Friday, June 10, 2011
Thursday, June 9, 2011
"The U. S. recovery is over. Rest in peace" headlines CNN Money. An economist at UCLA used the "pulse of commerce index" of domestic fuel as a primary indicator that there's no forward momentum left to the post-09 rebound. For their own reasons, lots of other economists, like Paul Krugman, Robert Reich, Jeff Rubin, are all saying the same thing.
Was it ever a recovery, though? Did we really escape the gravity-well of the 2008 event, the world's first peak global oil shock? Or was this just a brief rebound off the mat before the global economy continues its uneven but inescapable slide down the entropy slope?
If you're at all like me, an irrelevant bystander to history, it's just an idle question. But what if you're someone important in the world today? Or more seriously, (since brain wattage and political power have little necessary correlation that I can see) what if you're someone being well paid to advise important someones in the world today? And of course we include corporations as important personages because the SCOTUS decrees it so. If you're an adviser to the House of Saud, or to Exon, or you report to Chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, or one of his global counterparts, you might just have some leverage on decisions that direct real money and resources. So where you come down on the question might matter.
The question again is: Are we at a production bottleneck now, in late 2011 or 2012, or, do we have longer? If it is the latter that means that, somehow, as improbable as it sometimes seems, and despite all that's vexing central bankers in Europe, the U. S., China, Japan, and all points in between, the world still has time to invest in a future that runs on something other than hydrocarbons. So do we have until 2018 to double the average fuel economy of the U. S. fleet, to make improvements and cost reductions in electric vehicles, to build mass transit and boost the generating capacity of the grid, and all the million and one other incremental steps necessary to live in a world of declining hydrocarbons? It might just come down to the question, does the global economy have one more good recession left in it?
I'm reading a couple of books right now that I hope will help me understand if such a future is more than chimerical. The one I'll talk about today is Jeff Rubin's, Why Your World is About to Get a Whole Lot Smaller: Oil and the End of Globalization. I was extremely fortunate to get a copy of the book at Half-Priced books on South Lamar. Rubin's blog is, in my view, a must read for anyone serious about keeping up with energy news. I learn something new there most every post. For example, I have been repeating what I've heard J. H. Kuntsler and lots of others say about the Saudi's being the only entity on the planet with the spare capacity to boost global oil production on short notice. That probably was the case not many years back. But all the data in 2011, says Rubin, suggests that the Saudis are not able to play the role of central bank to global oil liquidity. It's not that they are choosing to stand pat on exports. It is that they are steadily consuming more of what they pump out of the ground each year while their existing fields are steadily declining. The muscular player in the oil patch today is Russia. Russian oil production rose to a near post-Soviet high of 10.26 million barrels a day in May, says Rubin, making Russia the most important oil producer. Indeed, with Saudi either unable or unwilling to increase production, the world would already have been at peak production were it not for Russian exports. And who else is saying Saudi and OPEC have plateaued? Well, when Jim Rogers is saying it on CNN the meme has gone mainstream.
Was it ever a recovery, though? Did we really escape the gravity-well of the 2008 event, the world's first peak global oil shock? Or was this just a brief rebound off the mat before the global economy continues its uneven but inescapable slide down the entropy slope?
If you're at all like me, an irrelevant bystander to history, it's just an idle question. But what if you're someone important in the world today? Or more seriously, (since brain wattage and political power have little necessary correlation that I can see) what if you're someone being well paid to advise important someones in the world today? And of course we include corporations as important personages because the SCOTUS decrees it so. If you're an adviser to the House of Saud, or to Exon, or you report to Chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, or one of his global counterparts, you might just have some leverage on decisions that direct real money and resources. So where you come down on the question might matter.
