Peak Oil and the Gulf Oil Spill
Since I cannot write to the producers/editors of the Lang & O’Leary Exchange (see previous post), then I will post my thoughts here.
On a previous episode, perhaps Thursday or Wednesday, I caught the tail end of an interview where the guest was speaking about the investing outlook and made an interesting (but mostly off-the-cuff) remark about the concept of peak oil. He said that if the recent events in the Gulf of Mexico have taught us anything it is that there is no shortage of oil and that the ‘peak oil theory’ has things wrong.
As I said, I suspect this was just an off-the-cuff remark, perhaps based on one of those fleeting ideas or insights we all get, but it represents a common misunderstanding of the concept of peak oil and what, in reality (or out there in the world), it is describing. It also shows, I think, how rhetoric sometimes trumps, or stands in for, rational reasoning since if you don’t think about it too much, this rhetoric tends to make some degree of sense. At any rate, I found this argument interesting and thought it would be a good one to mentally deconstruct and disassemble, perhaps to be used as an example in a future lecture or something.
Seeing the image of the uncontrollable outflow of gases and petroleum from BP’s well does show the tremendous amounts we are dealing with, even just in one blown well. We, as a species, produce and use petroleum at tremendous rates. In fact, we measure the world’s daily consumption of oil in millions of barrels. So, as the TV guest said, we are not running out of oil. However, the concept of peak oil does not include the proposition that we will run out of oil.
What the concept of peak oil puts forth is that it will become increasingly hard to produce large amounts of oil at low prices. In fact, that is what the underwater image of escaping petroleum really shows: today, we have to go to extreme lengths to secure reliable and exploitable sources of that finite, natural resource. Most of that oil was not recovered anyway and probably will never be. I don’t know if the oil that was recovered could even be refined, but I could see that they were burning off a great deal of gas at times. And, what will all this oil that BP recovered end up costing them? 20 or 25 billion dollars?
The fact is that our global society is having to rely on increasing unstable (usually due to war) and increasingly inaccessible sources of petroleum. That is why we hear more and more about these controversial forms of extraction like deep-water drilling and mining operations like the oil/tar sands. It’s not that these methods are any worse for the environment than past methods (resource extraction is just a very messy business) but that these methods are very dangerous, complex, and are themselves extremely resource-intensive. Sadly, it is probably a safe bet that we will see more of these man-made disasters and that more and more people will lose their lives as we come to rely on squeezing more and more from non-conventional sources.
This is precisely why the concept of peak oil is such an important one for a financial program like the Lang & O’Leary Exchange to look into and in detail. Modern, industrialized society arose because of, and is reliant upon, abundantly cheap energy. Since we get most of our energy (and something like 96% in the case of all forms of transportation) from petroleum, this is a big deal. Think of what this means for the long-term prospects of, not just individual companies, but entire industrial sectors. Aerospace, airlines (has that industry ever been profitable?) automotive manufacture, global and continental shipping/trucking (think Wal-Mart)… tourism. If we increasingly use natural gas (and many homes in North America have switched to that fuel for heating) to extract petroleum from oil sands or have to risk threatening other natural resources and the industries reliant upon them, then we don’t have an environment that is conducive to business or investing. Modern, industrialized agriculture is reliant upon cheap fossil fuels for diesel, fertilizer, synthetic hormones and pharmaceuticals, herbicides and pesticides. (The pharmaceutical industry depends upon industrial agriculture so is at risk too.)
What is most important is that this will affect all of as individuals too. Traditionally, energy was measured in terms of real world equivalents: man-hours or horse-power. One barrel of oil is said to represent the energy that 12 people, working for an entire year, can produce. Or it contains the energy that is the equivalent of 25,000 hours of labour from a human worker. So if I can purchase a barrel of oil for $70 today (or, say, 2 cents a barrel in Texas in 1931), that is a really cheap form of energy. But we are living in the midst of one of the severest economic recessions/depressions in a century. When or if economies can recover, demand will raise prices. It was just a few years ago when demand was surging and oil was at $140/barrel. All this points to the very real possibility that petroleum is going to get more and more expensive. For each one of us, that means we will have to perform more and more of the labour that petroleum has done for us in the past.
Finally, this is dire for businesses of all sorts (where operations are reliant upon cheap energy) and, especially, the financial sector. I find the argument that global stock markets (and market evaluations) are filled primarily with petro-dollars or petro-wealth to be a compelling one. In fact, we have inflated our economies on a mixture of banking-fuelled monopoly money and petro-wealth over the course of the entire 20th century. What is more, as Western economies are declining, many developing economies are still growing… and growing their demand for oil. In the future, we are going to have to increasingly compete with China, India, and elsewhere for oil production.
