B12 Solipsism

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Archive for the ‘oil’ tag

Low Oil Prices Pose Threat to Texas Fracking Bonanza – The New York Times

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iTunes Screensaver 1

Earlier today…

Record production in the United States, along with a drilling frenzy in Iraq and Saudi Arabia, as well as the prospect that Iranian oil will again flood world markets, have spooked traders into abandoning their positions. What’s more, the very productivity here in the heart of the Eagle Ford shale fields, and the efforts by the oil companies to make them increasingly efficient, are contributing to the glut as well.

Via:
Low Oil Prices Pose Threat to Texas Fracking Bonanza – The New York Times
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Written by eggplant

August 15th, 2015 at 10:26 am

Posted in Links

Tagged with , ,

Is Fracking About To Burst The Economy?

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The Myth of Trust
The Myth of Trust

I ran across a quite interesting discussion of the history of the Oklahoma oil boom in the 1970s and its subsequent bust in the early 1980s, which is linked with the story of Penn Square Bank. There is a book by Phillip Zweig specifically on this topic, called Belly Up: The Collapse of the Penn Square Bank, I think I’ll have to look for a copy.

If you have a moment, you should read the entire essay.1

History aside, what about the current situation with oil prices cratering? Are we in trouble?

Now of course a debacle of the Penn Square variety requires at least one other thing, which is a banking industry so fixated on this quarter’s profits that it can lose track of the minor little fact that lending money to people who can’t pay it back isn’t a business strategy with a long shelf life. I hope none of my readers are under the illusion that this is lacking just now. With interest rates stuck around zero and people and institutions that live off their investments frantically hunting for what used to count as a normal rate of return, the same culture of short-term thinking and financial idiocy that ran the global economy into the ground in the 2008 real estate crash remains firmly in place, glued there by the refusal of the Obama administration and its equivalents elsewhere to prosecute even the most egregious cases of fraud and malfeasance.

Now that the downturn in oil prices is under way, and panic selling of energy-related junk bonds and lower grades of unconventional crude oil has begun in earnest, it seems likely that we’ll learn just how profitable the fracking fad of the last few years actually was. My working guess, which is admittedly an outsider’s view based on limited data and historical parallels, is that it was a money-losing operation from the beginning, and looked prosperous—as the Oklahoma boom did—only because it attracted a flood of investment money from people and institutions who were swept up in the craze. If I’m right, the spike in domestic US oil production due to fracking was never more than an artifact of fiscal irresponsibility in the first place, and could not have been sustained no matter what. Still, we’ll see.

The more immediate question is just how much damage the turmoil now under way will do to a US and global economy that have never recovered from the body blow inflicted on them by the real estate bubble that burst in 2008. Much depends on exactly who sunk how much money into fracking-related investments, and just how catastrophically those investments come unraveled.  It’s possible that the result could be just a common or garden variety recession; it’s possible that it could be quite a bit more. When the tide goes out, as Warren Buffet has commented, you find out who’s been swimming naked, and just how far the resulting lack of coverage will extend is a question of no small importance.

At least three economic sectors outside the fossil fuel industry, as I see it, stand to suffer even if all we get is an ordinary downturn. The first, of course, is the financial sector. A vast amount of money was loaned to the fracking industry; another vast amount—I don’t propose to guess how it compares to the first one—was accounted for by issuing junk bonds, and there was also plenty of ingenious financial architecture of the sort common in the housing boom. Those are going to lose most or all of their value in the months and years ahead. No doubt the US government will bail out its pals in the really big banks again, but there’s likely to be a great deal of turmoil anyway, and midsized and smaller players may crash and burn in a big way. One way or another, it promises to be entertaining.

(click here to continue reading The Archdruid Report: Déjà Vu All Over Again.)

