Peak Oil Rant: XVII

As of this writing, Light Sweet Crude is at $74.47, up about a dollar from Friday, with some settlements above $75. From Jim Kunstler, the author of the phrase and book, The Long Emergency comes this missive from his blog:

Actually, we are negotiating, or bargaining, as Elizabeth Kubler-Ross once put it in describing the sequence of emotional reactions of humans facing certain death:

denial > bargaining > depression > acceptance

The main thread in this bargaining stage is the desperate wish to keep our motoring fiesta going by other means than oil. This fantasy exerts its power across the whole political spectrum, and evinces a fascinating poverty of imagination in the public and its leaders in every field: politics, business, science and the media. The right wing still pretends we can still drill our way out of this, if only the nature freaks would allow them to. The "green" folks thinks that we can devote crops to the production of gasoline substitutes, even though a scarcity of fossil fuel-based fertilizers will sharply cut crop yields for human food. Nobody, it seems, can imagine an American life not centered on cars.

This is perhaps understandable when you consider the monumental previous investment in the infrastructures and equipment for motoring, which includes the nation's car-dependent suburban housing stock -- which in turn represents the average adult's main repository of personal wealth. If motoring becomes unaffordable, then what will be the value of my house twenty-eight miles upwind of Dallas (Atlanta, Minneapolis, Denver, Chicago, et cetera)? The anxiety is understandable.

Can we bust out of this narrow tunnel of fantasy? Can we imagine living differently? Can we turn more fruitful imaginings into action before the American scene becomes a much more disorderly place? It would be nice to see President Bush really lead by taking a well-publicized ride on the Washington Metro, or dropping in to visit an organic farm, or signing a bill to increase incentives for small-scale hydro-electricity, or turning loose some federal prosecutors on WalMart's human resources department. It would be nice to see the Democrats put aside their preoccupations with gender confusion and racial grievance and start campaigning to restore the US railroad system. It would help to see the science and technology sector return from outer space. Corporate America and its leaders are probably hopeless, but so is the current scale and scope of their operations, and circumstances will decide what they get to do.

Jim Kunstler's vision of the post-peak oil world is grim and dark. But one has to admit that he's just taking the numbers and applying what most people know about human nature and human history and plotting the curve into the future. His vision of the future is the default future. If we do nothing we will get his Long Emergency.

Our task is to begin to imagine a different future. A future of small, local, and diverse power generation; more compact cities with tram lines (ask your grandparents); more locally grown produce and meat and more local jobs.

The Long Emergency Begins... Now?

I'm a gambling man so today I'm going to go out on a limb and predict that the this is the Big One, that the next global recession will begin now and is being triggered by petroleum price and supply issues.

Lets begin in the global economy's keystone market, the United States. We are totally dependent on cheap gas to make our economy work; for travel to work; production of goods and transport of same. Our rail system is a global joke and expensive gas will choke off our economy. Today gas prices are flirting with all time, inflation adjusted highs. See chart below, click on image for larger view. Source; Chart of the Day.


"But hang on, Cman," you will say, "surely prices will drop back down again." Not this time me buckos. This post from Econobrowser is a good brief on the current state of supply pressures on the price of crude. As the next chart (Source The Oil Drum) shows, global production has yet to recover back to pre-Katrina peaks. Short version: continuing decline in US production, the continuing tensions with Iran, which will not be resolved soon and the long-term problems in Nigeria which have shut in nearly half a million bbl/day of production are all dragging down supply in a market where demand continues to grow and indeed periodically exceeds supply.

Basic macroeconomics states that in a situation where demand exceed supply the price will go up and stay up until what? Demand falls. As should be obvious to anyone living in the US, demand for oil is what economists call inelastic. That is it cannot readily grow or shrink in response to price. Example: Red bell peppers. These are a big hit at our house. During the winter months they are available as imports from New Zealand and God knows where else at about $3/pound. Result, we don't consume as many as in the summer when domestic red bell peppers are on the shelves for about a buck-fifty. Can't do that with gasoline. What's Joe Commuter, who lives 30 miles away from work to do?

