Drumbeat: September 28, 2012
Posted by Leanan on September 28, 2012 - 10:55am
Cheap coal, EU rules threaten British energy crunch
(Reuters) - Britain could face an energy supply crunch this decade as cheap coal encourages plant operators to race through generation hours before new EU environmental rules come into force, then shutter generating capacity ahead of schedule next year.High gas prices and lack of clarity on incentives for investment in renewable energy are meanwhile seen hampering plans to replace about a fifth of the country's electricity generation with cleaner alternatives over the next 10 years.
Nine UK-based coal and oil fired plants with a combined generating capacity of 11.5 GW are due to close by 2015 or when they have completed 20,000 hours of operation for coal-fired power stations or 10,000 hours for oil-powered facilities - part of European Union efforts to cut harmful emissions.
But the owners of four plants, with a combined generation capacity of 6.1 gigawatts (GW) have already said they will close their plants by March 2013 as schemes to slash greenhouse gas emissions in the EU begin to bite.
Crude Oil Poised for Quarterly Gain Before U.S. Spending Report
Oil headed for the biggest quarterly gain this year before a report forecast to show personal spending rose in the U.S., signaling an economic recovery that may boost fuel demand.Futures were little changed after increasing 2.1 percent yesterday, the most in eight weeks. U.S. household purchases probably climbed 0.5 percent last month, up from 0.4 percent in July, according to a Bloomberg survey before Commerce Department data today. Oil surged yesterday as Spain pledged to cut its deficit to ease Europe’s debt crisis. Prices erased a 0.9 percent gain today as the dollar rebounded against the euro.
Consumer Spending in U.S. Stagnates
A slack job market and rising food and gasoline prices are squeezing households just as concern mounts that lawmakers might not be able to avoid the fiscal cliff of tax increases and government spending cuts slated to take effect next year. At the same time, rising stock prices and an improving housing market are lifting consumer confidence, which may help underpin demand.
Japan Aug Iran crude imports slump yr/yr
TOKYO (Reuters) - Japan's crude oil imports from Iran in August fell 66.8 percent from a year earlier to 497,961 kilolitres (101,035 barrels per day), the trade ministry said on Friday, following a one-month hiatus in July, after European Union sanctions affecting insurance reduced the flow.Japanese buyers stopped lifting Iranian crude in early June, so vessels sailing the final part of their journey to Japan would be covered by insurance in early July.
MILTON KEYNES, England -- /PRNewswire/ -- It's not often you read predictions of falling oil prices but self-made multi-millionaire trader and investor Vince Stanzione is betting on lower oil prices in the next 5 years and a boom in U.S. oil & gas production that will give the American economy a well-needed boost that could see the country not only being totally energy independent but an actual net exporter by 2020 - too good to be true?Before dismissing the call as crackpot, Stanzione is well-known for his contra financial calls such as the one he made in September 2011 that the Dow Jones would bounce back and hit a new high in 2013, which currently looks on track and stands 27% higher than it did at the time.
4 "Imminent" Crises We've Forgotten About
The fear was nearly universal. "Wake Up, America. We're Driving Toward Disaster," wrote The Washington Post. Salon, among countless others, warned of "peak oil -- that moment when supply stops growing and begins to decline, while demand continues to chug along." Alexey Miller, CEO of Gazprom, the world's biggest energy company, warned oil would hit $250 a barrel in "the foreseeable future."Four years later, world oil output is at an all-time high, and oil prices are down 40%. U.S. oil production is the highest it's been in 14 years, rising consistently for the first time in decades. Adjusted for average hourly wage growth, gas prices today are nearly identical to where they were six years ago. In 2008, the International Energy Information Agency predicted world oil demand would be 96 million barrels per day in 2012. Now, the U.S. Energy Information Administration puts that number closer to 89 million barrels per day. Global oil supply was 3 million barrels per day higher last quarter than it was in 2008.
The Peak Oil Crisis: Oil & the Arctic Meltdown
Even with relatively ice free waters, the big problem may turn out to be the availability of drilling rigs and ships that are robust enough to withstand encounters with Arctic ice. The upshot of all this is that there are so many factors inhibiting the widespread drilling for oil in the deep arctic, it is doubtful that much of this will take place in the next five to ten years. During this time frame, the odds are high that global oil production will begin to start down due to depletion of the best fields, and it seems unlikely that Arctic resources can be brought into production quickly enough to offset most of this decline.
Environmental risk of drilling in Arctic too high, CEO of oil giant Total says
LONDON -- Energy companies should not drill for crude oil in Arctic waters because the environmental risks are too high, Total SA Chief Executive Officer Christophe de Margerie told the Financial Times on Wednesday.The newspaper, which operated behind a pay wall, described de Margerie's comments as the first time a major oil company has publicly criticized offshore exploration in the Arctic.
Chinese icebreaker sails to Atlantic Ocean and back via Arctic route, marking first for China
BEIJING — A Chinese icebreaker docked Thursday at Shanghai after becoming the first vessel from China to cross the Arctic Ocean, a landmark trip that is part of Beijing’s efforts to expand its presence in the Arctic.With melting icecaps accelerating the opening of new shipping routes and the exploration of oil, gas and mineral deposits in the Arctic, China has been eager to gain a foothold in the region.
BP’s Texas Refinery Sale Shows Volatile Industry’s Decay
BP Plc may get less than half the $2.85 billion it planned for selling its Texas City refinery, the third-largest in the U.S., as values for U.S. plants haven’t kept pace with soaring profits.The average price of U.S. refineries sold since 2009 indicates the plant should sell for $1 billion, data compiled by Bloomberg Industries show, a valuation that would be among the lowest in two decades. At a time when investors are enjoying the highest stock returns since 2007, BP would reap less than half of the $4.4 billion total value it estimated it would get when it put its Texas and Carson, California, plants up for sale last year, according to data compiled by Bloomberg.
Proposed Nigeria oil bill taxes are fair -minister
(Reuters) - Taxes on deep offshore oil projects proposed by Nigeria are "competitive and considerate", its oil minister said, rejecting complaints by foreign oil majors that the levies are too high.Shell Nigeria managing director Mutiu Sunmonu warned this week that tax terms in a landmark Nigerian oil bill are so uncompetitive they risk rendering offshore oil and gas projects unviable, and could badly stifle investment.
Bumi Resources Questions Motives of London Probe: Southeast Asia
PT Bumi Resources said a probe by Bumi Plc, the London-listed shareholder founded by Nathaniel Rothschild, and subsequent “leaks” about the matter are an attempt to damage the Indonesian coal producer.
Petrobras Gets Approval to Acquire Anadarko Stake in Brazil
Petroleo Brasileiro SA, the world’s biggest oil producer in deep water, received approval to acquire Anadarko Petroleum Corp.’s 30 percent stake in an offshore block, the country’s oil regulator said.Anadarko, based in The Woodlands, Texas, “relinquished” its stake in the ES-M-661 block more than six months ago and is focusing on its assets in the Campos Basin, John Christiansen, a spokesman for Anadarko, said in a telephone interview today. Brazil’s oil regulator, known as ANP, didn’t provide terms of the transaction in a statement today on its website.
South Sudan Sees Increased Investment After Splitting Oil Block
South Sudan expects to attract more foreign investment into the newly independent country through its break up of an oil concession the size of Rwanda, the government’s spokesman said.Block B, which covers most of South Sudan’s eastern Jonglei state, was split into three blocks after Total SA’s ownership was invalidated because it was signed with Sudan before the south gained independence, Barnaba Marial Benjamin said in an interview on Sept. 26 in the capital, Juba. Total, based in Paris, previously held 32.5 percent of the block and will be allowed to choose one of the new concessions, he said.
