Friday, May 30, 2008
Thursday, May 29, 2008
Why oil costs over $120 per barrel
Posted by Euan Mearns on May 28, 2008 - 6:30pm in The Oil Drum: Europe
Global Total Liquids production and oil price, January 2002 to present. Production data from the IEA, data files supplied by Rembrandt Koppelaar. Monthly average WTI oil prices from Economagic.
With oil reaching $135 / barrel, Oil Drum readership exceeding 30,000 unique visitors per day and many wild stories circulating in the MSM as to why oil prices are so high this post strives to explain why oil prices are rising exponentially.
Production and demand
The most significant feature of the chart up top is the dog leg in production growth in 2004. Prior to then the flow of new oil field projects combined with increasing utilisation of spare capacity allowed global oil production to grow and to meet much of the growth in demand.
In 2004, OPEC spare capacity fell close to zero (see below) and the world struggled for a number of reasons to bring on new supply to compensate for decline (see below). The slowing of production growth has meant new supplies are insufficient to meet growing demand and the price has gone up to balance the books. Higher prices stimulate conservation that may take the form of fuel efficiency (driving a smaller car) or abstinence (poor people being priced out of the energy market).
Every year a large number of new oil fields are brought on line. However, this does not directly translate to growth in supplies since amongst other things the production decline in existing fields needs to be replaced first:
new annual production capacity = consumption growth + annual decline + spare capacity growth
Decline
All oil wells, oil fields and oil provinces are exposed to a phenomenon called decline. Producing oil depressurises the sub-surface reservoirs and uses up the reserves. With time the proportion of water to oil that is produced in any well increases (increasing water cut) and this combined with depressurisation leads to declining oil flow rates.
Combined, these processes result in naturally declining production. It has been estimated that the global average decline rate is 4.5% per annum. (personal communication, Peter Jackson, CERA). What this means is that every year the global oil industry must bring on stream 3.8 million barrels per day new production just to compensate for decline (4.5% of 85 mmbpd). If less than 3.8 million bpd are commissioned then global oil production will fall and vice versa.
Oil price mocks fuel realities
By F William Engdahl
As business and consumers consider the implications for them of crude oil selling at US$130-plus per barrel, they should bear in mind that, at a conservative calculation, at least 60% of that price comes from unregulated futures speculation by hedge funds, banks and financial groups using the London ICE Futures and New York Nymex futures exchanges and uncontrolled inter-bank or over-the-counter trading to avoid scrutiny (see Speculators knock OPEC off oil-price perch, Asia Times Online, May 6, 2008).
US margin rules of the government's Commodity Futures Trading Commission allow speculators to buy a crude oil futures contract on the Nymex by paying only 6% of the value of the contract. At the present price of around $130 per barrel, that means a futures trader only has to put up about $8 for every barrel. He borrows the other $120.
This extreme "leverage" of 16 to one helps drive prices to wildly unrealistic levels and offset bank losses in subprime and other disasters at the expense of the overall population.
The hoax of "peak oil" - namely the argument that oil production has hit the point where more than half all reserves have been used and the world is on the downslope of oil at cheap price and abundant quantity - has enabled this costly fraud to continue since the invasion of Iraq in 2003, with the help of key banks, oil traders and big oil majors.
Washington is trying to shift blame, as always, to Arab oil producers and the Organization of Petroleum Exporting Countries (OPEC). The problem is not a lack of crude oil supply. In fact, the world is in over-supply now. Yet the price climbs relentlessly higher. Why? The answer lies in what are clearly deliberate US government policies that permit the unbridled oil price manipulations.
World oil demand flat, prices boom
The chief market strategist for one of the world's leading oil industry banks, David Kelly, of JP Morgan Funds, recently admitted something telling to the Washington Post: "One of the things I think is very important to realize is that the growth in the world oil consumption is not that strong."
Read more
Wednesday, May 28, 2008
A Sensible Path on Iran
By Zbigniew Brzezinski and William Odom
Tuesday, May 27, 2008; Page A13
Current U.S. policy toward the regime in Tehran will almost certainly result in an Iran with nuclear weapons. The seemingly clever combination of the use of "sticks" and "carrots," including the frequent official hints of an American military option "remaining on the table," simply intensifies Iran's desire to have its own nuclear arsenal. Alas, such a heavy-handed "sticks" and "carrots" policy may work with donkeys but not with serious countries. The United States would have a better chance of success if the White House abandoned its threats of military action and its calls for regime change.