We’ll see, but it might be a good time to start putting a few Krugerrands under your mattress…

Gold Coins
Gold Coins

Footnotes:
  1. The bank is often cited as being partly responsible for the collapse of Continental Illinois National Bank and Trust Company of Chicago, which had to write-off some US$500+ million in loans purchased from Penn Square. []

Written by Seth Anderson

January 12th, 2015 at 11:15 am

Posted in Business

Tagged with , , ,

Keystone XL Pipeline and Carbon Keynesianism

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Twists and Turns
Twists and Turns.

During the very first week of the 114th Congress, the new agenda was made clear: Bills to end the Affordable Care Act, to restrict abortion rights, to stop Obama’s immigration plan, and a bill to build the Keystone XL pipeline.

New Approved Keystone XL Pipeline Route

New Approved Keystone XL Pipeline Route

Paul Krugman laughs, and points out the absurdity of the GOP’s Carbon Keynesianism…

It should come as no surprise that the very first move of the new Republican Senate is an attempt to push President Obama into approving the Keystone XL pipeline, which would carry oil from Canadian tar sands. After all, debts must be paid, and the oil and gas industry — which gave 87 percent of its 2014 campaign contributions to the G.O.P. — expects to be rewarded for its support.

Building Keystone XL could slightly increase U.S. employment. In fact, it might replace almost 5 percent of the jobs America has lost because of destructive cuts in federal spending, which were in turn the direct result of Republican blackmail over the debt ceiling.

Oh, and don’t tell me that the cases are completely different. You can’t consistently claim that pipeline spending creates jobs while government spending doesn’t.

Consider, for example, the case of military spending. When it comes to possible cuts in defense contracts, politicians who loudly proclaim that every dollar the government spends comes at the expense of the private sector suddenly begin talking about all the jobs that will be destroyed. They even begin talking about the multiplier effect, as reduced spending by defense workers leads to job losses in other industries. This is the phenomenon former Representative Barney Frank dubbed “weaponized Keynesianism.”

And the argument being made for Keystone XL is very similar; call it “carbonized Keynesianism.” Yes, approving the pipeline would mobilize some money that would otherwise have sat idle, and in so doing create some jobs — 42,000 during the construction phase, according to the most widely cited estimate. (Once completed, the pipeline would employ only a few dozen workers.) But government spending on roads, bridges and schools would do the same thing.

And the job gains from the pipeline would, as I said, be only a tiny fraction — less than 5 percent — of the job losses from sequestration, which in turn are only part of the damage done by spending cuts in general. If Mr. McConnell and company really believe that we need more spending to create jobs, why not support a push to upgrade America’s crumbling infrastructure?

So what should be done about Keystone XL? If you believe that it would be environmentally damaging — which I do — then you should be against it, and you should ignore the claims about job creation. The numbers being thrown around are tiny compared with the country’s overall work force.

(click here to continue reading For the Love of Carbon – NYTimes.com.)


The worship of Mammon” by Evelyn De Morgan[1]. Licensed under Public Domain via Wikimedia Commons.

Infrastructure improvement? Blasphemy! Spending money to fix bridges, roads, water supply pipes, commuter rails – that’s Socialism! But building a massive pipeline to ship oil from Canada to China via the Gulf of Mexico is God’s commandment. If you consider Mammon a God that is…

Written by Seth Anderson

January 12th, 2015 at 9:27 am

Oil Trains Hide in Plain Sight Waiting To Kill Us By Exploding

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You Go Your Way And I'll Go Mine
You Go Your Way And I’ll Go Mine.

Big Government, saving you from an oil tanker blowing up in your neighborhood. What a travesty! Shut it down!

While the existence of this virtual pipeline is obvious to its neighbors—trains are visible from homes, the local commuter rail station, a park and a popular jogging trail—it is officially secret. Delaware Safety and Homeland Security officials contend that publicizing any information about the oil trains parked there would “reveal the State’s vulnerability to terrorist attacks,” according to a letter to The Wall Street Journal.

Finding the locations of oil-filled trains remains difficult, even in states that don’t consider the information top secret. There are no federal or state rules requiring public notice despite several fiery accidents involving oil trains, including one in Lac-Mégantic, Quebec, that killed 47 people.