Shell did not sign Kurdish deal, Baghdad says
Baghdad has denied reports Royal Dutch Shell will become the latest oil major to set up shop in the autonomous Kurdish north."We don't have any discussions with the Kurdish regional government [KRG] about working in the region," a statement released by the office of Iraq's deputy prime minister for energy quotes Hans Nijkamp, a shell vice president, as saying.
Ecopetrol Says Rebel Attacks Falling Before Peace Talks
Ecopetrol SA (ECOPETL), Colombia’s largest oil company, said attacks on its installations have declined ahead of the first talks in a decade between the government and rebels scheduled for next month.“This month we had only three attacks, which is nothing compared to the historical numbers,” Chief Financial Officer Adriana Echeverri said today in an interview in London. “They are dropping.”
Iran might not sell oil to some countries, come winter
The Iranian parliament (Majlis) plans to discuss a bill, which may vote for stopping exports of crude oil in winter to countries which have imposed sanctions against the Islamic Republic's oil sector, ISNA reported.If the bill is approved, Iran will not sell oil during winter to the mentioned countries, Head of Parliament's Energy Commission Masud Mir Kazemi said.
Netanyahu’s Iran ‘Red Line’ Deadline May Buy U.S. Time
Israeli Prime Minister Benjamin Netanyahu used a drawing of a cartoonish, short-fused bomb to challenge the international community at the United Nations to shut down what he says is Iran’s sophisticated effort to attain nuclear weapons.Now the world, in particular the U.S., will have to decide what steps may need to be taken to defuse the potentially explosive stand-off between Israel and Iran. Netanyahu focused on Iran’s production of enriched uranium, potential atomic bomb fuel if removed from international safeguards and further processed.
‘Innocence of Muslims’ Filmmaker Nakoula Ordered Held
Nakoula, 55, has a criminal history that includes bank fraud by using false identities and a drug conviction. He was questioned this month by U.S. authorities investigating whether he violated terms of his parole.Under the terms of his release, Nakoula was prohibited from representing himself with anything other than his true legal name, and is barred from using the Internet without permission from his probation officer.
U.S. call for "cool heads" in China-Japan island dispute goes unheeded
(Reuters) - U.S. Secretary of State Hillary Clinton urged China and Japan on Thursday to let "cool heads" prevail in a festering dispute over a cluster of East China Sea islands, but hours later Chinese and Japanese diplomats traded barbs at the United Nations.
Kazakh ambassador to U.S. reappointed as foreign minister
ALMATY (Reuters) - Kazakhstan President Nursultan Nazarbayev has appointed his long-serving ambassador to the United States as foreign minister to help the oil-rich country to forge stronger economic ties with the West.
'War on coal'? Why Obama might not be industry's worst enemy.
Environmental regulations by the Obama administration come at a cost to coal plants and mines, but the rise of cheap natural gas appears to be a greater threat.
Shale Takeovers Looming as Texas Discounted in Australia
Buyers seeking a piece of North America’s shale boom can find it in Australia.Australian companies exploring for oil and natural gas that’s trapped in shale rock in the U.S. and Canada are valued at a median of 11 times their reserves, a 23 percent discount to their counterparts that are listed on stock exchanges in North America, according to data compiled by Bloomberg. The valuation gap -- driven by Australian investors who are more than 8,000 miles (12,800 kilometers) from the companies’ wells in Texas and Oklahoma -- may lure acquirers, said RBS Morgans Ltd.
Support Slips for More Rules as Gas-Frackers Campaign
Public support has cooled for stricter environmental regulation of hydraulic fracturing for natural gas, a drilling method that has lowered U.S. energy prices while raising concerns over its impact on drinking water.Fifty-six percent of Americans said there needs to be more regulation of the technique, also called fracking, according to a Bloomberg National Poll conducted Sept. 21-24, down from 65 percent in March. The share of respondents calling for less regulation of fracking rose to 29 percent, from 18 percent in March.
Diesel in Water Near Fracking Confirms EPA Tests Wyoming Disputes
“At a quick glance, these results appear consistent with the earlier EPA study,” Rob Jackson, an environmental scientist at Duke University, said in an e-mail. “The stray gas concentrations are very high, not only for methane but especially for ethane and propane. That combination suggests a fossil-fuel source for the gases.”
Transocean Given Month to Halt Brazil Operations After Spill
Transocean Ltd., the world’s largest offshore drilling company, was ordered by a Brazilian court to cease within 30 days operations in the country, where it supplies eight rigs to Petroleo Brasileiro SA, Latin America’s largest oil producer by market value.Transocean “is vigorously pursuing the overturn or suspension of the preliminary injunction, including through an appeal to the Superior Court of Justice,” Transocean said in a statement distributed by Marketwire. “Absent relief from the courts, Transocean will be required to comply.”
Buyers, automakers raise doubts about electric cars
Having largely exhausted a pool of electric-car devotees as buyers, automakers are facing headwinds in trying to make plug-in cars a mass-market product.Nissan joined General Motors last week in offering deeper lease discounts on its premier electric car. The latest deal on the all-electric Leaf brings the lease payment closer to the level of a comparable non-electric car, not counting the gas savings, an analysis for USA TODAY by Edmunds.com finds.
While cheap leases are a boon to consumers, they're also a sign that motorists aren't embracing electric cars with enough vigor to be willing to pay the steep price premiums they carry.
Uranium Plant Using Laser Technology Wins U.S. Approval
RALEIGH, N.C. (AP) — A nuclear power partnership of General Electric and Hitachi has received federal approval to build the first plant to enrich uranium for use in commercial reactors using a classified laser technology.
Entergy Sues Feds Over Nuclear Waste
Entergy Nuclear Pallisades sued the United States yesterday for failing to accept nuclear waste from two plants Entergy owns in Michigan, according to published reports.
Seaborne power generation idea floated in the Middle East
A power-generating system designed for remote offshore operations that could cut costs and reduce carbon dioxide emissions by 40 per cent is being offered for installation in the Arabian Gulf.Developed for the oil and gas industry by the Norwegian classification society Det Norske Veritas (DNV), the "Offshore Power system for a new era", or OPera, as it has been dubbed, is essentially a high-voltage power grid supplied by a floating power station.
'Miracle' crop could invade like kudzu
RALEIGH, N.C. — It's billed as a champion energy crop that yields three times as much ethanol per acre as corn, a fast-growing field grass that's ideal for making clean auto fuel without displacing scarce crop land. The N.C. Biofuels Center has been pushing for more than a year to grow the arundo plant on a mass scale, touting it as a new cash crop and the prime energy source for a proposed $170 million biofuel refinery in eastern North Carolina.But the bamboolike grass has a dark side. Some scientists have called arundo "the plant from hell" and rank it among the world's 100 worst invasive plants.
Q. and A.: Farming for an Uncertain Future
One of the topics I’m thinking about is “getting over the hump.” Imagine the lines of population growth, resource depletion and accumulation of carbon in the atmosphere going up, up and up. And as they are going up, up and up, our whole scientific effort is dependent on fossil fuels for our pickup trucks, for our tractors, for our greenhouses, for the tremendous power we have with these computers. It’s all dependent upon the scaffolding within civilization of lots of highly dense carbon.So the question is, will these new species and varieties be dependent on the extractive economy? And I am saying, no. That as we get over that hump and somewhere on the down slope in the use of resources, there will come a time in which the creatureliness of these plants, these perennial grain crops, are available for the same kind of selection that farmers have had for millennia, and agronomists for hundreds of years.
