Shale oil becomes shale fail (and a nice subsidy for consumers)

I'm tempted to say the following to the writers of two recent pieces (here and here) outlining the continuing negative free cash flow of companies fracking for oil in America: "Tell me something I don't already know."

But apparently their message (which has been true for years) needs to be repeated. This is because investors can't seem to understand the significance of what those two pieces make abundantly clear: The shale oil industry in the United States is using investor money to subsidize oil consumers and to line the pockets of top management with no long-term plan to build value.

There is no other conclusion to draw from the fact that free cash flow continues to be wildly negative for those companies most deeply dependent on U.S. shale oil deposits. For those to whom "free cash flow" is a new term, let me explain: It is operating cash flow (that is, cash generated from operations meaning the sale of oil and related products) minus capital expenditures. If this number remains negative for too long for a company or an industry, it's an indication that something is very wrong.

The risks of synthetic biology in the information society

Knowledge is power. The instructions for making viruses from synthetic strands of DNA are on the internet. And, the strands themselves are available for purchase online. It's called synthetic biology. Right now it's not easy to get the strands you need to make dangerous viruses or to put them together. But it is becoming easier.

That's the issue that exploded concerning the synthetic construction of an thought-to-be extinct horsepox virus. The problem is that the instructions for making horsepox are distressingly useful for constructing a smallpox virus, a virus responsible for hundreds of millions of deaths in the 20th century alone until its eradication. Smallpox, you'll recall, was eradicated through a successful worldwide effort led by the World Health Organization. After 1980 it was no longer necessary to vaccinate people against the disease and very few people alive today have been vaccinated against it.

Not surprisingly, an outbreak resulting from, say, the inadvertent or possibly intentional release of a synthetic smallpox virus from a lab could prove devastating worldwide.

Climate catastrophe: The median is NOT the message

Anyone who has followed the climate change issue in the last 30 years knows that official forecasts provided by the Intergovernmental Panel on Climate Change (IPCC) are quickly upended by developments and have often been obsolete before they were issued.

The latest report from the IPCC is the first, however, to abandon the measured tone of its previous ones and foretell what it considers a climate catastrophe for human civilization unless the world makes an abrupt U-turn and begins dramatic reductions in greenhouse gas emissions almost immediately.

And yet, even this forecast is probably too conservative in its pronouncements. That's according to Michael Mann, a climate researcher whose famous "hockey stick" graph has been central to understanding the rise in global temperatures and has been replicated again and again using other measures of historical worldwide temperatures.

Taking a short break - No post this week

I'm taking a short break from posting this week. I expect to post again on Sunday, October 14.