Sunday, June 19, 2022

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.

Sunday, June 12, 2022

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.

Sunday, June 05, 2022

Sunday, May 29, 2022

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.

Sunday, May 22, 2022

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.

Sunday, May 15, 2022

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).

Sunday, May 08, 2022

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.)

Sunday, May 01, 2022

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.

Sunday, April 24, 2022

Sunday, April 17, 2022

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.

Sunday, April 10, 2022

Sunday, April 03, 2022

Easier said than done: National self-sufficiency in a changed world

In the wake of a rapidly evolving realignment of the world trading system resulting from the economic equivalent of World War III, President Joe Biden last week took the first of what are likely to be many steps toward building greater self-sufficiency for the United States.

Biden called for increasing U.S. production of key minerals used in the manufacture of electric vehicle batteries. He invoked the Defense Production Act which allows the government to support production of certain materials and goods deemed essential for national defense and even to order industry to mine minerals and make machinery including vehicles such as tanks and bombs.

For the Biden administration its first small step toward U.S. self-sufficiency consists of making companies which mine minerals key to electric vehicle batteries such as lithium, nickel, graphite, cobalt and manganese eligible for direct subsidies or purchase commitments to incentivize increased production. The applicable program (called Title III) has about $750 million to spend, not that much to rectify what is a huge deficit.

Sunday, March 27, 2022

Hoarding is suddenly in, "lean" operations are out as shortages ripple across the globe

Ukraine, a major exporter of grains and other food crops, announced soon after the Russian invasion of the country that it would ban exports of many food crops to ensure that Ukraine has enough to feed its population.

Russia, another major exporter of grain, especially wheat, curtailed its exports of wheat, rye, barley, and corn. It also curtailed sugar exports.

The list of countries banning or reducing exports of foodstuffs is now increasing so quickly that it is starting to look like a pile-up on the freeway:

  1. Argentina, a major soy exporter, has halted exports of soy oil and soy meal.
  2. Hungary has banned grain exports.
  3. Moldova has halted exports of wheat, corn and sugar.
  4. India, the world's second largest sugar producer, is contemplating capping sugar exports through the end of September. The 8-million-ton cap would effectively cut off sugar exports after May.
  5. Indonesia, the world's largest exporter of palm oil, has curtailed exports to keep local prices in check as they have risen 50 percent so far this year.
  6. Serbia will stop exporting wheat, corn, flour and cooking oil.
  7. Turkey has halted the re-export of grains, oilseeds, cooking oil and other agricultural commodities sourced from other countries that are now sitting in warehouses and were bound for other countries until the ban.
  8. Jordan has banned export or re-export of rice, sugar, powder milk, dried legumes, fodders, wheat and wheat products, flour, yellow corn, ghee and all types of vegetable oil.

Sunday, March 20, 2022

World War III is here, but it's not what we expected

Movies and books have often portrayed World War III as either the final chapter of the human epoch or as a new but primitive restart for those who survive the nuclear conflagration. We cannot know if such prophesies will ultimately come true. For now World War III appears to have started with Russia's attack on Ukraine, but without nuclear missiles so far.

Make no mistake. The battlefield for this war is worldwide; it's just that it is primarily an economic battlefield. When Russia attacked Ukraine, the other great powers did not send soldiers and tanks. Instead, they orchestrated one of the most comprehensive economic warfare schemes ever devised.

Measures included cutting Russia out of the international payments system called SWIFT, blocking Russian exports (except most commodities) and discouraging commerce of many kinds with Russia. Many countries froze accounts owned by Russia's central bank and also accounts owned by prominent wealthy Russians. Wealthy Russians targeted by sanctions also saw yachts moored outside Russian territory seized. The value of the yachts runs into the billions of dollars.

In the wake of these unprecedented sanctions, many non-Russian companies have reduced, suspended or eliminated operations in Russia. Here is a list of over 400. Not all were forced to take action because of the sanctions. But companies expected that doing business inside Russia would become extraordinarily difficult and also did not want to get on the bad side of governments around the world participating in the sanctions.

Sunday, March 13, 2022

'Rogue states' and the necessity of oil

There is nothing like a sudden decline in available oil supplies to bring out forgiveness in what is dubbed in and around Washington, D.C. as "The Blob." This term refers to an amorphous, but powerful group of think-alike U.S. foreign policy actors both inside and outside of government who have influenced every U.S. administration since the end of World War II. The main tenet of The Blob is that America knows best how to lead the world and it must do so.

The Blob seriously penalizes those whom it regards as a threat to American power and security. The Blob likes to use words such as "rogue" and "pariah" to describe those countries which get on its wrong side. (Many are admittedly run by truly odious regimes.) To get a sense of who has violated The Blob's sensibilities, one needs only to glance at the U.S. Department of Treasury website page entitled "Sanctions Programs and Country Information." On it you will find The Blob's who's who of rogue and pariah states.