The new species and varieties are only half of the equation. The other half is to bring two or more species together with a diverse ecosystem as the conceptual tool. Essentially, all of nature’s ecosystems are perennial mixtures, so that’s our standard.
California farmers examine climate change issues
New science and research has San Joaquin Valley farmers taking a harder look at the effect that climate change may have on their industry.If researcher's predictions hold true, the Valley's multi-billion dollar agriculture industry will be hit with longer stretches of hot temperatures, fewer colder days and shrinking water supplies.
USA TODAY analysis: Nation's water costs rushing higher
While most Americans worry about gas and heating oil prices, water rates have surged in the past dozen years, according to a USA TODAY study of 100 municipalities. Prices at least doubled in more than a quarter of the locations and even tripled in a few.Consumers could easily overlook the steady drip, drip, drip of water rate hikes, yet the cost of this necessity of life has outpaced the percentage increases of some of these other utilities, carving a larger slice of household budgets in the process.
California: Desalination Clears Hurdle
The San Diego County Water Authority announced a tentative agreement Thursday to buy all of the output of what will be the Western Hemisphere’s largest seawater desalination plant, clearing a major hurdle for construction.
Resort’s Snow Won’t Be Pure This Year; It’ll Be Sewage
This coming ski season, the resort, Arizona Snowbowl, will become the first ski resort in the world to use 100 percent sewage effluent to make artificial snow.“It’s a disaster, culturally and environmentally,” said Taylor McKinnon of the Center for Biological Diversity, one of the plaintiffs. He worries about the impact on the delicate alpine tundra and to human health should skiers fall into the treated sewer-water snow and ingest it.
The United States Forest Service, which owns the land where the resort is, says the treated water meets the highest standards — just below drinking water — and is already used to irrigate golf courses, soccer fields and parks, according to Corbin Newman, a regional forester.
New Clues About Ancient Water Cycles Shed Light On U.S. Deserts
ScienceDaily — The deserts of Utah and Nevada have not always been dry. Between 14,000 and 20,000 years ago, when large ice caps covered Canada during the last glacial cooling, valleys throughout the desert southwest filled with water to become large lakes, scientists have long surmised. At their maximum size, the desert lakes covered about a quarter of both Nevada and Utah. Now a team led by a Texas A&M University researcher has found a new water cycle connection between the U.S. southwest and the tropics, and understanding the processes that have brought precipitation to the western U.S. will help scientists better understand how the water cycle might be perturbed in the future.
Island nations fret over climate change
UNITED NATIONS (UPI) -- The existence of island nations like Micronesia depends on an international response to the growing challenges of climate change, President Emanuel Mori said.Rising sea levels, which may be due to declining polar ice levels, are threatening low-lying countries like Micronesia. Mori told the U.N. General Assembly that world leaders needed to take the growing threat seriously.
"Our very existence depends on it," he said. "Without international cooperation and assistance, we are helpless against the adverse impacts of climate change."
High Arctic warming surpasses Viking era, study shows
OSLO (Reuters) - Temperatures high in the Norwegian Arctic are above those in a natural warm period in Viking times, underscoring a thaw opening the region to everything from oil exploration to shipping, scientists said on Thursday.Last week, sea ice on the Arctic Ocean set a record low since satellite observations began in the 1970s. In recent years, mussels have been found off the Norwegian archipelago of Svalbard for the first time since the Viking era 1,000 years ago.
The study showed that summertime temperatures on Svalbard were higher now than at any time in the past 1,800 years, including in the Medieval Warm Period from 950 to 1200, scientists wrote in the journal Geology.
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EDITORIAL - Minister Paulwell and the narrative of oil
A realistic and balanced piece to which I responded with a carefully crafted comment. Luckily my one little bit of indiscretion made it past the censors and the comment has shown up! Here's where I think I might have used somewhat inflammatory language:
Times are a changing. I doubt an editorial like this would have been forthcoming 5 years ago and I am somewhat surprised that my comment with all it's doomerish implications has been published.
Edit: I think I have just figured it out by re-reading my comment. I made my point without using certain key words including; conserve, efficiency, renewable, solar, photovoltaic and wind! There, that's the secret!
Alan from the islands
If the objective (and it is) is to decrease the use of fossile fuels (from a resource availibility aspect or a CO2 aspect) subsidies on renewables (especially OPEX oriented) are for sure not the right way to do it.
Simple volume based taxes on fossile would be much better (especially as you don't have to define the "solutions" to favor any of them, be it on efficiency/conservation or alternative production side).
Removing taxes on work in parallel.
But in a money printing frenzy environment, not much sense remains obviously.
Germany notwithstanding, I suppose?
In all fairness, Germany has done BOTH, with considerable Gas Tax (and surely a few other taxes) and with the FIT for boosting Solar/Wind, etc.. and with the high-pressured exception of maybe one poster here, it seems that Germany has been pretty suggessful with its aggressive support of Renewables, despite the plaintive cry that they have, indeed picked some winners. Really, we know what those sources are already.. why be coy about it. It's hardly like Wind and PV were just arbitrary or capricious picks..
Now imagine how those winners would perform in the Caribbean?
(*Alan, great line, with the 'Pyromania'.. you'll get a chance to use it again.. it makes the dig without alienating.)
Yeah, Germany is also burning a lot of lignite (CO2 emissions per capita much higher in Germany than France for instance), and not sure we can say how wind and solar will truly fare there.
Hambach mine
Anyway I'm not against renewables at all, but I truly think subsidies and "carbon trading" are bad policies compared to simple volume based (on CO2 or energy content) taxes on fossile.
In line with James Hansen in (2) below for instance:
http://www.guardian.co.uk/world/2009/jan/01/letter-to-barack-obama
And if you look at the starting point in terms of primary energy, it's quite clear that conservation measures (like insulation, smaller less heavy cars), would be much better investment, even if less glamourous.
Volume based gas taxes were set up in Europe after the first oil shocks (more or less the same in all major countries), without talking CO2, and they have been efficient, average mpg much better when compared to the US for instance.
Today we are in a monstruous oil shock, but not even able anymore to call a cat a cat, we prefer "financial crisis" labels and such...
(added to the fact that the "embargo"(a complete non event) is still the label used in the US for the first oil shock, when the correct one should simply be "US production peak oil shock")
With regard to coal, I don't think that is properly levelled at Renewables, which are installed principally to upend whatever burned or fissioned fuels they can.
I credit the recent, albeit modest and allegedly temporary upswing in Coal burning in Germany to Nuclear's accounts, and to the unfortunate policy decisions that had left them with as much dependence on Fission as they did. It will take time, investment and engineering to move past both Nuclear's and Coal's faltering promises. Coal power is about the only thing out there that Nuclear gets to point to when it wants to look clean by comparison.
Meanwhile, every KWH or Calorie delivered by Solar and Wind is one that didn't create more CO2, Air and Water Pollution, or Waste, and the fuel supply was and will continue to arrive free from the environment.
The preference towards improved building performance (insulation), transportation and efficiency is, of course everpresent, but not to be offered as an either/or to the above proposals, since Germany again shows that it is more than possible to be doing both at the same time.
Nuclear, unfortunately, doesn't look clean, but is in fact very clean compared to anything, even solar and wind. Especially solar is quite dirty.
Every kWh of solar is one that sustained 9 kWh of coal, since the solar money, if spent on nuclear, would have displaced 10 kWh of coal.
Solar power in Germany will thus take the life of tens of thousands - the YOLL is somewhere around 300 per TWhe of coal. This course of action has been chosen with eyes open; policy makers know this. However, no one takes lead anymore. Politics is all about symbiosis with media and medias' sale of drama. I guess the reasoning is "if we say the truth, the other guy will win and then it didn't matter what the truth was anyway".