Well, the long term solution to the supply demand tightness -- which is only going to get worse due to peak oil production declines (see this post -- growth is to permanently reduce demand through structural changes in our economy. This includes, permanently increasing fuel efficiency in our automotive and trucking fleet, reevaluating our dependence on autos for most transport and reinvesting in our rail system, and largely abandoning or completely restructuring the sprawling auto-centric suburbs around our cities. Like most global crises it will sneak up on most of the population slowly and almost imperceptibly thanks to a lazy and complaisant media.

This is the call of our generation and the next. To ring out the Oil Age and usher in something else. No one is sure yet what that will be, but we need to get there. I'll say it again, we are stuck between two futures, the unimaginable and the unthinkable. Time to get imaginin' because like it or not, the Long Emergency begins... now.

L'appel des résistants

From France today we receive an Appeal of Resistance Fighters. A dozen or so of the last living members of France's "Greatest Generation" who fought against the Nazi occupation issue a final call to maintain the social and democratic spirit in which the movement was founded.

We therefore call on the movements, parties, associations, institutions, and unions that are heirs to the Resistance to rise above the sectoral stakes, and to devote themselves first of all to the political causes of social injustices and social conflicts, no longer solely to their consequences, in order to define together a new "Program of the Resistance" for our century, recognizing that fascism always feeds on racism, intolerance, and war, which themselves feed on social injustices.

We call finally on children, young people, parents, old people, grandparents, teachers, public authorities, to raise a true peaceful insurrection against the mass media which offer, as the horizon for our youth, only commercial consumption, contempt for the weakest and for culture, generalized amnesia, and excessive competition of all against all. We do not accept that the principal media from now on are controlled by private interests, contrary to the program of the National Council of the Resistance and to the ordinances on the press of 1944.

More than ever, to those who will create the century that is just beginning, we want to say with our affection:

"To create is to resist. To resist is to create."

The top singatory is Lucie Aubrac, who engineered a prison break to pry her husband Raymond (also a signatory) from the clutches of Claus Barbie, the Butcher of Lyon.

Rhymes with Munich?

This post has taken about a week to research. Thank god for Billmon and the Whiskey Bar for coming up with the analogy we were all looking for. As Twain said, "History does not repeat but it does rhyme."

The revelations this weekend that the administration is considering a military strike against Iran and yet more appallingly, contemplating the use of nuclear weapons is deeply disturbing. Make no mistake, the prospect of a nuclear-armed Iran is really scary. Really, really scary if you happen to live in Israel or Southern Europe.

Sy Hersh's New Yorker article of last week and the related chest thumping of all parties gives the impression of a fast-approaching crisis point. Neocons like to draw comparisons to Munich 1939. But before we all go marching down the road to Armageddon, why not just take a few minutes to review some facts.

The "Iran Problem" can be boiled down rather succinctly actually.

• Iranian President Ahmadinejad is a really bad guy, especially if you are a pro-democracy Iranian.


• The Clinton Administration had a number of opportunities to prevent things from coming to pass as they have and they failed because of timidity.


• The current administration has had a number of opportunities to prevent things from coming to pass as they have but they have failed because of ideology and stupidity.


• Virulently anti-Israel rhetoric aside Ahmadinejad is far more of a threat to Iranians than he is to anyone else, particularly to Israelis and Americans


• Time is on our side.

Now, you have two choices here. You can take the above as Gospel and go forth and prostelitize to the masses or you can stick around for the gory details.

President Ahmadinejad is a real islamofascist. That phrase gets overused a lot but here is a guy who really fits the mold in his use of religion and the practice of the political arts of the right as defined by Payne. His election was really an attempt by the religious hierarchy in Iran to get the pro-Western, pro-democracy movements under control. But Ahmadinejad seems to have rapidly gone off the reservation. Lots of parallels to early Nazi Germany here but try to avoid taking them too literally.

