Drumbeat: June 11, 2010
Posted by Leanan on June 11, 2010 - 10:34am
I think most people know in theory about the destination of the road paved with good intentions, but revitalization movements that go awry have a bad habit of putting that theory into practice. Next week, I’ll explore those uncomfortable possibilities in more detail, and in the process, show how the magical thinking that underlies revitalization movements could be put to use in much more constructive ways.
For the moment, though, I want to pass on the counterspell against incantatory thinking that I mentioned at the conclusion of last week’s post. Like the magic spells in fairy tales, it comes with a taboo that limits what you can do with it. The taboo is this: you can use it to guard yourself from incantations, if you think about it and understand it, and you can pass it on to someone else who’s ready to receive and understand it. If you give it to someone who’s not willing to accept it, though, it will cause exactly the flight into incantation and fantasy it’s meant to prevent. Here it is:
WASHINGTON (AP) -- Has the oil spill in the Gulf of Mexico got you so mad you're ready to quit Big Oil?
Ready to park the car and take up bike-riding or walking? Well, your bike and your sneakers have petroleum products in them. And sure, you can curb energy use by shutting off the AC, but the electric fans you switch to have plastic from oil and gas in them. And the insulation to keep your home cool, also started as oil and gas. Without all that, you'll sweat and it'll be all too noticeable because deodorant comes from oil and gas too.
“I’ve read Internet threads where people want to use a nuclear weapon to close the oil well blowout in the Gulf of Mexico. Even Matt Simmons, who’s a hero to me because of his Peak Oil work, says we might need to use a nuclear weapon to close the well. Can you discuss that?”
In this week’s “Your Money” column, I spot an oddity in the conversation about how we all ought to react to the oil spill in the Gulf of Mexico: Greenpeace doesn’t think you should boycott BP.
British energy giant BP plans to suspend its second-quarter dividend as it faces growing public anger over its handling of massive oil spill in the U.S. Gulf Coast, according to published reports.
Mexico expects oil from BP Plc's damaged Gulf of Mexico well to reach its shores by December, and is considering how to sue the company for any environmental damage, Mexico's environment minister told Reuters.
WASHINGTON—The Obama administration's point man for the Gulf Coast oil spill on Friday said it will be at least July before BP PLC has the tankers in place to capture the latest estimates for crude flowing from the blown well.
(Reuters) - With the U.S. government doubling its estimate of oil coming out of the broken well on the sea floor of the Gulf of Mexico, companies linked to the spill, including BP Plc, face an increasing liability and potential penalties. Following are some questions and answers for how it could play out.
How much oil has spewed so far? On Day 53 of the worst U.S. oil spill in U.S. history, it's equivalent to:
● Just over 2.5 hours worth of U.S. oil consumption. The United States is the world's biggest oil user, and burns about 20 million barrels a day, or 833,000 barrels an hour. Every 21 days, the BP well spews one hour's worth of U.S consumption.
● Eight times as much oil as the amount spilled when the Exxon Valdez tanker plowed into a reef in Prince William Sound in Alaska in 1989, spilling 257,000 barrels. BP's well spews the equivalent to one Exxon Valdez tanker every 6.4 days.
Tony Hayward, chief executive of BP, may be one of the least popular people on the planet at the moment, but he seems to have a friend in City Hall.
Mayor Michael R. Bloomberg on Friday defended Mr. Hayward, saying that the public should not rush to fault BP executives for the oil spill in the Gulf of Mexico.
BP's moves to contain and capture more oil from a leaking undersea well in the Gulf of Mexico did not make the spill dramatically worse, U.S. Energy Secretary Steven Chu said Friday.
Chu, speaking to Reuters in an interview, also expressed optimism that sufficient safety measures could be made to eventually lift a U.S. moratorium on deepwater drilling.
Despite the Gulf spill, Petrobras continues to drill offshore.
Brazil could benefit from the BP Gulf of Mexico spill as a US moratorium on offshore drilling boosts available rigs for the country's deep-water oil exploration programme.