The question again is: Are we at a production bottleneck now, in late 2011 or 2012, or, do we have longer? If it is the latter that means that, somehow, as improbable as it sometimes seems, and despite all that's vexing central bankers in Europe, the U. S., China, Japan, and all points in between, the world still has time to invest in a future that runs on something other than hydrocarbons. So do we have until 2018 to double the average fuel economy of the U. S. fleet, to make improvements and cost reductions in electric vehicles, to build mass transit and boost the generating capacity of the grid, and all the million and one other incremental steps necessary to live in a world of declining hydrocarbons? It might just come down to the question, does the global economy have one more good recession left in it?
I'm reading a couple of books right now that I hope will help me understand if such a future is more than chimerical. The one I'll talk about today is Jeff Rubin's, Why Your World is About to Get a Whole Lot Smaller: Oil and the End of Globalization. I was extremely fortunate to get a copy of the book at Half-Priced books on South Lamar. Rubin's blog is, in my view, a must read for anyone serious about keeping up with energy news. I learn something new there most every post. For example, I have been repeating what I've heard J. H. Kuntsler and lots of others say about the Saudi's being the only entity on the planet with the spare capacity to boost global oil production on short notice. That probably was the case not many years back. But all the data in 2011, says Rubin, suggests that the Saudis are not able to play the role of central bank to global oil liquidity. It's not that they are choosing to stand pat on exports. It is that they are steadily consuming more of what they pump out of the ground each year while their existing fields are steadily declining. The muscular player in the oil patch today is Russia. Russian oil production rose to a near post-Soviet high of 10.26 million barrels a day in May, says Rubin, making Russia the most important oil producer. Indeed, with Saudi either unable or unwilling to increase production, the world would already have been at peak production were it not for Russian exports. And who else is saying Saudi and OPEC have plateaued? Well, when Jim Rogers is saying it on CNN the meme has gone mainstream.
Wednesday, June 8, 2011
How to Score this Disaster Flick?
Last post made a stop by Club Pigou. This round of clubbing takes me by Club Orlov where the idea struck me that, if you're going to play a Cassandra, be self-aware about the tenor of one's presentation. There's the pedantic, scientist approach of people like Lester Brown at Earth Watch. Not really good for a diverse audience that would like bad news to be at least entertaining. There's snarky and combative, but that's entirely cornered by the cultural right. There is a kind of oblique, scene-painting-of-disquiet approach that the National Geographic uses. Beyond the pretty pictures and going on decades of excellent articles about the degradation of the terrestrial biosphere is the single subtext message: "Heh! Stupid! Figure this out while you still can do something about it."
One could go with the Chicken Little, Hair-on-Fire, approach. I tried this early on in a lot of posts at Grist.com but moved away from it since Joe Romm helped me realize that there's little margin of error between being highminded and being vainglorious. Alternatively, there is the low-key, understated approach of someone like Dimitri Orlov. He makes impending catastrophe sound almost banal. For example, this passage from his blog, ClubOrlov:
Although a complete and instantaneous collapse of global industry doesn’t seem particularly likely just at this very moment, its likelihood begins to approach 100 per cent as we move through the 21st Century. The opposing view – that industrial civilization can survive this century – comes up rather short of facts to support it and rests on an unshakable faith in technological miracles. In an echo of medieval alchemy, the hopes for technological salvation are pinned on some element or other: yesterday it was hydrogen; today it’s thorium. Fusion reactors are currently out of fashion, cold fusion doubly so, but who knows what new grand proposal tomorrow will bring?
Whether it's the Russians or the British (The Pythons to Dr. Who,) apparently one gains the craft of gallows humor at the price of losing a global empire. Not a fair trade off perhaps, but nice consolation nonetheless.
Here is an echo of the same from Jeremy Grantham, a Brit., in his April 2011, GMO 2nd quarterly letter to investors.
