Random Notes  

Online Opinion's first post of this month's energy series has been posted, with Russ grayson declaring : Oil no longer the dressing for the '3,000 mile Caesar salad'. The first comments out of the blocks on the article are disappointing, with someone immediately trotting out the old conspiracy theory about the oil companies buying up all sorts of fabulous renewable energy technologies in the 1970's then suppressing them - and that these will be trotted out on demand for a seamless changeover as the oil slowly runs out.

Go local. That’s the suggestion of NSW North Coast community educator, Tim Winton, for coping with the approaching peak oil crisis.

“Peak oil” describes the reaching of a peak in global oil production. After that, an inevitable decline kicks in, with increasing scarcity and rapidly rising prices. Far from being the idea of doomsayers, economists and the petroleum industry are taking the threat seriously. The basic underpinning of industrial economies may be about to disappear.

“Decline will follow the peaking of oil extraction”, warns Tim. “Economists say we have 30, perhaps 40 years before the supply reaches its peak but others put the time as much less, some as little as 5 years. I believe the economists are a little over-optimistic. Whatever the figure, it leaves precious little time to develop alternative sources. The International Energy Agency says it will take around 30 years' lead time to scale up alternative energy sources to avoid economic dislocation.”

Jeff Vail has a couple of posts on the slow eroison of fungibility in the oil market - The New Energy Mercantilism and Pipeline Mercantilism. The proposed Russia / China pipeline is the example given, though obviously Hugo Chavez's politically based redirecting of Venezuelan oil is the first real sign of this that we are seeing.

It's a slippery subject: How does a freely-exchange-traded commodity become subject to mercantilistic influences? Well, here's one example:

Russian and China Agree to Pipeline Project

How is this mercantilsm in action? Well, oil only goes where the infrastructure exists to ship it. Market forces will fund capital projects to build infrastructure to ship it where there is demand--but the key is that this pipeline project is not operating under the auspices of market forces, but is instead being subsidized by the two respective governments. So these government subsidies are intentionally directing market forces--this is subsidy mercantilism. It certainly isn't new, but we are definitely seeing more of it with regards to energy. So far almost all mercantilistic efforts have focused on negative barriers--making it cheaper for oil to flow the direction that a government wants it to, for example.

The more dangerous phase in energy mercantilism will come with the increase in positive barriers--legal or financial barriers that make it more expensive for oil to flow any direction OTHER THAN the route desired by a given government. The critical difference here is that any nation willing to spend money can lower barriers through subsidy. Only nations with either 1) oil on ther own territory (or that must pass through their territory), or 2) sufficient military force to exert control over oil that does not directly flow through their territory. So the transition from creating negative barriers to creating positive barriers to oil flow is the "tipping point" between peaceful energy mercantilism and non-peaceful energy mercantilism.

On a related note, Tom Whipple's latest peak oil piece at the Falls Church News Press looks at emerging Canadian qualms about sending most of their fossil fuel reserves south of the border.

Currently, distribution of the world's oil production is relatively simple. Whoever wants oil, and has the money to pay for it, can buy as much as they want. No questions. No limits. Historically there have been a few exceptions, such as during World War II or the Arab Oil embargo, but in general if you have the money, importing oil has not been a problem.

Last month, the gorilla began to stir in the form of a report prepared by the folks up at the University of Alberta in Canada . It seems 68 percent of the crude oil and 55 percent of the natural gas produced in Canada is being exported to the US . Under the fine print of North American Free Trade Agreement (NAFTA), the Canadians are obligated to continue shipping this portion of their oil and gas production to us even after they go into depletion and can no longer produce enough to satisfy their own needs.

Not unexpectedly, a number of Canadian writers have started to ask why on earth 32 million Canadians should be obligated to send over half of their oil and gas production to help meet the energy appetite of 300 million Americans.

Rex at "LaborFirst Blog" has a post up noting that the "5 Star Energy Rating" system for houses in Australia is under threat (it seems we are rapidly heading in the wrong direction on many fronts when it comes to energy usage, which will make the carbon tax and post peak transitions we are going to go through one day all the more painful - and unnecessarily so).