Brazil could become one of the largest oil producers worldwide if its plans to develop large offshore, pre-salt oil deposits prove successful. However, meeting this challenge will require unlocking reserves from technically difficult deepwater fields with oil under layers of rock and salt thousands of feet below sea level. Potential regulatory changes could also impact the process of producing these reserves.
In the wake of the highly predictable, not-even-slightly-surprising BP Gulf disaster, we can ask the news media to dust off energy demand management and recycle root-and-branch energy savings from its present "don't talk about that one" status.
The Raukumara's potential is unknown - the Petrobras permit is for 12,333 sq km, or half the basin - but data gathered in 2005 indicates there are sediments and sands able to trap hydrocarbons in "commercial quantities". Pfahlert says the odds of a strike in New Zealand's "frontier country" are one in 20. The MED dreams of New Zealand becoming "a highly attractive global destination for petroleum exploration and production investment". It is a potential made possible by "peak oil".
Certainly as peak oil - the point at which oil production enters terminal decline - looms (some argue we have passed this point), it is becoming harder to locate fields in easy-to-extract locations. Instead, oil companies are exploring more dangerous regions, such as the Falkland Islands, the Arctic and the wild seas within New Zealand's EEZ.
"All the oil reserves we find now are in hard-to-extract places," says Dr Bob Lloyd, director of Otago University's Energy Studies Programme. "The sorts of problems that are happening in the Gulf of Mexico will happen more and more."
Once again, this review is a debunker of peak oil hysteria as well as energy dreamers who think renewables can replace non-renewables.
Despite the sharp decline in production and demand, the industry’s boom cycle investments in the search for more oil continue to pay off. Global oil reserves remained steady after a significant jump in 2008.
The industrial economy, that is. On the brink, yet again.
The real economy -- not the born-again exuberance in the world's stock markets -- is stalling as the effects of easy money wear off. Indeed, investor fund flows haven't been this bad since Lehmann Brothers collapsed in the autumn of 2008. The IMF says risks to the global economy are high, and policy makers are about out of bullets to ward off the demons.
Goliath, in his latest incarnation as California utility leviathan Pacific Gas & Electric, took to the field armed with all the weapons 45 million dollars can buy against…a pair of tiny websites and a tall red-haired dude with a busted video camera. And got his ass handed to him.
As Herman Daly and others have proposed, growth is fuelled by our need to keep up with compound interest of big payments like mortgages. This makes us work harder and consume more just to keep pace with debt payments.
Venezuela today praised the latest decision by an arbitration panel in a case over the 2007 expropriation of ExxonMobil assets by the government of President Hugo Chavez.
Congress needs to act now, not to free us from market forces, but to let market forces control what the flow of oil is and not OPEC. We need gas to run our economy and as long as the gas prices are being controlled by monopolistic mid-east concerns, with the aid of our administration the market is not going to do much to influence the price of gas. Big Oil has been entrenched for years with the government and industry. There was a time when the oil companies competed for your dollar and prices were decided by market forces. It is not that way today.
ACUTE shortage of electricity and natural gas has forced the government to resort to the establishment of rental power stations, bypassing official procurement procedures. For the moment the people are prepared to accept the government's compulsion to rent equipment and buy fuel at exorbitant prices, but they are aware that the crisis has arisen because of policy failures of past governments and the lack of readiness of the present one.
Venezuelan President Hugo Chavez has lifted nationwide electricity rationing, signaling the end of an energy crisis that had plunged the major oil-producing nation into deeper recession for months.
He said the start of the football World Cup was one reason for the suspension of rationing.
I’ve seen the future — and it’s in Birmingham. In the unassuming suburb of Balsall Heath, the architect John Christophers has revamped and extended a classic Victorian semi to create a 2,000sq ft, four-bedroom home for himself, his wife Jo Hindley and their five-year-old son Theo.
Christophers has also made sure that the house is entirely energy efficient: it generates its own power and is so well insulated that there is no heating system apart from a wood-burning stove that was used intermittently during the coldest days of last winter.
