Faced with increasing political obstacles to oil and natural gas exploration in many countries around the world, the oil industry is focusing again on the United States. The industry is using the deceitful promise of energy independence to cajole Americans and their policymakers into relaxing environmental regulations and opening protected public lands and restricted offshore areas to drilling....Read more.
Sunday, May 06, 2012
The Oil Industry's Deceitful Promise of American Energy Independence
In lieu of my regular weekly post I am linking to my latest column on Scitizen entitled "The Oil Industry's Deceitful Promise of American Energy Independence." Here is the teaser:
Sunday, April 29, 2012
Will GMO labeling have its day in court?
It appears as if organizers have gathered enough signatures to put an initiative on the November ballot in California which would require the labeling of genetically engineered foods. Of all the efforts to date to mandate such labeling, this initiative seems most likely to succeed in a state known for its health consciousness and its widespread organic agriculture (which doesn't permit genetically engineered crops).
But passage of the California initiative would almost certainly lead to a court battle as major producers of genetically engineered seeds seek to have the new law invalidated. We know this because the Monsanto Company, the largest purveyor of genetically modified seeds, threatened the state of Vermont with a lawsuit should its legislature pass a genetically modified organism (GMO) labeling bill. Though passed 9 to 1 by Vermont's House Agriculture Committee, the bill is likely to die because the legislature goes out of session shortly, too soon, it seems, for the full House to act. Next door Connecticut is moving a similar bill, the fate of which remains open.
Labeling is an existential issue for the GMO industry. Where labeling exists such as in Europe, there is virtually no demand for genetically modified foods. Consumers do not want them. Why? Because the industry cannot demonstrate any benefits for the consumer. The only benefits--large profits drained from farmers locked into the treadmill of buying new GMO seed every year--accrue to the companies. With no demonstrated benefits and lots of questions surrounding the safety of GMO foods, consumers are choosing to play it safe wherever they can knowingly make choices through labeling. It turns out that GMO labeling would be the equivalent of putting a skull and crossbones on a food package or piece of produce, and the companies know it.
That's why in any lawsuit aimed at striking down a GMO labeling law, the companies will seek to limit their argument to a procedural one, namely, that food labeling is the purview of the federal government. (They may also say such a labeling requirement violates their free speech rights. But I doubt if this will fly since governments, state and federal, already enforce many labeling requirements on food.)
The GMO companies will want to focus on the procedural issue of federal supremacy in food labeling for two reasons. First, those companies have a stranglehold on the U.S. Congress and know that it will never pass any GMO labeling requirements. Second, the companies desperately want to avoid any discussion of the substantive issue of "substantial equivalence," the notion, coined by the U.S. Food and Drug Administration (FDA), that GMO crops are basically the same as conventional crops and therefore do not require any special testing for safety.
This is where it gets interesting because it is precisely here where the anti-GMO advocates find themselves on firmer ground. In any legal challenge to GMO labeling laws, those defending the laws could use a legal process called discovery to unearth documents and question officials and scientists at the various companies. What unreleased feeding studies might the defenders find in company files that would contradict the industry's claims? What failed research might they uncover that would shed light on the dangers of GMOs? In addition, there would be no reason why the defenders couldn't also call independent experts to testify about why GMOs really are different from conventional plants and animals, and therefore warrant a label. Who knows? We might even be treated to juicy testimony from an industry whistleblower about falsified test results. This is just the kind of high-profile discussion the GMO industry wants to avoid.
Here is a preview of what we might expect if such testimony were allowed:
When the question of GMO crops first came up at the FDA, the agency's scientists concluded that GMOs were, in fact, different enough that they should be tested in the way that new drugs are tested before approval. These scientists were overruled by the Clinton administration, and the widespread introduction of GMO ingredients into food began.
Since then, independent research has been hard to come by. The GMO companies fund much of the world's agricultural research and therefore can threaten to withdraw support from an institution whenever research--even that funded from other sources--might threaten the industry. In addition, the companies deny most researchers--read: those who can't be counted on to toe the party line--access to so-called "isogenic lines (conventional and Roundup Ready plant lines that are otherwise genetically identical)." Doing so would allow scientists to test whether the claimed benefits of the genetic alterations are significant or could possibly create drawbacks or dangers.
Despite this there is a growing body of evidence to suggest that, at the very least, GMO crops should undergo extensive safety testing before being released for use. And, there is further evidence that associated practices such as the profligate use of the pesticide glyphosate--known commercially as Monsanto's Ready Roundup used on genetically altered Ready Roundup tolerant plants to make chemical weeding easy--may be changing soil flora so that crops are much more susceptible to "sudden death syndrome," a fungal disease that rots the roots of plants. In addition, the pesticide may not be breaking down in the environment the way its maker says it does. Instead, it appears to linger and build up in the soil. Because glyphosate ties of up nutrients in the soil, it makes crops grown on land saturated with the pesticide less nutritious and more subject to the buildup of toxins.
It is difficult to say who would prevail in a court battle over GMO labeling, one that would almost certainly go to the Supreme Court. Although the current right-wing justices have shown deference to states in most of their opinions, they have also abandon principle whenever sticking to it would inconvenience large corporations--their love of which they announced most prominently in the so-called Citizens United case which has opened the floodgates to unlimited corporate money in politics.
When much of the world is essentially off limits to you because of labeling, when in the very large U.S. market more than 90 percent of the people say they want labeling, when a Google search for the industry's leading company, Monsanto, reveals "evil" as its first suggested additional search term, the only way you can win is to cheat. Buy state legislators, buy Congress, buy the courts (if you can), stack the government with former employees, lie to the public again and again.
The one thing that the GMO industry does not want is a discussion in the clear light of day of what it is doing and what it is suppressing. And, that is what the upcoming battle over the California GMO labeling initiative and, if it passes, the subsequent court case are going to provide.
P.S. One of the things the GMO lobby is going to claim in the California labeling fight is that requiring labels in just one state will drive up food costs. They will argue that this is because of the added costs of two labels for each product containing GMO ingredients and the costs of segregating properly labeled products bound for California from those going to the rest of the country. I have a simple fix for this: Put the California-compliant label on all products containing GMOs regardless of destination!
I'm preparing to be astonished should the food companies follow my suggestion.
But passage of the California initiative would almost certainly lead to a court battle as major producers of genetically engineered seeds seek to have the new law invalidated. We know this because the Monsanto Company, the largest purveyor of genetically modified seeds, threatened the state of Vermont with a lawsuit should its legislature pass a genetically modified organism (GMO) labeling bill. Though passed 9 to 1 by Vermont's House Agriculture Committee, the bill is likely to die because the legislature goes out of session shortly, too soon, it seems, for the full House to act. Next door Connecticut is moving a similar bill, the fate of which remains open.
Labeling is an existential issue for the GMO industry. Where labeling exists such as in Europe, there is virtually no demand for genetically modified foods. Consumers do not want them. Why? Because the industry cannot demonstrate any benefits for the consumer. The only benefits--large profits drained from farmers locked into the treadmill of buying new GMO seed every year--accrue to the companies. With no demonstrated benefits and lots of questions surrounding the safety of GMO foods, consumers are choosing to play it safe wherever they can knowingly make choices through labeling. It turns out that GMO labeling would be the equivalent of putting a skull and crossbones on a food package or piece of produce, and the companies know it.
That's why in any lawsuit aimed at striking down a GMO labeling law, the companies will seek to limit their argument to a procedural one, namely, that food labeling is the purview of the federal government. (They may also say such a labeling requirement violates their free speech rights. But I doubt if this will fly since governments, state and federal, already enforce many labeling requirements on food.)
The GMO companies will want to focus on the procedural issue of federal supremacy in food labeling for two reasons. First, those companies have a stranglehold on the U.S. Congress and know that it will never pass any GMO labeling requirements. Second, the companies desperately want to avoid any discussion of the substantive issue of "substantial equivalence," the notion, coined by the U.S. Food and Drug Administration (FDA), that GMO crops are basically the same as conventional crops and therefore do not require any special testing for safety.
This is where it gets interesting because it is precisely here where the anti-GMO advocates find themselves on firmer ground. In any legal challenge to GMO labeling laws, those defending the laws could use a legal process called discovery to unearth documents and question officials and scientists at the various companies. What unreleased feeding studies might the defenders find in company files that would contradict the industry's claims? What failed research might they uncover that would shed light on the dangers of GMOs? In addition, there would be no reason why the defenders couldn't also call independent experts to testify about why GMOs really are different from conventional plants and animals, and therefore warrant a label. Who knows? We might even be treated to juicy testimony from an industry whistleblower about falsified test results. This is just the kind of high-profile discussion the GMO industry wants to avoid.
Here is a preview of what we might expect if such testimony were allowed:
When the question of GMO crops first came up at the FDA, the agency's scientists concluded that GMOs were, in fact, different enough that they should be tested in the way that new drugs are tested before approval. These scientists were overruled by the Clinton administration, and the widespread introduction of GMO ingredients into food began.
Since then, independent research has been hard to come by. The GMO companies fund much of the world's agricultural research and therefore can threaten to withdraw support from an institution whenever research--even that funded from other sources--might threaten the industry. In addition, the companies deny most researchers--read: those who can't be counted on to toe the party line--access to so-called "isogenic lines (conventional and Roundup Ready plant lines that are otherwise genetically identical)." Doing so would allow scientists to test whether the claimed benefits of the genetic alterations are significant or could possibly create drawbacks or dangers.
Despite this there is a growing body of evidence to suggest that, at the very least, GMO crops should undergo extensive safety testing before being released for use. And, there is further evidence that associated practices such as the profligate use of the pesticide glyphosate--known commercially as Monsanto's Ready Roundup used on genetically altered Ready Roundup tolerant plants to make chemical weeding easy--may be changing soil flora so that crops are much more susceptible to "sudden death syndrome," a fungal disease that rots the roots of plants. In addition, the pesticide may not be breaking down in the environment the way its maker says it does. Instead, it appears to linger and build up in the soil. Because glyphosate ties of up nutrients in the soil, it makes crops grown on land saturated with the pesticide less nutritious and more subject to the buildup of toxins.
It is difficult to say who would prevail in a court battle over GMO labeling, one that would almost certainly go to the Supreme Court. Although the current right-wing justices have shown deference to states in most of their opinions, they have also abandon principle whenever sticking to it would inconvenience large corporations--their love of which they announced most prominently in the so-called Citizens United case which has opened the floodgates to unlimited corporate money in politics.
