Oil is Job 1

On September 3, 2010, in Corporations, by Joe Costello

The IEA announced the world is going to become increasingly reliant on OPEC for oil, more accurately the Persian Gulf, as other members of OPEC will soon enough be formerly petroleum exporting countries. The WSJ writes,

The global dependency on the members of the Organization of Petroleum Exporting Countries for oil will rise in the next five to 10 years as production by non-OPEC nations declines, the chief of the International Energy Agency said Friday.

“We have seen an increase in non-OPEC supplies. But in the mid-term, non-OPEC production will decline,” Nobuo Tanaka, the agency’s executive director, told reporters on the sidelines of a conference. “So, dependency on OPEC oil will increase.”

OPEC’s 12 members, who include Saudi Arabia, the United Arab Emirates and Kuwait, account for about 40% of the global oil (production).

So, I guess a trend that’s been going on for over three decades is news. The increase in non-opec supply is almost entirely due to the global economic contraction. Here’s some better numbers, not that numbers have any relation to economic reality these days, nonetheless, the countries around the Persian Gulf have 60% of known global oil reserves — speaking of unreal numbers — while, the EU, the US, China and Japan, who conveniently enough account for 60% of the world’s economy have only 9% of the world’s remaining oil reserves, and if you cut the US out of that equation it would drop to 3%.

The entire corporate globalization experiment of the past few decades is built on the premise of cheap oil. The entire global “oil market”, increasingly unable to provide cheap oil, is built on the American military, and the American military is built on debt, which each year becomes ever more unsustainable. Now, we could go to the EU, China, and Japan and say you guys need to start kicking-in to pay for our military service, but I doubt that would go over well with anyone, no one’s going to give money without a corresponding increase in say. Or we can begin to realize that the entire corporate globalization experiment, premised on cheap oil, is at best problematic and more accurately a failure. We as a planet need to begin creating a non-oil based economy, that is, we need to truly become post-modern. But when you have an economy, politics, and culture completely addicted to oil, that’s difficult. Instead you get desperation like ethanol and biofuels, which is the equivalent of the addict selling-off the food, furniture, and soon enough the house. Getting off oil is job 1 for any sustained economic revival and that means a complete redesign of our infrastructure.

Cross-posted from Oil is Job 1.

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energy as political reform

On February 23, 2010, in The Public, by Joe Costello

The WSJ has a good piece on the beginning of the adoption of smart electricity meters, which is a start to changing our electricity system. Ten years ago, the utilities were pretty much unanimously against these meters, so it’s good to see them starting to install them. It offers a lot of lessons on how we’re going to need to change how we do things and the obstructions encountered in so doing.

The WSJ writes:

To date, 16,000 to 18,000 people have participated in more than five dozen pilot tests involving smart meters and experimental rate plans, according to Ahmad Faruqui, a consultant with the Brattle Group who has helped utilities develop some of the programs. He says that while it is sometimes disheartening to see utility executives ignore their own findings, he understands the desire to move slowly until people become comfortable with smart-meter technology.

That’s a pretty small number, but its a start. The biggest problem of course is the utilities, who having run the system pretty much the same way for almost a century, they don’t see much need to change. The simple agreement has been the utilities provide electricity at a reasonable, and some would say a very cheap rate, and people basically allow the utilities to run things whatever they want. Leading to the second problem, most electricity users pay very little attention to how they use electricity, first and foremost because its so cheap.

Information is always cheaper than energy, getting more information into the system allows things to change. I have always been astounded in dealing with the electricity industry how it is almost universally accepted that more information about how things were run, wouldn’t provide any value. This is still a big problem and as the article points out, the utilities don’t even know what to do with the information they are receiving. Simply giving them more information isn’t going to help, or will not be as helpful as it should be. The electricity system in this country is run by government bestowed monopolies. Political reform needs very much to be utility reform. We need to open the system so that not just the utilities, but others who will know what to do with the information can enact necessary change.

The WSJ writes:

“You could have a real rebellion” if smart meters push up customers’ rates, especially if utilities’ other capital expenses are increasing, he says.

There’s probably few industries which as much fixed capital debt as the utilities, and it seems at times this debt is never ending. It is an important point for the United States. We are an extremely wealthy nation, however much of our fixed capital, particularly in regards to the energy sector, is the problem. We have to change how this operates and the more debt we pile on the existing infrastructure, the more difficult that change is going to be. Unlike the developing world where such infrastructure is limited, adding to it creates wealth. In the United States changing this infrastructure is not creating new wealth, but transferring established wealth to new purposes. It is an extremely important distinction. Power is going to have devolve from the utilities.

Electricity users must educate themselves and be part of the change. Being a citizen in the 21st century means understanding energy.

Cross-posted from Archein: “energy as political reform”

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On Energy

On January 10, 2010, in The Public, by Joe Costello

on energy

We watched the financial system help bring down the economy, but the fact is all finance remains a sideshow to the what is really the main event of modern life — energy. It is the harnessing of fossil fuels for human use that pretty much allows much of what we deem modern. And no nation on the planet has been more proliferate in its use of energy than the United States, thus America for the past hundred years has been equated with modernity. The most important fossil fuel for American modernism has been oil, more accurately cheap oil, and that is becoming increasingly problematic.

America first became aware of its oil dependence back in the 70s, but has done little about it except build its military in attempt to secure the remaining resources. The simple accounting fact is the finding of new sources of oil peaked back in the mid-1960s and has been pretty much a straight line decline every year some. Over the last decade, it has been struggle for the oil industry to even keep discoveries equal to existing use.

The United

States most recent oil program was the occupation of Iraq, and we will not be gone from Iraq until we solve our oil addiction. Stuart Staniford of The Oil Drum has an interesting piece about the redeveloping of Iraq’s oil industry and the Iraqis claim they can eventually pump 12 million barrels a day. This is very hard to believe for many many reasons. It would mean the Iraqis increasing total global production by over 10%. But, let’s say they’re right. It would be good news for the world only in the sense that as Staniford piece points out it gives the world more time to transition away from oil. However, there is no sign of this happening anywhere, particularly in the US, and of course China is going full bore in building their own oil dependence — call it modernity.

Thinking about energy gives a whole new meaning to the term post-modern. Every idea about future economic health needs to be tied to a transition away from oil. The good ideas don’t for the most part include present bio-fuels, particularly the turning of food-stuffs into transportation fuels. The American ethanol program is plain and simple immoral. But there’s other problems with many bio-fuels and the Post has good piece on the problems of increasing bio-fuels with more forest materials.

Energy remains the foundation of any discussion on the economy and it’s future health. One easy way to think, burning isn’t a solution. For America, it means conservation and efficiency foremost, and our waste is of such a horrendous magnitude there’s plenty to gain. The other is the sun and after many years of procrastinating, we seem finally to be getting serious about it. And that’s much better news that any increase in Iraq oil production.

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