(Bloomberg) -- BP Plc’s oil leak in the Gulf of Mexico will prompt crude-producing nations to adopt international standards amid “an increased concern about the planet,” Mexico’s environment minister said.
Global standards “must be a very important topic when nations issue permits for oil production,” Mexican Environment Minister Juan Elvira Quesada said yesterday in an interview in Mexico City. “It’s very important that we exchange and harmonize the safety standards.”
NEW YORK (MarketWatch) -- BP's green and yellow brand marker may be in peril, along with the beleaguered oil giant's chief executive Tony Hayward, as the oil spill crisis in the Gulf of Mexico drags on, marketing and management professors speculated this week.
BP dominates this rapidly expanding oil production region. Who else is in the high stakes game?
The decision to halt deep water exploration activity and the uncertain status of shallow water operations in the Gulf of Mexico is already having profound impacts on the offshore energy industry, and these impacts will only worsen the longer the pause continues. Since the Gulf region depends on the offshore industry for thousands of jobs and billions of dollars in revenue, the impacts of the "one size fits all" moratorium will add further job loss and economic woes to a region already suffering from these same hits to its seafood and tourism industries.
Schlumberger announced the effect on its US operations following the recently announced six-month Minerals Management Service (MMS) moratorium on certain drilling operations in the US Gulf of Mexico and on other matters relating to its North American operations.
BP has already spent more than $1 billion battling its oil spill. Here's a look at where the cash is going.
BP announced it is providing the State of Florida with an additional $25 million grant to continue implementation of the State's Area Contingency Plan.
This $25 million grant is in addition to a previous $25 million block grant that BP announced on May 5 to help accelerate the implementation of the State's Area Contingency Plan, and a $25 million tourism grant announced on May 17.
Talk of a second potential oil spill in the Gulf of Mexico grew louder Tuesday, fueled by several reports that the Ocean Saratoga rig, operated by Diamond Offshore, is leaking into the Gulf.
The Press Register, an Alabama newspaper, reported that a crew boat was seen spraying dispersant on a slick trailing from the drilling rig, which is located about 12 miles off the tip of Louisiana in about 500 feet of water.
The political world has not quite caught up with the industrial and financial worlds when it comes to the vast increase of energy supplies of gas. For years that commodity from which a growing portion of stationary power (heating and electrical) is generated has been influential in European development. Since the nineties the Russians have manipulated that lifeline, which provides Western Europe with 25% of its energy. Those days would appear to be over. The next forty years are projected to bring a massive increase in natural gas availability thanks to the commercially competitive development of shale gas.
Gazprom, the Russian energy giant, has had to rethink its entire future operational development and export revenue plan. It is not alone among the major gas suppliers such as Qatar and Algeria. (Iran is second only to Qatar in proven gas reserves, but it is not one of the top suppliers.) The United States has returned as one of the world's major gas producers through the unlocking of the technological mysteries of shale rock gas exploitation.
Canadian economist Jeff Rubin has won the $20,000 National Business Book Award for Why Your World is About to Get a Whole Lot Smaller: Oil and the End of Globalization.
Last month, Congress announced it was preparing to increase the barrel tax on oil. Revenues would be used for future crises like the one in the Gulf.
In response to that announcement, the U.S. Chamber of Commerce slammed the idea, saying it was hastily put together. VP of the chamber's energy institute said that the tax could be passed on to consumers if the oil industry manages to raise gas prices in response to the tax increase.
Clearly we would expect the Chamber to be opposed to such a tax, so certainly this was not a surprising response... Although you'll be hard-pressed to ever hear the Chamber weigh in on all those oil subsidies that have done a tremendous job at keeping us hooked on artificially low gasoline prices.
“After being self-sufficient in coal for years, China has begun to import coal. This year, it will import 150 metric tons, which is double last year’s total. It may seem a molehill compared with what it burns, but that molehill is about 60% of Australia’s coal exports. Australia is the world’s largest coal exporter and growing.