With the abrupt drop in oil supplies from Russia in the wake of the Ukraine/Russia conflict, the list of rogue and pariah states is about to get shorter as the necessity of obtaining ready oil supplies trumps any concern about previous challenges to The Blob's narrative.

Sunday, March 06, 2022

Ukraine conflict may portend end to current world trading system

At the beginning of nearly every war including the current one in Ukraine, there are those who loudly declare that it will be over shortly and then business-as-usual can resume. They are rarely right. While no one can say for certain what the trajectory of the Russian-Ukrainian conflict will be, the economic warfare that is going on alongside it is very likely to destroy the current global trading system.

The last time a worldwide trading system was destroyed was just over a century ago. From the late 1800s up to the eve of World War I the dominance of the British fleet on the high seas and the reach of the British Empire created an era of stability and interconnection highly favorable to worldwide trade.

Then, World War I blew that stability and interconnection apart. Later, the Great Depression led to a global trade war that finished off the remnants of the international trading system. The world did not achieve a trading system that spanned the globe unhampered again until the end of the Cold War—which had split the world into two trading blocks for nearly 50 years.

It is unlikely that Russia will simply back down even in the face of crippling economic sanctions. Things have gone too far and the Russian leadership has staked too much on its position that Russia must have its own sphere of influence free from NATO soldiers and rockets. What the Russians have historically called "the near abroad" must not harbor threats to Russian security, they say. Think of this as Russia's Monroe Doctrine.

Sunday, February 27, 2022

The Mars obsession: Are two planets better than one to ensure human survival?

One of the rationales suggested for going to Mars is that given all the vagaries of the universe, human culture would have a better chance of surviving far into the future if humans settled on two (or more) planets. In the abstract, this statement seems axiomatic.

Before accepting this proposal, however, it might be worthwhile to ask where else we might use resources devoted to establishing a permanent human colony on Mars. First, let's examine the logic behind the "two planets" idea.

The logic is simple. If humans have established cultures on two planets, the separation between the planets will generally keep a major catastrophe including an extinction event on Earth—say, a highly lethal pandemic or the eruption of several supervolcanoes—from affecting the other planet. In the case of Mars the separation at its closest is about 34 million miles. At its farthest, the separation is 250 million miles. It is this isolation which offers protection.

So, the question arises then whether something approximating this isolation might be achieved right here on Earth. The answer is that it has already been tried, and it works. The isolation of peoples across the globe was a longstanding fact in prehistory and even in historical times until relatively recently.

Sunday, February 20, 2022

Avocado interrupted: Why having enough isn't always enough

The news that the Biden administration shut down imports of avocados from Mexico in response to threats made against U.S. safety inspectors had restaurants and consumers contemplating both higher prices and possibly no avocados at all sporadically.

By the end of the week, Mexico and the United States had resolved the situation to the delight of avocado lovers in the United States and elsewhere. But, the incident illustrates why having enough of something doesn't always translate into ready availability. One incident involving threats to inspectors brought an entire supply line to a halt.

Avocados, of course, have a limited shelf life and so must move quickly from field to consumer. It doesn't make sense to stockpile avocados as they will simply ripen and then rot if unused. And yet, the supply lines for most other things—including ones that have a long shelf life such as computer chips—have become increasingly fragile as manufacturers and retailers have practiced what is known as just-in-time (JIT) delivery. JIT means arranging delivery of what one needs just in time to use it, say, in an assembly process or to restock shelves. Essentially, it eliminates or at least dramatically reduces inventories.

Sunday, February 13, 2022

Taking a short break - no post this week

I'm taking a short break this week and expect to post again on Sunday, February 20.

Sunday, February 06, 2022

Increased U.S. natural gas exports = higher U.S. prices: Who knew?

Few people noticed when energy reporters wrote in early January that the United States had become the world's largest exporter of liquefied natural gas (LNG). Now, a group of U.S. senators has noticed and say those exports may be driving up heating and electricity costs for their constituents. In a letter to the secretary of energy, they are asking the secretary "to conduct a review of LNG exports and their impact on domestic prices and the public interest, and develop a plan to ensure natural gas remains affordable for American households."

Who knew that exporting natural gas from American gas fields would raise natural gas prices at home? Well, the natural gas industry certainly knew. In the last decade, the industry was smarting under persistent low prices as it continually overproduced gas into a flooded domestic market.

It pushed for and succeeded in relaxing rules for exports in general and for expedited approvals of new export cargoes and facilities. The U.S. Department of Energy still has de facto control over most natural gas exports. But policy in the last five years has been to assist and encourage expansion of those exports.

