DrumBeat: August 26, 2007
Posted by Leanan on August 26, 2007 - 9:10am
Topic: Alternative energy
Compared to July 2006, when we had similar prices, we have one massive and little remarked difference today: there is nothing like the geopolitical risk we had in July 2006 at the height of Israel’s intense bombing and artillery shelling war against Lebanon. At the time, the geopolitical risk premium (GRP) was estimated at anywhere from 15 to 30 USD-per-barrel. Today’s GRP is likely only about 5 to 7 USD-per barrel. It therefore has a lot of growth potential, and not much downside potential.The underlying base for high prices is short supply, because the world is one more year closer to Peak Oil than in 2006. Coupled with over-discounted risks to supply, prices can fly at the touch of the right panic button.
The end of oil is not a possibility but a certainty
Regardless of how long you've been alive, whether you're 16 or 60, it's never been a problem to get gasoline. The ability to fill our gas tanks has often felt as guaranteed to Americans as free speech and free press. However, the privilege of gas may become a thing of the past quicker than we may think.There is one fact often overlooked when dealing with the issue of oil and that is this: We cannot make a finite resource infinite.
Oil aplenty, and right in our own backyard
There is no energy crisis in America. We pay so much for gas today largely because a small number of legislators prevent us from using our own Heaven-sent natural resources, in Alaska and off our shores. The energy sources are there; we just aren't allowed to use them.
Cecil Roberts, president of the United Mine Workers of America, quickly cut to the chase on this matter by labeling CTL as a legitimate and real answer to resolving numerous worrisome issues on the table for our country. Energy independence, national security, the trade deficit and economy all stand to benefit greatly from the expansion of CTL technology. In West Virginia, thousands of jobs with good wages and benefits are in the balance.
Mexico's Pemex restores 81 percent of oil production after storm
Mexico's state oil company Pemex has restored 81 percent of oil production after Hurricane Dean crashed through its southern Gulf of Mexico oil fields, the company said Saturday."This result was achieved three days early, reaching a production of 2.1 million barrels (per day)," the company said.
Oilsands face pipeline space shortage
A new problem is bubbling in Canada's growing oilsands industry: too much oil and not enough pipeline space to move it.Production from the deposits is growing so much, so fast, producers and pipeline companies are looking for ways to mitigate the impact of an oil bubble expected to swell by November and last for as long as 18 months.
Myanmar official defends fuel price hikes that sparked protests
A recent increase in fuel prices that sparked a series of rare protests in Myanmar was triggered by spiraling global oil prices and was not a political move, a diplomat from the impoverished Southeast Asian nation said Sunday.Myanmar could no longer afford to subsidize fuel so heavily because of the steep increases in oil prices worldwide, Thaung Tun, Myanmar's ambassador to Manila, told The Associated Press on the sidelines of a regional ministers meeting in the Philippine capital.
Analysts say fuel protests in Myanmar no immediate threat to junta
A week of protests over fuel price hikes present no immediate threat to Myanmar's military rulers because very few people joined the demonstrations and the key organizers were swiftly detained, analysts said Sunday.
Saudi oil forces get US training
US defense giant Lockheed Martin is training thousands of recruits for a special force designed to protect Saudi Arabia's oil facilities from attack, a specialist economic newsletter said yesterday. Saudi authorities have recruited around 5,000 members of the Facilities Security Force and plan to raise the number to 8,000-10,000 over the next two years as an interim target, the Nicosia-based Middle East Economic Survey said.
Regional oil revenues to remain strong
Dubai Mercantile Exchange (DME) chief executive officer Gary King will give an analysis of the regional energy outlook when he addresses a British Business Group event in Dubai on Monday night.“I believe we will be in a period of sustained high energy prices for some time in our current climate and will continue to live in an environment of high energy price volatility,” says King, who will be speaking at the BBG’s latest special interest group meeting at the World Trade Club Dubai.
The Sacking of the Iranian Minister of Oil
It is difficult to explain what is happening in Iran in terms of its domestic politics, particularly when it comes to the oil sector. How can Iranian officials explain to their people that, with Iran currently the second largest country in OPEC, the country has to ration its gasoline because it is suffering from a shortage in oil-derivative supplies?
Enjoy the countryside while you can. In the near future there will be no place for sentiment, no eye for beauty and no room for cows and sheep. Don't blame the farmers: the culprits are population growth, global warming and the energy gap.
Farmers all over the world are finding a sudden boom in demand for their crops – but as fuel for cars rather than as food.
