a very direct clarification of their goals today.
http://www.agu.org/news/press/pr_archives/2010/2010-37.shtml
While I do prize the sobriety and clear intentions of their response, I leave it to the diverse crowd listening to discern and decide whether this is science maintaining its objectivity, or instead it's sovereignty, or its funding sources .. or some crushing balance of them all. (Sincere apologies for the cynicism.. but I'm afraid the 'objectivity' part is not the unassailable 'island' it would like to be..)
Bob
.. and to further clarify my own disclaimers, I just have to wonder how far one is willing to neutralize their expressions in order to stay off certain 'Enemies' lists, to get as far away from some 'inconvenient crosshairs' as possible..
Or, OTOH, it MIGHT simply be an honest statement, hmmmm?
Another energy SCAM!!
An acquaintance of mine sent me a link to this you tube video:
http://www.youtube.com/watch?v=OPI6OfBME5E&p=07DAB1954D6DB2F5&index=29&p...
There is a web site that goes with it: http://www.freelectricity.com/SiteMap.html
He is a college graduate with an advanced degree in "Political Science".
We need to create a running list of "energy scams" and how to "debunk" them.
Don't they teach anything to students about the Second Law of Thermal Dynamics anymore!??
D. A. Douthit
The sundance generator? Why not just all the way and call it the flux capacitor?
Magnets? How do they work?
Hahahahahahahahah!
Send your poor ignorant college grad acquaintance this link...
http://www.youtube.com/watch?v=o5vAlZWRARU
Feynman rules. I've been listening to some Feynman lectures on Physics and I'm surprised he did not answer with "No one knows. It is just a force that exists in nature and no one knows why" since he would often terminate there. Perhaps there is a more fundamental explanation in terms of more fundamental particles that I am not aware of but as far as I know, the magnetic force just is.
According to the following web site:
http://groups.google.com/group/alt.energy.renewable/browse_thread/thread...
Dennis Lee has been running scams of all sorts starting around 1985.
He has been working the energy bit for 15 to 20 years.
What a "snake oil" salesman!!
David A. Douthit
Forget thermodynamics, they couldn't even get Kilowatts separated from KWH.
There sure was a lot of talk about this 'Registration of 1.6million households..' I don't think this was dreamy kids thinking they'd found Shangri-la, I think it's hopeful but uneducated sheisters, looking to buy themselves their paradise.
And yet - someone playing with magnets has pretty graphs claimed to be from UL and TUVRhineland that sure looks like more energy out than in.
Ya all can go to the 1st link I could find on them.
http://pesn.com/2010/07/14/9501672_Terawatt_Research_LLC_defies_free_ene...
The leadership class of Terawatt have "interesting" backgrounds.
Anecdotally, an old lady put the car in drive and smashed through the glass front of the local pizza joint while trying to back out of the parking space. I think we'll be seeing a lot more of such accidents in the future.
Already seeing a lot more steel pillars between parking spaces and storefronts too. :)
I've seen a rise, or is it a trend, in the UK to single out older drivers for the "too old to drive" meme. Basically I put it down to propaganda which is conditioning people to accept the moral argument for older drivers to be removed from British roads.
My own view is that people will lose the means to travel, either through having no reason to travel or no ability to do so. Systemically, civilisation will react to energy depletion, even if people and politicians don't seem to. But then they're not the real driver, the system will react automatically to changes in available energy levels.
Unfortunately statistics show that the oldest group of drivers is the most dangerous one on the road. Whether it be slow reaction times, or blind spots in their vision (the brain fills these in with its guess as to what should be there). After a stroke my dad never believed he had a big blind spot (but he did). Generally society is very reluctant to yank the driving privledges as that seriously impacts the ability to care for themselves, and old folks rarely drive far or often.
i think the most dangerous group is geezer drivers texting while drunk - gdtwd.
Insurance costs don't seem to agree with the statistics then. According to them young males are more of a problem when it comes to dangerous driving. But that's not the point. For the system, civilisation in this case, to adjust to diminishing energy levels it will begin to remove the least beneficial energy consumers first (initially anyway). The more the energy levels reduce the more drastic the measures become.
A moral case can be made for the removal of older drivers, as you yourself were doing, so this is the path of least resistance. Like I said before, I believe everyone's ability to travel will be seriously curtailed as time moves on. And its quite likely that people won't mind too much, because the way the system works people will have been preconditioned to acceptance of the new reality, the new normal.
I don't think I made a moral case for removing (or not removing) them. There is a public safety case for doing so, and a social case for not doing so, so the
decision has to be made in the face of tradeoffs. My guess/hope is that as/if electronic safety features get added (detection of objects in the cars path connected to automatic braking and such) that the safety case can be made small enough to not have to so restrict older people.
