Defying gravity

Everybody who knew anything on Wall Street knew for certain that oil prices were coming down this year. Crude prices lept in 2004 for a number of one-off reasons: Iraq, an overheated China, terrorist attacks, OPEC cuts, a weaker dollar. But that's all in the past. Now we're back to normal. Inventories are building. OPEC is adding supply. Iraq has had its election. But wait, prices are still going up. The puzzlement is detailed by Reuters and CBS Marketwatch in the usual fit of cluelessness that passes for business reporting.

Every Economics 101 student knows that in a perfect market prices are determined by supply and demand. But oil is not and has never been a perfect market. I believe that current prices no longer merely reflect current supply and demand, but rather the view among some market participants that future supplies will not be so plentiful. Long-dated futures prices for crude have risen in concert with nearby prices. People are beginning to hoard. Once the cycle begins it's hard to know where it will stop.

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Do these people look happy?

I was struck by the photo accompanying this article in The New York Times. The piece announces the passage of a law in Brazil sanctioning the planting of GMO crops, something that has been done in the country on the sly for years. I'm trying to imagine how wide an angle the news photographer will need when the first large-scale public health crisis traced to GMO foods erupts. Why am I so sure it will happen? Because no agency requires any testing of any kind for GMO foods. We are the testers.

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Wal-Mart as cargo cult

When European explorers first arrived in the islands of the South Pacific, they must have seemed like gods to the natives. Their never-before-seen sailing ships, their firebreathing weapons, their miraculous metal tools all made such an impression that after they left, the islanders built effigies of the ships hoping again to attract the god-like creatures to their shores in order to obtain more of their wonder-making wares.

These island peoples had no knowledge of how the strange boats and tools were made or where they came from. To James Howard Kunstler in a piece for Orion Online this seems very much like the relationship between Wal-Mart and its customers who similarly have little notion about where the things they buy come from or how they get to America. The magic is not so much the technology as the price. Privileges heretofore reserved for the wealthier set are now available for $7.99 and falling.

The trouble is that the encounter between Wal-Mart and its shoppers has been every bit as devastating to America's small towns and cities as the encounter between the Pacific islanders and their European conquerors eventually proved to be.

Something for nothing is America's motto now. And where you can't get that, then something for next to nothing is the next best thing--even if it destroys the very place you live.

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The 'soft collapse': Will organic farmers become the most important people on earth?

Several pieces has been appearing on the Internet which eschew the apocalyptic visions of some peak oil bloggers and commentators and propose that a failure to find adequate new energy sources is more likely to lead to a slow decline in industrial civilization, a decline that might even be temporarily arrested and reversed by technological developments. This piece appearing on Energy Bulletin is the most thoughtful and complete I've seen. My main interest is a comment at the end, something which you also see in the writings of James Howard Kunstler.

Without cheap fossil fuels to produce the synthetic fertilizers and pesticides which drive industrial agriculture, we will be in grave need of the knowledge of how to farm the land without these. Organic farmers are the storehouse and guardians of this knowledge, and it is to them that we will likely increasingly turn to feed the world. Such farmers will be in double demand. First, they will be called upon to produce vastly much more food than they do today. Second, they will be called upon to teach organic techniques to the many more people we'll need to work the land both in the countryside and in urban gardens in order to adequately feed everyone.

Something like this has already happened in Cuba where an end to cheap oil shipments from the collapsing Soviet Union in the early 1990s forced a complete reorganization and vast expansion of agriculture in the country. Will we have enough organic farmers to do the job should the time come for the rest of us?

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Has lack of regulation hurt American business?

That's the provocative question asked by this piece in The Christian Science Monitor. America used to be a leader in renewable energy. Now, it is a laggard. The unwillingness of the United States to join the Kyoto Protocol and the government's continuing resistance to and even rollbacks of environmental regulations are in danger of making it a technological backwater for what will perhaps be the most important technological field in the next several decades: alternative energy.

The United States is the undeniable world leader in the pharmaceutical industry because of its heavy regulation of prescription drugs, recent scandals at the FDA notwithstanding. Why can't we learn from that example?

