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DrumBeat: June 21, 2006
Posted by threadbot on June 21, 2006 - 9:10am
Topic: Miscellaneous
George Orwel, an oil analyst and writer for both the Oil Daily and Petroleum Intelligence Weekly, has written a book about peak oil called Black Gold. You can read an excerpt at Energy Bulletin.
I have often been reminded of a Chinese saying that basically translates into something like this: Long is not forever. In other words, everything comes to an end; it doesn't matter how long it takes. I've been covering the oil industry for a long time and I often talk with many economists about the status of the market. They are a very optimistic lot. That's good because they deal with issues of wealth creation, except that when they let unreasonable optimism color their thinking in such a sway that their only concern is the short-term financial benefit, they run the risk of losing their credibility.
"We may not like to admit it," Mr. Goodell writes, "but our shiny white iPod economy is propped up by dirty black rocks."The Times also notes that the Scent of Ballots Is in Air, and Energy Bills Are Blooming. Dick Durbin (D-IL), Dianne Feinstein (D-CA), Olympia Snowe (R-ME) and Lincoln Chafee (R-RI) are pushing the Ten-in-Ten Fuel Economy Act, which will raise the CAFE standards from 25 mpg to 35 mpg by 2017. And Congress wants the oil industry to pay royalties that error let it avoid.
Internationally:
China cuts Saudi oil imports. Their refineries are having trouble with the new high-sulfur crude. This may explain the second quarter drop in Saudi production.
In Zimbabwe, Fuel Prices Skyrocket As Supplies Dwindle. Despite the high prices, lines are long and many gas stations have run dry.
And the invisible hand, at work in the U.S.:
As gas costs rise, so does use of public transit. Ridership is surging, with low-income people most likely to give up their cars.
DuPont and BP partnering to produce biofuels. Their first product will be biobutanol, a gasoline component made out of sugar beets.
The world's largest factory for making solar power cells will be built in the Bay Area. Seed money was provided by the founders of Google.
And Bob will be happy to know that poop is a hot new trend. Yes, including "humanure."
http://www.bloomberg.com/apps/news?pid=10000103&sid=a0Uif4sdYWQY&refer=us
GM Debt Slips Further Into Junk Status
Credit rating agencies are upset with General Motors again after it unveiled changes to a 5.6 billion-dollar loan package. They say the changes put bondholders at a disadvantage.
Both Standard and Poor's and Moody's Investors Service lowered the automaker's debt deeper into junk territory. Wall Street rating agencies kicked GM and Ford's credit out of investment grade last year on worries about labor costs and slumping car sales.
The credit agencies acted after GM announced that it would offer lenders collateral, better pricing and other perks in exchange for extending the maturity of the loans.
Very sobering indeed.
-C.
I feel sorry for the workers. Once again management screws up and it's the worker who pays the price.
People should be responsible for their own retirement. However if pensions were promised they should be honored. But let's stop promising them and take some personal responsibility for a flippin change. I know it's hard when people want everyone else to give them the silver platter they never had.
(Yawn)
This is what is known as a 'straw-man' argument. Unions are simply doing what capital is doing in trying to secure the best possible deal for itself. For every 'lazy union worker' story you can trot out I can trot out 'worthless exectuive' stories. Words like 'results' and 'efficiency' doesn't seem to get talked about much when executive pay packages get discussed. Look at the correlation between executive pay and company performance. Oh, wait, there is none.
The management, however, is ultimately responsible to the shareholders who actually own the company. Workers don't make decisions on cars to produce or how marketing will work. Indeed, only the threat of a strike compells management to take worker concerns seriously.
People should be responsible for their own retirement. However if pensions were promised they should be honored. But let's stop promising them and take some personal responsibility for a flippin change.
While you may wish this to be so, reality points out that most individuals know far too little about investing to make the amount of money they need in their investment portfolios to get them through retirement. This is a well known fact. This, however, isn't what we're discussing.
I know it's hard when people want everyone else to give them the silver platter they never had.