An intense lobbying effort by representatives of the building and construction industry is rumoured to be underway, with the intent of scrapping the 5 star energy rating system for homes. The lobbying effort is understood to be focused on getting the support of the Prime Minister and the Environment Minister.

The Victorian State Government introduced its 5 star rating system just last year, but now this may very well be under threat.

Why? Because building industry lobby groups claim that having mandatory efficiency levels for building makes homes more unaffordable, adding to the cost of housing.

The timber industry doesn't like the 5-star rating at all, but their motivation is not only because of claims that it increases the cost of housing. You see although timber is fine for frames, timber floors have a low thermal mass and therefore do not contribute to a well designed home's energy efficiency. High efficiency homes do not use timber floor. The timber industry is not pleased with this at all.

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Lets face it. The Building and Construction industry want to scrap this because they want the option of building us cheap and crappy homes like they've always done. Gaps under the doors, draughts, cookie-cutter designs. That way they can keep it affordable for the first home buyer who is just grateful to finally get out of the rental market and is happy to accept any old shoddy construction.

Well if they want to keep homes affordable, then pick on something else. Pick on stamp duty, or even better, pick on negative gearing that ratchets up demand and reduces the available housing stock for the first home buyer (pigs might fly!), but don't trash something that has barely left the starting block.

In some shorter notes - Rigzone reports that BP's Lord Browne is once again claiming that "Current High Oil Prices are 'Unsustainable'" (while I think the whole feudal system of titles etc sucks, at risk of being hauled off for sedition against the monarch I might add, 60 minutes had an interview last night with Prince Charles which took a brief look at his successful organic farming endeavours. Charlie is one royal I do quite like - and you can definitely see where the plot line for the "To Play The King" episodes in "House of Cards" came from).

Rigzone also reports that Woodside plans to start drilling in Libya early in 2006 and that Taiwan has found "huge" Natural Gas reserves off its coast.

On a slightly amusing note, MonkeyGrinder points to a report on an excess of Hummers. How long until the Hummer dies a well deserved death as a transportation product ?

The SMH reports that the CSIRO is to axe 200 research jobs and, even worse, reduce its research on renewables while increasing the focus on geosequestration of carbon dioxide and other fossil fuel consumption enhancing technologies (what is Australia's number one export earner again ?).

PeakOil.com has links to an article claiming that growth in US wind power could reduce the amount of natural gas used to produce electricity by up to 5 percent at the end of the year (which would be very encouraging if true) and one on the great strides being made by Portland, Oregon on reducing CO2 emissions.

TreeHugger has an article on the development of floating wind turbines by Norway's Hydro, while WorldChanging examines "Renewable Energy's Investment Hockey Stick".

Global investments in renewable energy seem to be growing faster than any of us thought. If current trends continue, we'll soon be seeing the hockey-stick-shaped growth curves that have become iconic shorthand in technology sectors for hyper-paced growth.

According to a report released today (Download - PDF) by the Renewable Energy Policy Network for the 21st Century, or REN21, global investment in renewable energy set a new record of $30 billion in 2004. That's a far, far bigger number than others have projected, such as the Cleantech Venture Network, which just ten days ago projected that investments in clean technology -- a broader category than just renewable energy -- would total $10 billion between 2005 and 2009.

(My firm, Clean Edge, projected earlier this year that markets for just three technologies -- solar photovoltaics (PV), wind power, and fuel cells -- would grow to $15 billion annually by 2014, but that measures purchases of these technologies, not investments in them.)

And a few non-energy related notes, just to satisfy my urge to watch the evolution (and devolution) of communication and surveillence systems - Past Peak notes that "Big Brother Really Is Watching" (and we may as well get used to it, because it isn't going to go away) and William Grieder has an article on "All The King's Media" (via Energy Bulletin) which takes a look at the state of the media and of democracy in the 21st century.

