Oops! U.S. oil and gas exports fuel domestic price rise

The U.S. oil and natural gas industry long fought for and in the last decade finally won release from federal restrictions that limited exports. The ostensible reason was that because of the so-called "shale revolution" in the country's oil and gas fields, the United States would have plenty of oil and gas to spare for export.

The real reason behind the push was that the oil and gas industry wanted what almost every other industry in American already had: The right to sell their products to the highest bidders no matter where they lived on the globe.

This made it almost certain that as U.S. prices rose to match world prices, U.S. consumers would feel the pain. And, since energy prices affect everyone who votes, they are always politically consequential.

So, it is unsurprising that with U.S. regular gasoline prices over $5 per gallon President Joe Biden lashed out at U.S. oil companies—which are having one of their best years ever—saying they need to increase production of refined oil products. The companies have responded that their refineries are running at close to maximum capacity and so there is not much they can do in the short run.

Gene editing: You can't edit behavior because...

Scientists thought they could make hamsters more cooperative by editing out a gene for a receptor that, when activated by a particular hormone hamsters produce, causes more aggression. Essentially, they made the hamsters immune to the aggression-promoting hormone expecting the hamsters to become more cooperative.

But just the opposite happened. Both male and female hamsters with the altered gene became more aggressive—much more aggressive.

There are several problems with the reductionist thinking that resulted in this experiment. First, behavior is exceedingly complex. We describe and define it using words which have multiple and ambiguous meanings. Those words need to be understood in a larger context. And, even when they are, those words still only point to meaning in our environment and inner experience. They are not the thing itself.

Taking a short break - no post this week

I'm taking a short break this week and expect to post again on Sunday, June 12.

Climate change, energy, and an unstable grid: The mainstream belatedly gets the connections

Memorial Day marks the unofficial beginning of summer in the United States as the temperate breezes of spring give way to an enveloping heat that has become more and more intense each year due to climate change. This summer forecasters are expecting two big things: deadly heat and electricity outages. Mainstream news coverage is now explaining why these are inextricably intertwined, a relatively new development in such coverage. And, it turns out that the recent blistering record heatwave in India and Pakistan is but a foretaste of our future.

Those of us who have covered climate change in the last two decades believed that by the time such connections became obvious and noted by mainstream outlets, the world would be so far along in the process of global warming that stability-challenging events such as grid failures would become normal.

That's because of the lag time between when we introduce greenhouse gases into the atmosphere and when we experience the warming caused by them is between 25 and 50 years. This is due to what's called the thermal inertia of the oceans which means more or less that the oceans take time to warm (usually decades). Even if we were to take drastic action now that stopped all further emissions of greenhouse gases, the world would be in for several more decades of rising temperatures. But, of course, we as a global society are instead pursuing business as usual.

Helium: Longtime 'canary in the coal mine' signals more trouble

Coal miners for much of the last century—until the introduction of modern monitoring devices in the 1980s—brought canaries into mines. They did so because these birds are extraordinarily susceptible to the presence of carbon monoxide, a deadly, odorless gas the build-up of which continually threatens death to coal miners. When the canaries stopped singing, miners knew something was wrong and that it was time to evacuate quickly.

Today, helium (the gaseous element, not the cryptocurrency) is in the headlines because there is an acute shortage. I first called attention to a coming helium shortage back in 2009 with a piece entitled "Let's party 'til the helium's gone." It appears that that is precisely what global society has done in the 13 years since.

The story of helium is a cautionary tale for it has provided a canary-like signal for many years that all was not well with our way life. I once more wrote about mounting troubles in the helium market in 2013 and again in 2019. For each and every resource, we as a society have assumed that we will always find the substitutes we need in the quantities we require at the prices we can afford by the time we need them. We are now testing that belief with regard to helium and other materials such as certain rare earth elements which are used in a wide variety of modern technologies such as consumer and military electronics and alternative energy equipment.

Just a hint from the mainstream that limits precipitate rising oil prices

Last week a Bloomberg writer at the very end of an article explained that the "only solution" to high gasoline and diesel prices is recession. While I would not accuse the writer of advocating degrowth—this would be too radical for a mainstream business publication—his analysis points to a key and obvious cause of today's high prices for oil and other commodities: There isn't enough of them to go around.

There's an old saying in the oil industry that the solution to high prices is high prices. The logic is that high prices will do two things: 1) Reduce demand as those who cannot afford oil products at high prices will cut back and 2) incentivize more exploration and production as companies seek to increase production to take advantage of high prices.

The big question today is whether the second mechanism can actually ramp up oil production enough to bring down prices. In a recent survey a large number of oil executives said their production plans do not depend on current prices. Many cited the desire of investors in publicly traded companies to receive larger dividends and benefit from the corporate buyback of shares (which tends to increase the stock prices as fewer shares are available for trading).

Decentralization, abortion and the choice of where to live

The world is becoming less connected. And, it is becoming less centralized. This has both political and social implications and relates to the newly erupting fight over abortion in the United States which I will come back to later. In short, in a decentralizing world, where you live will matter more, a lot more.

Overarching supranational institutions such as the World Trade Organization, the World Bank, and the International Monetary Fund—long focused on integrating the world into one large economy and increasingly one common commercial culture—are now seemingly less relevant than choosing sides in the Russia/Ukraine conflict or choosing no side at all (which is just a third grouping).

Many countries are now frantically trying to make themselves more self-sufficient in food and energy, the supply of which have been seriously disrupted and curtailed because of the war between Russia and Ukraine and the far-reaching economic sanctions which followed. (See my previous pieces here and here.)

Meanwhile elsewhere on planet Earth...drought and heat get a lot worse

You can be forgiven for thinking that the most important thing happening now is the war between Ukraine and Russia. After all, the Russian government through its foreign minister and its mouthpieces in the media has threatened to use nuclear weapons to win the war in Ukraine. Whether you think Russia is bluffing or not, it's all very scary.

Meanwhile, elsewhere on planet Earth our perilous ecological situation is spiraling from bad to worse. That this is the big story and has been for many decades has escaped the media but does occasionally get their attention when the perilous consequences cannot be ignored. Climate change and the resulting drought and heat that are now our constant companions are currently showing up in the news cycle. To wit:

1. The water level in Lake Mead (formed by Hoover Dam to provide water to Arizona, California and Nevada) has declined to historic lows. The original intake valves that used to supply water to Las Vegas and environs are now exposed for the first time ever. (Other deeper ones were built in anticipation of this day. See my coverage of the now 23-year-old drought when it was only 10 years old.)


2. The Metropolitan Water District of Southern California for the first time is limiting water use for outdoor watering. The order affects about 6 million residents. The District is also calling on users in the entire district of 19 million people to lower water use by 30 percent.

Taking a short break - no post this week

I'm taking a short break this week and expect to post again on Sunday, May 1.

Resource limits and our strange game of musical chairs

With a wide range of commodities in limited supply, various regions of the world are now  behaving as if they are engaged in simultaneous games of musical chairs when it comes to commodity shortages.

The games differ by commodity and by region, but they all share one characteristic: As in a game of musical chairs, someone will have to go without. And, as in a game of musical chairs, available supplies are shrinking (as represented by the removal of chairs).

An interesting twist on this game is that now some chairs are being transferred from one game to another. For example, the Biden administration has declared that U.S. liquefied natural gas (LNG) exports to Europe will be stepped up in order to displace natural gas from Russia—which has become a suspect source due to the conflict between Russia and Ukraine and the broad economic sanctions against Russia. The gas still flows for now. But will Russia use a gas cutoff as a weapon? That is a question agitating all of Europe.