Consider countries that could have quickly become nuclear weapon states had they been treated similarly. Brazil, Argentina and South Africa had nuclear weapons programs but gave them up, each for different reasons. Had the United States threatened to change their regimes if they would not, probably none would have complied. But when "sticks" and "carrots" failed to prevent India and Pakistan from acquiring nuclear weapons, the United States rapidly accommodated both, preferring good relations with them to hostile ones. What does this suggest to leaders in Iran?
To look at the issue another way, imagine if China, a signatory to the nuclear Non-Proliferation Treaty and a country that has deliberately not engaged in a nuclear arms race with Russia or the United States, threatened to change the American regime if it did not begin a steady destruction of its nuclear arsenal. The threat would have an arguable legal basis, because all treaty signatories promised long ago to reduce their arsenals, eventually to zero. The American reaction, of course, would be explosive public opposition to such a demand. U.S. leaders might even mimic the fantasy rhetoric of Iranian President Mahmoud Ahmadinejad regarding the use of nuclear weapons.
Wednesday, May 14, 2008
Dazzling demons
Behind the Klimt everyone knows, the opulent artist of desire, stands another Klimt - a painter who was years ahead of Picasso and Matisse, a great destroyer of traditions and a creator of terrifying beauty
The stars of Britain's first major Klimt show will be his glittering portraits. But his darker, lost works - destroyed by the Nazis - started a revolution in 20th-century art, says Jonathan Jones
See our gallery of the exhibition here
Wednesday May 7, 2008
The Guardian
See our gallery of the exhibition here
Wednesday May 7, 2008
The Guardian
It was all over. The Reich was finished, Hitler dead, his charred jaw bone all Russian pathologists could find of him in the smouldering ruins of Berlin. Hundreds of miles to the south, in Austria, an SS unit prepared to stage its own private apocalypse.
On May 7 1945, they arrived at Immendorf Castle in southern Austria. The German soldiers already billeted there were ordered to leave. That morning, German forces in Austria had signed their surrender, to take effect the next day; for these SS men, it was the last night of the warSchloss Immendorf was a beautiful setting for their final night of power and freedom. The castle's massive fortifications were softened with sloping tiled roofs, so that it resembled a Loire chateau, set in spacious parkland, with ivy growing up the walls. A curving staircase led to a grand interior full of art treasures, stored here by the Reich to save them from air raids on Vienna.
Among this store were 13 paintings by Gustav Klimt. It seems that these were on view in the castle apartments: the Nazis, the castle's owner later reported, looked at the paintings with appreciation, and one was heard to say that it would be a "sin" for the Russians to get their hands on them. Klimt's sensual art turned out to be a fitting backdrop for the events of that night: according to a 1946 police report, the SS officers "held orgies all night in the castle apartments". Who knows what this means, but it is a strange and macabre image - the SS holding their orgies as Klimt's maenads and muses looked on.
The next day, the SS unit laid explosives in the castle's four towers and walked out. One man went back and lit a fuse, and a tower burst into flames. As the fire spread, explosives in the other towers detonated. Schloss Immendorf burned for days. Nothing survived of its interior, and the gutted shell was later demolished. According to the eyewitness reports that reached Vienna months later, amid the chaos of defeat, not a single work of art survived.
Klimt's fame has survived this loss, and yet he divides people. For every person who finds his work gorgeous, seductive, sexy, there is a sophisticate who will point out that his art is surely a bit vulgar, with all that gold; a bit slavish in its ostentatious celebration of rich women; and a bit, well, soft-centred. It's a negative view that is an accident of history, of what has survived of his work and what hasn't. Behind the Klimt everyone knows, the opulent artist of desire, stands another Klimt - a painter who was years ahead of Picasso and Matisse, a great destroyer of traditions and a creator of terrifying beauty.
Klimt was born in Vienna in 1862. He was a craftsman's son and trained as a painter, becoming a high-class decorator who painted the walls and ceilings of some of the most opulent public buildings in Vienna. He rapidly became the definitive visual artist of the last years of the Habsburg empire, a star in a culture of great daring: the composer Gustav Mahler, the writers Arthur Schnitzler and Robert Musil, and the architect Adolf Loos were Klimt's contemporaries. But the contemporary he most resembled was Sigmund Freud, the inventor of psychoanalysis. With their unabashed eroticism, Klimt's paintings share a basic belief about human nature with Freud, who shocked the world with his insistence that sexuality is at the centre of everyone's emotional life. You could even compare Freud's sessions, listening to his women patients as they lay on his couch, with Klimt's portrait practice. Klimt was a very private man who never married, but it was said that he slept with most of the women he portrayed: certainly his bold drawings point to an intimacy that goes beyond the polished eroticism of his paintings.