Removing peoples rights and freedoms is of course a moral argument regardless how the argument is couched.
But again I'll reiterate that this is not the point, the argument used for their removal from the roads is simply a cover for legitimising the action, it wouldn't necessarily be the reason for the action (older drivers are no worse now than in previous decades). Systemically older drivers are of less use to the system and can therefore be easily sacrificed for purposes of energy conservation. The same is being done in the financial system to conserve money, the social contract is being broken and people forced to retire later. Old people are the low hanging fruit because they're less beneficial to the system.
As I said people are being preconditioned to the eventual loss of the means to travel. Once a group of people have successfully had their rights curtailed it becomes much simpler to extend the curtailment to new groups providing an argument legitimising it can be made.
As energy availability diminishes everything is not going to fall apart, energy usage will drop in line with availability and this will occur systemically in a natural way. The less beneficial parts of the system will be shut down in a controlled manner and I believe travel will be an early victim. For most people life in huge urban ghettoes is in their future.
There is a practical side to this, as everybody has relatives that are too old to drive but require too much 'transportation help' for non-colocated family to adequately assist. The choice to take the keys, besides being emotionally difficult for all involved, really implies selling homes, revising lives, and potentially moving an elder to assisted care. The costs and efforts to do this are extreme, and it's easy to say "one more year" and "they've had close calls, but haven't hurt themselves or anybody yet" until it's too late.
If the gov't (and thus, population) isn't willing to carry the costs of transportation or subsidize relo and care, it's not reasonable to expect anything else. It
might make more sense to have a "graduated" license that is only good for daytime, clear-weather driving, or maybe even non-rush-hour, or not over 45mph.
It probably wouldn't hurt for everybody to have "elder hours" with speed limits 10mph less on city streets from 9-11 and 2-4...and focus deliveries and other off-peak activities then as well. It would only help push people away from cars and toward mass-transit...which would also help elders, in a positive-feedback loop.
Having no elders, no learners, and no semi's or dumptrucks on the streets during rush hour would certainly improve flow, and probably make everybody's life a little easier. Having the elders lead the push for better transit would be good for us all, too.
I've solved the car transportation issue for myself. I had four children and now have three grandchildren who will drive me around in a few or several years when I'm too old to drive. I saw hard times coming forty years ago and decided it made sense to have a big family to help me during my declining years. Three of my children live in Minnesota, and two of them in metropolitan Minneapolis, close to where I live. All my kids have offered to take me in if I ever need a place to live.
Don-
MSP traffic sucks (for being a "small" big city)! I got stuck on 494 or whatever that big interchange is there and came to a complete stop a few months back. It took me over an hour to get through the metro area (on the way home i made it from Coon Rapids to LSE in just over 2hrs). My buddy who lives right near Anoka and works downtown takes a bus because driving is such a waste of time (about an hour). If i lived in a big city i'd garage the car for special use and use public transportation (and carry a Glock).
I do have good bus service where I live in St. Paul and plan to use it when I can no longer drive.
Traffic is much much worse on the Minneapolis side of the Twin Cities than it is on the St. Paul side. For example, bad traffic congestion is rare on I-35E but quite common on I-35W.
Along with Garrison Keillor, I much prefer St. Paul to Minneapolis.
My mother's driver's license expired last year. She was 89, and decided not to try to renew it. To hear her tell it, not being able to drive is a liberation, a huge relief. And at the same time, she announced she was going to go into an assisted-living situation, which she had been preparing for and can afford.
Everybody wins - Mom's off the road, no one got hurt, and she is as happy as a clam at high tide to be in a place where she doesn't have to drive. Actually she is now less socially isolated in her new community than she was before, when she could drive.
She is now busy planning her 90th birthday blowout party... if it's anything like her 80th, I can hardly wait!
One suggestion I've heard is to sell the car(s) which will no longer be used, and use the money to open an account with a local taxi company. Ask them to provide transportation for your parent whenever he or she needs it.
One person who tried this said the taxi company was very accommodating, trying to send the same drivers each time, so his mom felt like she knew them. When she finally passed away, the three or four drivers who had driven her around all attended her funeral.
That is a really nice story. Is it possible that people can still be people?
Yesterday ended a 3 week, unexpected car vacation.
Original alternator went out after 28 years. Mail ordered Bosch rebuilt replacement (cheaper & better than local available). Six days and car was back. New alternator froze up. Damaged pulley. Replacement bad as well (bad batch or sat in Arizona heat and grease dried out or ?).
Finally got a good one.
A minor inconvenience. Several offers from friends, but I decided to just walk & take the streetcar.
Delayed going to discount grocery (Sav-a-Lot) that I usually drive to twice/month. Ill friend that I shop for had to take a taxi twice (he understood) and I walked groceries to him twice.