Every kWh of solar is one that sustained 9 kWh of coal, since the solar money, if spent on nuclear, would have displaced 10 kWh of coal
Simply not true in Finland - and solar can start producing electricity a decade sooner.
Nuclear promises =/ Nuclear reality
Oh, and solar tends to produce power when it is most valuable - something nuclear cannot do.
Alan
If you compare PV an nuclear, then your argument makes to a lesser extend sense in Germany. However, your arguement dies when you consider that on-shore wind contributes much more energy than PV (>10% vs 5%) and already beats with modern turbines NG and hard coal; lignite can still compete as fuel because it is dirt cheap in Germany, but lignite plants will economically be killed in the long run due to reduced FLH.
I would simply read the publications of the German association of lignite producer (Braunkohleverband) then you understand how the enemy assesses the situation of reneables, interestingly, they expect a quite high increase of wind power in the next two decades, higher than my bets and clearly state that enough base load is available in Germany until 2035, only small amounts of NG power should be added, nuclear is dead for them and the lost power (9 GW) no issue.
They made a real U-turn at the propaganda front, suddenly coal power plants are highly flexible, i.e. reach almost 90% of NG controllability with 30 MW/min, and there is no problem to combine them with renewables.
YvesT: "And if you look at the starting point in terms of primary energy, it's quite clear that conservation measures (like insulation, smaller less heavy cars), would be much better investment, even if less glamourous."
When you are talking about reduction of primary energy consumption, then replacing fossil or nuclear electricity production is energy wise the most efficient way because we replace around 3 units fossil/nuclear with one unit renewable energy. The effect was IMHO partially spoiled (CO2 wise) by switching off nuclear power plants too early.
If we talk about impact of spent Euro, then better houses are of course the way to go. However, the problem with better insolation etc. is, that you only convert around 2% of the houses per year -1% are new houses with high mandatory standards and additional 1% are converted existing houses- as these conservation measures only make economically sense when done in combinartion with mandatory work like new roof, windows...,i.e. the whole proscess requires decades. The reduction of primary energy in Germany during the last decade was to a large extend a result of better houses, here the KfW programes did and still do a quite good job.
I do not see a real competition between both approaches because the money comes from different sources, therefore, I am quite happy with the current situation.
I would argue that Germany's ability to borrow money for less than 2% for 10 years or for less than 2.75% for 20 years should be used to increase KfW programes and launch special programes for on-shore wind (efficient turbines in southern Germany, more money for repowering), as these expenses would be paid back within a few years.
I'm sure you meant insulation, not isolation. Not that I'm the language police, but we're all quite interested in both; the juxtaposition derailed my brain for a moment...
/Desert
Salt Marsh Carbon May Play Role in Slowing Climate Warming, Study Shows
A somewhat different take on that study:
Salt Marshes To Absorb Carbon To 2050, But May Emit It Later
That in turn depends on whether the flooding of additional continental margin allows the expansion of salt marshes. Most likely, shore protection on a large scale will take too much energy to accomplish and the subsequent flooding will create significant additional marshes and shallow inland seas. Significant areas of Gulf Coast states, the areas around the Chesapeake, areas upstream from San Francisco Bay, etc., are likely to become salt marshes.
Rising sea levels will flood currently dry land, allowing salt marshes (and their tropical cousins, mangals or mangrove forests), to expand inland. On the other hand, deeper sections of salt marshes will die if they cannot build up fast enough. Barrier islands will migrate shore-ward, burying the most sea-ward sections of salt marshes. Taking global warming into account, areas of salt marsh will likely expand pole-ward, with mangroves replacing salt marshes at the interface between temperate and tropical. All of this may result in a net sequestration of carbon, but not nearly enough to make up for burning all that fossil fuel,
Sorry guys. You need stable coastlines for the formation of salt marshes. Once ice sheet disintegration really gets going, you don't have stable coastlines until the process finishes. And the current drivers of global warming are an amplifying forcing -- human greenhouse gas emissions -- on top of an amplifying feedback -- much higher rates of carbon emission into the environment from burning forests, melting tundra, destabilizing clathrates, retreating glaciers, and baking earth.
Not likely for there to be much in the way of healthy salt marshes by mid century given these dynamics.
You are saying SLR will be to fast for mangroves and other salt marches to survive. This is essensially the case.
The current rate of SLR hasn't killed off salt marshes and mangroves yet. The question is what rate of SLR will have a negative effect on salt marsh and mangrove productivity (carbon sequestration).
re 'Miracle' crop could invade like kudzu
Arundo donax is well known amongst musical wind instrument makers as the source material for clarinet, sax, oboe and bassoon reeds. Its also used for bagpipe reeds. In some places of the world entire instruments are made from this material. Its similar to Bamboo and from a musician's point of view, far superior to it.
Its truly invasive - provided its roots can reach water. It can be found along all California waterways from the simplest irrigation ditch to the Sacramento River. It tolerates high heat and poor soil conditions. It was brought to California as a coppicing material - its mature stems are usually about 1" in diameter, and strong enough to use for agricultural poles. The wood in these stems gets harder with heat - Arundo grown in Baja is extremely hard and is used as a building material.
For reed making there are many good and bad qualities of Arundo that determine its suitability. Hardness, density, fineness or grain, etc. There are regions in Spain, France, Italy, California and Oregon that export their own "varietals" for reed making. I've tried growing it up here near Seattle and there is some they have kept growing at the Woodland Park Zoo in Seattle - but it really struggles up here with our long wet winters and deep frosts. Oregon crops usually are replanted from California root stock. Growing conditions more than genetics determine its suitability for reed making.
It would seem at first glance that this would be an ideal plant for growing a lot of biomass quickly. There is the risk of spreading however. But then, observe that it grows primarily in wet spots. I wonder what the irrigation requirements would be compared to corn grown for ethanol. This summer's drought brought the issue of water requirements for biofuels into sharp focus.
Another worry for us musicians and instrument makers who depend upon our Arundo donax varietals - I suppose the energy industry will find a need to genetically modify it! It could ruin it for reeds.
Arundo donax has been growing in parts of the US for a couple of centuries, so it's not like some new species to be introduced with unknown results.
Nowhere in the article do they mentioned how Arundo is going to be converted into ethanol. I suppose the ounce hot keyword "cellulosic ethanol" is now off limit. As far as I know there is still no cost effective way to convert large amount of cellulose into sugar that can then be fermented into ethanol despite decades of efforts (researches on that topic started in the 80's). Anyway, it is probably the same than for many magical crops... they can grow on poor land and they can give high yields...but not both at the same time, at least not without lots of fertilizer. Pig manure might not be enough to reach such yield.
http://biofuelscenter.org/
http://www.ncbiofuels.net/
http://edis.ifas.ufl.edu/ag327
Special Report: Chemtex receives USDA loan guarantee (28 August 2012)
More on Chemtex's (M&G) process can be found here:
More: European Biofuels Technology Platform
Link up top: 'Forget Peak Oil - Oil Will Crash to $50,' Asserts Self-made Multi-millionaire Investor Who Sees the U.S. Being a Net Oil Exporter by 2020
Now this man must know what he is talking about because correctly called a new high in the Dow in 2013. Except of course 2013 has not arrived yet. And he knows all about those new drilling techniques:
With that new vertical drilling technique there is just no way we won't be a net oil exporter by 2020. I tell you this man clearly knows what he is talking about. And he has the inside track on new oil discoveries in Canada and Iraq. We should be hearing about those very soon when that data becomes public.
Ron P.