When much of the world is essentially off limits to you because of labeling, when in the very large U.S. market more than 90 percent of the people say they want labeling, when a Google search for the industry's leading company, Monsanto, reveals "evil" as its first suggested additional search term, the only way you can win is to cheat. Buy state legislators, buy Congress, buy the courts (if you can), stack the government with former employees, lie to the public again and again.
The one thing that the GMO industry does not want is a discussion in the clear light of day of what it is doing and what it is suppressing. And, that is what the upcoming battle over the California GMO labeling initiative and, if it passes, the subsequent court case are going to provide.
P.S. One of the things the GMO lobby is going to claim in the California labeling fight is that requiring labels in just one state will drive up food costs. They will argue that this is because of the added costs of two labels for each product containing GMO ingredients and the costs of segregating properly labeled products bound for California from those going to the rest of the country. I have a simple fix for this: Put the California-compliant label on all products containing GMOs regardless of destination!
I'm preparing to be astonished should the food companies follow my suggestion.
Sunday, April 22, 2012
Withdrawing from the global village
The world's elites don't want to admit it. But the kind of global village that they have insisted on building--a vast free-trade paradise run by an ever more complex and opaque system of logistics and finance--isn't working, not even for many of them. The cost of maintaining this brittle, complex system and keeping the huge imbalances it creates at bay is becoming dizzyingly expensive.
The consequences of those imbalances include heavily indebted countries such as Greece being driven into penury by the financial masters of Europe desperate to keep the Eurozone intact. They include an unsustainable system whereby the United States borrows from China to maintain U.S. consumption of cheap Chinese goods. (Most of that money has been recycled through mortgages on homes which were then used like ATMs in the past decade via waves of refinancing.)
The imbalances also include huge and growing inequality between the income and wealth of the few at the top and the rest of us. It's a truism in economics that if too much money gets concentrated into the hands of a few, precious little is left over for broad-based consumption by the mass of people except by means of greater indebtedness. And, that's what has happened. People have simply borrowed through the home mortgage machine and using credit cards to maintain their standard of living. Now, they've reached the maximum and are shedding debt. Deleveraging is what the economists call it.
The most obvious and dramatic cracks in the system are on display in Europe right now as it careens toward yet another financial crisis, this time involving Spain. The International Monetary Fund has solicited and received pledges for more than $400 billion in additional funds to address the emerging crisis in Europe. Already, trillions of taxpayer dollars have been spent or lent (often on poor collateral) to stave of the departure from the Eurozone of states that can no longer prosper under it. Expect trillions more to follow, all to satisfy ill-tempered investors who somehow thought buying government bonds from the likes of Spain, Portugal, Italy, Ireland and Greece would be a risk-free venture.
As it turns out, those ill-tempered investors are mostly banks in more solvent Germany and France. The bailouts for Portugal, Ireland and Greece were really bailouts mostly for French and German banks. On the other hand, what is the point of having a system in which governments go to the private markets for loans if the banks they charter don't buy the bonds. Europe set up a system that was bound to fail. Germans export goods, lend money to Greeks, Italians, Spaniards and Portuguese to buy them, and fail to think about how these people are going to pay them back. Ditto France. The export model cannot be universally practiced. Somebody has to import stuff. It's a system that produces a kind of prosperity for all until it doesn't.
Now that that system is about the fall apart, preparations are being made. The European Investment Bank, the European Union's bank, is requiring currency clauses in loan agreements with firms in Greece, Ireland and Portugal, clauses that would force renegotiation of the loan terms should a new currency be issued by those countries. Insiders are convinced that there is a Plan B in European capitals for a Eurozone breakup and re-introduction of national currencies in some countries.
With a possible dissolution come new concerns about borders. France and Germany are about to broach the subject of reintroducing border controls in the European Union, something EU members have not had to deal with inside the EU territory since 1995. The excuse is that illegal immigrants are coming through porous places in the borders of such states as Greece. But it's no stretch to imagine that migration within the EU will become as big a problem when newly impoverished Greeks and Portuguese and soon-to-be impoverished Spaniards make their way to France and Germany looking for work.
In the United States economic distress has led to newly strident calls to build a fence from San Diego to Brownsville, Texas along the Mexican border. A world with free movement across borders when jobs are hard to find is no more appealing to Americans than it is to the French or the Germans.
When it comes to trade, even free trade's friends have suddenly turned surly. Republican presidential candidate Mitt Romney says he wants to "designate China a currency manipulator and impose countervailing duties." Some might say that he doesn't mean it. On the other hand, in another environment he would never have even said it. In France, facing possible defeat at the polls by a socialist, free-trading President Nicholas Sarkozy has taken to ringing the protectionist bell as well.
The decision by the people of Iceland not to burden themselves with paying back European depositors who got stung when Iceland's banks failed strikes me as a nascent withdrawal from the constraints of the current global system. Iceland's decision seems premised on the notion that the integrated global financial system has benefitted only those at the top of financial institutions at great cost to Iceland and the poor European depositors lured there by high interest rates.
Ireland is the counterexample. The government there insisted that the people of Ireland take on nearly all of the country's failed bank obligations (owned mostly by nonresidents) which were far out of proportion to the size of the Irish economy. Ireland's decision to bear such a burden in order to stay within the Eurozone my prove pointless if Spain follows Greece into default and contagion spreads across the continent breaking up the Eurozone anyway.
Everywhere the costs of integration are starting to outweigh the benefits for the broad mass of people. Partly this is the structure of such integration which is designed to benefit the wealthy at the expense of the middle class and the poor. Partly such integration is fighting the tide of constrained energy availability. It is no accident that doubts about global integration are surfacing as oil prices hover around $100 a barrel. Cheap transportation is the backbone of global integration, and cheap transportation is fast becoming history.
Of course, at the level of local activists, there is a smorgasbord of efforts to make local resilience a priority in food, transportation, housing, education and commerce. But, not every aspect of the global village needs to be jettisoned. Ironically, the Internet has proven to be a powerful tool for sharing ideas across wide expanses about disengaging from an untenable global system. As our economic and resource difficulties intensify, look for more people calling for changes that disengage their countries and communities from the worst aspects of the global system.
When people at the very top of society begin to call for a withdrawal from the global system, even if only a partial one, you can be sure that many of the brightest and most energetic people down below have already figured out the advantages of doing just that. This is not really a call for complete isolation--just a call for a return to relations that are genuinely reciprocal and consistent with the energy limits which will govern our lives from now on.
The consequences of those imbalances include heavily indebted countries such as Greece being driven into penury by the financial masters of Europe desperate to keep the Eurozone intact. They include an unsustainable system whereby the United States borrows from China to maintain U.S. consumption of cheap Chinese goods. (Most of that money has been recycled through mortgages on homes which were then used like ATMs in the past decade via waves of refinancing.)
The imbalances also include huge and growing inequality between the income and wealth of the few at the top and the rest of us. It's a truism in economics that if too much money gets concentrated into the hands of a few, precious little is left over for broad-based consumption by the mass of people except by means of greater indebtedness. And, that's what has happened. People have simply borrowed through the home mortgage machine and using credit cards to maintain their standard of living. Now, they've reached the maximum and are shedding debt. Deleveraging is what the economists call it.
The most obvious and dramatic cracks in the system are on display in Europe right now as it careens toward yet another financial crisis, this time involving Spain. The International Monetary Fund has solicited and received pledges for more than $400 billion in additional funds to address the emerging crisis in Europe. Already, trillions of taxpayer dollars have been spent or lent (often on poor collateral) to stave of the departure from the Eurozone of states that can no longer prosper under it. Expect trillions more to follow, all to satisfy ill-tempered investors who somehow thought buying government bonds from the likes of Spain, Portugal, Italy, Ireland and Greece would be a risk-free venture.
As it turns out, those ill-tempered investors are mostly banks in more solvent Germany and France. The bailouts for Portugal, Ireland and Greece were really bailouts mostly for French and German banks. On the other hand, what is the point of having a system in which governments go to the private markets for loans if the banks they charter don't buy the bonds. Europe set up a system that was bound to fail. Germans export goods, lend money to Greeks, Italians, Spaniards and Portuguese to buy them, and fail to think about how these people are going to pay them back. Ditto France. The export model cannot be universally practiced. Somebody has to import stuff. It's a system that produces a kind of prosperity for all until it doesn't.
Now that that system is about the fall apart, preparations are being made. The European Investment Bank, the European Union's bank, is requiring currency clauses in loan agreements with firms in Greece, Ireland and Portugal, clauses that would force renegotiation of the loan terms should a new currency be issued by those countries. Insiders are convinced that there is a Plan B in European capitals for a Eurozone breakup and re-introduction of national currencies in some countries.
With a possible dissolution come new concerns about borders. France and Germany are about to broach the subject of reintroducing border controls in the European Union, something EU members have not had to deal with inside the EU territory since 1995. The excuse is that illegal immigrants are coming through porous places in the borders of such states as Greece. But it's no stretch to imagine that migration within the EU will become as big a problem when newly impoverished Greeks and Portuguese and soon-to-be impoverished Spaniards make their way to France and Germany looking for work.
In the United States economic distress has led to newly strident calls to build a fence from San Diego to Brownsville, Texas along the Mexican border. A world with free movement across borders when jobs are hard to find is no more appealing to Americans than it is to the French or the Germans.
When it comes to trade, even free trade's friends have suddenly turned surly. Republican presidential candidate Mitt Romney says he wants to "designate China a currency manipulator and impose countervailing duties." Some might say that he doesn't mean it. On the other hand, in another environment he would never have even said it. In France, facing possible defeat at the polls by a socialist, free-trading President Nicholas Sarkozy has taken to ringing the protectionist bell as well.
The decision by the people of Iceland not to burden themselves with paying back European depositors who got stung when Iceland's banks failed strikes me as a nascent withdrawal from the constraints of the current global system. Iceland's decision seems premised on the notion that the integrated global financial system has benefitted only those at the top of financial institutions at great cost to Iceland and the poor European depositors lured there by high interest rates.
Ireland is the counterexample. The government there insisted that the people of Ireland take on nearly all of the country's failed bank obligations (owned mostly by nonresidents) which were far out of proportion to the size of the Irish economy. Ireland's decision to bear such a burden in order to stay within the Eurozone my prove pointless if Spain follows Greece into default and contagion spreads across the continent breaking up the Eurozone anyway.