Crumbs all that's left in Africa breadbasket
A severe fuel shortage has forced commuter buses off the roads, leaving Zimbabweans living in the townships with little access to what little remains in the city center.In some parts of the country, even water is being sold on the thriving black market to desperate residents who have gone days without it.
The courts turned down an appeal by Shell CAPSA yesterday which argued that there was discrimination and arbitrariness when it came down to the inspections and fines applied by the Domestic Trade Secretariat.
ASEAN may need closer look at nuclear energy plans
The Association of Southeast Asian Nations ended this week’s energy security dialogue in Singapore facing some stark realities: they need to set aside years of lofty rhetoric and act to cushion the economic blow of high oil prices, and they will have to look hard at introducing nuclear energy to the region.
Bangladesh: Gas for Power Generation
One leading Bangladesh daily has published a report underlining the anticipated gas supply deficit to meet the emerging crisis for fueling the planned power plants. The report stated that the Government is contemplating setting up of a dozen power plants of 3570 MW capacity in the next 3-5 Years to mitigate the present huge deficit and immediate future demand. Acknowledging the present uncertain situation of gas supply and lack of exploration efforts the report suggested for import of gas from Myanmar to comfort the situation. This may be analyzed a little deeper to see what may the options to overcome the situations.
Venezuela's new jet set take off on back of oil-fuelled boom
Surging oil wealth and the restrictions of a dollar-pegged, overvalued currency are driving unprecedented numbers of Venezuelans to travel overseas on holiday, with the number of international flights jumping 45 per cent last month over the previous year.
Testing reveals fewer expected miles per gallon for 2008 cars and trucks
As the new 2008 cars and trucks roll into showrooms, there's a new sticker shock. Federal fuel-mileage ratings dropped an average of 15 percent for the new vehicles compared with 2007 models. The familiar economy figures on the window stickers now show fewer expected miles per gallon for even the most gas-stingy cars.
Gulf Coast Cities Draw Up New Blueprints
Two years after Katrina claimed more than 200 lives in Mississippi and left behind billions of dollars in damage, teams of visionary urban planners are embedded in Pass Christian and other coastal cities, helping them draft ambitious blueprints for rebuilding the "New Urbanism" way.New Urbanism - an architectural movement to transform sprawling city blocks into compact, walkable neighborhoods with old-fashioned features - is only one of the dynamics that could define Mississippi's coastline.
After oil supplies dry up, what's Plan B? - Extreme scarcity could be disastrous for U.S. economy
The United States has reacted to the threat of peak oil and gas with all the alacrity of its response to climate change. It is ignoring the looming crisis for as long as it can, just waiting for that sledgehammer to land its first blow. Eventually, when a recession hits, tax revenue will plummet, and the government will have nowhere near the money it needs to build an alternative energy and transportation infrastructure. Every year that goes by without an intensive mobilization to build an oil-independent economy diminishes our odds of surviving the end of oil....At this point, you might be asking yourself: When oil becomes scarce, how will I get food? That's a very good question. Here are a few more: Will my garbage get picked up? How will my water district purify and deliver water and treat sewage without petrochemicals? What if I need an ambulance? What if my home is one of the 7.7 million that rely on oil for heating? Which of my medications are made out of petrochemicals? How will I get to work? Will I even have a job anymore?
The dangers of the race for energy
OIL AND GAS aren’t our future but the way we use them will certainly play a major role in determining what our future would be like. Our over dependence on oil and gas as fuels could ultimately play a catastrophic part in decline of the peace around the world.
Lebanon on brink of blackout due to lack of fuel
Lebanon is on the verge of a blackout within three to four days due to the lack of fuel in most of the power stations here, said the media Saturday.As-Safir newspaper stated that Lebanon electricity authorities announced that several fuel factories had stopped working for financial and security reasons.
Rationing of electricity consumption began in Beirut and areas in the north and south regions of the country, with suspension periods reaching over 14 hours a day, the paper said, adding that four containerships filled with fuel were waiting for permission to unload their cargo.
As China Roars, Pollution Reaches Deadly Extremes
No country in history has emerged as a major industrial power without creating a legacy of environmental damage that can take decades and big dollops of public wealth to undo.But just as the speed and scale of China’s rise as an economic power have no clear parallel in history, so its pollution problem has shattered all precedents. Environmental degradation is now so severe, with such stark domestic and international repercussions, that pollution poses not only a major long-term burden on the Chinese public but also an acute political challenge to the ruling Communist Party. And it is not clear that China can rein in its own economic juggernaut.
Landmatters Coop gets planning approval!