So, I think that peak oil/energy is an important topic for the Lang & and O’Leary Exchange to consider and to investigate. Many of the people who are discussing peak oil (and who are responsible for its generation as a concept in the first place) are geologists and those working in the oil industry so it’s not just granola munchers and hippies talking about this. I would contact the editors/producers of the Lang & and O’Leary Exchange to argue my point but they only seem to want to exist in Twitteratii Land.
The CBC and its Obsession with Twitter
[Update: I subsequently found... or, more correctly, was shown the Land & O'Leary Exchange email address as the program announces it at the end of the show. It must be well buried on the website, as I could not find it but I despite all this I still stand behind what follows. And even though I now know the email address, I am not forwarding my comments as they probably do not care about such viewpoints anyway as it doesn't really square with the narrative they need to keep telling.]
Don’t get me wrong, as far as mainstream media as sources of reliable information goes, the CBC is a treasure. (In fact, some of my favourite media sources (especially when it comes to television) are public or state-sponsored broadcasters (CBC, PBS, BBC, Al Jazeera International). As someone who devotes most of his life to studying the media, I can confidently say these can be or tend to be very good sources. (BTW, my favoured source of news and current events are independent websites, radio, magazines and research institutes.)
So, I am not a CBC-basher or idealogue who thinks that public broadcasting is akin to Communism, but I am very frustrated with the likes of the CBC and their obsession with social media, specifically Twitter and Facebook. Sure, it’s popular amongst the ‘kool’ kids… those in high-school or think they still are in high school and feel an undying need to ‘run with the pack’ and who visualize themselves looking cool while others are watching them use their cool gadgets (and thinking to themselves: ‘Man, I’m so connected’). That’s annoying but OK. I can put up with such posturing but when it starts to really take over, then that is when I begin to worry.
I just tried going to the Lang & O’Leary Exchange website to make a comment about some recent programming but could not find, anywhere on the CBC’s vast website, any way to send an (e)letter to the editor. Instead, apparently, the only way you are supposed to contact the program’s staff is to follow them to some proprietary service, hand over all you private information, and then you’ll have the pleasure of reading, in 140 characters or less, some inane fact or thought passing through their heads.
Now, if this was a private news source, then I would not mind so much. If some news business thinks that it will expand its news-reading audience by limiting its interactions to a narrow space within the media-sphere that is primarily occupied by youth (who tend not to consume news), then that is their business decision. But a public broadcaster has a different mandate: it is meant to serve the public at large and in various capacities. To my mind, cordoning yourself off inside the proprietary space of another media service is not a wise way of going about this.
Perhaps it is just another way that the kool kids (that is, those who tend to swallow gallons of branded koolaid) tend to hijack things, in this case tax-payer-supported broadcasting, and turn it into just another mirror that reflects themselves to themselves while they think everyone is looking at them with undying admiration. It is just like high school cliques all over again. (And, really, isn’t Facebook just one giant, interactive high-school yearbook?)
It’s too bad as I like the program (especially when Kevin O’Leary is absent, hehe ) as they tend to have interesting guests and cover a lot of issues. Perhaps I am being too harsh, but it is a travesty when, in the 21st century, a viewer cannot easily contact the editors/producers of a tax-payer funded program on a public broadcaster.
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Hmmm… I wonder… what are the important ‘twends’ that the Twitterati are twittering about now?
…and now?
… how about now?
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Iraq War? What Iraq War?
I have been meaning to comment here on the withdrawal of U.S. combat troops from Iraq as announced by Barack Obama himself. I am certainly not the only one who scoffs at the thought that this is actually a withdrawal or an end to the occupation of Iraq by U.S. troops. The U.S. military is supposedly leaving behind troops (but they are not ‘combat’ troops!), large military bases and an embassy that is the size of 80 football fields and costs $1 billion a year to operate (meaning its more like a military fortress than an embassy). Today, the U.S. maintains well over 800 military bases in something like 130+ countries (these figures are notoriously confused, see this article for example.)
Still, most commentators and pundits showing up in the mainstream media (even in Canada) go along with the charade that the Iraq War has ended and there is a lot of talk that it was, in the end, successful. Such is the mainstream media: delusional and clearly preoccupied with other important topics such a celebrity sightings and talking up whatever reality TV program their network sponsors. And, I suspect, the vast majority of U.S. or Western citizens have put the conflict/war/occupation out of their minds too.