The desire for secrecy seems wrongheaded to some experts. “If you don’t share this information, how are people supposed to know what they are supposed to do when another Lac-Mégantic happens?” asked Denise Krepp, a consultant and former senior counsel to the congressional Homeland Security Committee.

She said more firefighting equipment and training was needed urgently. “We are not prepared,” she said.

In May, federal regulators ordered railroads to tell states about the counties traversed by trains carrying combustible crude oil from the Bakken Shale in North Dakota so local first responders could be notified.

The Journal submitted open-records requests to all 48 contiguous states and the District of Columbia and received at least some information from all but 14: Colorado, Delaware, Idaho, Indiana, Louisiana, Maine, Maryland, Michigan, Nevada, Ohio, Tennessee, Texas, Vermont and West Virginia.

Mapping data received from the disclosing states, the Journal found a lot of other cities in the same situation as Newark. On its way to refiners on the East Coast and along the Gulf of Mexico, oil often sits in tank cars in railroad yards outside Harrisburg and Pittsburgh, Penn., and passes through Cleveland, Chicago, Albany, Seattle and a dozen other cities.

(click here to continue reading Oil Trains Hide in Plain Sight – WSJ.)

I’ve been looking for a while to take a photo of one of these oil tankers in Illinois, but haven’t found one yet. Do you have a photo?

The Bakken crude contains a lot of butane, making it volatile but useful for mixing with heavier oils or as a refined byproduct, said refinery manager José Dominguez. On a recent afternoon, the refinery was running mostly Bakken oil, along with some diluted crude from Canadian oil sands and a ship’s worth of light sweet oil from Basra, Iraq.

When Norfolk Southern began routing crude trains through Newark, it didn’t notify the local emergency officials. Last March, a year after trains started turning up, Fire Chief A.J. Schall sat down with officials from the railroad and refinery to discuss the crude shipments.

“It shows a lack of communication,” he said. By the summer, Norfolk Southern and PBF paid for Mr. Schall and another local fire chief to fly to Colorado and attend a three-day class on crude-by-rail trains.

(click here to continue reading Oil Trains Hide in Plain Sight – WSJ.)

Ok, problem solved, just fly local officials to Colorado, and give them a cannabis stipend… 

Oh, and in case it isn’t clear, I’m a liberal who believes government is frequently the solution to our nation’s problems which puts me radically at odds to the flame throwers like Ted “Calgary” Cruz who want to shut the government down because they are opposed to some policy or other.

Read the rest of this entry »

Written by Seth Anderson

December 4th, 2014 at 12:38 am

Congress Extends Itself Tax Extender Style

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Relentless
Relentless

Gail Collins provides a good elevator pitch description of a tax policy tool called tax extenders…

One of the very, very few things the current Congress seems determined to deal with before it vanishes into the night is the problem of “tax extenders.” Extenders are strange but much-loved little financial mutants. Sort of like hobbits or three-legged kittens.

Congress, in its wisdom, has created a raft of temporary tax breaks for everybody from teachers to banks that make money overseas. Most are really intended to be permanent. But calling them short-term measures tricks the Congressional Budget Office into underestimating how much they cost.
“If you pass a new tax cut, you’ve got to find offsetting spending cuts. But these are in a sense free,” said Howard Gleckman of the Tax Policy Center.

After the election, both parties appeared inclined to just extend all the tax cuts for two years while making principled mumbling about reform down the line.

But then the Koch brothers roared into the picture. They feel that it’s wrong for the government to give a special benefit to an industry that’s one of their competitors. Especially a government that they and their associates devoted nearly $60 million to getting into office. Politico reported that their representatives have been meeting with Speaker Boehner’s staff.

And you know, they have a point. If Congress actually wanted to do serious reform, it should get rid of special tax breaks for the wind and solar energy sectors. While, of course, also removing all the tax breaks for drilling oil.

(click here to continue reading Congress Extends Itself – NYTimes.com.)

