Oil price and economic growth get married

It used to be that when it came to the world economy, oil prices and economic growth were more like distant cousins who disliked each other rather than a happily married couple always seen nuzzling together in public. The received wisdom was that low oil prices are good for the overall economy even if they are bad for the oil industry and for countries that are heavily dependent on oil for their revenues.

That's what many believed when suggesting that even though high oil prices and an attendant oil boom had underpinned economic recovery in the United States after the 2008 financial crash, low oil prices would now somehow on balance deliver even more recovery. And, low prices would also benefit the rest of the world as well.

Nowadays, as the oil price dips into the low $40 range again and economic growth weakens simultaneously, we must re-evaluate. U.S. economic growth declined significantly after oil prices began to fall in 2014. Only last week, U.S. growth for the second quarter of 2016 came in at 1.2 percent (annualized), less than half the forecast of 2.5 percent. First quarter growth was revised down to 0.8 percent from a previous estimate of 1.1 percent. That's down significantly from a peak of 5 percent growth for the third quarter of 2014, the last quarter during which the price of oil was over $100 per barrel.

World economic growth instead of speeding up, slowed down slightly from 2.6 percent in 2014 to 2.5 percent in 2015 according to the World Bank.

Are you anti-science if you don't like GMOs?

It's all the rage to call people who oppose the cultivation of genetically engineered crops anti-science. But if science is an open enterprise, then it should welcome discussion and challenges to any prevailing idea.

We should, however, remember that in this case genetic engineering of crops is not merely a scientific enterprise; it's big business. A lot of people have a lot to lose if the public rejects genetically engineered foods, often referred to as genetically modified organisms (GMOs). We are not by any measure in the preliminary phases of this technology. We are not considering it or calmly debating it before its release. We have long since been launched into an uncontrolled mass experiment, the results of which are unknown.

Knowledge is admittedly a double-edged sword. One might argue that any scientific advance brings risks. I would agree. Understanding nuclear fission and then nuclear fusion led to the atomic bomb and then the hydrogen bomb.

More than 30 years ago millions of people across the world flocked to the nuclear freeze movement out of fear that newly elected American president Ronald Reagan would seek a nuclear buildup and a confrontation with the Soviet Union. Were these millions anti-scientific or the voice of reason?

M. King Hubbert and the future of peak oil

Almost synonymous with the term "peak oil" is M. King Hubbert, perhaps the foremost geophysicist of the 20th century, who first theorized about the eventual decline of oil production in the 1930s. Hubbert and his work have once again come into the public eye as a result of the 2008 oil price spike and the highest ever daily average prices for oil from 2011 through 2014. His life has now been chronicled by science writer Mason Inman in a new biography entitled The Oracle of Oil.

Depending upon whom you speak with, peak oil is either a catastrophe waiting to happen or a far-off concern that has already been solved or will be soon. Frequently, peak oil is referred to as a myth. What you rarely hear is that peak oil is an empirical fact having already occurred in more than two dozen oil-producing countries. Making the list are names that will surprise many including Iran, Venezuela, and Russia, three of the world's top oil exporters.

The term "peak oil" simply means that crude oil production for any field, region or country eventually reaches a peak or plateau from which it inexorably declines. Because the amount of oil in the Earth's crust is finite, it is logical to assume that one day peak oil production will occur worldwide. The concern is that we as a global society are so accustomed to rising oil production that we have built an entire world around that assumption. Will we be ready when oil production begins to decline?

To shed some light on that and other questions author Inman takes us from Hubbert's early days at the University of Chicago to his famous speech in 1956 (in which he predicted a peak in U.S. crude oil production no later than 1970) to his days in Washington, D.C. working for the U.S. Geological Survey and his fights there concerning the timing of a U.S. oil production peak.

GMO industry: The dumbest guys in the room

I am now convinced the GMO industry has managed to hire the worst public relations strategists in human history. By supporting a deeply flawed GMO labeling bill in the U.S. Congress--some would say intentionally deeply flawed--the industry is about to open a Pandora's Box of PR nightmares for years to come.

First, a little background. GMO, of course, means genetically modified organism which more properly refers to genetically engineered crops and animals. GMO industry leader Monsanto and its competitors such as Bayer, Dupont, Dow Chemical and Sygenta have all been fighting a fierce battle in the United States against labeling foodstuffs derived from genetically engineered crops. After defeating statewide labeling referendums in California, Oregon and Washington, they failed to stop the implementation of Vermont's GMO labeling law which went into effect July 1.

In desperation the companies have been trying to get the U.S. Congress to pass a nationwide labeling law--one that is considerably less stringent and also riddled with loopholes--that would pre-empt Vermont's law. Just last week the Senate approved its version of the labeling law. If the House and Senate can work out their differences, we may see such a law signed by President Obama before too long.

The industry's main complaint has been that labeling GMOs would unfairly stigmatize them in the minds of consumers. Some 64 countries already require such labeling. What concerns the industry is that increased consumer awareness could create a movement that would lead to a ban on the cultivation of GMO crops, a ban already implemented by 19 countries in Europe.

Taking a holiday break--no post this week

I am taking a break for the Independence Day holiday weekend. I expect to post again on Sunday, July 10.