Sunday, November 25, 2007

Real Wealth, Imagined Wealth, Real Hardship

(Co-written by Bru and Eric)

Our economy is run on real things and imagined things. What happens when those real things start to disappear and we admit that the imagined things are imagined?

Oil: A Real Thing

The liquid which runs the global economy is nearing $100 per barrel. A few weeks ago, the price of crude reached as high as $98.62, which, save for in the immediate aftermath of the Iranian Revolution in 1980 (and adjusted for inflation), is an all-time high.

And this isn't even the summer driving season. And prices will stay this high, at best.

There are oil shortages in Russia, China, and Africa.

British oil and gas production in the North Sea is way down. There is a global shortage of oil engineers.

To the north, Canada warns us that natural gas exports will start declining, down 30% by 2015 and that imported oil from the Alberta tar sands will be less than previously thought. To the south, Mexican oil infrastructure is crumbling and production is crashing. The Cantarell field (one of the world's largest) has peaked and is in decline. Felipe Calderon has said Mexico may be out of the oil business by 2013. I assume this means the US will no longer be able to rely on Mexico's 2 billion exported barrels of oil at that time.

Then there were the things that have nothing directly to do with physics, geology, or economics. There was the oil spill in San Francisco, which dumped 58,000 gallons of oil into the bay, killing hundreds of birds. There was the bombing of a Yemeni oil pipeline.

Even Big Oil CEOs -- from Total, to BP, to Conoco -- are hinting at peak oil. The European Commission President mentioned it. The IEA chief economist implied it. The Italian prime minister said it jeopardizes the world economy. Renowned oil man T. Boone Pickens even mentioned it to the nation on prime time TV at the recent Oklahoma State/Kansas football game.

It is affecting nearly every aspect of our industrialized way of life. The fuel-guzzling airlines are, of course, one of the canaries in the coal mine water-logged oil well. British Airways is raising ticket prices because of it. Cruise ships chug oil too; they are tacking on a fuel surcharge now. Predictably, it is pecking away at our long-distance transportation network, as diesel prices rise to record levels. Drivers are cringing (and still thinking it's just the oil companies' price-gouging).

So we turn to biofuels to save us. Biofuels are an unmitigated global disaster waiting to happen, potentially a bigger killer than even the Iraq war, George Monbiot points out. A high-ranking UN official also called biofuels a "crime against humanity". Food prices have already caused unrest in Mexico, and now West Africa.

Wealth: Where Is It Going?

China is again signaling that it may start converting its dollar denominated assets -US Treasury Bills- into other currencies. They hold well over one trillion dollars of assets, a sizable fraction which, if dumped, could wreck the value of the dollar. Though a move of this scale would hurt China, even its mention brings fear and instability into currency exchange markets.

Not only are Middle East countries discussing a concerted de-pegging of its currencies from the US Dollar, but what was supposed to be a private OPEC meeting was mistakenly broadcast to reporters. The topic of said meeting? Selling oil in non-USD currencies because of its declining value.

A column from the Asia Times brings us a slew of other economic woes including: consumer spending is down, middleman (wholesaler) spending is down, 4th quarter GDP could be flat, our deficit spending is in the half-trillion dollar range, old-school inflation rates are close to 10% (as opposed to current distorted Greenspan CPI) - or in other words, things that hint at recession.

The most comic part from the AT column above is that because of the governments use of a distorted CPI, investments are potentially losing huge sums of money. Purchasing power is vanishing into thin air because of a higher, "shadow" rate of inflation and an APY higher than the official gov't inflation rate but lower than the alternative rate. The government then collects capital gains taxes on money gobbled up by purchasing power that was never realised. Ha, ha.

Sunday, November 18, 2007

Climate Change: This Is It

"The danger is not that we will stop talking about climate change, or recognising that it presents an existential threat to humankind. The danger is that we will talk ourselves to kingdom come."
- George Monbiot

George Monbiot's fears are coming true. We're still largely just talking about climate change in the U.S. while the IPCC pleads us to cut our emissions drastically and Bangladeshis drown in a cyclone.

Talk is one important part of the unprecedented global effort and cooperation that is needed to end our emissions growth in seven years and cut them by nearly 90% by 2030, as Monbiot has suggested. For example, I just went to a talk by James Hansen, NASA climate scientist, who has with remarkable courage come forward to raise the issue, as he has been doing since 1988. It seemed like most of the people in the audience "got it" but they didn't really get it. They left the talk and drove away in their cars. Of course, the talk was at a place that was hardly accessible by anything but a car, unless you wanted to bike there (like I did).

The IPCC report that was released today leaves no more room for waffling, denying, putting aside, or merely talking.
Such impacts could include the fast melting of glaciers and species extinctions.

"Approximately 20-30% of species assessed so far are likely to be at increased risk of extinction if increases in global average temperature exceed 1.5-2.5C (relative to the 1980-1999 average)," the summary concludes.

Other potential impacts highlighted in the text include:

* between 75m and 250m people are projected to have scarcer fresh water supplies than at present
* yields from rain-fed agriculture could be halved
* food security is likely to be further compromised in Africa
* there will be widespread impacts on coral reefs (BBC)
This is the real world. It's not up to "other people" to do anything; it's up to you. Don't wait for the federal government to force you to do something, just do it. The folks in Washington seem to be waiting for more droughts and more floods and more species extinctions and more forest fires and more hurricanes before they take their thumbs out of their asses and realize that the life of the entire planet is worth more than a few political brownie points. Until they enact strong emissions caps, I consider Congress as a whole to be on the same moral level with someone who steals food aid at a refugee camp to use for an eating contest.

Something like this just cannot be allowed to happen. For the future of the planet it just cannot.

I'll give you a secret: cutting your own emissions is easier than you think. You just have to get started.

Sunday, November 11, 2007

Getting Peak Oil into the Mainstream

With the potential for the price of a barrel of oil to go above $100 very soon, I was thinking about ways that peak oil activists could help get out our message. Of course, breaking through the psychological barrier of USD 100 may well be the most helpful event, but what else? It seems that your typical news watcher pays attention to only gas prices, heating costs in winter and electricity bills - this is what hits consumers' wallets. Here are a couple ideas I've had lately on how to get Peak Oil more exposure in the MSM.

1) Dress up PO as a little rich white girl and kidnap it. When little girls go missing, people pay attention! We would have to give it a media friendly name and also get POs mom, Population Bubble to continually confront the press and make bat-shit crazy statements for months on end. If PO could capture a fraction of the investigative journalism that child abduction receives each year, it'd be on the talk/news show circuit for months.

2) Make PO famous, get it drunk and send it off from a party driving home. The rest will take care of itself. Once the reports of the DUI and accident come out in the news, everyone will want to know this things life story. Who (what) are it's parents? What kind of life did it lead, what environment did it grow up in to get to this point in it's life? Why didn't we notice the warning signs before it was too late?!

But seriously, screaming bloody Mary about rising energy prices does not do much to help our cause, because when they drop back down (as will happen in volatile markets) we are blown off as criers of wolf. I've also noticed lately on networks like CNBC that people like Matt Simmons or T. Boone Pickens are quieted, or have the subject quickly changed when they bring up ideas of supply shortages being caused by limits. When discretionary side spending companies pay you for commercial airtime - the last thing you want is someone claiming we that we are approaching limits within a finite world. How do we operate, either outside or within, this framework?