Everywhere the costs of integration are starting to outweigh the benefits for the broad mass of people. Partly this is the structure of such integration which is designed to benefit the wealthy at the expense of the middle class and the poor. Partly such integration is fighting the tide of constrained energy availability. It is no accident that doubts about global integration are surfacing as oil prices hover around $100 a barrel. Cheap transportation is the backbone of global integration, and cheap transportation is fast becoming history.
Of course, at the level of local activists, there is a smorgasbord of efforts to make local resilience a priority in food, transportation, housing, education and commerce. But, not every aspect of the global village needs to be jettisoned. Ironically, the Internet has proven to be a powerful tool for sharing ideas across wide expanses about disengaging from an untenable global system. As our economic and resource difficulties intensify, look for more people calling for changes that disengage their countries and communities from the worst aspects of the global system.
When people at the very top of society begin to call for a withdrawal from the global system, even if only a partial one, you can be sure that many of the brightest and most energetic people down below have already figured out the advantages of doing just that. This is not really a call for complete isolation--just a call for a return to relations that are genuinely reciprocal and consistent with the energy limits which will govern our lives from now on.
Sunday, April 15, 2012
The dumbest guys in the room: Is Cheniere Energy a contrarian indicator for natural gas?
Some people seem to have a knack for hopping aboard a trend just before it ends. Cheniere Energy Inc., owner of the largest liquefied natural gas (LNG) import facility in the United States, appears to be a case in point. In the world of finance, Cheniere would be what is called a contrary indicator, one that suggests that a trend is about to reverse.
In late 2004 when Cheniere received federal approval to construct a new LNG import facility at Cameron Parish, Louisiana, most experts believed U.S. natural gas production was already entering a long-term irreversible decline. Imported LNG would be needed to meet natural gas demand in the coming years. Named Sabine Pass, the facility received its first LNG cargo in April 2008 near the tail end of the last natural gas bull market. Prices peaked above $13 per thousand cubic feet (mcf) just two months later. It would have been a supremely good time to short everything related to natural gas. In the months that followed Cheniere's stock price collapsed.
Four years later U.S. natural gas prices hover around $2 per mcf due to a glut caused by a flood of new production from deep shale deposits. Domestic demand for high-cost imported LNG has evaporated. With Europeans bidding $12 for LNG cargoes and Asians bidding $16, there is simply no way for Cheniere to obtain LNG supplies that can compete with $2 natural gas.
So, Cheniere is reversing course. It is now building an export terminal at Sabine Pass and another one in Corpus Christi, Texas. Trying to put a good gloss on its wasted investment in import facilities at Sabine Pass, Cheniere tells investors on its website that it is "currently developing our proposed liquefaction project at our Sabine Pass terminal which would transform the terminal into a bi-directional LNG processing facility." Why anyone would simultaneously import and export LNG from the same facility is not explained.
The company's enthusiasm results from claims that the United States now has a 100-year supply of natural gas. That enthusiasm is shared by investors who seem unbothered by the actual data. The 100-year claim derives from an industry estimate of total resources, a significant portion of which will never turn into actual reserves. There is no evidence to suggest that all these resources will be both technically recoverable and economically profitable.
Proven U.S. reserves amount to only 11.5 years of consumption at 2010 rates. If we include proven and probable reserves, the number is 22 years, hardly a figure that inspires confidence that there will be adequate supplies available for export in the coming decades. In the same linked piece author Art Berman, a petroleum geologist and consultant who has carefully studied the state data for U.S. natural gas production, concludes that all major natural gas producing areas except Louisiana appear to be peaking in their rate of production. These include "Texas, Louisiana, Wyoming, Oklahoma, Gulf of Mexico Outer Continental Shelf, and New Mexico [which] account for roughly 75% of U.S. natural gas supply and, therefore, provide a useful proxy for total U.S gas production."
It is worth quoting Berman at length to get the flavor of his analysis:
In late 2004 when Cheniere received federal approval to construct a new LNG import facility at Cameron Parish, Louisiana, most experts believed U.S. natural gas production was already entering a long-term irreversible decline. Imported LNG would be needed to meet natural gas demand in the coming years. Named Sabine Pass, the facility received its first LNG cargo in April 2008 near the tail end of the last natural gas bull market. Prices peaked above $13 per thousand cubic feet (mcf) just two months later. It would have been a supremely good time to short everything related to natural gas. In the months that followed Cheniere's stock price collapsed.
Four years later U.S. natural gas prices hover around $2 per mcf due to a glut caused by a flood of new production from deep shale deposits. Domestic demand for high-cost imported LNG has evaporated. With Europeans bidding $12 for LNG cargoes and Asians bidding $16, there is simply no way for Cheniere to obtain LNG supplies that can compete with $2 natural gas.
So, Cheniere is reversing course. It is now building an export terminal at Sabine Pass and another one in Corpus Christi, Texas. Trying to put a good gloss on its wasted investment in import facilities at Sabine Pass, Cheniere tells investors on its website that it is "currently developing our proposed liquefaction project at our Sabine Pass terminal which would transform the terminal into a bi-directional LNG processing facility." Why anyone would simultaneously import and export LNG from the same facility is not explained.
The company's enthusiasm results from claims that the United States now has a 100-year supply of natural gas. That enthusiasm is shared by investors who seem unbothered by the actual data. The 100-year claim derives from an industry estimate of total resources, a significant portion of which will never turn into actual reserves. There is no evidence to suggest that all these resources will be both technically recoverable and economically profitable.
Proven U.S. reserves amount to only 11.5 years of consumption at 2010 rates. If we include proven and probable reserves, the number is 22 years, hardly a figure that inspires confidence that there will be adequate supplies available for export in the coming decades. In the same linked piece author Art Berman, a petroleum geologist and consultant who has carefully studied the state data for U.S. natural gas production, concludes that all major natural gas producing areas except Louisiana appear to be peaking in their rate of production. These include "Texas, Louisiana, Wyoming, Oklahoma, Gulf of Mexico Outer Continental Shelf, and New Mexico [which] account for roughly 75% of U.S. natural gas supply and, therefore, provide a useful proxy for total U.S gas production."
It is worth quoting Berman at length to get the flavor of his analysis:
For several years, we have been asked to believe that less is more, that more oil and gas can be produced from shale than was produced from better reservoirs over the past century. We have been told more recently that the U.S. has enough natural gas to last for 100 years. We have been presented with an improbable business model that has no barriers to entry except access to capital, that provides a source of cheap and abundant gas, and that somehow also allows for great profit. Despite three decades of experience with tight sandstone and coal-bed methane production that yielded low-margin returns and less supply than originally advertised, we are expected to believe that poorer-quality shale reservoirs will somehow provide superior returns and make the U.S. energy independent. Shale gas advocates point to the large volumes of produced gas and the participation of major oil companies in the plays as indications of success. But advocates rarely address details about profitability and they never mention failed wells.
Shale gas plays are an important and permanent part of our energy future. We need the gas because there are fewer remaining plays in the U.S. that have the potential to meet demand. A careful review of the facts, however, casts doubt on the extent to which shale plays can meet supply expectations except at much higher prices.(my emphasis)
The entire piece should be required reading for anyone involved in energy policy or who is thinking about investing in anything related to natural gas. The upshot for investors is that natural gas prices are likely to recover much sooner than most analysts are predicting. Gas rig counts in North America tumbled from 906 during the first week of November to 624 last week. This is the lowest number of gas rigs deployed since 2002. As the count continues to fall, new production capacity will slip in the face of a 32 percent annual production decline rate. That's not a typo. The U.S. must now replace one-third of its natural gas production capacity each year just to stay even. Shale gas wells contribute to much of the problem with a first-year decline averaging 65 percent and a two-year decline rate around 80 percent.
The rotary drills will only return to the shale gas fields when prices reach levels that are actually profitable which Berman estimates to be at least $4 per mcf for existing plays and up to $9 per mcf for some new ones. What this implies is much slower growth in supplies, something anticipated by the U.S. Energy Information Administration in its 2012 Annual Energy Outlook which projects that natural gas production will rise from 24.2 trillion cubic feet (tcf) in 2011 to 27.7 tcf in 2035, hardly a bonanza. Still, the EIA buys into the idea that the United States will become a net exporter of gas in 2021.
But Berman is skeptical believing that shale gas supplies will prove so challenging to extract that the country will find itself importing natural gas for a long time to come. If that's so, then we can look at Cheniere's decision to build natural gas export terminals as the perfect contrarian sign that U.S. natural gas prices are nearing their lows and will rise in the years to come.
The U.S. Congress and federal regulators may yet rue the day that they approved natural gas export terminals. Since such terminals typically enter into multi-decade contracts to ensure that they can recoup their costs, natural gas may be going out of the country just when domestic supplies are needed the most.
Cheniere expects its liquefaction plant, which liquefies natural gas by cooling it to -260 degrees F, to start operating in 2015. If that year marks the beginning of a sustained climb in U.S. natural gas prices brought on by increasing strains on domestic supplies, Cheniere will retain its usefulness as a contrary indicator. Increasingly expensive domestic gas may then result in small profit margins or even losses for exporters such as Cheniere. Between now and then, however, the hype surrounding U.S. natural gas supplies and LNG exports may help enrich a few Cheniere investors who are savvy enough to cash out before reality catches up with the company's stock price.
Disclosure: I have no investments related to Cheniere Energy Inc.
Sunday, April 08, 2012
Should we care about the human future? If so, how much?
In virtually every institution in human society, we humans concern ourselves with the continuation of the species. We have children, we raise them in some sort of family, we educate them for the world of work and citizenship, and then we see them couple and start the cycle all over again. All the while we seek to defend ourselves from disease, violence, economic deprivation, in fact, anything that might cut short our lives or those of our children. It ought to be self-evident that human beings do care about the future. What I want to examine is whether they should and if so, how much.
For this I will need to take you through some simple thought experiments which will test just how much you might do for the sake of human continuity and just how far into the future you might project your own responsibility.
It is a truism that parents concern themselves with the well-being and happiness of their children and grandchildren (and great grandchildren if they live that long). So, a concern about the general state of human society will extend two or perhaps three generations into the future or roughly 50 to 75 years. After that, it's hard for us to put a lot of emotion into making things right for people we will never know.