Written by Seth Anderson

November 17th, 2014 at 10:19 pm

Still Sorry Somehow was uploaded to Flickr

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South of the Loop

embiggen by clicking
http://flic.kr/p/neZ7YH

I took Still Sorry Somehow on May 17, 2009 at 11:42AM

and processed it in my digital darkroom on April 20, 2014 at 12:34AM

Written by eggplant

April 21st, 2014 at 12:03 pm

China Reaps Biggest Benefits of Iraq Oil Boom

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A Couple of Jokers
A Couple of Jokers

Oh, dandy. Aren’t you  glad that Bush Cheney and that merry band of war criminals decided to piss away trillions of dollars and uncounted lives in the sands of Iraq in order to free Iraqi oil from Saddam Hussein?

Since the American-led invasion of 2003, Iraq has become one of the world’s top oil producers, and China is now its biggest customer.

China already buys nearly half the oil that Iraq produces, nearly 1.5 million barrels a day, and is angling for an even bigger share, bidding for a stake now owned by Exxon Mobil in one of Iraq’s largest oil fields.

“The Chinese are the biggest beneficiary of this post-Saddam oil boom in Iraq,” said Denise Natali, a Middle East expert at the National Defense University in Washington. “They need energy, and they want to get into the market.”

“We lost out,” said Michael Makovsky, a former Defense Department official in the Bush administration who worked on Iraq oil policy. “The Chinese had nothing to do with the war, but from an economic standpoint they are benefiting from it, and our Fifth Fleet and air forces are helping to assure their supply.”

 

(click here to continue reading China Reaps Biggest Benefits of Iraq Oil Boom – NYTimes.com.)

Six Thousand Thirteen Too Many
Six Thousand Thirteen Too Many

Especially when it turns out Exxon Mobil and their ilk expected to be able to reap their usual massive profits…

Notably, what the Chinese are not doing is complaining. Unlike the executives of Western oil giants like Exxon Mobil, the Chinese happily accept the strict terms of Iraq’s oil contracts, which yield only minimal profits. China is more interested in energy to fuel its economy than profits to enrich its oil giants.

Chinese companies do not have to answer to shareholders, pay dividends or even generate profits. They are tools of Beijing’s foreign policy of securing a supply of energy for its increasingly prosperous and energy hungry population. “We don’t have any problems with them,” said Abdul Mahdi al-Meedi, an Iraqi Oil Ministry official who handles contracts with foreign oil companies. “They are very cooperative. There’s a big difference, the Chinese companies are state companies, while Exxon or BP or Shell are different.”

China is now making aggressive moves to expand its role, as Iraq is increasingly at odds with oil companies that have cut separate deals with Iraq’s semiautonomous Kurdish region.

Or as Jeff Danziger’s comic puts it:

jeff Danziger 130604

Written by Seth Anderson

June 4th, 2013 at 8:05 am

How Republicans Killed Own Pet Oil Pipeline Project

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Gas At Last
Gas At Last

The GOP only cares about symbolic victories, not about actual governance. For example, the infamous Keystone XL pipeline. Obama would have happily punted on the decision until after the election, but the GOP was more interested in scoring political points, so they forced Obama’s hand.

At the peak of December’s payroll tax cut showdown on Capitol Hill, two top Republican aides discussed with me the pros and cons of making the Keystone XL pipeline a centerpiece of the debate. They relished the idea of forcing President Obama to take a public stand on the pipeline early in an election year, instead of after the election as he had wanted. And they were eager to force him to choose between supporters in the labor movement, some of whom are pushing for the pipeline, and others in the environmental movement who vehemently oppose it. So they decided to go for it.
At the same time they knew he’d likely have to reject the project, and for them that created a dilemma.

“It’s a question of whether we’d rather have the pipeline or the issue,” said one of the GOP aides. Black or white.

In the end they chose the issue.

On Wednesday, as expected, Obama shutdown the project, dooming it unless the Canadian company angling for the project goes through the costly process of reapplying and winning approval next year.

