DrumBeat: January 17, 2007
Posted by threadbot on January 17, 2007 - 10:05am
Topic: Miscellaneous
According to the U.S. Department of Energy's special report, the world will face "peak oil" by 2015. But many of the world's best informed professionals think the end is much closer than that. Some, like Matthew Simmons, think that it has already passed as far back as 25 years ago. And their reasoning is disconcertingly solid.Over in the Middle East the oil fields are already using water-flooding, a version of advanced oil recovery, to get out what oil they have left. That is a major sign that they have passed their peak of easily extractable oil.
This is especially true in Saudi Arabia.
Venezuela's Cerro Negro confirms force majeure
Heavy crude upgrader Cerro Negro, a joint venture between Exxon Mobil, BP, and Venezuelan state oil company PDVSA, on Tuesday confirmed it has declared force majeure as a result of OPEC production cuts ordered by Venezuelan authorities.
Venezuela to go for 60% minimum in Orinoco
Venezuela will take at least 60% stakes in four extra-heavy crude projects in the country's Orinoco river basin, said the country's oil minister on Tuesday.
A Depression in Natural Gas Prices May Prove Bullish For China
Flynn believes a winter which some forecasters are predicting could challenge the high gas storage levels. He said: “We have well above the five-year average of storage levels.” And should the weather compare to some of those past winter nightmares? “If we get a good old-fashioned winter, then we might find those storage levels are not as comfortable as we thought.” Flynn also observed, “then, we’ll find out how adequate those gas supplies really are.”
More power; more heat; more problems: Power leakage means new chips waste more energy, analyst says
"If you have an increase in computing demand for business requirements, you're going to (quickly) come to a point where there won't be enough space in your data center. You can also run out of cooling capacity," Garbani says.
WHAT a difference a year makes. At this time last year the oil price was rocketing and everybody was talking about peak oil. Now, prices have plunged.
Oil prices to remain around USD 50 per barrel till mid 2007
A specialized oil report expected that oil prices would remain at the vicinity of USD 50 per barrel until mid 2007 due to adequate oil supplies and new oil strategies of many countries.
Peak Oil Talk on Wednesday: Energy Expert Matthew Simmons Comes to UCSB on January 17
Blackout leaves most of Victoria in the dark
A MASSIVE power failure - triggered by bushfires - has blacked out large swathes of Victoria, causing chaos around the state and forcing organisers of the Australian Open to switch on generators.
Power Failures in Melbourne… Bush Fires or Energy Crisis?
Is it time to enter the dark world of the conspiracy theorist? Was yesterday in Melbourne a sign of the future? Have we witnessed the first signs of the Energy Crisis? Was it really the fault of bushfires, or was it perfect cover for the power suppliers to ‘turn the lights off’ for a few hours to get some practice for when the real event occurs?
Rival Reports Breakthrough in Oil Sands Technology
Rival Technologies Inc. announced that it has received and analyzed additional data from tests conducted last month. The Company said that it now owns an extremely valuable formula that represents a breakthrough for upgrading oil sands bitumen and heavy oil.
Gazprom in dispute with Polish gas pipeline operator
The Russian natural gas giant Gazprom is partly suspending cooperation with the operator of the Polish segment of a major pipeline after its request for lower transit fees was rebuffed, Poland's state-owned gas monopoly said Tuesday.
Gazprom is in talks with public relations companies over a multi-million dollar campaign aimed at improving the image of the Russian state-controlled gas monopoly in Europe and the US, after it was badly dented by “gas wars” with former Soviet republics.
U.S. House Ready to Vote on Oil Tax, Royalty Plan
The stage is set for the first major energy policy vote of the 110th Congress this week with the House expected to debate and likely ratify a Democratic bill that would repeal oil industry tax breaks and ensure royalty payments on deep water Gulf of Mexico production.
World Bank ok with blood for oil
It has been a year since the horror of the bloodshed in Sudan’s Darfur region--with over 200,000 dead in three years--began leaking across the border into Chad. It has also been a year since a simmering conflict boiled over into a full-scale confrontation between World Bank President Paul Wolfowitz and Chadian President Idriss Deby. Are the two connected? In a word, yes. Here’s how.