So, I thought I would post a document showing just how out of touch most in the West are when it comes to the wars/conflicts/occupations that their militaries/governments are pursuing in their name (I suspect that the lack of awareness is only slightly better in the U.K. or Canada). I had originally prepared this as a handout for a class I was teaching at the time but I did not use it in the end. The document looks at the casualties of Iraqi citizens since the beginning of the U.S.- and U.K. led invasion of Iraq. The interesting thing about this is that 1) we have no idea, and 2) most in the U.S. are completely clueless about how many Iraqi have died since their former President invaded that country in 2003.
It truly is sad how Westerners can be so oblivious to what their governments do in their name and to maintain their comfortable Western lifestyle. When living in (or next to) the empire, such blissful ignorance is a very, very dangerous thing.
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PS. The document is in PDF format. You can download Adobe’s reader here or you can download other free (and some that are open source) PDF readers here.
Google to World: Let’s Do Evil (but pretend we’re not)
A colleague asked if I had been following the most recent volley in the net neutrality issue involving that schizophrenic good/evil corporation Google and their partner Verizon. Other than a few articles and an interesting episode of Democracy Now, I have been too busy with other projects to really delve into it. But this morning I took some time to read up on the issue, including a Google Blog entry describing their joint proposal with Verizon. In the entry, the “compromise” between Google and Verizon, and the resulting policy paper, is discussed and summarized. It is quite interesting, in the sense that it is a prime example of public-relations double-speak (where I think they are trying to carefully camouflage their intentions and make it seem that they support the principle of net neutrality while actually going against it or around it).
In the blog post, they summarize their joint policy proposal with seven key points, which I will ‘translate’ from the obfuscating language of the corporate-lawyer-public-relations-guru to the language of an ordinary netizen (again, you can access the original here):
1. Google-Verizon state they believe in net neutrality. Well, not exactly. What they specifically state is that they “have long been proponents of the FCC’s current wireline broadband openness principles.” Sort of wishy-washy. The phrase, “have long been proponents,” is not a strong statement and leaves the future tense wide open. Plus, they are not ‘for’ the principle of net neutrality but the Federal Communications Commission‘s “current wireline broadband openness principles.” Keep the term “wireline broadband” in mind as this is a crucial point. (They also reference a past court ruling in the U.S. which decided that technically/legislatively, the FCC does not have the power to enforce net neutrality principles. The suit was brought by the cable giant Comcast (another less than savory media player) against the FCC.)
2. They (Google-Verizon) reiterate that “wireline broadband” should abide by net neutrality principles.
3. They (Google-Verizon) believe that broadband providers, both ‘wireline’ and ‘wireless,’ should act in a transparent manner toward customers, application- and content-providers so that they know how various services are structured. This is a slippery paragraph where Google-Verizon put forth language with positive connotations (“transparency”) but also introduce the conceptual division they are making between ‘wireline’ and ‘wireless’ services.
4. Raising the FCC-Comcast court case again, and the fact that under U.S. law, Congress has not specifically given the FCC jurisdiction over net neutrality, they (Google-Verizon) put forth their own policy framework where the FCC is given such powers and where enforcement takes place on a “case-by-case” basis and in a “complaint-driven process.” Which means that the FCC could only react to complaints about abuses to net neutrality by being informed by third-parties. Under such a process, the FCC would not have paid, trained investigators who actively look out for such abuses but would rely on third-party individuals to bring complaints to the commission. (Would your average user or small business have the necessary knowledge, information and expertise to make such complaints?)
5. Here we find Google-Verizon offering some more glittering generalities such as “innovation” (who can argue with that?) and “safeguards” (those are always good). They (Google-Verizon) state that they “want the broadband infrastructure to be a platform for innovation.” OK, that sounds good. But then they go on: “Therefore our proposal would allow broadband providers to offer additional, differentiated online services….” OK, so here innovation is defined as allowing corporations to offer “differentiated online services.” What these are they don’t quite say (“It is too soon to predict how these new services will develop….”) but in doing so they have just semantically “differentiated” between ‘old’ kinds of broadband and new services that will be somehow different.