“This means,” according to Richard Heinberg of the Post Carbon Institute, “if Chinese imports double again next year--not an unrealistic scenario--China will need to import more coal than Australia can currently provide. One more doubling of import demand and China will be wanting to import 600 million tons per year, about the total amount of coal exported by all exporting nations last year.” Of course, it’s not just coal that China needs. It needs oil, natural gas, uranium, you name it.
Of course, there are contrary signals too. China’s largest publicly traded steel maker has just cut prices for the first time in eight months. This is extraordinary when you consider that iron ore prices now sit 147% higher than during fiscal 2009.
I’m excited to announce my Point of Inquiry guest, for the program airing on Friday, June 18: Bill McKibben. He is author of many great books including, most recently, Eaarth: Making Life on a Tough New Planet – which is prompting a ton of discussion right now about the new world we’re going to have to inhabit for the rest of our lives (and indeed, for many generations) because of anthropogenic climate change.
Although I’ve failed to do so for the last two shows, I’m announcing this interview in plenty of time to take questions for McKibben from POI listeners. I will be interviewing Bill on Monday afternoon, the 14th, so that leaves three full days for thinking about questions you might like to hear him address on the air.
After famously stating that the threat from climate change is graver than that posed by terrorism, former government chief scientist Sir David King has this week issued another stark warning, arguing that oil supplies could peak far sooner than anticipated by politicians and businesses.
Speaking this week in his role as director of the Smith School of Enterprise and the Environment (SSEE) at the University of Oxford, King accused governments around the world of having their "heads in the sand" over the risks associated with their continued dependence on fossil fuels.
(Bloomberg) -- Oil futures for delivery in 2018 at less than $100 are “undervalued” as BP Plc’s spill in the Gulf of Mexico will raise the costs of exploration and lead to drilling restrictions, Barclays Capital said.
“Oil will be slower onstream, more expensive to produce, it will be more politicized and there will be less of it,” Barclays analysts including Paul Horsnell said in a report today. “All of those are factors that make us look at the current back of the oil curve and see it as undervalued at current levels of a shade below $100.”
(Bloomberg) -- Crude oil fell after a report showed U.S. retail sales unexpectedly dropped in May, raising doubts about a recovery in the world’s biggest economy.
Oil for July delivery declined as much as $1.38, or 1.8 percent, to $74.10 a barrel and was at $74.49 in electronic trading on the New York Mercantile Exchange as of 1:34 p.m. London time.
(Bloomberg) -- Tougher environmental standards starting in Europe next month are boosting premiums for low- sulfur fuel oil and may increase demand for less-polluting grades of crude.
(Bloomberg) -- BP Plc Chairman Carl-Henric Svanberg is being summoned to Washington for a meeting with President Barack Obama as politicians step up pressure on the company to settle damage claims and suspend the dividend.
(Bloomberg) -- U.K. Prime Minister David Cameron will talk to President Barack Obama about the oil spill in the Gulf of Mexico tomorrow after pressure mounted on the British leader to defend BP Plc against criticism in the U.S.
Government scientists said BP's leaking well may have been gushing as much as 40,000 barrels of oil a day, which is double prior estimates.
If 40,000 barrels per day has been leaking from the well, then there could be nearly 2 million barrels of oil in the Gulf of Mexico. This would put BP's estimated liability at $80 billion, based on an estimated from Goldman Sachs analysts that it will cost $40,000 per barrel for clean-up, litigation and other costs related to the spill.
British Petroleum (BP) shares plunged to a 14-year low this week on fears of political fallout.
With investors seemingly deciding to panic all at once, BP's U.S. exchange-traded ADR (the company also trades in London) tumbled 16% in one day on Wednesday. That fall cut the share price almost exactly in half, as measured from pre-oil spill highs just under $60 per share.
For us there is just one question: What took so long?
Wall Street analysts continue to believe that BP can pay for its mess in the Gulf, although their confidence level has been dinged by the company's inability to stem the spill — and the political fallout.
(Bloomberg) -- BP Plc’s oil spill may drive down Gulf Coast property values by 10 percent for at least three years, according to a forecast by CoStar Group Inc.