Pipe Tool Industrial
Pipe Tool Industrial

All to generate some talking points, and talking points based on lies…

The political attack here is based on a number of false and exaggerated claims — including that the pipeline construction would have created 20,000 jobs (the only independent study of the project concluded that the true number would’ve been much lower) and that the oil is now destined for China instead of the U.S.

At her own Capitol briefing Wednesday, House Minority Leader Nancy Pelosi took issue with these claims.

“If the Republicans cared so much about the Keystone pipeline, they would not have narrowed the president’s options by putting it on the time frame they did,” Pelosi said. “They left him very little choice…. This oil was always destined for overseas. It’s just a question of whether it leaves Canada by way of Canada, or it leaves Canada by way of the United States. So without taking a position on the pipeline, I don’t agree to the stipulation that this is oil that’s going to China now instead of the US. It was always going overseas. I don’t know where to, but it wasn’t for domestic consumption. And that’s really an important point because the advertising is quite to the contrary.”

(click here to continue reading How Republicans Killed Own Pet Oil Pipeline Project | TPMDC.)

Legal Tender
Legal Tender

Not to mention this little under-reported factoid:

In the meantime, House Speaker John A. Boehner (R-Ohio) launched a “countdown clock” that ticks off the time until the permitting deadline expires and posted a video on YouTube that touts the pipeline as a chance to create jobs with private investment. Playing off Obama’s mantra of “We Can’t Wait,” the video flashes phrases across the screen including, “We Can’t Wait for Leadership. We Can’t Wait for Jobs.” Environmentalists note that in December 2010, according to Boehner’s financial disclosure forms, he invested $10,000 to $50,000 each in seven firms that had a stake in Canada’s oil sands, the region that produces the oil the pipeline would transport. The firms include six oil companies—BP, Canadian Natural Resources, Chevron, Conoco Phillips, Devon Energy and Exxon—along with Emerson Electric, which has a contract to provide the digital automation for the first phase of a $9.4 billion Horizon Oil Sands Project in Canada.

Bill McKibben, a climate activist and co-founder of the group 350.org, wrote in an e-mail that Boehner has received more than $1 million from fossil-fuel companies, “and now we find out that he’s got extensive personal investments in companies dependent on tarsands oil.”

“He was willing to shut down the government in part to prevent enough time for serious environmental review,” McKibben added. “In any other facet of our public life . . . this whole list taken together would be seen for the gross conflict of interest that it is.”

(click here to continue reading Daily Kos: John Boehner’s Keystone XL conflict of interest.)

Written by Seth Anderson

January 19th, 2012 at 8:20 am

Traders Blamed for Oil Spike

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Speculators like Goldman Sachs taking advantage of pliable politicians and regulators to change rules? Amazingly, this is what Matt Taibbi described a few months ago. Perhaps someone in the Obama administration reads Rolling Stone?

Don't Oil this index
[Do Not Oil This Index]

The Commodity Futures Trading Commission plans to issue a report next month suggesting speculators played a significant role in driving wild swings in oil prices — a reversal of an earlier CFTC position that augurs intensifying scrutiny on investors.

In a contentious report last year, the main U.S. futures-market regulator pinned oil-price swings primarily on supply and demand. But that analysis was based on “deeply flawed data,” Bart Chilton, one of four CFTC commissioners, said in an interview Monday.

The CFTC’s new review, due to be released in August, adds fuel to a growing debate over financial investors who bet on the direction of commodities prices by buying contracts tied to indexes. These speculators have invested hundreds of billions of dollars in contracts that were once dominated by producers and consumers who sought to hedge against oil-market volatility.

[Click to continue reading Traders Blamed for Oil Spike – WSJ.com]
[non-WSJ subscribers click this link]

and

The debate over speculators underscores the shifting nature of commodities trading in recent years. Before the mid-1990s, these markets were dominated by entities that had physical dealings with the underlying commodity, and “speculators” who often took the opposite position, providing liquidity to markets.