Sunday, January 30, 2022

Fossil fuels vs climate action: A not-so-hidden dilemma

When crossing the ocean by sea or by air, small differences in the direction you take will result in huge differences in your ultimate destination. Back in the middle of the last century, human society might have made relatively minor adjustments in its trajectory, say, in the growth of consumption of resources including energy, even perhaps deciding that these must level off at some point in the future.

We humans made no such adjustments and so we now find ourselves faced with only draconian choices. But we do not seem to understand that we've arrived at a destination far from the one we imagined in 1950. An example is the celebration in the environmental community of a recent federal court decision to invalidate oil and gas leases offered by the U.S. government on 80 million acres of the Gulf of Mexico. (It turns out that oil and gas companies only bid on 1.7 million of those acres.)

The ostensible reason for invalidating the leases was that the government did not adequately consider the effect of the leases on climate change. The government could do another evaluation and try selling the leases again. But environmental organizations would likely challenge the leases in court again.

While the effects of climate change are already severe and likely to become even more so, global human society is utterly dependent on uninterrupted flows of fossil fuels to function. And, while climate change activists continue to champion a so-called energy transition to green energy sources such as solar and wind, what they might not understand is that so far, these alternatives have been used to augment human energy consumption. They have not displaced fossil fuels at all. Nor are they likely to in any time frame that matters.

Sunday, January 23, 2022

The 'parliament of things': Redefining human

French philosopher of science Bruno Latour coined the phrase "parliament of things" in the early 1990s. He imagined the social democratic order gradually embracing the need to represent in its political deliberations the interests of the entire nonhuman world—animals and plants, rivers and oceans, mountains and deserts, in fact, the entire universe outside the human sphere.

After all, it is that world upon which we humans depend for our very existence. And, that nonhuman realm was showing signs of change even then that could threaten the continuity of human culture in the form of climate change, soil erosion, toxic pollution, species loss and myriad other challenges to the stability of the environment in which humans were enmeshed.

Fast forward 30 years and Latour explains in a 2020 lecture why the parliament of things as he originally conceived it is no longer possible. There is no longer a political space where humans can "agree to disagree," that is, where they can deliberate to find common ground and a consensus.

Sunday, January 16, 2022

Techno-utopia unravelling: Why complexity is no longer solving our problems

When we think of technology, we generally think of machines and gadgets that populate our life. For those in industry, the word may mean a process with many steps for the manufacture of a product—products that include things as complex as a computer and as simple as a potato chip.

For the ancient Greeks the word techne—from which we get technology—referred to what they called the mechanical arts—which in our day would be all of industry and commerce geared toward the practical ends of survival and for the support of other pursuits such as sports and entertainment.

While we watch our technically advanced global society founder as its denizens are once again brought low by another wave of COVID-19, we find ourselves stuck in a loop that tells us we simply need more technology. In this case, we say we need continuous vaccine booster shots. And, of course, we need everyone who hasn't already done so to receive a vaccine of some sort. While there is considerable evidence that vaccines lessen the severity of an infection and therefore reduce the likelihood of hospitalization and death, they neither prevent COVID nor prevent its transmission.

What we cannot fathom is that technology is just as often the source of problems as solutions, and that more technology often creates more problems. The technology that allows anyone with the money to fly across the ocean in less than a day is a pandemic-promoting technology. The technologies that enable transoceanic and transcontinental shipping are pandemic-promoting technologies. Even long-distance car rides allow us to spread infectious diseases to a frightening extent.

Sunday, January 09, 2022

Taking a short break - no post this week

I'm taking a short break this week and expect to post again on Sunday, January 16.

Sunday, January 02, 2022

How our miraculous transportation system turns water into brine

"Water, water, everywhere, nor any drop to drink."

When English romantic poet Samuel Taylor Coleridge published those words in 1798, there was no dense network of modern concrete and asphalt roads in Great Britain (or anywhere else) and there were no automobiles or trucks to ride on them. And so, of course, there was no salting of roads in winter.

The excerpt quoted above is from Coleridge's famous poem, "The Rime of the Ancient Mariner," and refers to the mariner's desperate desire for drinkable water while floating on the ocean.

We as a society are inching closer each year to bringing the ancient mariner's predicament on land because of our practice of salting roads in winter to make them safer for driving. The amount of salt we use for this purpose in the United States has gone from 0.15 metric tons per year in the 1940s to 18 million metric tons annually as of 2017.

The result has been dangerously escalating salt concentrations in rivers, streams, lakes and ponds. Some urban bodies of water exceed the U.S. Environmental Protection Agency's standard for protecting aquatic life by 20 to 30 times. Humans, of course, aren't aquatic life, but the trend in the salinization of surface water is troubling given the important role those waters play in water supplies around the country and the world.