Along with the "visionary's" concomitant record of fraud, embezzlement etc., etc.....
Ron, you just had to have made that up. No journalist of any integrity whatsoever, along with a diligent editor could let that pass and expect to have any credibility. Such a line would mean that the cornucopian, BAU argument is totally bereft of any facts.
OK enough sarc..
He did get one thing right..
Ron - A few other minor flaws. I guess this falls under the category of not expecting anyone to fact check.
"Four years later, world oil output is at an all-time high, and oil prices are down 40%." Oil price 2008 = $91.48; 2012 = $93.02. So not down 40% but up a little over 1%.
"... gas prices today are nearly identical to where they were six years ago". Gasoline 2006 = $2.70/gal 2012 = $3.80. So not "nearly identical" but 40% higher.
Everyone has the right to make their guesses. But if he has that much trouble with easily researched historical data one has to wonder what he's using for his future models. I missed the part about the new vertical techniques. Maybe he was holding a picture of a Bakken well sideways?
Yes, Rockman, this had me going nuts, trying to imagine a 'new' vertical technique. I suppose that if the 'old' vertical was down, maybe the 'new' technique involves drilling up?
And he is so prescient in his predictions. I mean, if 5,000 'experts' predict oil prices at every level from $5/bbl to $500/bbl, someone would almost have to be correct. So long as there is still some oil to produce, that is. The same with the levels of the Dow, S&P and NASDAQ. Unlike the economics markets, though, which are mostly WAGs by pundits, there are a few restraints on oil that can be reliably modeled. Such as ratio of discoveries to levels of use and production; depletion rates; things like that.
Who, in their right minds, would ever give any credence to such drivel?
Craig
Titan, baby!
(Rock - can you hit that target?)
Craig, we could throw darts at a dartboard and be right some of the time too.
You'd also do better in the stockmarket too, as proven by choosing shares based on throwing darts at a copy of the stock listings.
NAOM
That is an actuall experiment. Even better, they had monkeys throw the darts, and they beat the experts to it.
Folks that care little about where energy comes from, and they've been hearing these unsavory things about future oil supply from their eccentric brother-in-law. They need a little assurance that they really don't need to worry.
Just a matter of picking the right expert.
If oil crashes to $50, it's because we would be in a deflationary depression that not even Bernanke's digital printing press can prevent.
Of course, it would never be reported that way.
But IF oil fell to $50 a barrel again, the stock market would NOT be doing well. So his investment advice is worth what you paid for it.
I figured this was just Leanan's attempt at a little friday comic relief...
Desert
Food Prices Are Soaring Further Into The Danger Zone
"155 mile range, 155 mph, 0-60 in 3.9 seconds, and a 3 hour recharge time". What's not to love? The price?
Little by little, seems high mpg ICE cars are continuing to be offered, too.
Mazda6 diesel sedan offers up to 60 mpg US
Meh! Volkswagen Golf BlueMotion Concept boasts 73.5 MPG of eco-minded fury
Yeah, you read that right;
VW Golf BlueMotion concept is a diesel looker worth 73.5 mpg
Alan from the islands
That's probably about as fuel-efficient as a car will ever be. Alas, it appears it will not only cost $30,000, but also require a return to manual transmissions, which is also certain to limit its sales...
With all the drag-defeating stuff, I'd wager the repair (and hence insurance) costs will also be stiff.
The "drag-defeating stuff" is probably no more expensive to repair than any other modern body style. What really makes modern cars difficult to repair is the electrical components. Moderate body damage can cause minor damage to electrical wiring, which in today's vehicles is very difficult to troubleshoot, and when a fault is found may require major wiring replacement as well as component replacement.
A car fifty years ago only had lights, ignition, wipers, and a radio in its electrical system.
Today's cars also have central locking, power windows, cruise control, airbags (perhaps ten or more of them), emission control systems, security systems, entertainment systems, air conditioning, windshield wipers, rear window heaters, rear window washers, rear window wipers, rear view camera, heated mirrors, heated seats, 12v power outlets, 110v power outlets, steering wheel control for the entertainment system, trip computer, automatic headlights, navigation system, and probably several other things I haven't thought of.
The wiring for all of these devices is hidden within the structure of the vehicle, where it can easily be damaged either in an accident or during repairs. Some of this equipment is downright dangerous when damaged: an airbag on a damaged vehicle might explode while being removed to allow repair.
The result is that a vehicle with relatively minor damage can be essentially unrepairable. That's what drives up insurance costs.
Back when we were insuring with comprehensive our Chevy Metro (4-cyl version), the cost to insure the car exceeded that of our brand new Nissan Maxima by several hundred dollars per renewal. I figured then that the cost was due to the fact that any damage to the Metro would amount to a large chunk.
Just last year, our neighbor who drives a USPS mail truck every day managed to side-swipe the Metro when leaving for work with his Suburban. The estimate to repair was $3K - because no replacement doors were available at any junkyard, and fixing the door would require hours of manual metalwork.
Turned out the problem with tiny cars is that the parts are modular - in our case, the doors aren't just a skin and frame - it's all one piece - requiring smoothing (labor) vs. skin replacement.
Ultimately, the car was declared totaled. We opted to keep the car with a smaller check and renewed the title as salvaged.
It was all good, though. We now can sell the car for about 75% of the payout, as the damage is easily ignored; more than we could have sold the car for prior to the accident.
It seems that modern cars (like many other technical items) are designed to be assembled once, but not taken apart for repair. Look under the hood and you will see little or no extra space. I recently had occasion to look under the hood of a 1970s pickup truck and was amazed - even though it had a 5 litre V-8 engine, the engine compartment looked like it was practically empty. Of course there was no hardware for air conditioning and the old pushrod engines were fairly compact for their displacement.
Another thing is that unitized bodies are pretty much standard and these are designed to crumple outside the passenger compartment in the event of a collision. However, it doesn't have to be a big collision before the damage can neither be ignored nor repaired at a tolerable cost.
I talked to one person who had a perfectly good, working, barely scratched vehicle scrapped because the airbags went off. Cost of replacing the airbags, containers(they explode through the cover that needs replacing) etc was more than the value of the vehicle.
NAOM
My "new" car, purchased a few weeks ago, is a 2004 which came with a salvage title. There apparently was a small front fender hit which popped the air bags. The structural damage was minimal, the bumper beam was only slightly bent on the ends. I didn't see it as it appeared after the first collision, I got it after a second bump in which the air bags didn't deploy. As a result of my efforts to fix the latest fender dent, I found the air bag light was on and then searched around for parts.
The air bag system is rather expensive to fix, as the factory manual states that the controller must be replaced along with the air bags. Replacing the whole system could cost more than $1000 for front only bags, and more when side air bags pop too. Then there's the cost of installation and testing, usually at dealer labor rate. I think the previous repair job on my "beater" included airbags from a junk yard, but the controller wasn't replaced. There are adds on the Net which offer to reset a controller after deployment, but I'm awaiting shipment on another controller from a junk yard car which wrecked without deployment, since I wouldn't want to find out the hard way that the G sensor in a reset controller no longer worked properly in another collision...
E. Swanson
I don't know if that has a chassis but, if it does, check the beams for cracks. I had a crack develop, at a sharp factory bend, on my old Jeep after a couple of bumps.
NAOM
Driving through the mountains here is a total pain in an automatic. I would choose manual every time. I even started to think that the oil companies pay the transmission makers to select the most fuel inefficient gear for the conditions. Now I don't care as I use a bike.
NAOM
But not in the U.S.