As for the whole Germany thing... just go read this Billmon article. All of it. Seriously. Best blog post of the year thus far. See this link in particular for how Clinton punted on the Iranian question in June 2000.

And yes there is also a largish body of evidence that the Iranians have approached the Bush administration on a number of occasions both prior to Ahmadinejad's election and recently to open up a dialog. They have been consistently rebuffed.

Finally, anyone who wants the unvarnished nuke-geek lowdown on Iran's nuclear ambitions and abilities, go check out the site of Arms Control Wonk, Dr. Jeffery Lewis, Executive Director of the Managing the Atom Project at the Belfer Center for Science and International Affairs at Harvard. Incidentally, he received his B.A. in Philosophy and Political Science from Augustana College.

But back to reality... and the Reality is that bomb-grade uranium must be 85 percent pure not five percent (although anything above 20% is usable for a really low-yield "dirty bomb"). The Reality is that it would take 164 centrifuges about 15 years to produce enough 85 percent ²³⁵U to make one bomb. In this series or articles Lewis shows that about Iran needs to put together a facility of approximately 50,000 (or 49,836 more than they currently have) to produce the 25-30kg per year that would reload their civilian reactor -- the cover story -- or produce enough for 25-30 nuclear weapons per year. He uses existing IAEA and other open-source materials to come up with a "worst-case scenario" timeline of three years before Iran is there. That scenario assumes everything goes Iran's way.

Time SHOULD be on our side. We don't have to go balls to the wall with Iran yet. In fact, a thinking person might say that even the worst case scenario means we can wait until after the next presidential elections when hopefully there is a bit more competency, and courage in the national command structure. But with a messianic president facing down a genuine Islamic fascist, all bets are off.

Just remember this as the situation unfolds, 90% of what you will hear from both the Bush Administration and from Iran is complete and utter bullshit.

Citizen Journalists Lead on CIETC Probe

There is a lot of hand wringing and navel gazing both in the blogsphere and in the mainstream media (for the benefit of the unblog-schooled, that's hereinafter MSM) to the extent of, "bloggers are really good at meta-commentary but they will never replace real journalists." I call bullshit on that.

There are tons of national counterexamples but we don't have to go very far afield to find blogger journalists who are doing a fine job out-reporting the MSM. Blogger, Who's Makin' Bacon? has been on CIETC scandal since the story broke. His reporting has more details and nuance than most of the stuff out of the Des Moines Register. More juicy bits too. Ditto Drew Miller.

Neat Evolutionary Timeline

This 135 foot long web page is a timeline of animal evolution with one pixel = 30,000 years. Go down to the bottom and scroll and scroll and scroll. A bit more than halfway across to get to the first multicellular life forms. Scroll more... Four fifths of the way gets us to hard bodied sea creatures. Scroll, scoll... Heck with it. Just slam the slider all the way to the right. There. Now you are looking at the entire cycle of hominid evolution in that last two inches (144 pixels) of screen real estate. All of recorded human history? One pixel.

Feel really insignificant yet? That is God and she's telling you that Intelligent Design is crap and if you want to really feel in awe, contemplate this infinite patience bitches!

Edit on 4.17A super cool shockwave evolution timeline. Drag the red triangle slider.

Lundby and LaMetta

Resolved: The election of urban moderate Mary Lundby as GOP Senate Leader will give more traction to LaMetta Wynn's State Senate campaign.

Discuss.

Remarks to the Clinton City Council, April 11, 2006

Madam Mayor, and members of the Council...

I am here today as the President of the Friends of the Clinton Public Library to lend support to the Library Trustees' new library plans.

The symbol of the grand, neoclassical public library is an icon of the American subconscious. But, the idea of the public library as a vital public space has only recently re-emerged amongst policy makers. And while the grandeur of many Victorian municipal libraries testify to the pride with which these institutions were founded, as a British historian [A. Black] points out, “In some respects, indeed, it appeared that [the] buildings were more important than they books they contained” And I would add, the role they play in the community.