Most significantly, the Inspector’s ruling explicitly endorsed the permaculture aspect of the project, which is a planning precedent for the UK. The planning inspector granted planning permission for a permaculture holding, integrating agriculture, forestry, education, ancillary rural enterprises and residential use subject to the 'low-impact' criteria set out in their planning application.
The following story is told from the point of view of a farmer living in an intentional community in a post-Peak Oil world several years from now. The details change as it continues to evolve in my mind, but in all its versions it sticks to one general assumption. The gap between energy demand and supply widens, and at some point in the future various aspects of our social and economic institutions begin to break down in earnest. Here is today’s version…
Verve points to future for Ford
The Verve, which will debut next month at the 2007 Frankfurt Motor Show, is the first of three subcompact concept vehicles that will debut in the key regions of Europe, Asia and North America.North America, in particular, has been longing for a subcompact, or so-called B-size, car from Ford since gas prices soared to $3 a gallon. Ford left the ultra-efficient subcompact car segment in 1997, the last model year for the Aspire, and hasn't said when it's coming to market with a replacement since then.
I am far from saved. My footprint is surely too large for me to enter the kingdom of sustainability heaven. If sustainable living is a continuum, from excessive waste to zero waste, then I too am not where I want to be on it.However, I gaze out across the continuum and see people—environmentalists!—much farther behind than I expect.
A few people I know who consider themselves environmentalists have purchased new cars recently, ones that run on internal-combustion engines and get less than thirty miles to the gallon. One friend, a global-warming scientist, told me he decided not to buy a hybrid “until the kinks get worked out.”
"Momentum building" for new climate deal: U.N.
The United Nations says momentum is building for tougher long-term action to fight global warming beyond the U.N.'s Kyoto Protocol and a climate meeting starting in Vienna on Monday will be a crucial part of the process.
Climate change is a mixed bag for Inuit
It's a double-edged sword for the Inuit. It's transforming their frozen landscape, melting glaciers and disrupting animal life. The number of hunters in the area has dropped in recent years from nearly 500 to about 200.Since 1995, Greenland's vast ice cap has lost 7 percent of its mass and 300 feet in height, according to the European Environmental Agency, a European Union body based in Denmark.
But the change also presents new opportunities. Twenty years ago, when visitors were rare, the fjords and bays were clogged with ice through July. Now, those bays are navigable by April or May. That means more tourists — eager to explore one of the most remote and unexploited corners of the globe.
Eight cruise ships will come to the area for the first time this month and next.



Hello TODers,
Please recall my recent NPK posting on the Haber-Bosch nitrogen process, how much FF-energy it requires just to make it, then how much more gas/diesel is required to distribute 100 million tons annually around the globe so farmers can finally spread it on their fields. Thus my Wild & Crazy ping-pong ball idea. Has someone has recently invented an even better idea than my brainfart!
Could most of the Haber-Bosch nitrogen factories soon be obsolete? Could this company's Nitro-Fix invention soon save nearly 1% of the world's total energy usage? I would be interested in any expert elaboration or refutation.
http://newsinfo.inquirer.net/breakingnews/regions/view_article.php?artic...
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Luis Guillen, president of the Summa Biotechnologies Corp. based here, said there was a 20 percent surge in rice output in Northern Mindanao due to farmers’ use of a locally-produced organic and environment-friendly fertilizer.
“The use of bio-organic inoculant fertilizer has increased palay yield by 20 percent,” Guillen said in a statement.
The fertilizer, known as Nitro-Fix, is made of nitrogen-fixing bacteria developed by researchers at the University of the Philippines in Los Baños.
Rice studies showed that once these bacteria from organic matters capture the nitrogen gas in the atmosphere, it would convert the nitrogen into a usable form needed to sustain the nitrogen requirements of rice, corn, vegetables, and other crops.
Guillen said the palay plants are healthier, and produce impressive results such as broader and greener leaves, extensive root system and sturdier stalks.
Also, the plants are more resistant to pests and diseases than those applied with chemical-based nitrogen fertilizers, which he claimed have proven to be detrimental to soil fertility and contributes greatly to declining farm productivity.
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http://www.malaya.com.ph/jan13/edbanayo.htm
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Food on every table
First the mayor tested in a pilot area, Nitro-Fix, a bio-organic fertilizer that contained nitrogen-fixing bacteria which attracts the nitrogen in the atmosphere and converts it into a form that substitutes for 50% of the chemical fertilizers needed as inputs by rice and corn.
The results were phenomenal. Fertilizer cost per hectare was reduced by half, and average yields grew by 20 percent. The incremental revenue of each Butuan farmer could go up to some 50,000 pesos per year.