"Now no one, in round numbers, wants to buy into the implication that we must rescale our collective growth ambitions. I was once invited to a monthly discussion held by a very diverse, very smart group, at which it slowly dawned on my jet-lagged brain that I was expected to contribute. So finally, in desperation, I gave my first-ever “running out of everything” harangue (off topic as usual). Not one solitary soul agreed. What they did agree on was that the human mind is – unlike resources – infinite and, consequently, the intellectual cavalry would always ride to the rescue. I was too tired to argue that the infinite brains present in Mayan civilization after Mayan civilization could not stop them from imploding as weather (mainly) moved against them. Many other civilizations, despite being armed with the
same brains as we have, bit the dust or just faded away after the misuse of their resources. This faith in the human brain is just human exceptionalism and is not justified either by our past disasters, the accumulated damage we have done to the planet, or the frozen-in-the-headlights response we are showing right now in the face of the distant locomotive quite rapidly approaching and, thoughtfully enough, whistling loudly."
The whistle, for Grantham, is the data from commodity prices, which for him resound the clarion call to consider just what kind of a pickle we all will be in if we do not swiftly make alternative arrangements to hydrocarbons and other vanishing critical resources. One hopes that it's a little harder to shoot the messenger when it's one of capitalism's titans. We'll see.
But whatever one's station, the parting thought for the moment is that Cassandra sounds best when she's holding up a graphic of the Hubert Curve, or the Keeling Curve, (insert other favored iconic representation of FUBAR) while tunefully whistling, "Always look on the Bright Side of Life."
One could go with the Chicken Little, Hair-on-Fire, approach. I tried this early on in a lot of posts at Grist.com but moved away from it since Joe Romm helped me realize that there's little margin of error between being highminded and being vainglorious. Alternatively, there is the low-key, understated approach of someone like Dimitri Orlov. He makes impending catastrophe sound almost banal. For example, this passage from his blog, ClubOrlov:
Although a complete and instantaneous collapse of global industry doesn’t seem particularly likely just at this very moment, its likelihood begins to approach 100 per cent as we move through the 21st Century. The opposing view – that industrial civilization can survive this century – comes up rather short of facts to support it and rests on an unshakable faith in technological miracles. In an echo of medieval alchemy, the hopes for technological salvation are pinned on some element or other: yesterday it was hydrogen; today it’s thorium. Fusion reactors are currently out of fashion, cold fusion doubly so, but who knows what new grand proposal tomorrow will bring?
Whether it's the Russians or the British (The Pythons to Dr. Who,) apparently one gains the craft of gallows humor at the price of losing a global empire. Not a fair trade off perhaps, but nice consolation nonetheless.
Here is an echo of the same from Jeremy Grantham, a Brit., in his April 2011, GMO 2nd quarterly letter to investors.
"Now no one, in round numbers, wants to buy into the implication that we must rescale our collective growth ambitions. I was once invited to a monthly discussion held by a very diverse, very smart group, at which it slowly dawned on my jet-lagged brain that I was expected to contribute. So finally, in desperation, I gave my first-ever “running out of everything” harangue (off topic as usual). Not one solitary soul agreed. What they did agree on was that the human mind is – unlike resources – infinite and, consequently, the intellectual cavalry would always ride to the rescue. I was too tired to argue that the infinite brains present in Mayan civilization after Mayan civilization could not stop them from imploding as weather (mainly) moved against them. Many other civilizations, despite being armed with the
same brains as we have, bit the dust or just faded away after the misuse of their resources. This faith in the human brain is just human exceptionalism and is not justified either by our past disasters, the accumulated damage we have done to the planet, or the frozen-in-the-headlights response we are showing right now in the face of the distant locomotive quite rapidly approaching and, thoughtfully enough, whistling loudly."
The whistle, for Grantham, is the data from commodity prices, which for him resound the clarion call to consider just what kind of a pickle we all will be in if we do not swiftly make alternative arrangements to hydrocarbons and other vanishing critical resources. One hopes that it's a little harder to shoot the messenger when it's one of capitalism's titans. We'll see.
But whatever one's station, the parting thought for the moment is that Cassandra sounds best when she's holding up a graphic of the Hubert Curve, or the Keeling Curve, (insert other favored iconic representation of FUBAR) while tunefully whistling, "Always look on the Bright Side of Life."
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