(via Renewable Energy Law Blog)

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Tillamook bans bovine growth hormone

Tillamook, an Oregon dairy cooperative famous for its cheese nationwide, has decided to ban Monsanto's bovine growth hormone for all milk used in its cheese products. The hormone increases milk production but is linked to health problems in herds and is creating widespread apprehension among consumers about possible human health effects. The Campaign to Label Genetically Modified Foods and the Business Journal of Portland have items on the drama.

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From 'Road Warrior' to renewable energy

In the 1981 post-apocalyptic adventure film, Road Warrior, Mel Gibson plays Max, savior to a peaceful clan of Australians protecting an oil refinery besieged by petroleum-hungry hoodlums. The hoodlums--desert pirates--need the petrol to run their decrepit assortment of stripped-down and jerry-built vehicles that allow them to launch raids over a wide area.

The story has a happy ending. The peaceful clan manages to escape to a faraway place using a tanker convoy that carries much of refinery supplies with them, a stratagem that leaves the desert pirates without the means to pursue the clan. Is it a tale of a post peak oil production world or merely an allegory for the flight to the suburbs? Whichever it is, the interpretations are related and for now it's difficult to tell whether either will have a happy ending.

That is the concern of a new U. S. Department of Energy (DOE) report that has yet to be released, but has been summarized by one of the authors. The report focuses on "viable technologies to mitigate oil shortages associated with the upcoming peaking of world oil production." The author believes there are currently no substitutes for oil in transportation that wouldn't require at least 15 years of lead time to bring up to the scale needed to prevent shortages. And, he believes that a crash program would be required to achieve the necessary scale of production. The upshot: "Because conventional oil production decline will start at the time of peaking, crash program mitigation inherently cannot avert massive shortages unless it is initiated well in advance of peaking." He adds, "If peaking is imminent, failure to act aggressively will be extremely damaging worldwide."

Fortunately, two groups are offering blueprints for crash programs of the very type the DOE report calls for. The Apollo Alliance has outlined a $300 billion 10-year comprehensive federal crash program designed to wean the United States off fossil fuels by adding hugely to our renewable energy sources. Perhaps the plan's greatest virtue is that it has political considerations firmly in mind. It aims to get passed. It includes energy assistance to low income households, an emphasis on high-wage union jobs, a focus on manufacturing and retrofitting, firm support for environmental protection, an appeal based on energy security and a plausible promise to pay back all the government subsidies and grants through increased economic activity and the taxes it will generate. The authors of the plan are currently gathering a broad coalition to make the plan a reality.

The so-called SHINE Project, short for Solar High-Impact National Energy Project, has a smaller price tag--$5 billion over 10 years--but promises exceptional results. For example, under the SHINE program the equivalent of 48 million households could be served by solar power by 2025. The authors (one of whom is Joel Makower, consultant and fellow blogger) believe that only 2.8 million homes would reach this status without the program. In addition, some 580,000 new jobs would be created if the manufacturing is done in the United States.

Neither program claims to be an endall. But, they represent the bold entrepreneurial thinking that has made the United States a powerhouse of technical progress. The programs will be criticized by those who think the marketplace will take care of everything and by those who think government has no place in solving such problems. That thinking will have to be overcome. Will oil at $100 or $150 a barrel be enough to do the trick? Let's hope we don't have to wait until that happens.

Which leads us back to this question: We will blunder blindly into a future filled with "road warrior" cults engaging in combat over the last table scraps of industrial civilization? Or will we choose the soft path of cooperation and renewal? The clock is ticking says the man from the DOE. It's not only of question of whether we will make the right decision, it's whether we will make it in time.

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Republican mad hatters

Back in the good old days hatmakers used to treat cheap fur (often, rabbit fur) with mercury compounds to roughen the fur and to make it mat more easily. This made it usable for felt hats. The treated fur was boiled in acid to thicken and harden it. During another part of the process the hat was steamed and ironed to get it into shape. All of these processes released mercury compounds into the air breathed by workers. The result: Mad hatters syndrome. The symptoms included trembling, loosening of teeth, loss of coordination, and slurred speech. Other effects were more subtle: irritability, loss of memory, depression, anxiety, and personality changes.