Losses may total $4.3 billion along the 600-mile (966- kilometer) stretch from the Louisiana bayous to Clearwater, Florida, the property-information service estimates.
The catastrophe unfolding in the Gulf of Mexico has been portrayed as a one-of-a-kind disaster, a perfect storm of bad equipment, bad planning and bad luck.
But it’s far from the only spill that’s taken place this year – or even the only spill occurring in the Gulf right now.
If Barack Obama has one foot “on BP’s throat” over the Gulf of Mexico oil spill, the other appears to be wedged firmly in his mouth.
Let’s try a little thought experiment.
Let’s imagine that it’s Jan. 21, 2009, President Barack Obama’s first full day in office. With the economy still collapsing around his ears and jobs disappearing by the hundreds of thousands, the president announces that he is unilaterally placing an immediate moratorium on the issuance of drilling permits in coastal areas, including the Gulf of Mexico.
This should catch you up on everything that's happened with the BP oil spill so far.
(Bloomberg) -- Osaka Gas Co., Japan’s second- biggest natural gas supplier, aims to spend $1.3 billion buying power plants and pipelines by 2020 to expand overseas.
The utility targets 10 acquisitions valued at 120 billion yen, and will look for opportunities in Europe, North America and Australia, Kazuo Kakehashi, the head of the energy resources and international business, said in Tokyo yesterday.
A well blowout that shot gas and water polluted with drilling fluids as high as 75 feet into the air in Pennsylvania is a vivid reminder how a new generation of gas drilling is becoming more of a presence in the Northeast.
Discussion of whether the main result will be jobs and royalty payments or environmental degradation still remains surprisingly below the radar screen in New York State, aside from the upstate communities that will probably be affected. But the issues are already a huge fact of life just across the Delaware River in Pennsylvania.
(Bloomberg) -- The Dubai Mercantile Exchange, the United Arab Emirates oil futures market, plans to introduce Oman crude-based swaps contracts to woo Asian refiners away from Dubai-linked derivatives sold in the over-the-counter market.
The exchange will offer both swaps and options this year once regulators approve them, Chief Executive Officer Thomas Leaver said in an interview in Kuala Lumpur. The new derivatives will help refiners manage their price risk based on Oman’s output of 850,000 barrels a day rather than Dubai’s 80,000 barrels a day, he said.
Originally titled The Squeeze for the less literalist U.K. market, Oil would be a good book anyway. But the April 20 explosion and sinking of BP’s offshore rig Deepwater Horizon and the subsequent uncontrolled leakage of millions of barrels of crude oil into the Gulf of Mexico have made it an important book.
In the laconic manner of a medieval annalist, Oil covers the last 20 years of history for the oil industry’s super-majors, with some attention devoted to the trading game that has grown up around them in the era of complex financial instruments. (The merely large international oil companies and the national champions created by expropriation stand offstage in Bower’s drama, darting into the scene where appropriate.) Major themes include the race for unexploited fields in post-Communist Russia and the debate over peak oil. By a stroke of fate and geography, BP was a special focus for the Brit investigator, probably best known in Canada for his unapologetically vicious 2006 book about Conrad Black.
With the release of Oil: Money, Politics, and Power in the 21st Century, investigative journalist Tom Bower gives us a glimpse of what the debacle must look like from the boardroom. As the London papers tell the story, Bower is famous in British circles for his “forensic eviscerations” of the rich, powerful, and shamelessly corrupt. But here, he digs in on the business itself—and casts doubt upon the notion that its fundamentals are likely to change any time soon. NEWSWEEK’s Katie Paul chatted with Bower about how the industry got itself into this mess, and where it might be headed next.
To date I have seen no official plans from any agency regarding what has been dubbed the “long emergency,” that is the effects of Peak Oil on our society. The UK, Australia and the USA all have task forces at the legislative and bureaucratic level but in Canada it has been left to grassroots movements like the Transition Towns and Relocalization Network to fill in the gaps. When will official plans by your agencies for the long emergency be published as we are well past the peak of conventional oil and the Deepwater Horizon disaster in the Gulf may place moratoriums on future deep water drilling, further exacerbating the price of oil and the overall costs of living for Canadians?
