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.

Brexit and the energy equation

The fretting in the financial markets after Great Britain's voters narrowly decided to leave the European Union (EU), a move dubbed Brexit, was less about immediate effects--there aren't any since it would take Britain up to two years to withdraw--and more about a foreboding that other countries will want out, too.

In addition, some think it likely that Scottish independence will once again be on the agenda. Scots were heavily in favor of remaining in the EU.

Centrifugal political forces are bad for business since they spell uncertainty and ultimately disruption if they come to fruition as they did in Britain regarding the EU. And, Britain, of course, isn't the only country in Europe facing breakaway movements. The people of Spain's Catalonia region have for some time sought a referendum on independence from Spain. Only last year Catalan separatists won a majority in the regional government. The movement cites cultural and linguistic reasons for independent statehood, reasons that could be asserted by many groups across Europe and lead to more instability.

The larger question is why there is building discontent with global economic and political integration not only in Europe, but also in the United States as evidenced by the candidacies of Donald Trump and Bernie Sanders.

Disconnect: Congressional hawks hate sustainability, but love military that seeks it

Recently, I toured a U.S Navy mine sweeper and destroyer during Fleet Week. Just before the tour entrance line a tent with exhibits caught my attention. On the first table were a set of small bottles containing various kinds of liquid fuels, a sampling meant to highlight the biofuels now being developed and used by the Navy. At the second table I was greeted by a Navy public relations specialist who handed me a quarterly magazine devoted exclusively to the Navy's energy and environmental initiatives.

The U.S. Navy isn't the only service seeking to make itself less dependent on fossil fuels and friendlier to the environment. The U.S. Department of Defense (DOD) has committed itself to more sustainable practices and alternative fuels across all services. The reason: The DOD takes climate change and fossil fuel dependence as serious risks to the nation's security and to the U.S. military's own ability to fight and protect the nation.

Why does the U.S. military establishment take these threats seriously and act on them in such a thoroughgoing fashion while the military's strongest congressional supporters are the most ardent opponents of sustainable practices?

Using the hawkish Center for Security Policy's (CSP) 2013-2014 congressional scorecard as a proxy for devotion to all things military, we find 21 so-called "champions" of national security in the U.S. House and Senate who voted for all items favored by the CSP during the session. Among those 21 legislators, nine had a 0 percent rating from the League of Conservation Voters for 2014, four had a 3 percent rating, four had a 6 percent rating, one had 20 percent rating, one had a 60 percent rating, and two were not rated.

Can the world go all-electric?

Recently, word leaked out that Norway may ban the sale of diesel- and gasoline-powered vehicles by 2025. The move toward electric vehicles is part of a dream shared by those concerned about climate change and about fossil fuel depletion (especially oil depletion), namely, to turn the world into one big all-electric paradise by running everything we can on electricity.

Theoretically, this is possible, but getting there won't be easy. First, such a transition will take time. In the Norwegian example cited above, the transition to an all-electric private car fleet would take about 15 years based on Norwegian new private car registrations in 2015 and the current total number of registered private cars.

But the ban wouldn't take effect until 2025. While Norwegian electric car registrations are rising, so are total car registrations. Even if we generously assume that the rise in electric car registrations between now and 2025 will shave five years off the transition, that still means Norway won't achieve an all-electric private automobile fleet until 2035. And, Norway is already a leader in the move toward all-electric transportation. Other countries lag far behind.

The Norwegian example points out a second difficulty in the transition to an all-electric world. Norway gets 95.9 percent of its electricity from hydroelectric dams. It gets another 1.6 percent from wind turbines. Only 2.5 percent of its electricity comes from thermal power plants, the kind that burn fossil fuels such as coal and natural gas and that provide 66 percent of the world's electricity.

Taking a short break - no post this week

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

The faux insurgency of the climate change deniers and the need for closure

Climate change deniers like to style themselves as latter-day Copernicuses and Galileos, lone visionaries bucking the established wisdom of the ages embodied back then in the teachings of the Catholic Church.

There is a certain appeal to imagining oneself as isolated and embattled but unbowed. The analogy, however, is specious on its face. For neither Copernicus nor Galileo had giant international oil and coal companies supporting them with tens of millions of dollars of annual public relations expenditures and scores of fake think tanks which would have provided them comfortable and profitable sinecures while shielding them from the attacks of the church.

No, the climate change deniers actually work for the established church of our age, wealthy corporate interests opposed to doing anything to mitigate the ongoing carnage of climate change--the very interests that continue to have a stranglehold on the legislative bodies of the world to such an extent that relatively little has actually been done to address climate. The most compelling evidence is the steady march upward of atmospheric carbon dioxide levels measured at the world's best known measuring station, the Mauna Loa Observatory.

To hear the deniers one would think that we are already groaning under the weight of carbon taxes across the globe. The reality is that only a handful of countries and jurisdictions have bothered with such taxes, and one of them, Australia, repealed its tax. Yes, yes, there are cap-and-trade emissions schemes in the European Union, northeastern United States, California and Quebec. None of these jurisdictions has collapsed economically as a result. In fact, all are becoming leaders in a technological revolution that is moving us away from dependence on finite, climate-changing fossil fuels.