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http://www.uas-cropmaster.com/pdfTechsheet/Nitro-Fix%20Tech%20Sheet.pdf
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GENERAL INFORMATION:
Nitro-Fix is a two-part beneficial bacteria package. First it aids in Crop Residue (stubble) break down. Next it helps fix nitrogen. Nitrogen fixation is considered to be the second most important bio-chemical reaction after Photosynthesis known to Man.
With large-scale chemical use along with synthetic fertilizer application, the natural bacterial life in farm soils have been reduced almost to the point of dead soil. Because of the important contributions made by beneficial bacteria to the fertility level of the soil, it has
been stated that if their functions were to fail, life for higher plants and animals would cease.
Nitrogen fixing bacteria play a vital role in plant growth since they are capable of converting atmospheric Nitrogen into useful forms in the soil. NITRO-FIXTM is formulated to rapidly replace reduced bacteria counts and increase biological activity for maximum plant growth, health, and resistance to pests and diseases. Bacteria work in conjunction with plant life to release minerals, fix nitrogen, breakdown crop residue, and much more. It is acceptable by the OCIA standards as "organic".
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If this Nitro-Fix is cheap to make, can be grown in volume and processed locally, is easy to apply to fields, and precludes the use of half or more of the energy intensive Haber-Bosch ammonia & derivatives--this company's stock could become EXTREMELY VALUABLE very fast. Or is this old news to the expert farmers and gardeners on TOD?
From a 1996 discussion I found:
http://www.bio.net/hypermail/plant-biology/1996-December/013085.html
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To get into a comparison of growing techniques that involve direct feeding with annual applications of NPK fertilizer ("conventional" agriculture) versus biology-based methods which emphasize soil development could be a lifetime debate.
Sooner or later, the debate always comes down to the question of whether current cultural practices are sustainable or not. Can farmers simply keep using NPK fertilizer every year to sustain yields forever? There
are certainly doubts about this, from the USDA on down.
Some very respected soil scientists feel that current practices are like "mining" the soil, and that at some point the non-replenishment of humic matter and trace elements will make the soil unproductive, and that this
unproductivity will occur suddenly some year in the future.
The greatest argument against bio-organic methods at the moment is simply that there are not enough supplies available. (And you do have a valid point about the economic problems of converting over to a biological approach). We cannot begin to provide enough inoculant for
even one percent of the corn farmers of Illinois, for example.
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IF this Nitro-fix is truly a breakthrough: then this could really help optimize our decline through the Bottleneck Squeeze if combined with universal Peakoil Outreach and relocalized permaculture; it could really quickly help restore the bio-vitality of urban and suburban topsoils along with easing the migration of other plants and trees to climate change.
Of course, we would still need NPK, but the emphasis would be rapidly shifting to P,K; we could be using much of the nitrogen [think natgas] for other uses. Thxs for any reply.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
This product sounds like a variation on compost tea or maybe worm pee, which you don't have to buy from the store. Clearly a lot of organic farming ideas will have to go mainstream. Tomorrow for example I'm throwing out some charcoal mixed with NPK fertiliser, the N being urea granules. I might figure out a drip irrigation system with compost tea injected into the system. Maybe small amounts of synthetic nitrogen will boost other natural sources like manure and legume rotation.
The world has to get smart on this very quickly. If the Australian wheatbelt doesn't get September rain world grain stocks will be in trouble.
Hello Boof,
Thxs for responding. I whole-heartedly agree with your mounting concern on global food supplies. I have posted before that I would gladly sit in the natural darkness, plus pedal a bicycle everywhere in the daytime, in exchange for clean water, basic foods, and minimal violence. Although, an occasional beer would be a huge plus. Time will tell.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
I might figure out a drip irrigation system with compost tea injected into the system.
Entertain a folar feeding system. The fungi, protozoa, and bacteria in vermipost can help 'eat' the bacteria and viri which plants are attacked by.
In addition, the plants can take in the nutrients directly from the leaves.
totoneila
Bob Shaw
Nitrogen fixing bacteria are on a lot of plants naturally, like alfalfa, but I don't know of a similar product in the US. It sounds like a real blessing for the world, and would help cut down on the "dead zones" at the mouth of the Mississippi, too. Since it works on corn, it would make the EROEI of ethanol a whole lot better. Why don't you email the author of the article and ask him about the stock? is it legal to import and use in the US? The article said it cut the fertiliser requirement for rice by 50%
Bob Ebersole
I think the recycling of nutrients is what is lacking here("mining" is very accurate). Most but not all US farming involves removal of crop residues (straw, etc.) These organisms will need food, the residues...