But let's say you have an altruistic streak that transcends time. You actually believe that people you will never meet deserve your consideration now. You believe that you should leave them a society that makes a good life possible, however you conceive of that good life. How far into the future will this concern carry? 100 years? 1,000 years? 10,000 years? I sense your commitment fading the further out in time I go. After all, how can any of us possibly foresee what human life will be like in 10,000 years (assuming humans survive that long)? How can we even conceive of what a good life will look like then?
Now, let me throw a little cold water on your warm-blooded altruism. Let's say that today we as a global society decided to do everything we need to do to create what is roughly speaking a sustainable society. This would include ending our reliance on fossil fuels, adopting organic farming techniques, letting go of consumerism as an organizing principle, harvesting renewable resources only at the rate they can be renewed, gradually but drastically reducing population over time until it is below the Earth's carrying capacity for humans, and creating a cradle-to-cradle resource management system for all finite resources. Certainly, this list could be expanded. But the point is that the system we create could, in theory, be bequeathed to humans for as long as there is a planet Earth.
Now, what if at some point, say, 500 years into this grand experiment, a society arises that decides all these rules on what we can and cannot do should be repealed, especially the restriction on burning fossil fuels? So, today we make great sacrifices to move from a doomed society to one that is sustainable out of concern and respect for future generations. Then, some future generation blows it by undoing everything we've done. How's that for slap in the face? Except, of course, you won't be around to actually feel the slap. Still, this thought experiment forces us to confront a very ugly possibility and question how much we should sacrifice now for a potentially ungrateful and lethal generation in the future.
Now, let's go even further into the future. Let's say humans remain responsibly sustainable indefinitely. How long will that be? Well, the fossil record suggests that mammalian species such as humans have an average lifespan of 2 million years. So, if we date humans using the classification Homo sapiens, then we are a young species, perhaps 200,000 years old. If we date humans back to the beginning of the entire genus of hominids at least 4 million years ago, then humans are essentially in evolutionary overtime.
But no matter what time line you use, one thing remains true: The chances that we humans will defy the logic of the fossil record seem slim. Some 99 percent of all species that have ever existed on Earth have disappeared. We are very unlikely to evolve into some superior being that carries on the traditions and cultures of humans. We are much more likely to go extinct at some point no matter how sustainably we live as a species.
And finally, let's assume that somehow future humans evolve and adapt so well that they are alive billions of years from now. At some point, our Sun will expand as part of its death throes and consume the Earth. No more life at all on Earth at that point. (I know some of you are saying that perhaps humans will populate the stars. I see no realistic prospect that humans could actually do this even if they could find Earth-like planets. First, the distances would likely be so great that even highly advance spaceships would still take so long to reach such planets that the chance of survival would be small. Second, the Earth-like planet would almost certainly have micro-organisms that would kill humans almost as soon as they landed. Instead of the Andromeda strain coming to us, we would go to it.)
As I've lengthened the time line, no doubt you've found yourself wondering why any of us today should be concerned about the sustainability of human society in a future that is so vast that it is several orders of magnitude longer than human civilization has so far existed. Good question. The continuity of human beings simply cannot be guaranteed indefinitely into the future regardless of what our genes, our minds, or several hundred Star Trek episodes may tell us. We are largely powerless in that regard.
Now, I am not minimizing the impulse to make the world a sustainable place for our progeny. I recognize that as a very strong drive. And, it is one that is featured in countless environmentally-oriented appeals. But I am looking for bedrock here. Is there a way of thinking about sustainability that doesn't involve the inherently impossible task of seeking to assure human continuity indefinitely into the future? I think I have an answer.
Sustainable practices must be in and of themselves a path to a good life. If that's the case, then they are worth implementing simply because they lead to happier and more fulfilling lives. We can take a cue from the simplicity movement which embraced simple living as more fulfilling. Let me illustrate. I ride my bicycle for most of my errands and for exercise as well. Even if there were no climate change problem, even if there were no peak oil problem, even if there were no sustainability crisis, riding my bicycle would still enhance the quality of my life. I'm more fit. I'm more in touch with my physical surroundings. Typically, I'm still moving when traffic is halted. I can get closer to my destination. I pay no parking fees. I find myself now in a kind of universal brotherhood with every other cyclist on the road (a very underrated plus). I could go on. But I think it would be possible to say something similar about any practice that is truly sustainable.
I'm not suggesting that we give up on the rhetoric of creating a sustainable future for our children. But I am suggesting adding to that pitch that almost everything we call sustainable would make us happier even absent the problems we are trying to solve. That means people would ultimately have no regrets about adopting sustainable habits because, in general, they give us a fuller, more compelling life.
For this I will need to take you through some simple thought experiments which will test just how much you might do for the sake of human continuity and just how far into the future you might project your own responsibility.
It is a truism that parents concern themselves with the well-being and happiness of their children and grandchildren (and great grandchildren if they live that long). So, a concern about the general state of human society will extend two or perhaps three generations into the future or roughly 50 to 75 years. After that, it's hard for us to put a lot of emotion into making things right for people we will never know.
But let's say you have an altruistic streak that transcends time. You actually believe that people you will never meet deserve your consideration now. You believe that you should leave them a society that makes a good life possible, however you conceive of that good life. How far into the future will this concern carry? 100 years? 1,000 years? 10,000 years? I sense your commitment fading the further out in time I go. After all, how can any of us possibly foresee what human life will be like in 10,000 years (assuming humans survive that long)? How can we even conceive of what a good life will look like then?
Now, let me throw a little cold water on your warm-blooded altruism. Let's say that today we as a global society decided to do everything we need to do to create what is roughly speaking a sustainable society. This would include ending our reliance on fossil fuels, adopting organic farming techniques, letting go of consumerism as an organizing principle, harvesting renewable resources only at the rate they can be renewed, gradually but drastically reducing population over time until it is below the Earth's carrying capacity for humans, and creating a cradle-to-cradle resource management system for all finite resources. Certainly, this list could be expanded. But the point is that the system we create could, in theory, be bequeathed to humans for as long as there is a planet Earth.
Now, what if at some point, say, 500 years into this grand experiment, a society arises that decides all these rules on what we can and cannot do should be repealed, especially the restriction on burning fossil fuels? So, today we make great sacrifices to move from a doomed society to one that is sustainable out of concern and respect for future generations. Then, some future generation blows it by undoing everything we've done. How's that for slap in the face? Except, of course, you won't be around to actually feel the slap. Still, this thought experiment forces us to confront a very ugly possibility and question how much we should sacrifice now for a potentially ungrateful and lethal generation in the future.
Now, let's go even further into the future. Let's say humans remain responsibly sustainable indefinitely. How long will that be? Well, the fossil record suggests that mammalian species such as humans have an average lifespan of 2 million years. So, if we date humans using the classification Homo sapiens, then we are a young species, perhaps 200,000 years old. If we date humans back to the beginning of the entire genus of hominids at least 4 million years ago, then humans are essentially in evolutionary overtime.
But no matter what time line you use, one thing remains true: The chances that we humans will defy the logic of the fossil record seem slim. Some 99 percent of all species that have ever existed on Earth have disappeared. We are very unlikely to evolve into some superior being that carries on the traditions and cultures of humans. We are much more likely to go extinct at some point no matter how sustainably we live as a species.
And finally, let's assume that somehow future humans evolve and adapt so well that they are alive billions of years from now. At some point, our Sun will expand as part of its death throes and consume the Earth. No more life at all on Earth at that point. (I know some of you are saying that perhaps humans will populate the stars. I see no realistic prospect that humans could actually do this even if they could find Earth-like planets. First, the distances would likely be so great that even highly advance spaceships would still take so long to reach such planets that the chance of survival would be small. Second, the Earth-like planet would almost certainly have micro-organisms that would kill humans almost as soon as they landed. Instead of the Andromeda strain coming to us, we would go to it.)
As I've lengthened the time line, no doubt you've found yourself wondering why any of us today should be concerned about the sustainability of human society in a future that is so vast that it is several orders of magnitude longer than human civilization has so far existed. Good question. The continuity of human beings simply cannot be guaranteed indefinitely into the future regardless of what our genes, our minds, or several hundred Star Trek episodes may tell us. We are largely powerless in that regard.
Now, I am not minimizing the impulse to make the world a sustainable place for our progeny. I recognize that as a very strong drive. And, it is one that is featured in countless environmentally-oriented appeals. But I am looking for bedrock here. Is there a way of thinking about sustainability that doesn't involve the inherently impossible task of seeking to assure human continuity indefinitely into the future? I think I have an answer.
Sustainable practices must be in and of themselves a path to a good life. If that's the case, then they are worth implementing simply because they lead to happier and more fulfilling lives. We can take a cue from the simplicity movement which embraced simple living as more fulfilling. Let me illustrate. I ride my bicycle for most of my errands and for exercise as well. Even if there were no climate change problem, even if there were no peak oil problem, even if there were no sustainability crisis, riding my bicycle would still enhance the quality of my life. I'm more fit. I'm more in touch with my physical surroundings. Typically, I'm still moving when traffic is halted. I can get closer to my destination. I pay no parking fees. I find myself now in a kind of universal brotherhood with every other cyclist on the road (a very underrated plus). I could go on. But I think it would be possible to say something similar about any practice that is truly sustainable.
I'm not suggesting that we give up on the rhetoric of creating a sustainable future for our children. But I am suggesting adding to that pitch that almost everything we call sustainable would make us happier even absent the problems we are trying to solve. That means people would ultimately have no regrets about adopting sustainable habits because, in general, they give us a fuller, more compelling life.
Sunday, April 01, 2012
My 'Gasland' 'Tis of Thee
It is one thing to read about the fight over the environmental effects of hydraulic fracturing or fracking that are associated with natural gas drilling in deep shale formations. It's quite another to see that fight captured on film. The documentary film Gasland provides a compelling, if one-sided, portrait of the devastation visited on the lives of those who live closest to the drilling.
What a huge mistake it was in retrospect for a natural gas driller to approach filmmaker Josh Fox with an offer to lease his land for drilling. Fox decided to look into the matter carefully, and his research led to the making of Gasland. "Know your audience" might have been a good piece of advice for the natural gas industry. Fox certainly knows his. His portraits of people whose health has been damaged and whose rural homesteads have been turned into houses of horror sited on nightmarish landscapes can only move viewers to pity and indignation. In keeping with the dictum that every action has an equal and opposite reaction, the film has also moved the entire natural gas industry to rage.