Best Hopes for Walkable Communities,
'
Alan
Whether or not we face mass starvation I think we'll face 'mass cabin fever' as people are stuck at home. When that includes youngsters (under 40) I think there will be resentment.
Cabin fever will be a reality for those unfortunates stuck in a car-dependent infrastructure without car access.
My mother is 92, still living in her own apartment 3 blocks from me here in Boulder Colorado. She stopped driving at 85, but still has a very full social life. She walks to the neighborhood coffee shop to get together with other elderly ladies 3 days a week (none of the men seem to have survived). She uses Boulder's Community Transit system which stops a block from her house, and the Special Transit para-transit system for doctor's appointments (and she lives 1 block from the hospital). Sometimes I give her rides in our family car, but not very often.
Her lifestyle would be very common in Europe (you always see elderly people walking slowly with their little grocery carts), but is not common at all in the US.
There is no reason that lively pedestrian districts should disappear post Peak Oil, and plenty of countries that live on small fractions of US per capita oil consumption today have lively foot and bicycle-based social lives (Bangla Desh, Nepal,etc.)
Yes & no. Certainly people want some direct physical contact (sex) . . . but young people are accustomed to e-relationships with people on the internet, xbox live, etc. Isn't this discussion social contact?
One problem in the UK is people who still have lifetime licenses, not to age whatever but open ended. If the police come across a driver who is unsafe due to age or debility they can only take the license off that person by taking them to court and putting them through the grinder. They don't want to do that but they have no choice. If you listen to some of the cases you would understand the issue.
NOAM
BTW I get some interesting looks from hire companies and police when they look at my 'until 65' license when in different countries that have licenses for, maybe, 5 years at a time.
I still have a green licence, but they get pulled if you move house as they have to be re-issued as a 10yr photo licence.
API reports surprise declines in fuels inventories
Wow, that's about as far out of line with "analyst expectations" as you can get. Wonder if the EIA can pull a rabbit out of a hat tomorrow? But with numbers as big as these it is difficult to see the EIA report being anything but bad.
http://www.bloomberg.com/news/2010-11-09/crude-oil-rises-to-two-year-hig...
Hilariously, oil has pulled back to $86. Apparently people think oil being used up at record rates means it's a steal.
Also, last week API reported:
I have seen great disparity b/w the API and EIA weekly numbers a few times. I have thought to track this and see how well they match but probably never will... I would think that the only way for API to make a dime on this is if they give the traders a drop on the EIA report. It will be interesting tomorrow.
From API:
Single subscriber Member Non-Member
T00040 Weekly Statistical Bulletin (immediate)$10,500.00 $14,000.00
83400 PDF format (delayed 72 hours) $1,200.00 $1,500.00
It's interesting how someone can apparently sidle up to the US coast undetected, launch a missile, then sidle away again undetected.
'Missile' fired off California coast
The World's biggest spender on defence and country in constant paranoia over the possibility of being attacked? WTF? Something is obviously seriously wrong here, especially the nonchalant way this report is being treated. I assume 35 miles off the coast is well within US national territory. Wonder what the reaction would have been if it had dropped in the middle of Los Angeles?
'somethings happening here. what it is ain't exactly clear'
If the object had not been caught on film by a 'reliable source' - would "we" even know about it?
I've seen blood soaked debris surround EMTs and a prone human in US Federal buildings with 2 'live' TV trucks - yet nothing on the news about whatever happened. I've been told by the son of a man having an affair with an employee at the local newspaper that his drunk driving notice/story was pulled by the paper's employee because she was worried about his 'embarrassment'.
The media message is controlled. As it has for any of our lifetimes.
(Source: Labor's Untold Story, by Richard O. Boyer and Herbert M. Morais, published by United Electrical, Radio & Machine Workers of America, NY, 1955/1979.)
Something is obviously seriously wrong here, especially the nonchalant way this report is being treated.
Do keep in mind there is a list of "the X most underreported stories" that happens every year - its not like this is new folks.
Territorial waters only extend 12 nautical miles offshore. The economic zone is 200 miles, but that doesn't preclude foreign ships from operating in it without asking permission. They just can't drill any oil wells while they are there.
However, and this is just a wild guess based on talking to people who shouldn't talk so much while intoxicated, the people who are acting nonchalant have been told to "shut the f#@% up and don't talk about this" by persons at a high level in government.
Further wild guesses are that some government agency which shall remain unnamed but whose initials are possibly "CIA" fired something off into the for purposes that nobody in power wants anybody in unnamed foreign countries to know about. Further details will continue to be unavailable to the public.
If you really want to know what happened, just wait 50 years until the relevant documents are declassified.
This has been identified to an aircraft contrail and matched to a satellite picture of a contrail in the area at the time.
NAOM