Nitrogen fixating bacteria are well known. Soil microrhyzae form symbiotic relationships with plant roots to enhance nutrient uptake on many plants. Commercial preparations are available for different groups of plants. As these are living organisms they need to be provided with soil conditions that do not inhibit their growth (ie soil drench fungicides).
My limited knowledge of soil chemistry has been tested at our nursery where I tried to balance- water quality/Ph, soil Ph, and fertilazation practices. I can only say that it is not as easy as it seems. Reactions of plants to nutrient availability are varied. I find majors(NPK) to not be the limiting factors but rather, magnesium, sulfur, iron, and calcium.
The most limited nutrient will make the deficiencies appear. Boron for hazelnuts comes to mind as a major factor in yield. Nut farmers add boron with foliar applications at critical times.
There is also a greater focus on silica, for overall plant health and cell structure.
Best wishes to greater understanding (my own included)!
D
Here in Iowa low till and no till practices have been the norm for the last twenty years. Anything that isn't being sold to the elevator is left on the field and gently tilled in for the next year.
Wow! Good. Here in Oregon they take the wheat and then the straw for animal bedding. Same with grass seed(big crop for us here)
Here they grow corn and soy beans in rotating. Wheat plantings are small and always grown to get the straw - the wheat itself is considered a by product. I'm sure its done differently in other parts of the world ... straw is a crop, too.
Bob, it sounds like a marketer's version of plain old inoculant. Most garden supply places sell inoculant for legumes. It makes beans, peas, etc. grow better with more drought resistance. I have never understood why everyone doesn't use it. There are slightly different varieties for garden crops, field crops (alfalfa, clover, vetch), and even for trees like locust. Look for mycorrhizal inoculant.
This is the reason many farmers rotate a legume every few years. As long as you keep a legume in the rotation, you can maintain higher levels of nitrogen naturally.
Of course, many fields have been fertilized for so long that the inoculating bacteria are drastically reduced. Best hopes for building biotic soil!
Hello TODers,
My thxs to all that responded, but I need to get some shuteye. I am hoping to wade through the long "Nuri: Fractional Banking/Thermo" text in the next week as time allows. Econ is extremely difficult for me.
Kjmclark: I am highly ignorant of soil/plant science too, but the links talk about Nitro-Fix being good for non-fixating non-legumes too. I have no idea if that is a agri-breakthrough or not, but to my feeble mind it intially seems highly significant. But I could be very mistaken: which is precisely why I solicited for expert opinion.
Please TODers, don't invest a nickel just because of my postings [my personal stock-picking record is truly lousy]. Do your own research.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Thank you Bob , for this posting - as you point out food is priotity One.
And its commonly accepted that chemichal agriculture (Fertilizers,pesticides,fungicides) yield a staggering 4 times more as compared to old traditional agriculture.
The math is easy : Use 1$ get 4$
Hello TODers,
Just a quickie post: what percentage of the postPeak poor will be forced to work in the canefields so that the rich can drive sugar-battery powered PHEVS? Don't forget the ERoEI for cane is the highest for all plants so far.
http://www.informationweek.com/news/showArticle.jhtml?articleID=20180231...
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Sony Develops A Bio Battery Powered By Sugar
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Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
forced to work in the canefields
Why not the sweet, sweet sugar-beet fields?
Russia to convert nuclear container ship to Arctic drilling platform
http://www.barentsobserver.com/index.php?id=526765
Alan
Alan,
I don't remember any drill ship scenes in the movie Titanic. (sarcanol alert)Bob Ebersole
Alan,
I am not sure they mean drill ship or if they mean drilling service vessel. Looks to me like drilling support rather than a platform actually sinking wells. I could be wrong, it certainly looks big enough for a derick set, pumps and mud tanks etc.
From the article:
''With the transformation, the world will see the first ever nuclear-powered oil and gas service vessel. The place of work for the vessel is likely to be the Arctic, and first of all the Barents Sea. ''
Key phrase: Oil and Gas Service Vessel
Whatever it is, Russia seems to be first off the blocks in this race. Anyway, the Russians appear to be working to a plan. Which appears more than you can say for the West...
Mudlogger, no it will be a VLDS, a Very Large Drill Ship. They look completely different from your standard shallow water drill ship. A shallow water drill ship drills in water too deep for a jackup rig. But in waters 5,000 feet deep or so, a completely different type of drill ship is required.