Banks are urged not to finance coal power
A coalition of environmental groups is demanding that banks reject loan requests for projects that emit high rates of greenhouse gases, which contribute to global warming. The groups say they have won commitments from more than a dozen banks in the last few weeks to turn away from supporting coal-fired electric plants.
Millions switch to cheaper gas
LONDON - Millions of households abandoned their old suppliers in search of cheaper energy last year, leaving former monopoly British Gas with less than half of the gas market, energy regulator Ofgem said.
Ethanol demands squeeze hunting grounds
As the price of corn jumps, farmers may be tempted to plow up pheasant habitats.
Wagoner calls for U.S. to focus on alternative fuel
General Motors Corp. Chairman and CEO Rick Wagoner said Washington should not slack off on efforts to develop alternative energy sources now that oil prices have fallen.
Can market handle ethanol boom?
The rush to build ethanol plants is raising concerns about whether drivers will buy all that biofuel.
Commission tough on national CO2 emission plans
The Commission has told Belgium and the Netherlands to cut the number of permits that they give to industry to release CO2 into the atmosphere.
Bush readies speech on climate change
U.S. President George W. Bush's annual speech to Congress next week is likely to call for a massive increase in U.S. ethanol usage and tweak climate change policy while stopping short of mandatory emissions caps, sources familiar with White House plans said on Tuesday.
U.S. needs more incentives to use ethanol: industry
The idea of U.S. energy independence is now a myth, but could become a reality if U.S. lawmakers find ways to expand demand for fuels blended from home-grown sources like corn and give automakers incentives to make cars that burn on them, a top U.S. ethanol industry trade official said on Tuesday.
Refinery-blast report savages BP
BBC business editor Robert Peston called the report very meticulous and extremely savage.He went on to add that the panel's criticism against BP was very serious and went right to the top of the company.
Nuaimi:Saudi spare capacity three million bpd
Oil falls to 20-month low, eyes key $50 mark
Oil fell to a 20-month low on Wednesday, within striking distance of the psychologically key $50 mark, as top exporter Saudi Arabia saw no reason to worry over the market's 18 percent slide so far this month.
Cost of gas at lowest point in five weeks: Average cost-per-gallon at $2.23; $2 is possible government says
Russia May Ship Oil Around Belarus
Now that oil is flowing again, Russia wants to find routes to Europe that avoid the disputed Druzhba pipeline through Belarus. Shipping oil across the Baltic is one option under consideration.
U.S. airlines today begin a series of earning reports that will put behind them their longest and deepest losing streak ever: a collective $35 billion loss over the five years ended in 2005....Meanwhile, 2007 is starting off with a bang for the airlines, thanks to sharply lower fuel prices, continued strong demand from travelers and industry restraint in adding seats.
When Being Green Raises the Heat
CARBON DIOXIDE is heating up the Earth. Ice caps are melting, ocean levels are rising, hurricanes are intensifying, tropical diseases are spreading and the threat of droughts, floods and famines looms large. Can planting a tree help stop all this from happening?
Stern upbeat over climate action
Economist Sir Nicholas Stern has told MPs he is encouraged by the progress being made around the world to tackle climate change.India and China had to be persuaded to do more but the scientific arguments were gaining ground in the US.
Vt. lawmakers hear new warming approach
An author and entrepreneur urged Vermont lawmakers Tuesday to consider capping carbon emissions by selling permits for discharges to oil companies and some fuel dealers and then returning the proceeds to citizens, all in a bid to reduce the state's role in global warming.
Sweden's tree line moving at fastest rate for 7,000 years
"The tree line has moved by up to 200 metres (656 feet) in some places. Trees have not grown at such high levels for around 7,000 years," Leif Kullman, a professor at Umeaa University's department of ecology and environmental science, told AFP Tuesday.
It gets better every day.....
America's imperial ambitions will be its undoing. Even if we don't get thrown out of the Middle East and South Asia -- and at this point, it could go either way -- the resources needed to support our global network of 750 military posts will eventually bleed the country dry. In an increasingly over-populated world where resources will only become more scarce with time, we simply can't win. Entropy will prevail. Pity the white man and his awful burden.