No one from the industry agreed to be interviewed in the film; Fox gives viewers a long list of those who turned him down. I think they didn't trust him to be fair. But as any good public relations consultant will advise, that shouldn't have prevented the industry from making its case. It may have been that the industry feared it was running up against someone who actually knew what questions to ask.
As a close observer of the oil and gas industry, two things struck me about the film. First, the people most directly affected by natural gas drilling tend to be rural and of meager means. Because there are so few of them, they will never make up an electoral force on their own able to compel increased regulation of the industry. And, they have few options when their land, home and health are affected. Frequently, suing isn't one of them. Leaving is a difficult option since after their property has been stigmatized by the proximity of drilling, the land becomes more difficult to unload at any price.
Second, the film mentions the explicit exemption of hydraulic fracturing from the Safe Drinking Water Act, an exemption written into the 2005 Energy Policy Act. I've known about this exemption for a long time. And, obviously the exemption makes it cheaper to drill for shale gas since drillers are not obliged to follow federal water regulations. But the nature of those regulations as they relate to hydraulic fracturing was only made clear to me recently in a conversation I had with an environmental consultant to the oil and gas industry.
He said that one way to solve the controversy surrounding hydraulic fracturing of natural gas wells would be to treat them as hazardous waste injection wells which for obvious reasons are subject to the toughest regulations of any kind related to drilling. Such wells are designed to inject liquid hazardous waste deep into the ground into strata far below any drinking water.
Watching the emissions and pollution resulting from the drilling and production operations shown in the film, I realized why the explicit exemption was inserted into the Safe Drinking Water Act. It occurred to me that the federal regulation of hydraulic fracturing operations by the U.S. Environmental Protection Agency might have resulted in the determination that fracturing fluids are hazardous waste. That would turn fracked natural gas wells into hazardous waste injection wells. Such a classification would make shale gas wells not just a little more expensive to drill, but tremendously more expensive to drill. And, that would mean that natural gas from shale would only come out of the ground at much, much higher prices.
The United States has based its power and economic vitality on cheap energy. The exemption was adopted to help keep energy cheap, knowing that it would not be if shale gas wells were extremely costly to drill.
Because most of us now live in cities, we may be unaware of the size of America's shale gas formations. Vast areas of Pennsylvania, New York and Ohio have shale gas beneath them. Large parts of Texas, Louisiana, Arkansas, Colorado and Wyoming do, too. Gasland takes viewers on a shale gas roadtrip across the country to this new sub-territory within the country, a territory for which the rules that apply to the rest of us have been rewritten for the oil and gas industry. The people we meet have persistent headaches, breathing difficulties, newly acquired asthma, unexplained pain which now racks their bodies, and myriad other symptoms. Their ignitable water shoots flames when lit, the air smells of volatile hydrocarbons, and their animals, both household pets and livestock, don't always look so healthy.
Whether all of this is due to the pollution of their air, water and land by natural gas drilling and production cannot be easily proven. The shale gas boom hasn't been going on long enough for long-term studies to say for sure how serious the public health effects will be. Testing that is only now starting to be done suggests the effects will be profound. And, the damaged people whom we meet in the film give living witness to just such a possibility.
What America has done time and time again when it wants a valuable resource is convince itself that either its methods for getting it are surely safe or at least up to the industry standards, in other words, the best we can do. That then seems reason enough not to delay the profits that will follow. What is left behind is, in reality, a "sacrifice zone," an area and its people who are simply sacrificed for what is perceived as the greater good or sometimes just the greater greed.
Gasland is part of an American journalistic tradition of showing us this truth about ourselves. If you watch this movie and come out simply disgusted, you have missed the point. If you want to stop the devastation, you must take the first step yourself; you must turn down the gas. As long as we buy into the myth that we must have ever more energy to live well, we will be hostage to the energy giants who perpetrate this myth. Forcing them to extract natural gas and other fossil fuels more safely would be wise, but we should understand that it would mean smaller supplies and thus higher energy prices.
Ultimately, what we need to do is move away from fossil fuels altogether. After all, none of the people in Gasland would be suffering the maladies we witness if they were living next to solar panels or wind farms instead of shale gas wells.
What a huge mistake it was in retrospect for a natural gas driller to approach filmmaker Josh Fox with an offer to lease his land for drilling. Fox decided to look into the matter carefully, and his research led to the making of Gasland. "Know your audience" might have been a good piece of advice for the natural gas industry. Fox certainly knows his. His portraits of people whose health has been damaged and whose rural homesteads have been turned into houses of horror sited on nightmarish landscapes can only move viewers to pity and indignation. In keeping with the dictum that every action has an equal and opposite reaction, the film has also moved the entire natural gas industry to rage.
No one from the industry agreed to be interviewed in the film; Fox gives viewers a long list of those who turned him down. I think they didn't trust him to be fair. But as any good public relations consultant will advise, that shouldn't have prevented the industry from making its case. It may have been that the industry feared it was running up against someone who actually knew what questions to ask.
As a close observer of the oil and gas industry, two things struck me about the film. First, the people most directly affected by natural gas drilling tend to be rural and of meager means. Because there are so few of them, they will never make up an electoral force on their own able to compel increased regulation of the industry. And, they have few options when their land, home and health are affected. Frequently, suing isn't one of them. Leaving is a difficult option since after their property has been stigmatized by the proximity of drilling, the land becomes more difficult to unload at any price.
Second, the film mentions the explicit exemption of hydraulic fracturing from the Safe Drinking Water Act, an exemption written into the 2005 Energy Policy Act. I've known about this exemption for a long time. And, obviously the exemption makes it cheaper to drill for shale gas since drillers are not obliged to follow federal water regulations. But the nature of those regulations as they relate to hydraulic fracturing was only made clear to me recently in a conversation I had with an environmental consultant to the oil and gas industry.
He said that one way to solve the controversy surrounding hydraulic fracturing of natural gas wells would be to treat them as hazardous waste injection wells which for obvious reasons are subject to the toughest regulations of any kind related to drilling. Such wells are designed to inject liquid hazardous waste deep into the ground into strata far below any drinking water.
Watching the emissions and pollution resulting from the drilling and production operations shown in the film, I realized why the explicit exemption was inserted into the Safe Drinking Water Act. It occurred to me that the federal regulation of hydraulic fracturing operations by the U.S. Environmental Protection Agency might have resulted in the determination that fracturing fluids are hazardous waste. That would turn fracked natural gas wells into hazardous waste injection wells. Such a classification would make shale gas wells not just a little more expensive to drill, but tremendously more expensive to drill. And, that would mean that natural gas from shale would only come out of the ground at much, much higher prices.
The United States has based its power and economic vitality on cheap energy. The exemption was adopted to help keep energy cheap, knowing that it would not be if shale gas wells were extremely costly to drill.
Because most of us now live in cities, we may be unaware of the size of America's shale gas formations. Vast areas of Pennsylvania, New York and Ohio have shale gas beneath them. Large parts of Texas, Louisiana, Arkansas, Colorado and Wyoming do, too. Gasland takes viewers on a shale gas roadtrip across the country to this new sub-territory within the country, a territory for which the rules that apply to the rest of us have been rewritten for the oil and gas industry. The people we meet have persistent headaches, breathing difficulties, newly acquired asthma, unexplained pain which now racks their bodies, and myriad other symptoms. Their ignitable water shoots flames when lit, the air smells of volatile hydrocarbons, and their animals, both household pets and livestock, don't always look so healthy.
Whether all of this is due to the pollution of their air, water and land by natural gas drilling and production cannot be easily proven. The shale gas boom hasn't been going on long enough for long-term studies to say for sure how serious the public health effects will be. Testing that is only now starting to be done suggests the effects will be profound. And, the damaged people whom we meet in the film give living witness to just such a possibility.
What America has done time and time again when it wants a valuable resource is convince itself that either its methods for getting it are surely safe or at least up to the industry standards, in other words, the best we can do. That then seems reason enough not to delay the profits that will follow. What is left behind is, in reality, a "sacrifice zone," an area and its people who are simply sacrificed for what is perceived as the greater good or sometimes just the greater greed.
Gasland is part of an American journalistic tradition of showing us this truth about ourselves. If you watch this movie and come out simply disgusted, you have missed the point. If you want to stop the devastation, you must take the first step yourself; you must turn down the gas. As long as we buy into the myth that we must have ever more energy to live well, we will be hostage to the energy giants who perpetrate this myth. Forcing them to extract natural gas and other fossil fuels more safely would be wise, but we should understand that it would mean smaller supplies and thus higher energy prices.
Ultimately, what we need to do is move away from fossil fuels altogether. After all, none of the people in Gasland would be suffering the maladies we witness if they were living next to solar panels or wind farms instead of shale gas wells.
Sunday, March 25, 2012
Why Saudi and American bluffing won't lower oil prices (Hint: It doesn't work when people know you're bluffing)
If you have the power and the desire to bring down oil prices, the best way to proceed is to start bringing them down. The easiest and fastest method would be to make more supplies available to the world market and keep adding until you reach your target price. The less you say about what you are doing, the better. When market participants are filled with uncertainty about your intentions, they have only the direction of prices to guide them. That means the speculative players can help you achieve your goals more quickly as they panic out of their positions.
This was not, of course, the path chosen by the United States, Great Britain and Saudi Arabia recently when they announced that they were contemplating intervention in the oil markets--in the form of releases from strategic petroleum reserves in the case of the United States and Britain and in the form of increased production by Saudi Arabia.
It seems that while all three countries have the stated wish to bring down oil prices, they appear to lack the power or at least the desire to do so. So, they are left with bluffing. It's true that oil markets move on rumors and sentiment, but not as far nor for as long as people believe. The joint U.S.-Great Britain announcement caused oil prices to fall sharply the same day before recovering nearly the entire loss by the close. The Saudi announcement that it might increase production caused a sharper one-day fall which was largely recouped the following day.
Oil prices are ultimately tied to the delivery of actual oil. Unlike, say, stock prices, which can become unhinged from fundamental conditions for companies or the economy as a whole for long periods, oil prices are constantly being disciplined by actual supply and demand in the real world. Short-term misperceptions can occasionally drive the price to unsustainable highs or lows, but not for very long.