But a new group of investors has emerged in recent years. Those who want to bet on commodities prices have increasingly put their money in indexes that track the value of futures contracts, in which investors promise to pay a certain amount in the future for oil and other commodities. As of July 2008, financial investors had about $300 billion riding on these indexes, roughly four times the level in January 2006, according to the International Energy Agency, a Paris-based watchdog.

Separately, these investors may buy derivatives, not directly traded on futures exchanges, that let them make contrary bets to offset their risks.

Crude-oil prices surged in July 2008 to a record $145 a barrel, then dropped to about $33 in December. Oil now trades at around $68 a barrel.

Of course, Goldman Sachs is not mentioned by name in this article, why would they be? They are just one the single largest futures speculators

Written by Seth Anderson

July 28th, 2009 at 6:57 am

The Great American Bubble Machine – Gasoline

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Matt Taibbi’s putdown of Goldman Sachs is finally online if you didn’t get a chance to read it yet. He places Goldman Sachs at the scene of several crime scenes, also known as stock market bubbles. For instance, the summer of 2008’s massive gas price increase. Reserves of crude oil were as high as they had ever been, demand was lower because of a world-wide economic slowdown, why then did gasoline prices exceed $4?

Gas At Last

Taibbi explains:

As is so often the case, there had been a Depression-era law in place designed specifically to prevent this sort of thing. The commodities market was designed in large part to help farmers: A grower concerned about future price drops could enter into a contract to sell his corn at a certain price for delivery later on, which made him worry less about building up stores of his crop. When no one was buying corn, the farmer could sell to a middleman known as a “traditional speculator,” who would store the grain and sell it later, when demand returned. That way, someone was always there to buy from the farmer, even when the market temporarily had no need for his crops.

In 1936, however, Congress recognized that there should never be more speculators in the market than real producers and consumers. If that happened, prices would be affected by something other than supply and demand, and price manipulations would ensue. A new law empowered the Commodity Futures Trading Commission — the very same body that would later try and fail to regulate credit swaps — to place limits on speculative trades in commodities. As a result of the CFTC’s oversight, peace and harmony reigned in the commodities markets for more than 50 years.

All that changed in 1991 when, unbeknownst to almost everyone in the world, a Goldmanowned commoditiestrading subsidiary called J. Aron wrote to the CFTC and made an unusual argument. Farmers with big stores of corn, Goldman argued, weren’t the only ones who needed to hedge their risk against future price drops — Wall Street dealers who made big bets on oil prices also needed to hedge their risk, because, well, they stood to lose a lot too.

This was complete and utter crap — the 1936 law, remember, was specifically designed to maintain distinctions between people who were buying and selling real tangible stuff and people who were trading in paper alone. But the CFTC, amazingly, bought Goldman’s argument. It issued the bank a free pass, called the “Bona Fide Hedging” exemption, allowing Goldman’s subsidiary to call itself a physical hedger and escape virtually all limits placed on speculators. In the years that followed, the commission would quietly issue 14 similar exemptions to other companies.

Now Goldman and other banks were free to drive more investors into the commodities markets, enabling speculators to place increasingly big bets. That 1991 letter from Goldman more or less directly led to the oil bubble in 2008, when the number of speculators in the market — driven there by fear of the falling dollar and the housing crash — finally overwhelmed the real physical suppliers and consumers. By 2008, at least three quarters of the activity on the commodity exchanges was speculative, according to a congressional staffer who studied the numbers — and that’s likely a conservative estimate. By the middle of last summer, despite rising supply and a drop in demand, we were paying $4 a gallon every time we pulled up to the pump.

[Click to continue reading about the gasoline bubble: The Great American Bubble Machine : Rolling Stone]

Read the entire article here

Written by Seth Anderson

July 15th, 2009 at 9:04 pm

Circumstances Beyond Our Control – oil paint

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Written by swanksalot

May 19th, 2009 at 4:34 pm

Posted in Photography

Tagged with ,

Parting Gift to Oil Companies

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Speaking of last minute jabs to the eye, Bush has a parting gift to his buddies at Exxon and elsewhere

Strapped On

The Bush administration, in one of its final acts, is proposing to let oil companies drill for oil and natural gas in half a dozen areas of the outer continental shelf that had been previously been off limits to drilling, a move that will reopen the debate over offshore drilling for President-elect Barack Obama.