The picture on the link Alan posted shows the ship before the drill rig is complete. As the article says it will take 18 months to transform this ship into a drill ship.
What the picture shows is a nuclear-powered container carrier. What you will see in 18 months will be a nuclear powered drill ship, they hope. ;-)
Ron Patterson
I noted that they said "drilling" in one place and "service" in another.
There is a distinct difference between the two types for those with knowledge of offshore oil & gas operations. I question whether this regional journal has that knowledge.
The ship could service drilling ships & rigs with minimal modification. 18 months argues for a drilling conversion.
There could be some significant advantages for a nuke ship on station in the Arctic Ocean.
Best Hopes,
Alan
Alan, Darwinian,
The wording in the article was sloppy. It could mean a Drill ship or a Drilling support vessel.
In these waters both, in the very large class will be needed. And, IMO: Both , types will ultimately require Nuclear power.
You are of course correct: A very large Drill ship will be required for these water depths.
Retro fitting a Derrick set, pumps, Top drives, automated pipe handlers, joy stick control drilling and computerised drilling data acquisition, shale shakers mud pits etc will, IMO take a little longer than 18 months...
(I wonder where they will retro fit it?)
If they want to do it right, I have Global Santa Fe's phone number somewhere...:-)
Also: They should look at best practice in the latest deepwater drillship fleet, eg Twin Derrick Sets for minimal down time etc.
Still VLDC or VLDSS, they will need both types in tandem and they have the plans, the loot and the central planning attitude to bring it off.
With any luck the Artic Ocean will have pack ice at least part of the year. The ice pack flows generally from the Bering Sea to the North Atlantic. It also rises and falls in response to tidal forces. Many strong ships have been crushed by this ice. The engineering challenges are enormous. You just can't take what works in the Gulf and expect an easy go of it.
Just the place for a nuclear powered vessel.
What we humans should do is not what we will do.
cfm in Gray, ME
Sorry, I just couldn't help thinking of Pavel Chekov in Star Trek IV asking people on the streets of San Francisco: "Where are your nuclear wessels?"
Hello TODers,
A fascinating economic PDF text with full incorporation of Thermodynamics. Most of the included famous quotes are widely used here on TOD. I am not a econ guru, but I hope Don Sailorman, Stoneleigh, Nate Hagens, and others with Economic/Peakoil acumen will take a gander at this:
http://www.thetransitioner.org/wiki/tiki-index.php?page=Vladimir%20Nuri
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Vladimir Z. Nuri
Vladimir Z. Nuri has written a landmark text called "Fractional Reserve Banking as Economic Parasitism: A Scientific, Mathematical & Historical Expose, Critique, and Manifesto". This text is probably one of the most recent clear-sighted and visionary work. It is about:
Economic Parasitism?
Thermodynamic approach of money?
Political history of money
Proposals for further research (that will be connected to the projects of TheTransitioner)
"A straightforward model and algebraic formula for a large economy analogous to the ideal gas law of thermodynamics is proposed. It may be something like a new F = ma rule of the emerging econophysics field."
This pdf document can be downloaded here. [inside the toplink to accomplish this--BS]
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Maybe Nate can get Mr Nuri to do a TOD keypost!
EDIT: I would like to point out that Asimov's Foundation and Hari Seldon equated predictive collapse and directed decline to the above mentioned gas law:
http://www.math.uwaterloo.ca/~rbutterw/essays/.original/Chaos.html
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Chaos or Order?
Asimov wrote an article about psychohistory in Asimov's, July 1998.
[...] I suggested we add the fact that a mathematical treatment existed whereby the future could be predicted in a statistical fashion, and I called it "psychohistory." Actually, it was a poor word and did not represent what I truly meant. I should have called it "psychosociology" (a word which the O.E.D. lists as having first been used in 1928). However, I was so intent on history, thanks to Gibbon, that I could think of nothing but psychohistory. [...]
I modeled my concept of psychohistory on the kinetic theory of gases, which I had been beat over the head with in my physical chemistry classes. The molecules making up gases moved in an absolutely random fashion in any direction in three dimensions and in a wide range of speeds. Nevertheless, one could fairly describe what those motions would be on the average and work out the gas laws from those average motions with an enormous degree of precision.
In other words, although one couldn't possibly predict what a single molecule would do, one could accurately predict what umptillions of them would do.
So I applied that notion to human beings. Each individual human being might have "free will" but a huge mob of them should behave with some sort of predictability, and the analysis of "mob behaviour" was my psychohistory. ...
[...] a clipping from the April 23, 1987, issue of Machine Design.