The burden of military spending during the Cold War was a far higher percentage of U.S. GDP than is current spending. With the exception of the stagflation of the seventies, the Cold War era was one of growth and prosperity for the U.S. Thus, my reading of the numbers suggests that the U.S. could afford at least double its current level of military spending with little or no strain.
Yes, I understand your point. A recent article in the Christian Science Monitor compared military expenditures during WWII, Korea, Vietnam and Afghanistan/Iraq and reported that current expenditures were roughly 1% of GDP (as compared to 30% during WWII, if my memory is correct). But, then this only accounts for Afghanistan/Iraq and is not included in the $420 billion spent by the US military 2005.
Of course, the CSM article also pointed out that the cost of the current wars is being financed by borrowing. During WWII, US citizens supplied at least some of the needed savings by buying bonds. Now, we expect the Japanese and Chinese to loan us the money.
So, we might have some "fat" to burn in our campaign to rid the world of evil-doers. But in the long term, the thermodynamics are against us.
"Now, we expect the Japanese and Chinese to loan us the money."
Ahhh....so THIS is the "Coalition of the Willing"!!! They are paying for our military services by funding our debt. That is why they can't pull out of the USD$. It is a quid pro quo situation.
Makes sense.
Selling bonds is borrowing money.
During WWII US citizens were buying bonds, now foriegn governments are buying bonds. The only differenec is that it is easier to default or deflate out of foriegn debt than domestic.
The US wasn't almost $10 trillion in debt during the Cold War.
The US Dollar was the world's premier currency during the Cold War. This is slipping badly.
Sometimes History applies, sometimes not. The future is not necessarily a linear extension of the past. Things change.
During the cold war our forests still stood -- at least, in the Pacific Northwest -- and our oil fields were still full. Our giant aquifers still had a full charge, and the rivers ran free.
Now, most everything is used up, and a lot of what is left is mortgaged to the Japanese, the Chinese and the British and Dutch aristocracy.
Oh, and I forgot those coal and uranium and copper mines that no longer are productive.
Or, as Mark Twain said "History may not repeat itself but it does rhyme"
I've heard this stated several times before.
However, I have some doubts as to whether the ratio of military spending to GDP tells the whole story about the economic impact of that military spending.
First off, wasn't US military spending during the Fifties and part of the Sixties mostly pay-as-you-go and mostly taken directly out of taxes? This clearly started to change as the war in Vietnam grew and grew and LBJ started to pay more and more of it with plastic. In our current situation the war in Iraq is completely paid for with debt. This has to make a big difference.
Though it may not have a huge effect on the absolute size of the GDP, I think it's well to remember that a not insignificant fraction of the GDP includes military spending itself. So, to some extent an increase in military spending increases both the numerator and denominator of the military spending/GDP ratio (though of course not by the same proportion). The war in Iraq actually increases our GDP, and I'm sure some economists would find that beneficial. Do you?
While I can't point to any concrete evidence and I make no claims of expertise in this sort of thing, I just have a gut feel that the nature of the entities that comprised the US GDP in say 1956 were of a much more substantive and generally healthier nature than the entities that comprise the GDP today. The structural differences between an economy largely based on domestic manufacturing then vs the debt-ridden service economy and financial shananigans we have now surely must count for something. Or maybe it doesn't?
Do you really think the US economy right now could absorb the cost of another $500 billion+ Iraq war without dire consequences?
Agree that the whole economy is quite different now, and not in a good way for the U.S. We were still on the upslope of Hubbert's Peak. We were still making stuff other nations wanted to buy.
Something like 30%-40% of tax revenue came from corporations. Now they are all incorporated overseas, leaving individuals to foot the bill. Only 7% of revenue comes from corporate taxes now.
Today's NYT:
You forgot to add the cost of a wholly retrofitted private auto fleet with an eye for a changeover to primarily plug in diesel-electric hybrids running on biodiesel. I daresay that 1.2 trillion would still have enough left over for at least a part of that project.
Yes, I think the U.S. economy right now could absorb the cost of another $500 billion+ Iraq war without dire consequences. Note that the consequences of the Iraq war have been mainly beneficial for the economy as a whole. Why? Because the increased spending had a multiplier effect (just like Econ 101!) and stimulated the economy to the point where unemployment is near a forty-year low.