What oil market participants took away from the two tightly spaced announcements was that neither party is serious about doing much of anything. It seems unlikely the United States and Great Britain would dip significantly into their strategic reserves at a time when a war with Iran could break out at a moment's notice--not so much because the United States and Britain want war, but because Israel may act unilaterally to start one. A war with Iran would constitute a real emergency, and so, draining strategic reserves now to appease voter concern over high gasoline prices might prove foolhardy. Unless war with Iran breaks out, look for a token release of oil if such a release comes at all.
As for Saudi Arabia, the question is not whether the country could increase production, but how much, for how long, and of what kind of oil. The Saudis announced late last year that they were stopping their capacity expansion program because they had reached their target of 12.5 million barrels per day. But that new capacity has yet to be tested. Saudi production currently stands at about 10 million barrels per day. We do not know for certain what output Saudi Arabia could achieve over this on a sustained basis. And, even if the Saudis could increase their oil production substantially, would they really want to? They would risk adding supply in the face of a faltering European economy that could pull the legs out from under oil demand thus crashing prices far below the level the Saudis and their friends in OPEC really desire.
The reports that Saudi Aramco's shipping arm, Vela, has been chartering extra very large crude carriers which can carry up to 2 million barrels of oil should be taken with a grain of salt. It's hard to know whether this means the country is actually increasing total world supply or whether it means that Vela simply found its own fleet committed and needed to hire tankers from other shippers. We should take note that the Saudi oil minister admitted that his country's March and April oil production would be essentially unchanged. In this context, a Financial Times article (via The Globe and Mail) entitled "The price that launched a wall of ships" seems like another public relations plant by the Saudis designed to manipulate market sentiment. In any case, crude futures prices had by the end of trading last week regained almost the entire loss suffered after the piece appeared.
There is also the question of what kind of oil would make up any extra Saudi production. Not all oil is the same. Arab light is highly prized for its ease in refining. Most refineries in the world are designed to refine light crude with low sulfur content. Saudi Arabia is adding capacity from a new offshore field and from a previously mothballed onshore field both of which produce heavy crude, a less desirable crude that is more difficult and costly to refine. This tells us that while Saudi Arabia may be able to supply extra oil to the market, it may not be the kind of oil that the market can easily absorb.
Saudi actions beg this question: If the desert kingdom has so much oil left under its territory, why it is scraping the bottom of the barrel offshore and at an old field that was closed in 1980?
It's likely that market participants already understand all this and that's why they see the recent announcements by the United States, Great Britain and Saudi Arabia for what they are: bluffs.
What would bring oil prices down quickly in the short term is an economic slowdown, a possibility about which economists and market analysts are split. The slowdown would, of course, reduce demand for oil and oil products. A longer term strategy would be to move away from dependence on oil. That would take political courage and discipline, but Europeans seem to have long since accepted this strategy. Germany and Italy, for example, have both been gradually reducing their total petroleum consumption since 1998. In Asia, Japan's overall consumption has been declining since 1996.
The world clamors for cheap energy as an addict clamors for a cheap fix. Both behaviors result in less than optimal outcomes until the parties involved realize it's time for some serious treatment. Europe and Japan are leading the way. Will America have the wisdom and ingenuity to follow them?
This was not, of course, the path chosen by the United States, Great Britain and Saudi Arabia recently when they announced that they were contemplating intervention in the oil markets--in the form of releases from strategic petroleum reserves in the case of the United States and Britain and in the form of increased production by Saudi Arabia.
It seems that while all three countries have the stated wish to bring down oil prices, they appear to lack the power or at least the desire to do so. So, they are left with bluffing. It's true that oil markets move on rumors and sentiment, but not as far nor for as long as people believe. The joint U.S.-Great Britain announcement caused oil prices to fall sharply the same day before recovering nearly the entire loss by the close. The Saudi announcement that it might increase production caused a sharper one-day fall which was largely recouped the following day.
Oil prices are ultimately tied to the delivery of actual oil. Unlike, say, stock prices, which can become unhinged from fundamental conditions for companies or the economy as a whole for long periods, oil prices are constantly being disciplined by actual supply and demand in the real world. Short-term misperceptions can occasionally drive the price to unsustainable highs or lows, but not for very long.
What oil market participants took away from the two tightly spaced announcements was that neither party is serious about doing much of anything. It seems unlikely the United States and Great Britain would dip significantly into their strategic reserves at a time when a war with Iran could break out at a moment's notice--not so much because the United States and Britain want war, but because Israel may act unilaterally to start one. A war with Iran would constitute a real emergency, and so, draining strategic reserves now to appease voter concern over high gasoline prices might prove foolhardy. Unless war with Iran breaks out, look for a token release of oil if such a release comes at all.
As for Saudi Arabia, the question is not whether the country could increase production, but how much, for how long, and of what kind of oil. The Saudis announced late last year that they were stopping their capacity expansion program because they had reached their target of 12.5 million barrels per day. But that new capacity has yet to be tested. Saudi production currently stands at about 10 million barrels per day. We do not know for certain what output Saudi Arabia could achieve over this on a sustained basis. And, even if the Saudis could increase their oil production substantially, would they really want to? They would risk adding supply in the face of a faltering European economy that could pull the legs out from under oil demand thus crashing prices far below the level the Saudis and their friends in OPEC really desire.
The reports that Saudi Aramco's shipping arm, Vela, has been chartering extra very large crude carriers which can carry up to 2 million barrels of oil should be taken with a grain of salt. It's hard to know whether this means the country is actually increasing total world supply or whether it means that Vela simply found its own fleet committed and needed to hire tankers from other shippers. We should take note that the Saudi oil minister admitted that his country's March and April oil production would be essentially unchanged. In this context, a Financial Times article (via The Globe and Mail) entitled "The price that launched a wall of ships" seems like another public relations plant by the Saudis designed to manipulate market sentiment. In any case, crude futures prices had by the end of trading last week regained almost the entire loss suffered after the piece appeared.
There is also the question of what kind of oil would make up any extra Saudi production. Not all oil is the same. Arab light is highly prized for its ease in refining. Most refineries in the world are designed to refine light crude with low sulfur content. Saudi Arabia is adding capacity from a new offshore field and from a previously mothballed onshore field both of which produce heavy crude, a less desirable crude that is more difficult and costly to refine. This tells us that while Saudi Arabia may be able to supply extra oil to the market, it may not be the kind of oil that the market can easily absorb.
Saudi actions beg this question: If the desert kingdom has so much oil left under its territory, why it is scraping the bottom of the barrel offshore and at an old field that was closed in 1980?
It's likely that market participants already understand all this and that's why they see the recent announcements by the United States, Great Britain and Saudi Arabia for what they are: bluffs.
What would bring oil prices down quickly in the short term is an economic slowdown, a possibility about which economists and market analysts are split. The slowdown would, of course, reduce demand for oil and oil products. A longer term strategy would be to move away from dependence on oil. That would take political courage and discipline, but Europeans seem to have long since accepted this strategy. Germany and Italy, for example, have both been gradually reducing their total petroleum consumption since 1998. In Asia, Japan's overall consumption has been declining since 1996.
The world clamors for cheap energy as an addict clamors for a cheap fix. Both behaviors result in less than optimal outcomes until the parties involved realize it's time for some serious treatment. Europe and Japan are leading the way. Will America have the wisdom and ingenuity to follow them?
Sunday, March 18, 2012
An eerie winter
Last week's summerlike weather provided an exclamation point on the end of the fourth warmest winter in the lower 48 states. Back in late December and early January as the winter was unfolding, I thought to myself that somehow we needed eerie music piped into the sky to give people some clue about how they should feel. In the Great Lakes area where I live, we are used to having snow dumped on us in copious amounts--or at least we used to be.
I can remember as a child entire weeks given over to snow days with snow so deep we could build tunnels through it--much to my parents' dismay. But with each decade, winters in the Great Lakes Basin have become more and more mild. This winter was not just a one-off. And yet, it was the warmest since 2000, and so people have remarked about it.
It's the nature of those remarks, however, that begs for the corrective touch of a haunting soundtrack. So often did I hear what a pleasant winter we were having. How lucky we Michiganders were to have this balmy reprieve from snowy discontents. Naturally, the winter sports enthusiasts were disappointed. But they seemed to chalk it up to freakish weather patterns that are not likely to repeat next year.
We should take no comfort in the extremely cold European winter since climate scientists actually predicted this. They explained that the melting sea ice due to rising temperatures in the Arctic would favor "the formation of a high-pressure system near the Barents Sea which steers cold air into Europe."
Back on my side of the globe, a friend in Texas reports that the multiyear drought there has gotten so bad that he is thinking about putting a diesel generator on his property to provide electricity during the expected brownouts and blackouts. This is because the continuing drought may force a number of electric generating plants to shut down for lack of cooling water from shrinking rivers and reservoirs.
Environmental activist Vandana Shiva has rightly dubbed what we are experiencing as climate chaos. Predictable climate patterns are changing everywhere with unpredictable results.
It is not always easy to pin down the causes of any specific weather pattern. And yet, the unprecedented rate of change in temperature and weather patterns worldwide should give us concern that the winter just past is but a preview of coming attractions. What the geologic record shows has previously taken 5,000 to 20,000 years to occur--namely, a 100 ppm rise in carbon dioxide concentrations in the atmosphere--has taken only 120 years in our era. What that implies is that in the past no single human being could have witnessed the kind of changes in climate we are now seeing in the space of a single lifetime or even a single generation.
In a way we have become inured to rapid change. The ever increasing drumbeat of industrial civilization and technological change has made us think that rapid change is both inevitable and good. At least that's what we tell ourselves. So, when the rhythm of seasons is disrupted, it seems like just one more change.
Of course, climate change isn't just one more change. And, it is the rate of change which tells us something is awry. It is the very fact that I can detect the general trend of warming winters in the Great Lakes in the course of my lifetime that ought to set off loud, buzzing alarms.
Alas, there is no one in charge of providing suitable sound effects for me or anyone else that would convey the predicament into which we as a global society are now walking with our eyes wide shut. I say eyes wide shut because even though concern about global climate change is very high nearly everywhere except the United States, little is being done to address it.
Earlier this month I highlighted two recent films which I thought captured the deepseated unease in our collective unconscious, an unease that is only rarely linked to our ecological predicament. The soundtracks of both were suitably eerie in keeping with the winter just past. But, it seems we'll need a lot more eerie music before the great mass of people will be able to hear the frightening silence of a winter in the snowbelt...without snow.