At the time no one knew that mercury was the cause. That was then; this is now. Except now two Republican congressmen have issued a report that might lead you to believe that mercury isn't anything to worry about. After years of warnings about mercury in fish, the better-informed congressmen tell us: "There has been no credible evidence of harm to pregnant women or their unborn children from regular consumption of fish."

The report reads as if the fishing and coal industries got together to write it. That's because the real aim of the report is to shoot down regulation of emissions of coal-fired power plants. Coal is possibly the last major industrial source of mercury in the environment. When coal is burned, mercury, a contaminant in the coal, is released into the air whereupon is floats over land and sea before coming down. That's when the problems begin. The mercury gets into the food chain, particularly of fish, accumulates, and then gets into humans when we eat the fish.

The occasion of the report is the impending release of rules to bring mercury emissions under control from coal-fired plants. The Republican congressmen, Richard Pombo (R-Calif.) and Jim Gibbons (R-Nev.), don't want the strict regulation proposed by the Clinton administration as a settlement of a lawsuit. Rather, they want a so-called "cap and trade" system that allows plants to trade emission credits. The problem is that such a system won't do much of anything to bring total emissions down for a decade. The stricter technology-mandating rules would begin to bite within three years or so.

The assumptions and sleight-of-hand used by the report's authors is a catalog of the tactics used by the anti-environmental lobby. First, say there is no problem. Then, say that even if there is a problem it's not being caused by humans (i.e. the humans that run big utilities which give generously to the Republican Party and its candidates). The congressmen regale us with all the natural sources of mercury in the environment. They pretend that if it's naturally in the environment it can't be bad. Well, the environment also has arsenic and lead in it, neither of which is good for you. But, of course, humans are particularly good at concentrating these harmful elements using industrial processes and that is the crux of the whole problem.

The congressmen also tell us that the yearly emissions of mercury have fallen substantially over the last 30 years. What they ignore are the cumulative effects. If we reduce what we add each year to the mountain of mercury already released, this does nothing to lower the toxicity of the mercury already out there. We need to stop adding to what is already in the environment.

Chris Mooney, an independent science writer, does a good job of dissecting the sources of Pombo's and Gibbons' disinformation. Much of it comes from industry-sponsored studies and think tanks (read: propaganda mills). The remaining stuff comes from many government sources which are twisted beyond recognition.

The whole episode makes one believe that the congressmen themselves have been making too many felt hats in an old hat factory. When someone tells you mercury is not all that bad for you, remember the mad hatters.

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It's the infrastructure, stupid!

Energy investment banker Matt Simmons, long concerned with a possible peak in world oil production, lays out a nuanced case here for why oil reserves aren't the only reason for concern. Inadequate energy infrastructure is likely to play a major role in rising energy prices and may become part of the reason for a peak.

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Apples and oranges

Those who are saying that Great Britain should abandon its expansion of wind power and focus on energy efficiency are missing the point. Great Britain (and everyone else) should do both. We should also recognize that the question of which should be a priority is a false one as they are not directly comparable. One, energy efficiency, reduces carbon emissions and makes carbon-based fuels last longer. This is a worthy goal, but by itself it only delays the day of reckoning. The other, building clean renewable energy sources, is the only path with a future. Without it the day of reckoning will come and go without a solution.

By presenting the question as an "either/or" proposition, the authors of the report cited and the supporters of this approach would like you to believe that we cannot afford both and so we must choose based on the dollar cost of each alternative. But, in the end, it is the energy cost that matters in the future. Financial assessments are useful when money means something. In a world bereft of renewable energy, money will have far less meaning and value.

The real answer to the wind power critics is that we must pay for both energy efficiency and wind power. The task before us is to create the political will to do so instead of presenting fake "either/or" choices that only serve narrow constituencies and narrow minds.

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