Michael Ruppert is a name that you’re probably not familiar with. I confess that I had never heard of him before I got the chance to watch a film that documents his views on, what could generally be called, the inevitable result of humanity’s unsustainable lifestyle. The film is called Collapse and comes out on DVD, this Tuesday, June 15.
Even if the government does see the asteroids coming, what will your government do for you? Will your favorite politician give up his room in the survival bunker? For you? Are you kidding? The bottom line is that every investor needs to prepare his or her own lifeboat.
Along those lines, the subscribers with whom I met have a stash of physical gold and silver. That’s just the beginning. They “get” Peak Oil and the decline of the dollar.
I won’t get into personal details, but there’s a reason that these particular subscribers live in a semirural area south of Pittsburgh, in the mountains, with spring water, fertile soil and plenty of time to practice their target shooting.
A major correction to world GDP is inevitable, the economist Hannes Kunz told attendees at an international forum in Colle di Val d'Elsa, Italy on Tuesday 8 June.
Kunz was among experts at Footprint Forum 2010, an international gathering of 200 scientists, economists, and business and government leaders to discuss the most urgent environmental challenges, and strategies to address them.
How the world manages the transition to a 'no-growth economy' will make the difference between whether it is a benign or a drastic correction, with per capita GDP stabilising at levels closer to those of 20 years ago, or over a hundred years ago he said.
The oil in the Gulf of Mexico continues to gush, some say even worse than before and it has been interesting to watch the notion of peak oil start to achieve more credibility in some of the discussions. To enter, in Jay Rosen's terms, the 'sphere of consensus'. Even the President has hinted at the peak oil challenge in some of his speeches (although I'm told he acknowledged it while campaigning, too). I've read a few books about peak oil - probably the most compelling to me so far was The Party's Over: Oil, War, and the Fate of Industrial Societies by Richard Heinberg. Apart from wringing my hands, wondering how to live without plastic ziploc bags, keeping a few 5-gallon bottles of water in my cellar, and staying in my relatively small house (instead of heating and cooling and paying for a McMansion), I haven't actually done a whole lot to prepare for transitioning to a post-oil society.
Over the next 20 to 25 years glasshouse nurseries have the opportunity to earn income from investing in a renewable source of power generation, such as a wind turbine. By next year, they could also get paid to switch their heating from a fossil fuel to a renewable source.
(Bloomberg) -- Japan and Jordan will start talks for a nuclear treaty this month, paving the way for Areva SA and Mitsubishi Heavy Industries Ltd. to sell reactors as the Middle Eastern country plans its first atomic power plant.
So far in the IFR Facts and Discussion series, I’ve discussed Gen III and Gen IV fuel cycles and energy densities. In later IFR FaD posts, I aim to explore some possible scenarios for future deployment of the IFR and related technologies. But before I can do this, I need to explain (and justify!), some key underlying concepts — fissile inventory (what Alex Goodwin cleverly called the nuclear ‘spark plug’ in this post on the LFTR), breeding rates, and available fissile and fertile stockpiles. But before I even do that, I should give you the ‘vision thing’.
BONN, Germany—Top negotiators at United Nations climate talks in Bonn have presented a new draft text to get closer to a possible deal to fight global warming.
(Bloomberg) -- Senate Republicans failed to block the Obama administration from using existing law to regulate greenhouse gases, although they won enough votes to damage Democratic hopes of passing a bigger pollution-reduction plan this year.
Can whiter clouds slow global warming?
A grant from Bill Gates is helping researchers explore the possibility that making clouds whiter and more reflective by spraying them with a fine seawater mist could help block the sun's rays and send them back into space.
University of Washington professor Peter D. Ward's new book, "The Flooded Earth," presents a dystopian vision of humanity's fate in the event of unchecked global warming, including a submerged Space Needle and a Seattle spread across seven islands and a peninsula, surrounded by the sea.