Laughable. So, when workers make a good deal for themselves its called 'laziness' but when corporate exectuives get
golden parachutes and immense pay packages unrelated to performance that's called 'the market'. How very Orwellian.
I don't see any straws. I am not defending management. If you would actually look at the first parts of almost all these posts I admit they screwed up! You're not listening. Just as complicit as mangement has been, so is the union. It's a bed that both made and will now wallow in. Stop focusing on management for one whole second, well maybe a few more. For a human being to believe they are entitled to receive compensation for not working is backwards and scores at the basic misunderstanding of how business works. Management accepting these demands are even dumber. I don't dodge that, but seriously as a person you can't expect something for nothing. That's all I'm trying to say.
So what. Why don't people take the time to give a shit about how they're going to live 50 years from now and stop bitching that they don't get it. It's not that hard. if people put their flippin machine down and step away from the box, they might have the time to care about their future. The US doesn't save any money anyway, so what money are they going to fund ANY retirement with anyway? Oh yeah that refi money will work.
I never said a word about executive pay or "the market". If I did, please point it out since I'm not in that camp. Since you brought it up though, I'll speak on it. For one I don't disagree with you here. I'm a reasonable person and I enjoy playing moderator. I negotiate for a living. I'm not on the executive side per se, but I tend to look for discrepancies or anything that doesn't fit in an argument.
Strictly speaking from an ECON POV....there is an upside to this fat pay packages and that is it increases competition beneath them for the job. Corporate boards are the only ones who will change that and since they are populated by former execs, current ones, and generally those in power - the small shareholders have little say. I suppose the gov't could step in, but check out this article from Tim Harford as to WHY they make so much more than you and I.
http://www.forbes.com/2006/05/20/executive-compensation-tournament_cx_th_06work_0523pay.html
Because that was the deal that was made. If you pay me to do nothing and you agree to it, who is the bigger fool, you or me?
Let's turn this argument around. I am an executive. I get paid an immense amount. Company performance in fact diminishes. I demand and receive a substantial bonus. The company's future gets even dimmer. I demand, and receive once again, a golden parachute. The company folds. I go on to a similar job but before I do so I was able to pocket millions in stock options before the company tanked.
Tell me what the moral difference is between this and the above.
http://detroitvstheworld.blogspot.com/2006/06/eating-dead-horse.html
This morning's Wilmington (Delaware) News Journal reported that the DuPont Co. and BP have formed a partnership to develop, produce, and market biobutanol for gasoline blending.
The first step will be to convert an existing ethanol plant in Wissington, England to enable the production of biobutanol from sugar beets. The plant is expected to become operational in 2007 and will produce some 30,000 tons per year of biobutanol.
The article indicated that biobutanol has several advantages over ethanol, namely i) higher energy content, and therefore little or no reduction in gas mileage, and ii) does not absorb water and therefore can be blended right at the refinery and transported via pipeline.
DuPont also indicated that biobutanol can be made not only from sugar beets, but also from corn, wheat, or even straw and corn stalks.
I believe it was Robert Rapier who indicated a while back that biobutanol requires far less energy to produce because it does not require energy-intensive distillation to separate the butanol from the fermentation broth.
I think this is a very interesting development which, hopefully, might force some rethinking about the attractiveness of ethanol-from-corn and maybe slow down the ethanol-from-corn bandwagon, as least a little. (Though of course it must be recognized that the energy inputs for the growing of the crop feedstock upstream of the biobutanol process will not change one iota.)
Bio-butanol
It is potentially a much better option than ethanol, but still won't make a large dent in our oil consumption. There is just now way we can make enough of it. And, the ethanol lobby is firmly entrenched. Even if butanol is a better option, it is going to have a tough fight to displace ethanol.
RR
What use to be called cool, colorful Colorado, is currently being transformed into a desert. I fear the weather patterns and the climate have already been permanently transformed. This June was another radical departure from past temperature patterns. It used to be that several days of 90 plus weather in July was considered hot. Now June makes the old July seem cool. Combine this with a drowth of epic proportions and we may be saying bye to agriculture. I know. One region doesn't necesssarily describe the world. But the patterns here are so radically different that history, I can't help but think it means something very, very bad for the future of the planet.