6. This is the meat of the issue so it’s best to let Google-Verizon (or simply GooglErizon?*) to speak for themselves: “Sixth, we both recognize that wireless broadband is different from the traditional wireline world, in part because the mobile marketplace is more competitive and changing rapidly. In recognition of the still-nascent nature of the wireless broadband marketplace, under this proposal we would not now apply most of the wireline principles to wireless, except for the transparency requirement.” So, in English: GooglErizon thinks that wireless broadband is different from wired (or ‘wireline’… wow, that’s so ‘old’ sounding) because it is more competitive and, THEREFORE, GOOGLERIZON BELIEVES THAT NET NEUTRALITY PRINCIPLES DO NOT APPLY TO ‘NEW’ KINDS OF BROADBAND SERVICES THAT HAVE YET TO BE DEFINED AND WILL BE DEFINED BY GOOGLERIZON AND OTHER SIMILAR CORPORATE ENTITIES. They then go on to throw a bone to the GAO (U.S. Government Accountability Office… which if recent history is any indication, is a rather toothless organization when it comes to accountability) by giving them some sort of authority to study stuff.
7. Finally, they (GooglErizon) believe that broadband is in “the national interest” and that the FCC should continue using the Federal Universal Service Fund to fund broadband services into areas where there is currently no service.
So, there we have it. It is interesting how GooglErizon has come out in support of net neutrality principles by saying that those principles are fine as long as they are not applied to the ‘new’ services that they (GooglErizon) will offer in the future. The fact that they are not ‘wired’ is the only distinction, even though how one can distinguish between the multitude of wires, cables, radio, and satellite infrastructure–especially when a single piece of communication might travel along all of them in getting to its destination–is still an interesting question.
They (GooglErizon) seem to think that if there is a service (say, smartphones running Google’s Android operating system and carried by Verizon’s phone network) that lies on top of the existing internet or broadband infrastructure, then it should not be ruled by net neutrality regulations because this is not the ‘wireline‘ part of that collection of technologies that we collectively call the internet. I have been amused at how RIM, Nokia, Motorola, Apple, et all insist on calling their products by anything other than ‘computer’ (which is what they are) and instead use ‘smartphone’ or some other term. They do this because it makes it seem like what the user is using is not a small handheld, internet-enabled computer tied to proprietary services, but little magical Star Trek Tricorders that are somehow separate from all that other communications infrastructure. Now I see this at work in the GooglErizon policy proposal. We’ll all just pretend that these ‘new services’ don’t access the wireline Internet and all the public and private technological infrastructure that supports it. As long as their is some proprietary ‘smart’ device acting as an intermediary between ‘the line’ and the user, then net neutrality (and other regulations) will not apply.
But perhaps that is GooglErizon for you… they can do evil and slowly take over the world (as long as no one can really see that they are doing so).
*GooglErizon (Goo’ gler i zon): One of many corporate entities that are vying for control over communications and the public sphere.
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400 000 Dollars (USD) and Dr Housing Bubble
400 000 dollars (U.S. funds). That was the average price increase in commercial home real estate somewhere (Pasadena) in California from 2000 to 2007. California, the land of make-believe… and where the Governator was just a few years ago yelling “Don’t Be Economic Girly-Men!!” but is now presiding over a dysfunctional electoral system, consecutive multi-billion budget shortfalls, and a treasury which has to resort to I.O.U.s from time to time. Dr. Housing Bubble? He (it), was a blog that I started reading well over two (or even three) years ago, I guess. It quickly became my regular reading, especially a year or so ago.
At any rate, it offers a very interesting perspective on the housing market in the middle of la la land, which means: the heart of the housing-bubble/mortgage-fraud system that began to overtake the U.S. and the rest of the world’s investors as well.
Anyway… the thing that struck me when I first saw this headline, is that somehow that number (400,000) seemed to really sum up the recent past for me. It seems like a dream, these last ten years have seen the explosion of the spectacular and the bizarre, wonderous heights and utter hopelessness. All summed up by the explosion in real asset prices and the greed, opportunity, and expectations that moved along with it. This illusion is roughly measured (as if any measure can estimate this) by the figure of $400,000 USD.
$400,000… in U.S. dollars… the world’s reserve, and declining, currency. But it does not matter since most currencies/debt are intertwined these days. In the span of seven crazy years, the cost of a house went up 400,000. That is the abstract measure of ‘the market’ or the collective mind or whatever. And while prices have fallen in the U.S. and elesewhere (and even other ‘safe’ countries like Canada are looking like they are not immune), there is still a lot of that increase which lingers, especially since prices for many goods and services have also increased. So, 400,000… that is a big number when talking about a price increase.
Most economists and politicians talk as if inflation might be something to worry about in the future. But I think it is already here.