The only exceptions are the VW TDI Passat, Jetta and Golf. The Passat seems to be the most outstanding here: it's a mid-size car which would be classified as large if it had 2.1 more cubic feet of passenger and cargo volume. But on one independent test it recorded 51.7 miles per gallon travelling at 70mph on an interstate, beating five much smaller compact or subcompact gasoline-powered cars, each of which claimed 40mpg highway, by at least 12.8mpg. The Passat also used less fuel than any of these cars in all other driving conditions, though not by such a large margin.
The U.S. public supposedly will not buy diesel cars.
Yet VW currently has trouble keeping up with the demand for the TDI Passat, even though the manufacturer loads most of them with useless high-priced options. The largest VW dealer in Houston is currently publishing no discounts on the TDI Passat SE and has no remaining 2012 models in stock. Yet the same dealer is offering discounts up to $3,000 on the fourteen 2012 Passats with gasoline engines still unsold, and discounts of $1,100 to $1,500 on most of the 2013 gasoline powered Passats they have in stock. The 2013 Passats this dealer has in stock include only 23 diesels, and only seven of them are the most sought after variant (SE with automatic). Most of the TDI Passats in stock are the SEL version, which starts at $33,710. The cheapest gasoline 2013 Passat is about $23,000 with automatic, after advertised discounts.
About 20% of Passats sold in the U.S. are diesel, and taking discounts into account the average buyer pays about $5,000 more to get a diesel engine.
Ird, I wonder how many miles most buyers expect for a payback.
I was looking into the Jetta sportwagen TDI but could find nothing published in the US about towing capacity - we have one of those lightweight A-frame popup campers and would like to pull it long distances for little more cost than not having it along. Apparently, overseas, the car can be equipped with a westfalia tow hitch from the factory/dealer - but not in the US. I'm not sure why, perhaps some kind of insurance/liability issue?
E-trailer.com sells a hitch for the 2012 VW Jetta Sportwagen for $155. They rate it for a 2000 pound trailer.
As most Sportwagens sold are the TDI version, I imagine this would be fine for that vehicle.
And in the early 1980s we bought an Isuzu I-mark diesel that was supposed to get 50 MPG. No way! My sister and b-i-l also bought one. Even driving on the highway with the windows rolled up and the A/C off (and sweating their butts off) they couldn't get near 50 MPG.
I bought a 1982 I-Mark - manual - and drove it for 288,000 miles (sold it for $500). When new, I occasionally got 50 mpg (Once 52 mpg) on the highway (55 mph speed limit back then), but 46 & 47 mpg was as common. As it got older, I was in the 40 to 45 mpg range on the highway (higher speeds).
Today, I drive the car I wanted to buy back then, a 1982 Mercedes Benz 240D - manual transmission.
Best Hopes for Old Diesels,
Alan
What gets 30 MPG at 130 MPH? My new airplane!
What's not to love?
Wired: http://www.wired.com/autopia/2012/07/rotax-fuel-injection/
Excellent.
Next step would be nice to see certified diesel planes flying around.
I see some engine makers saying 'coming soon' to being certified, but not sure if vaporware stmt, or truly coming soon. ( http://www.deltahawkengines.com/object00.shtml )
EDIT
Seems Cessna has a 'coming soon' turbo diesel prop plane that looks close to production. http://www.wired.com/autopia/2012/07/cessna-turbo-diesel/
With regards to Island nations fret over climate change
May be due to declining ice levesl? May be??? What else could be the cause? A small rise is certainly to be attributed to warming water, but not enough temperature increase has been measured to account for the volume of water. Where did the author think that water came from? Unless, perhaps, the story of Noah is factual, and the fountains of the deep have opened up. Or maybe we are seeing declining land levels?
What do people think when they write this junk? They are obviously pandering to the far right demand for 'objectivity.' There is no need, and it denegrates the efforts that are needed to deal realistically with our predicament.
Craig
Edit: There is, after all, a distinction to be made between objectivity and stupidity.
Zaph- Actually, as per usual, the wording in that article is poor, at best. But the problem, IMO, is with 'polar ice levels' rather than 'may be'. If the reference is to declining Arctic sea ice, which is the big news of late, then, well, no. Floating ice doesn't raise sea level at all when it melts. Now, maybe they mean to imply that declining Arctic sea ice leads to additional heat loading in high latitudes and therefore will lead to melting of the Greenland glaciers. That would lead to rising sea levels, no maybe about it. But I don't give them that much credit. And, of course, there is another pole. Now, deniers love to point to 'growing' Antarctic sea ice, but of course it's more complicated than that. And just by using the word complicated, I've lost any chance of having the deniers hear me out. But whereas Antarctic sea ice winter max. has shown an increase of about 1 million km3 over roughly the same time that Arctic sea ice summer min. has declined by more than 3 million km3, a) that's obviously not a balanced offset, b) it doesn't matter in winter as it doesn't affect albedo,c) it says nothing about volume, of which Arctic is falling off the table, and d) it's a different dynamic altogether, and is actually the result of overall warming affecting ocean currents/upwelling/heat transfer. But back to my small beef with your beef with the article - sea level rises when land ice melts. So 'polar ice' is poor wording, unless they're referring to Greenland or Antarctic glacial melt. But mountain glacier melt is definitely contributing to sea level rise. So the article is poor/wrong, but in a different way than you jumped on. And I'm not really trying to jump on you, but just to jump on them harder...
clifman,
"Floating ice doesn't raise sea level at all when it melts."
Exactly (because its displacement has already taken place when it floats).
However, ice sheets resting on the bottom of the ocean that extend up above the water level, in shallow water, will raise ocean levels to the degree that displacement has not yet taken place.
Ice resting above sea level on land will displace 100%, i.e., raise sea level to the equivalent of displacement.
Other things, some you mentioned, temperature, currents, wind, the moon, etc., will also affect sea level. That is why the ocean level is not the same everywhere at any given time (it is in constant flux, but the trend is upward, rising).
The ice over the land in Greenland will raise the ocean level and average of ~20' (~6 meters), and the ice over land in Antartica will bring it up another ~200 feet (~67 meters).
Greenland will win the race concerning the sea level rise that will do things to existing seaports that will not, shall we say, be greeted with accolades and "positive thinking."
PS: Another way of saying "ice extent" is square miles. Volume is what tells how much ice there is, that is cubic miles. The cubic miles of ice in Antartica as well as the Artic is in decline, it is decreasing, even though at times the square miles of ice on the surface of the ocean may increase from time to time.
Keep your eye on volume of ice, i.e. cubic km of ice, not the area of ice, i.e. square km of ice.
Link: NASA Climate Change
My understanding it that about half of the sea level rise in the last century has been caused by expansion due to warming of sea water. So, the melting of floating ice does not contribute to sea level rise, but the warming of sea water past 4 degrees C causes it to expand (complicated by the fact that melt water continues to contract until it warms up to about 4 degrees C, after which it expands), contributing to sea level rise.
The fact that pure water has maximum density at 4C does not apply to sea water. The salt content is such that the density increases with decreasing temperature all the way to the freezing point, which is -2 C (28F)...
E. Swanson
Thank you for the correction. I had forgotten what salt does to the density and freezing temp of water (even though I was just thinking the other day about the ability of brine to stay liquid below "freezing").
If slitting hairs, there is a slight SLR contributed frommelting sea ice. They have a lower salt concentration, and salt and fresh water have different densities. When the fresh water dilute the sea watr,there is a density loss and thus volume gain.
It is calculated that if all ice in the world melts and pour down into the sea, there will be a wopping 3 mm SLR due to this effect.
??? 3mm ???
