All energy is local: The emerging physical delivery problem for petroleum fuels

Even as U.S. diesel and gasoline prices soared in the wake of the U.S.-Israeli war with Iran, both fuels remained widely available, just more expensive. Now, a few station owners are saying they are out of diesel though this appears to be an isolated problem for the moment. However, if the diesel and gasoline supply situation does not change, more and more stations may find themselves without one or both of these two crucial motor fuels.

Proximity to supply is starting to matter more and more. For example, in Texas (where many refineries and oil fields are located), the statewide average for diesel as of September 20 was $5.9779 per gallon. Regular gasoline was $3.9480 per gallon. In California (where refineries and oil fields are not as plentiful and air pollution rules complicate refining requirements) the statewide average for diesel was $8.4244 per gallon, while regular gasoline was $6.1533 per gallon.

And, it's not just ground transportation that is being affected, of course. Several airlines have announced they are cutting back on flights as a response to higher aviation fuel prices.

Pipeline "solution" to Strait of Hormuz closure gone in a flash

The East-West Pipeline in Saudi Arabia which delivers oil to the shores of the Red Sea has been an important workaround to the choking of tanker traffic by Iran in the Strait of Hormuz, the only exit for tankers from the Persian Gulf to the open sea. The Saudi government claims that 7 million barrels per day (mbpd) of crude oil can flow westward through the pipeline to the port of Yanbu though the current exports are thought to be lower (perhaps 5 mbpd) than that given infrastructure restraints.

But, now that pipeline has been bombed and put out of service. The Saudis are saying that the pipeline has been closed "as a precautionary measure." But that statement seems to underplay what has happened. Satellite images show that the attacks damaged at least two pumping stations. Repairing or replacing these stations may be more involved than simply replacing a section of damaged pipeline since the pipeline sits mostly above ground. And, of course, once repaired the pipeline could simply be attacked again. The 1200-mile length of the pipeline is not easily defended.

The oil-starved importers of the world have been gushing about how much oil has been getting out of the Persian Gulf right under the noses of a threatening Iranian Revolutionary Guard Corp (IRGC) who are standing watch with missiles and drones on the shores of the Strait of Hormuz. But even these surreptitious transits have carried volumes far below those transported before the war began, only 7 mbpd versus 20 mbpd. The East-West Pipeline became a crucial source of oil to the world after the Iranians closed the Strait of Hormuz.

Strategic metals literally going up in smoke

I've been writing for more than a decade and a half about a broad category of metals often nowadays dubbed "strategic" because they are crucial to high-tech applications such as solar photovoltaic panels, wind turbines, electric vehicles, flat screens, semiconductors, batteries, optics, aerospace and a wide array of military applications including night vision, radar systems, communications satellites, radiation shielding, vehicle armor, submarine hulls, precision weaponry, and on and on.

It is the military applications which interest me here because much of the volume of strategic minerals in most civilian devices can be recycled when devices containing them are junked. But, of course, in warfare the whole point in many cases is to just blow stuff up. And, once you do that to something containing any of the strategic minerals important for military applications, there is no chance to recover the metals and use them again.

That's why this headline caught my eye: "Ukraine's Drone Warfare Devouring 4% Of Global Germanium Demand As China Chokes Supplies." I can't verify whether this claim is true, but some nonzero amount of germanium is being consumed by drone warfare, not just in the Ukraine-Russia war, but also in the Iran war with the United States and Israel. It's important to note that germanium has many civilian applications such as semiconductors, solar energy, autonomous vehicles, scientific instruments, battery  technology and a variety of health care applications.

Conflict combines with climate change to push food supply down and prices up

Two weeks ago I wrote about how conflict and climate change are combining to impede navigation across the globe. That same combination is also pushing food supply down and prices up worldwide. Climate change is no longer coming; it's here and we're mixing it with our human folly in war in ways that make matters worse.

A single headline can only tell a fragment of the story. For example, "Britain faces food shortages within months, warn farmers," one article blares. Why? The writer explains: "The worst harvest since 1984 and a spike in livestock deaths have left many farmers without the cash needed to sow their fields for the coming year." Contemplate that for a moment. Many farmers in Great Britain may not even be able to afford to plant crops next season. As of now, a decision to plant would almost certainly cause farmers to lose money.

But we need to dig deeper for the cause. One farm leader explained: "Rain has come too late for lost harvests and slashed yields, while livestock farmers are dealing with the worst bluetongue outbreak [a disease in sheep] to reach our shores." So we now know that climate change is likely involved as warming temperatures tend to increase both droughts and floods depending on where you are. And, there is an increase in animal disease which can be traced to the warmer temperatures: "Bluetongue, a disease that causes fertility problems and deaths in sheep, has been particularly bad this year because high temperatures have led to a larger-than-normal number of midges, which spread the virus."

AI destroys transgenerational memory by tearing apart rare books to scan them

When I read that artificial intelligence (AI) companies are destroying rare books as they feed their contents into what are called their large language models (LLMs) which power their AI applications, I was reminded of a conversation I had many years ago that seems to illustrate what is at stake. (For the record, the companies cut off the spine to give them better access to all the pages and then after scanning the pages, dispose of those as well.)