That quote should be well worth keeping in mind in the months ahead.

Despite predictions of the death of the library due to the information revolution and the availability of digital resources, new library buildings are being built at a record pace and attracting renewed attention and increased usage. It is a stone cold fact that, according to the American Library Association, a modern, new library will see a PERMANENT increase in usage of 50% after opening with additional increases commensurate with the programs delivered.

In choosing Harding School as its site for a new library the Trustees' have reached what we hope is the end of a long process of deliberation. We feel strongly that the Harding site offers us the chance to build a new public library that

a)is a wise and valuable use of public funds; b) will be easy to reach for the present and future population of Clinton; c) results in a library that has a beautiful, natural setting and will work together with the nearby parks and recreation facilities to nurture new generations of curious children who are healthy both intellecutally and physically.

We have a long road ahead of us. But we relish this chance to come before you tonight and begin to outline our vision for a new public library. The need is there. As Andrew Carnegie himself said, “It was from my own early experience that I decided there was no use to which money could be applied so productive of good to boys and girls... as the founding of a public library”

Viridian... Accounting?

One of most important principles of the Viridian Design movement is: "Make the invisible visible." This means to pull the covers off the hidden costs and effects of things we do in everyday life to expose both the good and bad side. An example would be a thermostat that would display current electrical and gas usage and cost. Why don't they do that? If I want to know how much electricity or gas I'm using I have to go outside. Economists would call this exposing external costs.

Well, in what has to absolutely be a first for this blog, I'd like to talk about accounting. The board that writes many of the standards for accounting rules, The Financial Accounting Standards Board, has proposed a new rule on how companies calculate the obligations of their pension and retirement systems.

The proposed changes would force companies to list their pension values in the main body of their financial statements where all assets and liabilities are listed as opposed to burying the date in footnotes. The rules would also require companies to measure their pension fund values on the same date as the rest of their corporate obligations to prevent "timing the market" to make the pension funds assets look more plump than they are. The result will be a more complete and useful financial snapshot of corporate financial health.

And that's a problem for a lot of companies. Ford Motors for example. Ford currently lists net worth of $14 billion. Add (or as is more often the case subtract the unfunded portion of) the pension obligations of $20billion and Ford's corporate net worth disappears. Ditto for G.M. which lists a net worth of $14.6 billion but has pension obligations of $37 billion. As the New York Times article points out...

Many complaints about the way obligations are now reported revolve around the practice of spreading pension figures over many years. Calculating pensions involves making many assumptions about the future, and at the end of every year there are differences between the assumptions and what actually happened. Actuaries keep track of these differences in a running balance, and incorporate them into pension calculations slowly.

That practice means that many companies' pension disclosures do not yet show the full impact of the bear market of 2000-3, because they are easing the losses onto their books a little at a time. The new accounting rule will force them to bring the pension values up to date immediately, and use the adjusted numbers on their balance sheets.

Not all companies would be adversely affected by the new rule. A small number might even see improvement in their balance sheets. One appears to be Berkshire Hathaway. Even though its pension fund has a shortfall of $501 million, adjusting the numbers on its balance sheet means reducing an even larger shortfall of $528 million that the company recognized at the end of 2005.

Berkshire Hathaway's pension plan differs from that of many other companies because it is invested in assets that tend to be less volatile. Its assumptions about investment returns are also lower, and it will not have to make a big adjustment for earlier-year losses when the accounting rule takes effect. Berkshire also looks less indebted than other companies because it does not have retiree medical plans.

Despite the short term pain it will cause I cannot but think that this increased transparency in accountancy would be a good thing for corporate America and for American workers. It makes the true, terrible costs of our dysfunctional healthcare system easy to see and id also puts on full view the less than stellar management of many of the country's most respected companies who have kicked their problems down to the future instead of dealing with them in the hear and now. I guess it is okay to push mountains of debt off on your descendants as long as you get the good life in the here and now, eh?