I can remember as a child entire weeks given over to snow days with snow so deep we could build tunnels through it--much to my parents' dismay. But with each decade, winters in the Great Lakes Basin have become more and more mild. This winter was not just a one-off. And yet, it was the warmest since 2000, and so people have remarked about it.
It's the nature of those remarks, however, that begs for the corrective touch of a haunting soundtrack. So often did I hear what a pleasant winter we were having. How lucky we Michiganders were to have this balmy reprieve from snowy discontents. Naturally, the winter sports enthusiasts were disappointed. But they seemed to chalk it up to freakish weather patterns that are not likely to repeat next year.
We should take no comfort in the extremely cold European winter since climate scientists actually predicted this. They explained that the melting sea ice due to rising temperatures in the Arctic would favor "the formation of a high-pressure system near the Barents Sea which steers cold air into Europe."
Back on my side of the globe, a friend in Texas reports that the multiyear drought there has gotten so bad that he is thinking about putting a diesel generator on his property to provide electricity during the expected brownouts and blackouts. This is because the continuing drought may force a number of electric generating plants to shut down for lack of cooling water from shrinking rivers and reservoirs.
Environmental activist Vandana Shiva has rightly dubbed what we are experiencing as climate chaos. Predictable climate patterns are changing everywhere with unpredictable results.
It is not always easy to pin down the causes of any specific weather pattern. And yet, the unprecedented rate of change in temperature and weather patterns worldwide should give us concern that the winter just past is but a preview of coming attractions. What the geologic record shows has previously taken 5,000 to 20,000 years to occur--namely, a 100 ppm rise in carbon dioxide concentrations in the atmosphere--has taken only 120 years in our era. What that implies is that in the past no single human being could have witnessed the kind of changes in climate we are now seeing in the space of a single lifetime or even a single generation.
In a way we have become inured to rapid change. The ever increasing drumbeat of industrial civilization and technological change has made us think that rapid change is both inevitable and good. At least that's what we tell ourselves. So, when the rhythm of seasons is disrupted, it seems like just one more change.
Of course, climate change isn't just one more change. And, it is the rate of change which tells us something is awry. It is the very fact that I can detect the general trend of warming winters in the Great Lakes in the course of my lifetime that ought to set off loud, buzzing alarms.
Alas, there is no one in charge of providing suitable sound effects for me or anyone else that would convey the predicament into which we as a global society are now walking with our eyes wide shut. I say eyes wide shut because even though concern about global climate change is very high nearly everywhere except the United States, little is being done to address it.
Earlier this month I highlighted two recent films which I thought captured the deepseated unease in our collective unconscious, an unease that is only rarely linked to our ecological predicament. The soundtracks of both were suitably eerie in keeping with the winter just past. But, it seems we'll need a lot more eerie music before the great mass of people will be able to hear the frightening silence of a winter in the snowbelt...without snow.
Sunday, March 11, 2012
The narrowing window for a transition to a sustainable industrial society
The viability of modern civilization depends on two important dimensions: 1) the continuous availability and deployment of essential resources and 2) the long-term productivity and habitability of our environment. Acquiring and deploying the necessary resources tends to be a short-term goal. We may have stockpiles of ready food, fuel and other nondurable goods, but they are not typically meant to last for years.
Our long-term goal ought to be maintaining the productivity and habitability of our environment. It is, after all, the only environment we have. But, of course, in the interest of maintaining an ever increasing availability of resources (economic growth), we have injured the long-term productivity of our farm fields, fisheries and forests and put ourselves at the mercy of unforeseen declines in the rate of extraction of energy and other key finite resources from the Earth. And, we threaten the planet's habitability for humans and many other creatures by causing rapid climate change through the burning of fossil fuels, changes in land use and the release of other potent greenhouses gases such a nitrous oxide and methane into the atmosphere.
All of this has implications for the amount of time we have to transition to a sustainable industrial society. Nearly everyone, even wild-eyed resource optimists, believes we must make this transition at some point because of our reliance on finite fossil fuels and metals. The current talk of vast new supplies of oil and natural gas and vast remaining supplies of coal has people thinking that we have plenty of time for such a transition. The fact that the data do not support these claims is one strike against this line of thinking. But even if it were true, we would have to consider the consequences, namely, enormous additional greenhouse emissions that are likely to heat up the planet so much that food supplies will fall off sharply and water supplies will decline as rainfall patterns are disrupted. So, while one development--increased availability of energy resources--would tend to lengthen the window for a transition to a sustainable society, the climate effects would narrow it all the more.
Even if we discounted climate change (which we shouldn't), increased cultivation using industrial farm methods will tend to degrade the soil and eventually bring down agricultural productivity. Increased harvesting of food from the world's oceans would tend to undermine and even permanently prevent the recovery of their fish and seafood populations. Pollution of fresh water resulting from increased industrialization would require the use of more and more resources to purify that water. And, the harvesting of ever greater amounts of fiber from the world's forests will undermine future forest productivity by impoverishing the land upon which they grow. Each of these has the effect of destroying the long-term carrying capacity of the Earth and thus its productivity for human needs.
So, it turns out that we have several additional causes for the shrinking of the transition window. And, when we come back to reality on actual likely future energy supplies, we reintroduce one more reason for an urgent transition. Perhaps we could simply speed up our adaptation. Certainly, an all-out effort to transition to renewable energy and to a cradle-to-cradle recycling scheme would help (however politically unlikely such an effort might seem). But it has essentially taken us 50 years to build out an energy infrastructure of pipelines, refineries and service stations for oil and a second one for natural gas. We probably do not have the luxury of that kind of time to build out a renewable energy society either because we don't have the necessary fossil fuels (which must be used to build that society) or because climate change is moving too fast to make such a leisurely time line prudent (or both).
So when government officials or industry spokespersons or media commentators speak only of new energy supplies extending the time before we must make a transition to a sustainable society, they are thinking one-dimensionally. This is seductive and dangerous thinking. It is seductive because it seeks to make simple what is really a very complex and multi-layered transition. It is dangerous because that one dimension ignores all the other factors that are making a transition so urgent.
It is also dangerous to judge the resilience and success of our current living arrangements solely by our level of wealth or health. We are using up the natural capital upon which our very survival depends more rapidly than it can be regenerated. It's true that one can experience the illusion of great wealth by spending all one's savings in a week. But life after that would become quite precarious as a single large expense, say, a large medical bill, could send one to bankruptcy court.
That is how we are living with respect to the natural systems we depend on. Right now we are in the last day of a week of a natural capital spending spree. When those natural systems become incapable of sustaining our accustomed consumption and pollution levels, we could find ourselves caught in a kind of natural bankruptcy, living in straitened circumstances but without much preparation.
Some will say that the window for a transition to a sustainable industrial society has long since passed and that we are destined for an eventual return to an agrarian and craft society. There are two problems with this kind of thinking that have nothing to do with whether it is correct or not. First, almost no one will be able to accept such a message upon the first hearing and perhaps not ever. If you argue something which your audience will likely never accept, you will miss the chance to move them incrementally toward your view.
Second, it is unlikely that there will be a clear line in any future society between what we call industrial and what might be called craft. No matter how difficult our circumstances become, we will not suddenly forget how to generate electricity. Nor will we forget how to do many other things which form the basis of industrial society. Of course, we may not be able to do these things on the same scale as now. But, I think it is permissible to talk about doing many of the same things we do today on a much smaller scale to meet our needs.
Using a comprehensible and palatable message at least makes it more likely that people will think that a transition is possible and want to participate in it. Without that, the length of time available for a transition won't even matter.
Our long-term goal ought to be maintaining the productivity and habitability of our environment. It is, after all, the only environment we have. But, of course, in the interest of maintaining an ever increasing availability of resources (economic growth), we have injured the long-term productivity of our farm fields, fisheries and forests and put ourselves at the mercy of unforeseen declines in the rate of extraction of energy and other key finite resources from the Earth. And, we threaten the planet's habitability for humans and many other creatures by causing rapid climate change through the burning of fossil fuels, changes in land use and the release of other potent greenhouses gases such a nitrous oxide and methane into the atmosphere.
All of this has implications for the amount of time we have to transition to a sustainable industrial society. Nearly everyone, even wild-eyed resource optimists, believes we must make this transition at some point because of our reliance on finite fossil fuels and metals. The current talk of vast new supplies of oil and natural gas and vast remaining supplies of coal has people thinking that we have plenty of time for such a transition. The fact that the data do not support these claims is one strike against this line of thinking. But even if it were true, we would have to consider the consequences, namely, enormous additional greenhouse emissions that are likely to heat up the planet so much that food supplies will fall off sharply and water supplies will decline as rainfall patterns are disrupted. So, while one development--increased availability of energy resources--would tend to lengthen the window for a transition to a sustainable society, the climate effects would narrow it all the more.
Even if we discounted climate change (which we shouldn't), increased cultivation using industrial farm methods will tend to degrade the soil and eventually bring down agricultural productivity. Increased harvesting of food from the world's oceans would tend to undermine and even permanently prevent the recovery of their fish and seafood populations. Pollution of fresh water resulting from increased industrialization would require the use of more and more resources to purify that water. And, the harvesting of ever greater amounts of fiber from the world's forests will undermine future forest productivity by impoverishing the land upon which they grow. Each of these has the effect of destroying the long-term carrying capacity of the Earth and thus its productivity for human needs.
So, it turns out that we have several additional causes for the shrinking of the transition window. And, when we come back to reality on actual likely future energy supplies, we reintroduce one more reason for an urgent transition. Perhaps we could simply speed up our adaptation. Certainly, an all-out effort to transition to renewable energy and to a cradle-to-cradle recycling scheme would help (however politically unlikely such an effort might seem). But it has essentially taken us 50 years to build out an energy infrastructure of pipelines, refineries and service stations for oil and a second one for natural gas. We probably do not have the luxury of that kind of time to build out a renewable energy society either because we don't have the necessary fossil fuels (which must be used to build that society) or because climate change is moving too fast to make such a leisurely time line prudent (or both).
So when government officials or industry spokespersons or media commentators speak only of new energy supplies extending the time before we must make a transition to a sustainable society, they are thinking one-dimensionally. This is seductive and dangerous thinking. It is seductive because it seeks to make simple what is really a very complex and multi-layered transition. It is dangerous because that one dimension ignores all the other factors that are making a transition so urgent.