The U.S. economy is huge. In the very very long run, being a colonial power is a drain, as ancient Rome found out. But the expansion of Rome went on for hundreds of years, and its "decline" also took hundreds of years.
Thus I think it is a big mistake to look to concepts such as entropy for elucidation of current issues in U.S. military spending--which is low by standards of the past sixty years.
I ran across an interesting little stat a while ago. If you add up our military expenses since WW2 it is almost exactly equal to the national debt, around $10 trillion. So it seems reasonable to me to say that of all the money we've spent on the military, we haven't paid for one red cent of it. (and we never will)
Well if you add up all the interest paid since 1946 it is much more than ten trillion. Like my Granddaughter, if you keep it up the intrest will soon be greater than your income.
Yes but in the high tech twenty first century every year is a decade, or even more than a decade. Entropy is exponentially faster, and empires look almost like claymation compared to ancient Rome.
A would also add that in 1956(say) when the Military bought something, chances were that it was MADE by an American who took that paycheck home to support his Not-working wife and spent it in HIS community.
I wonder what percentage of the military spending is on something MFG'ed out of the country?
" the war in Iraq is completely paid for with debt."
Actually, not really. The current nominal federal deficit is about $250B. If you subtract about $200B for inflation's effects on our outstanding debt (2% inflation and $10T in debt) you have a net, real deficit of only $50B, or less than 1% of GDP, and maybe 9% of military spending. That may have a lot to do with the current economic slowdown, BTW.
Actually, Japan has a much larger government deficit, as a % of their GDP.
Key difference is that Japans government borrows from it own people whereas the US is mostly borrowing overseas today. So it is likely less sustainable. Given the state of the Japan economy over the last 2 decades I really think that if you have bring them up as a comparison you are in a bit of trouble.
"Given the state of the Japan economy over the last 2 decades I really think that if you have bring them up as a comparison you are in a bit of trouble."
But that’s just the point: we’re not doing so badly compared to the Japanese. Their economy has stagnated for a long time due to excessive savings, while the US economy has grown perhaps 50% ( albeit while accumulating excessive foreign debt).
Time will tell.
Oh, heck, I'm not saying things will go perfectly smoothly for the US. I'm just not sure that the US compares badly to the Japanese, who among other things are about 90% dependent on FF imports for energy(they use oil for most electricity generation!), while the US is only about 30% dependent overall.
http://www.tekes.fi/tapahtumia/densy/Tanaka.pdf
about 18% of electricity generation (TWhr) in Japan is oil fired, according to the above.
http://www.cslforum.org/japan.htm
about 60% of all electricity from thermal generation, including coal and gas. They are expanding their nuclear sector quite rapidly.
Energy efficiency is a priority in the Japanese economy. They are the most energy efficient large economy, which is particularly interesting given they have a harsh climate, and are the most industrialised of the advanced industrial states (other than South Korea).
They are certainly ahead of the US in securing contracts for, and building infrastructure for, long term LNG imports.
It would be a gross oversimplification to say the problem with the Japanese economy is it has 'too much savings'. Actually Japanese consumers (now) have very low savings rates: a little heralded transformation from the late 80s.
What you have in Japan was a broken system for investing capital: the banking system was not making efficient loans, nor were companies investing efficiently.
There are significant signs the same thing has occurred in the US housing finance market (although not on the scale of the Japanese bubble of the 1980s). It will be interesting to see how it plays out.
hmmm.
This is part of the reason I post: learning new things.
So the Japanese only save about 3% now. Wow.
Only 40% of generation from oil & gas? That's not too bad. Of course, it's all imported.
They're pursuing solar (and nuclear) pretty aggressively. OTOH, they don't know what to with wind, what with small disconnected grids that make balancing load & demand hard.
Anyway, my point was that we shouldn't make simplistic comparisons with other countries. The US has problems, but other countries do too.
Wouldn't this ability to greatly increase military spending be somewhat dependent on the dollar maintaining its role as the world's reserve currency?
With the threat of new petrocurrencies and the world looking to move away from the dollar the ability to borrow may be greatly curtailed in the next few years.
I wonder when it will become apparent to the general public that guns are going to increasingly come at the expense of butter. So far we have been able to have both, but that can't last forever.
Nothing lasts forever.