Sorry to be a bit parochial here, but perhaps someone out there can feel my pain. Clinton?
The U.S. has something like 135 new coal plants in the planning stages. Bush acts like being addicted to oil is the only problem. How about being addicted to coal? Stop the insanity.
Your cut in demand will merely be consumed by others not willing to do so. This is a classic market failure in action -- all the more so because there are significant distribution issues involved.
Why should the poor cut their consumption when the rich do not?
Aluminum is very similiar. Even the servers that service this web site use amazing amounts of juice.
My wife and I live off grid on one solar panel and use less than a kilowatt hour per day; but we have no illusions that we're going to offset the industrial uses I just described.
the most recent one happened here and to a daycare center, they took the copper tubing from the air conditioner as well as some electrical wiring.
So don't lose hope or faith that things will turn out o.k. for humanity, Try to conserve. My electric bill has averaged about $35.00 a month for the last year and I use Green Mountain.
Suppose, for instance, we rely only on the price system with no major changes in policy. Who is going to get screwed here? Of course, those least able to pay. This will provoke resentment. In many places that resentment already promotes violence. Americans accept economic inequality only because of the notion that they've got a 'shot at making it big.' Peak Oil holds the potential to hurt everyone, but, more than that, change psychology such that people believe things will get worse, not better. Under such conditions will the 'poor' simply sit by, see all they've worked for slip away, while the rich are seen to be consuming as much as before?
In experiments chimpanzees who were trained to trade two tokens for a cup of fruit juice become enraged and turned violent when they saw a chimpanzee trade in two tokens and receive more than one cup of fruit juice. If a newly impoverished John Q sees Thomas Fatcat motoring around merrily in a world of increasingly scarce fuel...
Many nations have good plans addressing energy consumption, conservation and even global warming.
Japan is a conservation-driven nation (for good reason -- no FF) http://energytrends.pnl.gov/japan/ja004.htm
Poland has a plan http://www.kape.gov.pl/EN/About/
Sweeden -- cevre.cu.edu.tr/annex14/sweeden.PDF
Germans -- cevre.cu.edu.tr/annex14/sweeden.PDF and they lead the world in solar cell production
French, even with all their nuke power have a plan --http://www.pinr.com/report.php?ac=view_report&report_id=353
The Dutch have wind power and the Finns are going at the problem full blast. Norway is confronting the drastic decline of domestic production.
Are we Americans a strange lot? Would things be different if John McCain had beaten Bush in the 2000 primaries? Are we the only major industrial power not doing something about the combined oil/GW/national security/current-account deficit problem?
Stuart is betting the plateau will give us time? We may need it if Colorado is turning into a non-productive desert.
The "multi" in "multilateral" scales nicely. I pay less energy bills if everyone in my house conserves. I get lower utility rates if everyone in my region conserves. I get a better economy and national security if everyone in my nation conserves ... and of course I get a better environment if everyone on the planet conserves.
I'm starting now, with individual conservation, but I don't think it's wrong for folks to push for international agreements, etc., that will broaden the multilateral effort.
(BTW, I might spring for a high efficiency washer (after talking about it for a while and hearing my old washer get louder and louder as it ages) ... isn't it neat that something as meaningless as style and conspicuous consumption has created this big selection of front-loaders? They're even coming down in price a bit.)
We're part of larger collectives. If those collectives fail then we do too.
Jevons' Paradox assumes that your cut in demand will be sufficient to lower the price, leading to increased consumption by others. Real electricity prices, however, have been on a steady upwards climb, driven most recently by increases in natural gas prices. Given that there are additional factors that seem likely to cause continued problems on the supply side -- for example, all existing nuke licenses, accounting for 20% of current generation, are scheduled to expire between about 2010 and 2035 -- it seems likely that the trend of increasing retail electricity prices will continue. Unless your cut in demand is sufficient to reverse this trend, Jevons' Paradox shouldn't come into play.