More than 60 years after the end of the second world war, many questions remain about the paintings burned at Schloss Immendorf. How did so much of Klimt's work come to be lost that day? Why was it there? And has this loss deprived us of a proper understanding of Klimt's genius?Read more
Monday, May 12, 2008
About 350
About 350
Below is a letter from Bill McKibben introducing Project 350–take a look, get up to speed, and then let’s get to work!
And feel free to get in touch with us at organizers@350.org
—–
350 is the red line for human beings, the most important number on the planet. The most recent science tells us that unless we can reduce the amount of carbon dioxide in the atmosphere to 350 parts per million, we will cause huge and irreversible damage to the earth.
We’re planning an international campaign to unite the world around the number 350, and we need your help. We need to make sure that the solutions the world proposes to climate change are to scale with the level of crisis that this number represents. Everyone on earth, from the smallest village to the cushiest corner office, needs to know what 350 means. The movement to spread that number needs to be beautiful, creative, and unstoppable.
What we need most right now are on-the-ground examples for how to take the number 350 and drive it home: in art, in music, in political demonstrations, in any other way you can imagine. We hope this project will grow tremendously in the months to come, and it helps all the more if people can see the great things others are doing already. We will connect actions all around the world and make them add up to more than the sum of their parts-but we don’t have all the ideas and all the inspiration. We need you to act on yours.
We could also use your help spreading 350. Can you contact anyone you think might be interested and willing to help–in every country on earth–and send them our way?
Many thanks,
Bill McKibben and the 350.org crew.
P.S.—We’ve raised some money to get this campaign up and running, but to execute a successful international campaign will require more than we’ve got. If you’re in a position to help, please support Project 350 by making a tax-deductible donation to our 501c3 fiscal sponsor, the Sustainable Markets Foundation, by clicking here.
Tomgram: Bill McKibben, The Defining Moment for Climate Change
Already climate change -- in the form of a changing pattern of global rainfall -- seems to be affecting the planet in significant ways. Take the massive, almost decade-long drought in Australia's wheat-growing heartland, which has been a significant factor in sending flour prices, and so bread prices, soaring globally, leading to desperation and food riots across the planet.
A report from the Bureau of Meteorology in Australia makes clear that, despite recent heavy rains in the eastern Australian breadbasket, years of above normal rainfall would be needed "to remove the very long-term [water] deficits" in the region. The report then adds this ominous note: "The combination of record heat and widespread drought during the past five to 10 years over large parts of southern and eastern Australia is without historical precedent and is, at least partly, a result of climate change."
Think a bit about that phrase -- "without historical precedent." Except when it comes to technological invention, it hasn't been much part of our lives these last many centuries. Without historical precedent. Brace yourselves, it's about to become a commonplace in our vocabulary. The southeastern United States, for instance, was, for the last couple of years, locked in a drought -- which is finally easing -- "without historical precedent." In other words, there was nothing (repeat, nothing) in the historical record that provided a guide to what might happen next.
Now, it's true that the industrial revolution, which led to the release of greenhouse gases into the atmosphere at historically unprecedented rates, was also, in a sense, "without historical precedent"; but most natural events -- unlike, say, the present staggering ice melt in the Arctic -- have been precedented (if I can manufacture such a word). They have been part of the historical record. That era -- the era of history -- is now, however, threatening to give way to a period capable of outrunning history itself, of outrunning us.
The planet in its long existence may have experienced the extremes to come, but we haven't. The planet, unlike much life on it, may not -- given millions or tens of millions of years to recover -- be in danger, but we are.
When you really think about it, history is humanity. It's common enough to talk about some historical figure or failed experiment being swept into the "dustbin of history," but what if all history and that dustbin, too, go… well, where? What are we, really, without our records? Once we pass beyond them, beyond all the experience we've collected, written down, and archived since those first scratches went on clay tablets in the lands of the Tigris and Euphrates -- now being stripped of their cultural patrimony -- at least two unanswerable questions arise. Once history has been left in the dust, where are we? -- and, who are we?
Let the indefatigable environmentalist Bill McKibben, who has a powerful urge to stop us just short of the cliff of the post-historical era, take it from here. Tom
The World at 350
A Last Chance for CivilizationBy Bill McKibben
Even for Americans, constitutionally convinced that there will always be a second act, and a third, and a do-over after that, and, if necessary, a little public repentance and forgiveness and a Brand New Start -- even for us, the world looks a little Terminal right now.