Amid the smoke and stench of burning careers, Washington feels a bit like the last days of the ancien régime. As the world's finest democracy, we do not do guillotines. But there are other less bloody rituals of humiliation, designed to reassure the populace that order is restored, the Republic cleansed. Let the perp walks begin. Whether the public feels reassured is another matter.

George W. Bush's plight leads me to thoughts of Louis XV and his royal court in the eighteenth century. Politics may not have changed as much as modern pretensions assume. Like Bush, the French king was quite popular until he was scorned, stubbornly self-certain in his exercise of power yet strangely submissive to manipulation by his courtiers. Like Louis Quinze, our American magistrate (whose own position was secured through court intrigues, not elections) has lost the "royal touch." Certain influential cliques openly jeer the leader they not so long ago extolled; others gossip about royal tantrums and other symptoms of lost direction. The accusations stalking his important counselors and assembly leaders might even send some of them to jail. These political upsets might matter less if the government were not so inept at fulfilling its routine obligations, like storm relief. The king's sorry war drags on without resolution, with people still arguing over why exactly he started it. The staff of life--oil, not bread--has become punishingly expensive. The government is broke, borrowing formidable sums from rival nations. The king pretends nothing has changed.

The burnt odor in Washington is from the disintegrating authority of the governing classes. The public's darkest suspicions seem confirmed. Flagrant money corruption, deceitful communication of public plans and purposes, shocking incompetence--take your pick, all are involved. None are new to American politics, but they are potently fused in the present circumstances. A recent survey in Wisconsin found that only 6 percent of citizens believe their elected representatives serve the public interest. If they think that of state and local officials, what must they think of Washington?

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Heroic truth-tellers in the Watergate saga, the established media are now in disrepute, scandalized by unreliable "news" and over-intimate attachments to powerful court insiders. The major media stood too close to the throne, deferred too eagerly to the king's twisted version of reality and his lust for war. The institutions of "news" failed democracy on monumental matters. In fact, the contemporary system looks a lot more like the ancien régime than its practitioners realize. Control is top-down and centralized. Information is shaped (and tainted) by the proximity of leading news-gatherers to the royal court and by their great distance from people and ordinary experience.

People do find ways to inform themselves, as best they can, when the regular "news" is not reliable. In prerevolutionary France, independent newspapers were illegal--forbidden by the king--and books and pamphlets, rigorously censored by the government. Yet people developed a complex shadow system by which they learned what was really going on--the news that did not appear in official court pronouncements and privileged publications. Cultural historian Robert Darnton, in brilliantly original works like The Literary Underground of the Old Regime, has mapped the informal but politically potent news system by which Parisians of high and low status circulated court secrets or consumed the scandalous books known as libelles, along with subversive songs, poems and gossip, often leaked from within the king's own circle. News traveled in widening circles. Parisians gathered in favored cafes, designated park benches or exclusive salons, where the forbidden information was read aloud and copied by others to pass along. Parisians could choose for themselves which reality they believed. The power of the French throne was effectively finished, one might say, once the king lost control of the news.

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What will come of all this? Possibly, not much. The cluster of scandals and breakdown may simply feed the people's alienation and resignation. The governing elites, including major media, are in denial, unwilling to speak honestly about the perilous economic circumstances ahead, the burgeoning debt from global trade, the sinking of the working class and other threatening conditions. When those realities surface, many American lives will be upended with no available recourse and no one in authority they can trust, since the denial and evasion are bipartisan. That's a very dangerous situation for a society--an invitation to irrational angers and scapegoating. It will require a new, more encompassing politics to avert an ugly political contagion. We need more reliable "news" to recover democracy.

And to close, while Big Brother might be watching everyone now, at least modern technology has made it possible for us to watch back - today's visitor award goes to Saudi Aramco (an unusual addition to the honour roll) - hey guys - how about publishing some decent (ie. reliable and transparent) figures on your oil reserves ? It would clear up a lot of "when is the peak" uncertainty amongst us armchair peakologists...