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Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Hi Bob,
I am extremely dubious of economic or financial theories based on physics or chemistry. In my opinion, economics has been held back by those trying to make it like physics.
For analogies, I think biology is much closer to economics than is physics--but none of these analogies should be pushed too far.
As I see it, the great question for a steady state (or declining) economy is income distribution. There is going to be massive structural unemployment as a result of Peak Oil and also a great deal of cyclical unemployment. How to deal with this upcoming unemployment is a question that almost nobody is looking at. I do not think it is feasible to put millions of service workers back to work on farms; even decades after peak oil I think agriculture will stay capital intensive rather than labor intensive in modern societies.
In regard to fractional reserve banking being a form of parasitism, I just do not buy it. Banks are different from other financial businesses because they are regulated; they are not regulated because they are unique. Fractional reserve banking evolved from earlier arrangements, and although you could have a system of 100% reserves, it is not clear that the benefits of this change would outweigh the costs. When he was a young man, Milton Friedman advocated 100% reserve banking; there are some good arguments in favor of it.
It is interesting to note that during the financial turmoil of the past month, banks have been able to escape pretty much unscathed. A big reason for this is that banks have higher lending standards than do, for example, some mortgage companies. Contrary to popular belief, the fractional reserve that banks are required to keep is not a safety reserve at all; they cannot dip into it in time of need.
Fractional reserve banking does not make it onto my list of top 1,000 worries. It works reasonably well. The excesses of the financial system have affected banks to some extent, but they have not originated in banks--which are generally not in the business of making subprime loans (though some of their nonbanking subsidiaries are).
You take a lot of flak here on occasion, Don, but when you are not around, you are certainly missed. Great post.
RE unemployment, as you know people also should bear in mind that wages are sticky, stickier than house prices. And they could become even stickier should American workers relearn how to organize. A very real possibility in a downturn. That dynamic alone could make the problem worse.
Warren Buffet Warned Us
In the era of industrial capitalism, a low interest rate was a stimulant. But in this era of finance capitalism flirting fearlessly with debt, lowering rates creates complex problems, especially when most big borrowers routinely hedge their interest-rate exposures. For them, even when short-term rates drop or rise abruptly, the cost remains the same for the duration of the loan term, the only difference being that they pay a different party. While debtors remain solvent, investors in securitized loans go under. Credit derivatives have been the hot source of profit for most finance companies and will be the weapon of massive destruction for the financial system, as Warren Buffet warned.
In the US, where loan securitization is widespread, banks are tempted to push risky loans by passing on the long-term risk to non-bank investors through debt securitization. Credit-default swaps, a relatively novel form of derivative contract, allow investors to hedge against securitized mortgage pools. This type of contract, known as asset-back securities, has been limited to the corporate bond market, conventional home mortgages, and auto and credit-card loans. Last June, a new standard contract began trading by hedge funds that bets on home-equity securities backed by adjustable-rate loans to sub-prime borrowers, not as a hedge strategy but as a profit center. When bearish trades are profitable, their bets can easily become self-fulfilling prophesies by kick-starting a downward vicious cycle.
http://www.atimes.com/atimes/Global_Economy/HA11Dj01.html
Related Discussion on Oil Drum:
A problem erupts when somebody declares that the emperor has no clothes, that this form of economic activity is unsustainable or insane. The same problem erupts if I decide my house has dropped in price so that it is now worth less than I paid for it. Why should I service the loan and generate money for you if I can just walk away and leave you with the collateral? At that point the Ponzi scheme comes to a crashing halt. This is what occured a week ago when the financial markets underwent a liquidity crisis. No body wanted to trade these synthetic assets as 1) No one was sure what the value of the asset to be traded actually was (remember these assets represent the slicing and dicing of multiple other assets); 2) No one was sure what the value of the underlying asset (my house) might be, either now or in the near future; 3) No one could be sure that the person with whom they traded was not overexposed in this market and therefore represented a significant counterparty risk
http://www.theoildrum.com/node/2916#comment-231387
Fractional reserve banking requires that I retain 10% of my capital and I am free to lend the other 90%. Since I have resold the securitized loans I now have the immediate return of capital on my books and I can turn around and repeat the process, creating a new security, retaining 10% and selling off the other 90%. The purchaser of the security can repackage what they have just bought, combine it with other ecurities and sell it to a fourth party who can in turn do the same thing and sell it on to a fifth party. Part of the problem with this activity is that non-bank actors (hedge funds) also engaged in this process and were effectively acting to enlarge the money supply. The regulators appear to have looked the other way.
http://www.theoildrum.com/node/2916#comment-231498
Money does not exist.