However the U.S. has plenty of "butter." Most of our GDP is stuff that we could really do without--meaningless legal services, medical services for people in their last year of life, psychological services for unhappy (Desperate!) housewives, snowmobiles, gambling, porn, overpowered boats, etc. Because so much of our output is not very useful, we could give it up with small loss.
Our ability to increase both agricultural output and manufactured goods is huge. It might take a few years, but the U.S. could fairly easily go back to a 1955-85 style economy with heavy military spending.
We still know how to build airplanes and tanks, not to mention other munitions of all kinds.
every one of those "useless" things is a job for someone.
Throwing the "multiplier effect" out with the butter...
Don, this is precisely why we should be worried. The US economy is increasingly reliant upon appeals to personal vanity to keep us all employed (and fed, clothed and sheltered). What happens when our "mad money" dries up?
Also, I might want to argue with you over our ability to increase our agricultural output substantially. Our best farmland is already in production and what remains out in CRP, etc. are "marginal" lands -- not very productive. We made huge gains during the "Green Revolution" but those gains, as we know, were possible only because energy was cheap. Organic, Conventional -- any way you cut it, growing a 250 bu./ac corn crop takes a lot of resources and energy. Will GM organisms be our salvation? They may lead to a better returns per unit of input, but the big gains in ag yields have already occurred.
Now,if you want to talk about producing calories in a strictly controlled laboratory environment -- there you could make some gains. Soylent Green anyone?
In Minnesota (and I suspect elsewhere in the Midwest) huge tracts that used to grow corn are now in pasture. It wouldn't be much of a trick to plow up land that is good for corn (and now in pasture or growing alfalfa for hay) and increase output greatly.
We have been paying farmers billions upon tens of billions of dollars a year NOT to produce. To increase agricultural output, all we'd have to do is to reverse present policy--which goes back seventy-five years--that tries to minimize surpluses. When you pay farmers not to grow corn, they won't grow so much of it. When corn gets up to a reasonable price such as five or six dollars a bushel (moderate in inflation-adjusted historical terms), then you'll see a quick and very substantial increase in corn production.
Well, I have no doubt that as the bushel price of corn or beans (or switchgrass, for that matter) climbs, we're going to see a lot of idle land put into production. We just shouldn't fool ourselves into thinking that that won't create its own set of problems.
That's true, but in order to achieve Bush's reported target of 60 billion gallons/year there would need to be approximately 130 million acres devoted to corn production (assuming 2.8 gallons of ethanol produced per bushel and average yields of 165 bushels per acre). According to Iowa State University, about 79 million acres were planted to corn in 2006. That's a big shift no matter how you look at it.
http://www.card.iastate.edu/iowa_ag_review/fall_06/article2.aspx
We have been paying farmers billions upon tens of billions of dollars a year NOT to produce.
10's of BILLONS of Dollars per year you say?
The department of Ag gets 19.7 billion in 2007. So you are claiming that most of that money goes so farmers WON'T actually produce?
The consevation program gets under a billion.
Where exactly is the '10's of billions' you claim coming from?
My distinct impression, from various sources including 'The Omnivores Dilemma,' is that the policy of paying farmers to leave land fallow, especially for corn, was phased out by Earl Butz and that now farmers are encouraged to plant every available acre. This is a big reason for the (rapidly diminishing) corn glut.
Farmers have not planted "fence post to fence post" for many years. The price of corn has been so ludicrously low for so very many years that much land has been put to growing hay or left in pasture--or in some cases left completely idle. What few people outside the Corn Belt seem to appreciate is that the low prices for corn of recent years were not only ridiculous but also unsustainable.
You sir, are 100% correct! Ethanol opponents like to conveniently leave out such 'minor' inconsistencies from their diatribes. You know, the little things such as:
- the fact that the price of corn vis-a-vis production has probably never been economically sustainable
- the fact that there is and has been a glut of meat on the market for years, the results of which have sacked producer margins if not the outright existence of the smaller, individual rancher
- the fact that millions of $$$ in corn farming subsidies will be eliminated this year because the farmgate price of corn has actually risen to realistic levels
- the fact that 1/3 of all the corn used can be returned as a high-protein feed, the amounts of which may impact the market so much, that cause for concern has been raised by lower-protein feed providers