Regarding that conversation, the town where I used to live decided to give its public library a thorough rework. After it was completed, I was lamenting the aesthetic result during a conversation with someone who was a local hero for having meticulously restored historic homes and other buildings in and near the downtown area, restorations that helped propel a revival in the downtown and adjacent neighborhoods.

I observed that the exterior facing of the renovated library changed color and materials at strange intervals. The result gave the impression that the contractor more than once had run out of one type of facing and then gone to the hardware store and picked up whatever was on sale to continue the job, but still didn't have enough to finish the job and so repeated the process. My take was that the cartoonish modernism of the building exterior would quickly move beyond its sell-by date.

Military conflicts combine with climate constraints to impede navigation across the globe

Since early March a previously obscure waterway between Iran and Oman that very few people could name has become the subject of daily reporting around the world after Iran closed it as a response to the attack on Iran by the United States and Israel. The Strait of Hormuz, which remains closed to most ships, is now known around the world as the transit point for 20 percent of the world's oil and high percentages of key materials including fertilizers such as ammonia (23 percent), urea (34 percent) and phosphate (20 percent), helium (30 percent), and sulfur (24 percent), all of which are derived from or are co-products of oil or natural gas except phosphate.

On the other side of the Arabian peninsula, a long-festering conflict between Ansar Allah (which controls part of Yemen) and Saudi Arabia has escalated. Not surprisingly, Ansar Allah, also known as the Houthis, have resorted to a tactic used previously in the conflict. They have closed the Bab el-Mandeb Strait near their the territory to Saudi vessels.

The strait connects Red Sea shippers with ocean-going routes to Asia. This includes ships coming through the Suez Canal on the northern end of the Red Sea. The Houthis say that commercial shippers not serving Saudi Arabia may continue using the strait, but many have chosen to avoid it as the Houthis attack Saudi ships. In practice this means primarily a prohibition on Saudi oil tankers which carry Saudi Arabia's main export. For now, the Saudi ships are taking a trip around Africa to reach Asia despite the added costs. But the Houthis have shown they can hit Saudi ports on the Red Sea and could escalate to shut down even this traffic.

As U.S. oil and refined product exports soar, will the Trump administration impose an export ban?

The U.S. oil industry got a scare last week. News reports say that the Trump administration may be considering an export ban on crude oil and refined petroleum products such as gasoline and diesel in order to bring those prices down—prices which have been elevated considerably by the reduction of oil supplies worldwide in the wake of the Iran war. But, a Trump administration spokesperson said the administration has no plans to ban exports of oil or natural gas products.

It's important to note that there is an old adage in Washington, D.C.: "Nothing is true until it is officially denied." The administration has probably discussed such a ban. Whether it will implement one is the question. With exports of distillate fuels (which include diesel and fuel oil) hitting the highest on record and gasoline exports bouncing between about 750,000 and 1 million barrels per day, American consumers may be wondering why the administration doesn't act now.

The answer is complex as I detailed in my piece in May entitled "Will the U. S. curtail oil exports as fuel prices rise?" But the short version is two-fold:

The Iran war is a monkey trap for the United States

A monkey trap offers a reward such as food that when grasped makes the hand too large to withdraw from the hole in the trap giving access to that food. Unless the monkey lets go, the animal is stuck. Now, the obvious choice when danger arrives is to simply let go and run. But, supposedly, monkeys won't let go even as human hunters approach and then club them to death.

The war with Iran has become the Trump administration's monkey trap; potential victory over Iran is the prize in the trap. Strangely, the only prize now available is something that was already available before the war started: freedom of transit through the Strait of Hormuz. But now that Iran has seized control of the strait and effectively closed it to unfriendly traffic, that seizure has become the most important leverage Iran has over the United States and its allies.

As long as the war continues, Iran says there will be no shipments of oil, natural gas, petrochemicals, helium, fertilizers and other key commodities except for its own and a few select shipments from friends of the regime. Since these shipments make up substantial fractions of the world's supplies, closure of the strait has sent prices of these products skyward with shortages already appearing in many places across the globe.

Does Elon Musk think AI is socialist?

Our tech overlords tell us that artificial intelligence (AI) will soon create a world of abundance while solving our major problems such as climate change. Just so you know who I'm talking about, I have previously defined our tech overlords as "a grab bag technology companies, technology scientists and inventors, and technology investors and journalists who have bewitched the modern world through inventions that speed up our daily lives without necessarily making them better."

In a recent interview with The Economist magazine, tech overlord-in-chief Elon Musk explained that "[i]f you have vast numbers of robots with vast amounts of digital intelligence, you have a sort of a quasi-infinite economy." In such an economy, "anyone can have anything they think of." He added that "money won't matter in 2036" because everyone will have a high income without working. This is a Star Trek version of the future, he explained.

Musk's views exemplify the tech industry fantasy of a push-button, voice-activated future world of abundance portrayed in the many Star Trek television series and movies. Any serious viewer of the series and movies knows that in the Star Trek future, poverty has been eliminated, people do not need money and in fact, everything you want or need is available to you.

Taking a break - no post this week

I am taking a break this week and plan to post again on Sunday, July 26.