"Melting of the Greenland ice sheet or the Antarctic ice sheet would produce 7.2 m or 61.1 m of sea-level rise, respectively."
http://en.wikipedia.org/wiki/Current_sea_level_rise#cite_note-18
"due to this effect", i.e., the effect of making sea water slightly less salty.
Thanks donalb. I should have RTFM (read the manual :)
Model estimates of sea-level change due to anthropogenic impacts on terrestrial water storage
Emphasis added.
That was a very interesting result, but we should be cautious about accepting it too readily:
What makes sea-level rise?
42% of sea level rise due to groundwater pumping? I doubt even 5% caused by this.
In the US most of the groundwater pumping is for irrigating crops. Most of that water does not run off, but goes in the ground or is evaporated. Cities that use groundwater do see most of this go into rivers that lead to the oceans. But in the US nearly all large metro areas use water from rivers/streams and reserviors (fed by rivers/streams).
Where on earth is this groundwater reaching the ocean?
Sounds more like speculation than some scientific study.
There is a problem with pumping from fossil water aquifers. Whatever happens with that water after use, there is a net loss from the aquifers. Depending on how irrigation water is applied, some part evaporates before reaching the plants or ground. Some of the water is transpired by plants, some evaporates from the soil. That evaporated water is added to the total water vapor in the atmosphere. Most precipitation is over the oceans, so an increase in the amount of water evaporating from land will shift the water cycle slightly towards the oceans. Some of the water is retained by the plants, and transported to market, where the water will eventually be added to some sort of waste outflow. Groundwater can also reach the ocean via rivers. Rivers are fed not only by direct runoff of precipitation, but by movement of water through the ground. However, the flow of many rivers has been diminished by the demands of irrigation, so evaporation and eventual precipitation is probably the primary mechanism.
The Earth's water budget is complex. I have no feel for how much pumping of fossil groundwater adds to sea level, but here is another paper that puts it at about 1/4 of sea level rise: Rising sea levels attributed to global groundwater extraction.
Actually most of the current rising is due to thermal expansion of warming seawater. Extra water from melting landice is a still distant second, although this compnent has been increasing rapidly of late. decreases in groundwater storage are also significant.
There are a few places on the mainland that are starting to fret as well.
Miami Beach gets rising seas sticker shock
http://www.bizjournals.com/southflorida/print-edition/2012/08/10/miami-b...
Well if nothing else, I'm pretty sure they can count on that increase in water... >;-)
http://en.wikipedia.org/wiki/List_of_Florida's_highest_points
The North Florida Highlands go all the way up to 345 feet. The Lake Wales Ridge and the Brooksville Ridge are somewhat lower.
Those ridges represent a small area. The vast majority of the Florida peninsula is under 100 feet.
Here in Turnbull I'm relatively high for this near the coast at 32'.
Global Sea Level Rise Map
If you set sea level rise to 30 meters and zoom in to south Florida, most of Florida south of Orlando is submerged. The Mississippi Bay goes all the way to northern Louisiana.
The average elevation above sea level of Florida is 30 meters. In the early Pleistocene sea level was as much as 45 meters above the current sea level in Florida.
I'm really confused by the markets. Oil goes up while the indices drop? A flood of bad news yesterday and today on every front (Europe debt, Asia stocks, street violence in Spain and Greece, US consumer spending, US business activity, Japan, China, LiBOR fixing, BofA fines, bank layoffs, Mideast tensions, Apple), and the Dow barely hiccups? Adjacent, contradictory business articles that are either right or wrong depending on the time of day? Am I being a nut thinking this behavior is absurdly, obviously, screechingly irrational? I must be, because there's not a peep about the topic by the people who should know.
I guess the danger is that I'm only reading what I want to read and have unintentionally put on blinders to the economic positives that are driving this bullish market. I would love to know what those positives are so I can correct my suspected bias.
Economics is all bs, mostly WAGs by pundits... Markets are emotional.
People read into news what they want... investors want bull markets, and read all news accordingly. Bad news becomes good news (if it is bad, there will be stimulous or QE, etc.); good news is still good news, my dear Pangloss, and all is well in this, the best of all possible worlds.
Craig
I'll see your Candide and raise you a Babbitt.
I think that the stock markets are currently being driven by The Great Income Divergence; more money in hands that can afford to gamble, along with fewer options for a chance at hefty returns. Gotta put all that cash someplace. I've dealt with some in the moneyed class who see the stock market as very much of a gaming system, much like Las Vegas, etc.. The old saying "more money than they know what to do with" comes to mind. I also think that fund managers are seeing fewer options as we approach a financial implosion that few are willing to accept as already baked in. I personally hope they keep the game going for just a bit longer, until I and mine have a chance to cash out. Won't be long now... Best to get free and clear, watch the game from the cheap seats.
The obvious reason for the stock market doing so well is that there really is no other choice. For those who have money -- whether they are billionaires or just someone putting aside a few dollars out of each pay check in a retirement account -- the choice is between the stock market, where you might make a little if you're lucky; the bond market, where the returns are lower than inflation, so you know for sure you'll lose money; and Las Vegas, where you'll probably lose money, but at least you'll have some fun doing so.
So it's not surprising a lot of money is chasing a limited amount of equities, thus pushing prices up.
But just let interest rates creep up a little . . .
Last year stocks returned 2.07%. The current 5-year treasury yield is 0.6%. Inflation is currently claimed to be 1.7%. So 0.6% is clearly losing money. 2.07% is apparently making a little money.
If treasury yields go up to 5% (which they have quite often in the past, most recently in 2006) the stock market return will have to go up to about 7%. If this doesn't happen because company profits more than triple, share prices will go down until the return is this high. That implies loss of about 70% of market price. Of course, if treasuries go to 5%, debt servicing will become impossible for the Federal Government (and for many other organizations and individuals).
So I don't believe it is The Great Income Divergence, which I suspect is less real than its proponents claim. Not that the rich aren't as rich as the statistics indicate, or the rest of us as poor as we think we are. Instead, I suspect the rich have always been richer than we thought they were. In the last thirty years one tax shelter after another has been shut off, with Swiss bank accounts being perhaps the most painful. A plutocrat who makes $100,000,000 a year now, but only made $20,000,000 a year in 1990, may quite well have made $57,000,000 in 1990 (which had the same purchasing power then as $100,000,000 does today) but stashed $37,000,000 in his Swiss bank account and told the IRS he made $20,000,000.
I'm only guessing at the magnitude of this effect, but if the rich weren't engaging in this kind of scam before the U.S. government persuaded Swiss banks to open their books, why did the U.S. spend so much effort to get them to open up?
"So I don't believe it is The Great Income Divergence, which I suspect is less real than its proponents claim."
The "proponents" would be the CBO:
Yes, but the income distribution figures come from what is reported to the IRS.
In 1979 the top marginal tax rate was 70%, which meant effort by the rich to increase income had a return of 30 cents on the dollar, but effort directed towards avoiding or evading tax gave a benefit of 70 cents on the dollar. If those with high income did not spend more time ensuring as much as possible of their income was never reported to the IRS they were idiots, and if they were idiots they probably did not have high income.
Over the last three decades the Federal Government has spent a huge amount of money trying (in most cases successfully) to shut down tax havens. If this has not substantially increased the proportion of income the top 1% reveal to the IRS, that expenditure was totally wasted. While the government has on occasion wasted money, I'd like to think this effort was not wasted.
So if reported income is closer to real income today than in 1979, the comparison of 1979 and 2007 is invalid.
That says nothing about the validity of the current inequality.
We should also consider non-monetary benefits the 1% enjoyed in 1979 that they are much less likely to enjoy today: things like free use of corporate jets, country club memberships, personal use of company resources such as chauffeurs, etc.