Money is not real in the same way that food, hunger, starvation, water, thirst, and drought are real. Money is neither necessary nor sufficient for activity, trade, or exchange to occur between human beings. Money is an idea, an agreement between people that they will accept it in exchange for their products and services that they may in turn trade for other needed products and services.
But it's always about products and services. Things and energy. Money is an abstraction that either facilitates or hinders the physical exchange of resources and the fueling of processes in the real world, ultimately described by physics (thermodynamics, conservation of mass), chemistry, biology, psychology, and meta-disciplines like chaos and complexity theory.
Money aids the process that allows the farmer to provide food, so that the researchers can develop bulldozers, so that the people can move a mountain.
But money can not move mountains, only technology and energy can. Money cannot solve mountainous problems, only well fed and resourceful people can. Money cannot feed people, only food can. Money cannot grow food, only seeds, sunlight, water, and nutrients can.
Money lubricates or provides friction to the exchange process in a large society, money does not alter the physical realities.
Economic theories are held back precisely because they do not stem from an agreed-upon physical reality, described by scientific disciplines including physics and chemistry, and are ultimately doomed to fail as such. They are amusing and intriguing, though. :)
Related Discussion on Oil Drum:
Fed bends rules to help two big banks: If the Federal Reserve is waiving a fundamental principle in banking regulation, the credit crunch must still be sapping the strength of America's biggest banks. Fortune's Peter Eavis documents an unusual Fed move.
http://www.theoildrum.com/node/2916#comment-231534
And how big is the derivatives market now? Jim Willie of the Hat Trick Letter says, "The scope of the CDO bond fraud is gigantic. In 2002, $84 billion in CDO bonds were issued. In all of 2006, $503 billion were issued. The parade has not ended! In 1Q2007, an incredible $251 billion were issued, on track for a cool $1,000 billion annually." Heading for a trillion bucks a year!
http://www.theoildrum.com/node/2916#comment-231592
The reason they are so amusing (econ theories) is because so much of our fake progress depends on this twist*infactuation of numerical fiat finance....And thus, the expandment of the same somethin' fer nothin' unaccountable outcomes tends to grow until it softly expires or implodes, or just explodes....none of which will be discussed in any of the same numerical real life outcomes.
It really does not matter if thinking is done in 2 dimensions or 4.
I believe you are thinking in reduced terms and over too many fiat heads.
Unbacked bullshit currency has always had a very brief positioning in any time*table. Why is that? Truth is a slave to time/debts/fiat/usurp, least until truth sets us free again. (truth works backwards)
Thinking gravitates towards those freedoms.
Thinking can be positive or negative.
Positive can have a majority ingrained psychology inducement of fiat nonsense issuing more of the same so-called everything for nothin' benefits, while so- called negative thoughts is often seen as the masquerading follies outside the proper fiat link--- and the unwanted truth in the daze of expert narration of such nonsense.
Energy WILL decide fates regardless of the crackpot MSM opined/majority/ownership of fabricated dream worded world concensus.
Energy will not care about conspired truth or lies. But It will quite likely remain the REAL truth behind the verbal volumes and pages of that ongoing other history.
We live in very interesting historied times - Not because we happened to be borne in this era of final oil deliberations, but because we are overtaken with blips bleeps and graphical monetary squiggles trying to infinitely create more value from finite energy, and, more importantly, to make those visual fiat brainwashings believable beyond questioning.
Fake will always create more fake as long as reality or determining physics can be mediated into the next "greatest marketeering" farce equaling more fiat farces of determined control---Based on fiat.
The core of this begins with "medium of exchange value." Thee opposite becomes non accountable debt invasion based on those digi blips bleeps and blunders. Why does this outcome have to take place? Because, unless we invent a new energy miracle real swoonlike, then our collective brainmass of fiat disturbances will prevent our collective eyes to ever open beyond our immediate past, which has been all about expandment of more fakery.
Our eyes are not about reality. They are about money and wasting consumption for more happy fiat growth. Our eyes rarely see past overun unbacked fiat infinite growth. And how could/would they.....?
Conspiring was easier in the past.(Lids were contained with mediums of far lesser awareness, thus those lesser technologies had lesser influence) People were trying to better their individual plight in a free nation of wills under honest guidelines. (ignorance is bliss?) They also trusted one another. They could see the benefits of their labor, and they could see that hard earned rewards would elevate the outcome of the next generation (loved ones who could not yet conceive the idea of free fiat daddy warbux spoiledness)....
Today, thee greatest grand i