It is also dangerous to judge the resilience and success of our current living arrangements solely by our level of wealth or health. We are using up the natural capital upon which our very survival depends more rapidly than it can be regenerated. It's true that one can experience the illusion of great wealth by spending all one's savings in a week. But life after that would become quite precarious as a single large expense, say, a large medical bill, could send one to bankruptcy court.
That is how we are living with respect to the natural systems we depend on. Right now we are in the last day of a week of a natural capital spending spree. When those natural systems become incapable of sustaining our accustomed consumption and pollution levels, we could find ourselves caught in a kind of natural bankruptcy, living in straitened circumstances but without much preparation.
Some will say that the window for a transition to a sustainable industrial society has long since passed and that we are destined for an eventual return to an agrarian and craft society. There are two problems with this kind of thinking that have nothing to do with whether it is correct or not. First, almost no one will be able to accept such a message upon the first hearing and perhaps not ever. If you argue something which your audience will likely never accept, you will miss the chance to move them incrementally toward your view.
Second, it is unlikely that there will be a clear line in any future society between what we call industrial and what might be called craft. No matter how difficult our circumstances become, we will not suddenly forget how to generate electricity. Nor will we forget how to do many other things which form the basis of industrial society. Of course, we may not be able to do these things on the same scale as now. But, I think it is permissible to talk about doing many of the same things we do today on a much smaller scale to meet our needs.
Using a comprehensible and palatable message at least makes it more likely that people will think that a transition is possible and want to participate in it. Without that, the length of time available for a transition won't even matter.
Sunday, March 04, 2012
Cinema imagines the worst: A psychological journey
It's one thing to create a literal portrayal of civilization-destroying natural disasters on film. It's quite another to depict a character's inner psychological journey as the world moves closer and closer to cataclysm. In the literal portrayal category we find the likes of Armageddon and Deep Impact, both about asteroids impacting the Earth. There is as well The Day After Tomorrow which depicts a rapid cooling in the Northern Hemisphere brought on, ironically, by global warming which shuts down the thermohaline ocean currents, the mechanism by which the Earth distributes heat from the equator to the poles.
Such film depictions are usually heavy on special effects that dazzle the viewer with explosions (often lots of them) and in the case of Armageddon and Deep Impact, elaborately staged space missions. I'm normally allergic to such stuff, but found the special effects in The Day After Tomorrow quite compelling because they depicted mostly natural processes--speeded up immensely, of course, for dramatic purposes.
Now we have two films which attempt to portray the inner life of the main characters as these characters sense and then come to grips with impending civilization-scale catastrophe. Melancholia follows a new bride, Justine, into her wedding reception only to find her distraught and withdrawn. Through her conversations with her sister, we sense that Justine has had a history of depression. So, what could be troubling the poor bride on her wedding night at an elaborately planned party where she is surrounded by friends? We are given several possibilities. But the real problem is only hinted at vaguely here and there.
(Perhaps I need to insert a spoiler alert here since I will henceforth reveal a considerable amount of the storyline of the two films I discuss below. But I believe the analysis will actually enhance the enjoyment of first-time viewers.)
As it turns out, the sudden appearance of a blue planet from behind the Sun is what's unsettling Justine; only she doesn't know it at first. The film's opening leaves us in no doubt about its conclusion. So, we are freed to contemplate how each character deals with the coming of this planet and the dangers it poses. There is the denial of Justine's brother-in-law, John, an amateur astronomer who assures everyone that the planet will simply pass the Earth by. That's what all the scientists say, he explains. Justine's young nephew has a healthy, but naive curiosity about the phenomenon. Justine's sister, Claire, feels something is wrong. We witness Claire doing a little research on the internet, research which reveals the reason for Justine's abject depression and Claire's uneasiness. But as the moment of truth approaches, it is Justine, who, snapping out of her deep depression, is able to face the enormity of what is about to happen with remarkable equanimity.
And, that is the director's point. Lars von Trier means for the film to be an expression of his experience with deep depression. The depressed person, it turns out, is the one who can, paradoxically, accept very bad news without falling apart, who can actually function and act with decisiveness in the face of certain catastrophe--not so much to solve the problem as to accept it.
In Take Shelter a working class family man, Curtis, begins to have dreams of devastating storms that threaten his home and community. At first, he tries to ignore these dreams. But soon they become so insistent that he is driven to spruce up and then stock supplies in the underground storm shelter just outside his house in the back yard. And yet, the dreams continue.
Curtis wonders whether what he sees in his dreams will come to pass or whether the dreams might simply be delusions. His mother, after all, is a paranoid schizophrenic. He reads some books on mental illness trying to determine if he is following his mother's path. He's not sure. More dreams prompt him to expand the shelter at considerable expense, requiring him to take out a home improvement loan to do so.
Curtis's wife is angry about the expense. His neighbors and relatives think he is crazy. His boss is upset because Curtis borrows equipment from work without permission which he uses to help expand the shelter.
Take Shelter provides an excellent description of a man, susceptible to the messages that nature is sending him, but unable to articulate those messages to others. He senses danger and formulates a plan to protect his family. He does not, however, have the slightest idea how to explain or justify the danger he senses to people in his town. And, even if he knew what to say, his fellow citizens think he is crazy; so why would they listen?
The fears, the difficulty in articulating them, the attempts at preparation, the ridicule by family members, friends and neighbors, all this should be familiar to those involved in the peak oil movement and even still to a certain extent those working to arrest climate change. And, then there is the depression. I believe that if you haven't experienced depression to some degree or another related to these issues, then you haven't grasp the seriousness of our predicament.
These films tell me that filmmakers are beginning to give voice to the emerging emotional turbulence in the collective unconscious arising out of our ecological predicament. Whether Lars von Trier, who also wrote the screenplay for Melancholia, understands the implications of peak energy or climate change or the myriad other ecological challenges we face, I do not know. But clearly he has passed through the emotions associated with a very similar journey of awakening. The director and writer of Take Shelter, Jeff Nichols, obviously understands climate change. The severe weather depicted in the film can have no other physical referent.
Strange as it may seem to some, watching both films has enlivened me. Here are two movies that give substance to my depression and my nightmares--reaffirming that these flow not from mental disease but from an acute awareness of the human predicament on a planet that is sending us messages about how to heal both our damaged biosphere and our damaged souls.
Such film depictions are usually heavy on special effects that dazzle the viewer with explosions (often lots of them) and in the case of Armageddon and Deep Impact, elaborately staged space missions. I'm normally allergic to such stuff, but found the special effects in The Day After Tomorrow quite compelling because they depicted mostly natural processes--speeded up immensely, of course, for dramatic purposes.
Now we have two films which attempt to portray the inner life of the main characters as these characters sense and then come to grips with impending civilization-scale catastrophe. Melancholia follows a new bride, Justine, into her wedding reception only to find her distraught and withdrawn. Through her conversations with her sister, we sense that Justine has had a history of depression. So, what could be troubling the poor bride on her wedding night at an elaborately planned party where she is surrounded by friends? We are given several possibilities. But the real problem is only hinted at vaguely here and there.
(Perhaps I need to insert a spoiler alert here since I will henceforth reveal a considerable amount of the storyline of the two films I discuss below. But I believe the analysis will actually enhance the enjoyment of first-time viewers.)
As it turns out, the sudden appearance of a blue planet from behind the Sun is what's unsettling Justine; only she doesn't know it at first. The film's opening leaves us in no doubt about its conclusion. So, we are freed to contemplate how each character deals with the coming of this planet and the dangers it poses. There is the denial of Justine's brother-in-law, John, an amateur astronomer who assures everyone that the planet will simply pass the Earth by. That's what all the scientists say, he explains. Justine's young nephew has a healthy, but naive curiosity about the phenomenon. Justine's sister, Claire, feels something is wrong. We witness Claire doing a little research on the internet, research which reveals the reason for Justine's abject depression and Claire's uneasiness. But as the moment of truth approaches, it is Justine, who, snapping out of her deep depression, is able to face the enormity of what is about to happen with remarkable equanimity.
And, that is the director's point. Lars von Trier means for the film to be an expression of his experience with deep depression. The depressed person, it turns out, is the one who can, paradoxically, accept very bad news without falling apart, who can actually function and act with decisiveness in the face of certain catastrophe--not so much to solve the problem as to accept it.
In Take Shelter a working class family man, Curtis, begins to have dreams of devastating storms that threaten his home and community. At first, he tries to ignore these dreams. But soon they become so insistent that he is driven to spruce up and then stock supplies in the underground storm shelter just outside his house in the back yard. And yet, the dreams continue.
Curtis wonders whether what he sees in his dreams will come to pass or whether the dreams might simply be delusions. His mother, after all, is a paranoid schizophrenic. He reads some books on mental illness trying to determine if he is following his mother's path. He's not sure. More dreams prompt him to expand the shelter at considerable expense, requiring him to take out a home improvement loan to do so.
Curtis's wife is angry about the expense. His neighbors and relatives think he is crazy. His boss is upset because Curtis borrows equipment from work without permission which he uses to help expand the shelter.
Take Shelter provides an excellent description of a man, susceptible to the messages that nature is sending him, but unable to articulate those messages to others. He senses danger and formulates a plan to protect his family. He does not, however, have the slightest idea how to explain or justify the danger he senses to people in his town. And, even if he knew what to say, his fellow citizens think he is crazy; so why would they listen?
The fears, the difficulty in articulating them, the attempts at preparation, the ridicule by family members, friends and neighbors, all this should be familiar to those involved in the peak oil movement and even still to a certain extent those working to arrest climate change. And, then there is the depression. I believe that if you haven't experienced depression to some degree or another related to these issues, then you haven't grasp the seriousness of our predicament.
These films tell me that filmmakers are beginning to give voice to the emerging emotional turbulence in the collective unconscious arising out of our ecological predicament. Whether Lars von Trier, who also wrote the screenplay for Melancholia, understands the implications of peak energy or climate change or the myriad other ecological challenges we face, I do not know. But clearly he has passed through the emotions associated with a very similar journey of awakening. The director and writer of Take Shelter, Jeff Nichols, obviously understands climate change. The severe weather depicted in the film can have no other physical referent.
Strange as it may seem to some, watching both films has enlivened me. Here are two movies that give substance to my depression and my nightmares--reaffirming that these flow not from mental disease but from an acute awareness of the human predicament on a planet that is sending us messages about how to heal both our damaged biosphere and our damaged souls.
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