It might be noted that the 1%+ are able to arrange their affairs so that much of their income is in the form of capital gains - these are generally taxed at a much lower rate than salary or wage income. A while back, it was discovered that the backdating of stock options was rampant. Aside from this, a bit of inside knowledge can pay big dividends.
There are lots of other tricks that involve costs that can't be easily measured - for example, arranging meetings at exotic locations etc.
That last line about sizes it up for those with funds to invest.
Put it in banks? Not much return there.
Real estate? If you don't mind it just sitting there while hope springs eternal it will jump up in value enought to turn it for a profit.
Bonds? Very risky with the EU teetering on a razor fiscal edge, US growth last qtr at 1.3% and manuf. orders this last month down again.
That leaves the stock market. Those with funds and those squirreling money away in keoghs and ira's need somewhere to put it and are just hoping it keeps going up. In this case the market is probably going up due to 'group think' pooling of money. They feel emboldened by all the others jumping in. But what a scary feeling it must be to wake up in a rush every morning wondering if it's crashed for one reason or another.
Especially with news like this: http://www.reuters.com/article/2012/09/28/us-usa-economy-idUSBRE88O0VM20...
'Pricey gasoline hits U.S. consumers, weighs on growth'
That is last qtr's growth, 1.3%, but what would it be if not for an increased debt load of over 1 trillion dollars a year? And that debt load keeps going up in spite of Helicopter Ben's QEIII just write a check when needed routine. Right now the very party that insisted on reduced govt. expenditures is balking at defense cuts slated for the beginning of the new year, because it will supposedly mean fiscal armegedden! We can't even slightly lower the deficit because our economy would implode? Sounds a lot like peak oil, but we are suppose to talk about everything else like it really isn't a problem, except read the headline again. I guess it really is a problem afterall.
From the Federal Reserve perspective, flows into the stock market must be an attractive way to increase the amount of money.
Does anyone know of a reference that gives the leverage in terms of change of total stock market capital value divided by the amount of money flowing in or out of the market?
My guess would be that it is much greater than one. In other words, if $10 billion in new money comes into the market on a given day, it will bid up prices such that the end-of-day prices times shares outstanding summed over all stocks will be a lot more than $10 billion higher than it was at the close of the last day.
This enables the Fed to create a lot of "new wealth".
So a giant speculative bubble in other words.
(Edit: spelling and clarity)
No, not a speculative bubble. An amplified, very sensitive mechanism of "price discovery". Possibly a part of a "bubble machine", though.
Let's run through a simple example.
Imagine there is a stock index. It lists ten companies, each with shares "worth" a billion dollars. Let's call the index Xlist.
"Worth" in scare quotes, because that "value" was arrived at by taking the price the shares of each company traded for last, and multiplying by the number of shares each company has issued. Let's say that each company has a billion shares, each last traded at exactly one dollar.
Now you come along with a million dollars and want to buy shares in, say, company 5.
Noone is willing to sell their shares for 1,00 dollars per share; they want to make a profit. However, a hundred thousand shares is on offer for 1,05 dollars a share. You buy those, and pay 105 000 dollars.
Company 5's shares are now, by the magic of mark-to-market accounting, "worth" 1,05 billion dollars: 50 million dollars more than before!
Assuming the Xlist companies are evenly weighted, the index rose 0,5 %.
How much did the net amount of money invested in Xlist change?
Just 5 000 dollars, since the shares you bought for 105 000 were in turn bought for 100 000.
-- -- --
You repeat the process for eight other companies, and end up having paid 945 000 for 900 000 shares. The value of the index has increased by 450 million dollars, 4,5% up from the start value of 10 billion. Net funds invested in Xlist increased just 45 000. Greater than one, indeed! The "new wealth" in this hypothetical example is generated at 10 000:1.
Well satisfied with your day's work, you decide to spend your remaining 55 000 on a nice, shiny new toy.
-- -- --
This process, of course, works equally well in reverse.
The important takeaway is that this process is very, very sensitive to net in- and outflows of money.
I believe Merrill's point was that this sensitivity makes stock indices rather dubious as indicators of economic health.
About "Environmental risk of drilling in Arctic too high, CEO of oil giant Total says".
This story ran in the French newspapers few days ago. Another story from Total I haven't seen in Drumbeat is about its oil production forecast. Here is an English version
http://af.reuters.com/article/mozambiqueNews/idAFL5E8KO2QM20120924
Total gives some details about the new offshore oil fields of Africa coast it expect to put online by 2017 and indicates it will represent 70% of the increase in productio. There is no indication on how Total will cover the remaining 30% or compensate for losses from mature fields.
However it is clear they expect to need a lot of cash and are selling non essential assets like natural gas pipelines and storages they got when buying Elf (a former French oil company).
Think of this (the African development) along the lines of a repetition of the deep water development in Brazil, but in locations where there is no infrastructure at all. Not only no oilfield infrastructure.
Brazil, with over thirty years of exploration and development offshore now claims reserves of 13.2 billion barrels and production of 2.1 million barrels per day.
Now Total may well be a better operator than Petrobras (the main Brizilian producer) but not a whole lot better. I will not be surprised if it takes a lot longer than five years to reach these targets.
Oh, and it must be emphasized that the targets are boe, not barrels of oil, with no indication of how much of it is gas. Egina is deep water oil, Kaombo is ultra deep water oil, Moho is deep water oil, and the Mozambique blocks are essentially unexplored and mainly deep water. They hope for oil, but the basin is mainly gas further north.
The Great Leap Forward: Spectacular Gasoline Price Superspike Marks Monthly Close of Futures Trading
Futures trading for the front month gasoline futures contract advanced about 20 cents/gallon, one of the largest one day price gains ever. Today was the last day of trading for the October futures contract, and futures traders had to close out their positions or move forward to take actual delivery - or make other similar arrangements to settle based upon cash transactions for gasoline. In the last few days the NY harbor wholesale gasoline price for cash (immediate) delivery had been about 20 cents higher than the futures price, so essentially today’s trading action was the futures market catching up to reality.
And what reality is that? The reality that gasoline supplies are quickly approaching minimum inventory levels – MOLs – due to a combination of (previously discussed) factors. Recently I estimated that the MOLs for gasoline were about 192 million barrels nationwide, as compared to the 196 million level indicated in the last weekly EIA report. However there was subsequently a little noticed follow-up monthly revision made by the EIA to the previously reported inventory amount for July, where the total was revised downward by 3 million barrels. While it can not be determined if that adjustment has already been reflected – or not – in the recent EIA weekly reports, if it was not then US inventories may be about a million barrels away from hitting MOLs.
Once supplies fall below the MOL, minimum operating level, there is not sufficient supply in pipelines and storage tanks to smoothly meet retail demand. Wild price gyrations and even shortages may occur once that threshold is crossed.
My estimate of the MOL comes from my interpretation of a 2004 Congressional report where MOLs at that time were estimated to be about 185 million barrels. However the basis for even that Congressional report relies upon an earlier report prepared years earlier, which is probably now buried deep within some Department of Energy archive. The earlier report is not available anywhere on the internet, and for the time being, even my version is some place where I can’t immediately find it. It’s not clear if the DOE just gave up on trying to figure what the MOL was, or it determined is was not something that should be in the public domain, or both.
http://online.wsj.com/article/BT-CO-20120928-713561.html
Disclaimer: I have no futures trading account, although I invest in energy stocks and funds commonly traded on the NY Stock Exchange.
It would appear that some speculators, perhaps taken in by all the hype about increasingly plentiful oil, got badly burned.
And those that created the hype.....?
Source: Zerohedge.com
This is going to hurt.