It's not just the economy. We've gone through swoons before. It's that gas at $4 a gallon means we're running out, at least of the cheap stuff that built our sprawling society. It's that when we try to turn corn into gas, it sends the price of a loaf of bread shooting upwards and starts food riots on three continents. It's that.......Read more
Monday, May 5, 2008
The Gospel of Consumption
And the better future we left behind
by Jeffrey Kaplan
Published in the May/June 2008 issue of Orion magazine
Just ten years later things looked very different. Cars dominated the streets and most urban homes had electric lights, electric flat irons, and vacuum cleaners. In upper-middle-class houses, washing machines, refrigerators, toasters, curling irons, percolators, heating pads, and popcorn poppers were becoming commonplace. And although the first commercial radio station didn’t begin broadcasting until 1920, the American public, with an adult population of about 122 million people, bought 4,438,000 radios in the year 1929 alone.
But despite the apparent tidal wave of new consumer goods and what appeared to be a healthy appetite for their consumption among the well-to-do, industrialists were worried. They feared that the frugal habits maintained by most American families would be difficult to break. Perhaps even more threatening was the fact that the industrial capacity for turning out goods seemed to be increasing at a pace greater than people’s sense that they needed them.
It was this latter concern that led Charles Kettering, director of General Motors Research, to write a 1929 magazine article called “Keep the Consumer Dissatisfied.” He wasn’t suggesting that manufacturers produce shoddy products. Along with many of his corporate cohorts, he was defining a strategic shift for American industry—from fulfilling basic human needs to creating new ones.
In a 1927 interview with the magazine Nation’s Business, Secretary of Labor James J. Davis provided some numbers to illustrate a problem that the New York Times called “need saturation.” Davis noted that “the textile mills of this country can produce all the cloth needed in six months’ operation each year” and that 14 percent of the American shoe factories could produce a year’s supply of footwear. The magazine went on to suggest, “It may be that the world’s needs ultimately will be produced by three days’ work a week.”Business leaders were less than enthusiastic about the prospect of a society no longer centered on the production of goods. For them,...................
Read the article
Saturday, May 3, 2008
A Confederacy of Dunces
| Ignatius Comes of Age | ||
| Heather Heilman | ||
| tulanian@tulane.edu | ||
| Photography By Kenneth Harrison | ||
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But by the spring of 1963 something had changed. In his letters, he describes himself as content, relaxed and stable. He was productively at work on a novel. "Some of it, I think, is really very funny," he wrote of his work-in-progress. Later, as the time of his discharge from the Army approached, he wrote, "About the thing I am writing I have one conviction: it is entertaining and publishable, and I have more than a degree of faith in it." The working title of the novel was Ignatius Reilly, but we know it as A Confederacy of Dunces. It was published in 1980, 11 years after the author's suicide, and won the Pulitzer Prize in 1981. Tulane English professor Dale Edmonds identifies four quintessential literary works set in New Orleans: The novel is set in New Orleans in the early 1960s. Ignatius "graduated smart" from a certain uptown university, but has since managed to avoid gainful employment. He lives at home with his mother and spends his time reading the Roman philosopher Boethius, filling up numerous Big Chief tablets with "a lengthy indictment against our century," and talking back to Hollywood musicals at the Prytania Theater. But cruel Fortuna conspires against him, and his mother sends him out to look for a job. In his search for employment he encounters a cast of only-in-New-Orleans characters, from Irish Channel Yats to the strippers, pornographers and homosexual bon vivants of the French Quarter. 
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In 1963, Sgt. John Kennedy Toole (A&S '58) was stationed at the U.S. Army Training Center at Fort Buchanan, Puerto Rico, where overeducated draftees with expired student deferments taught English to Puerto Rican recruits. Toole had arrived in Puerto Rico in November of 1961. He did not enjoy his first year at Fort Buchanan. In letters home, he complained that everything there started late and that "nothing on this island can seemingly be subdued or rational or orderly," an astonishing gripe for a native of New Orleans. He described his students as "somewhat like characters from a Puerto Rican version of Grapes of Wrath." The rainy season depressed him. He was heartbroken when he lost his Tulane class ring. He was homesick and drinking too much. 
Kate Chopin's The Awakening, Tennessee Williams' A Streetcar Named Desire, Walker Percy's The Moviegoer, and A Confederacy of Dunces--a motley group of books despite their common setting. Confederacy is the most peculiar of the four, a chaotic account of the misadventures of obese, slovenly, delusional, pretentious, obnoxious, hunting-cap-wearing Ignatius J. Reilly. But that string of adjectives barely begins to describe him. He's a character who resists quick description--he's someone the reader has to experience directly.
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