In an interview with The Wall Street Journal, the director of the federal agency that manages the nation’s offshore oil and gas reserves said his agency would formally open a 60-day public comment period Friday on whether to allow leasing for oil and natural gas in all of some portion of 12 areas of the shelf, including four areas off Alaska, two off the Pacific coast, three areas in the Gulf of Mexico and three more along the Atlantic coast.

Six of the sites — those located off California, in the eastern Gulf of Mexico, and along the Atlantic seaboard — had previously been off limits to development under a quarter-century old federal moratorium that congressional Democrats allowed to expire last fall amid intense voter anger over high gas prices.

While none of the sales would occur before 2011, the proposal puts some pressure on Mr. Obama’s administration to decide what additional areas of the outer continental shelf, if any, should be open to oil and gas production

[From Bush Administration Proposes Letting Oil Companies Drill Offshore – WSJ.com]

There’s not even a joke appropriate for these clowns

Written by Seth Anderson

January 16th, 2009 at 10:47 am

Posted in Business,environment

Tagged with , ,

Michael Pollan’s Open Letter to the Next Farmer in Chief

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“The Omnivore’s Dilemma: A Natural History of Four Meals” (Michael Pollan)

Michael Pollan1 wrote a fascinating open letter to the upcoming new administration.

vegetables

After cars, the food system uses more fossil fuel than any other sector of the economy — 19 percent. And while the experts disagree about the exact amount, the way we feed ourselves contributes more greenhouse gases to the atmosphere than anything else we do — as much as 37 percent, according to one study. Whenever farmers clear land for crops and till the soil, large quantities of carbon are released into the air. But the 20th-century industrialization of agriculture has increased the amount of greenhouse gases emitted by the food system by an order of magnitude; chemical fertilizers (made from natural gas), pesticides (made from petroleum), farm machinery, modern food processing and packaging and transportation have together transformed a system that in 1940 produced 2.3 calories of food energy for every calorie of fossil-fuel energy it used into one that now takes 10 calories of fossil-fuel energy to produce a single calorie of modern supermarket food. Put another way, when we eat from the industrial-food system, we are eating oil and spewing greenhouse gases. This state of affairs appears all the more absurd when you recall that every calorie we eat is ultimately the product of photosynthesis — a process based on making food energy from sunshine. There is hope and possibility in that simple fact.

[From The Food Issue – An Open Letter to the Next Farmer in Chief – Michael Pollan – NYTimes.com]

Reading around the blogosphere2, there are already calls for Obama to hire Pollan as Secretary of Agriculture, or similar.

oops, never posted this article3, and now Obama claims to have already read the open letter:

was just reading an article in the New York Times by Michael Pollen about food and the fact that our entire agricultural system is built on cheap oil. As a consequence, our agriculture sector actually is contributing more greenhouse gases than our transportation sector. And in the mean time, it’s creating monocultures that are vulnerable to national security threats, are now vulnerable to sky-high food prices or crashes in food prices, huge swings in commodity prices, and are partly responsible for the explosion in our healthcare costs because they’re contributing to type 2 diabetes, stroke and heart disease, obesity, all the things that are driving our huge explosion in healthcare costs. That’s just one sector of the economy. You think about the same thing is true on transportation. The same thing is true on how we construct our buildings. The same is true across the board.

[From Swampland – TIME.com » Blog Archive The Full Obama Interview «]

So there you have it…

Omnivore's Dilemma
Pippen reading Omnivore’s Dilemma

Footnotes:
  1. who we’ve mentioned a few times before []
  2. yes! phrase coined by skippy []
  3. probably because it’s pretty half-baked, and never going to be fully baked. Regardless, read the piece []

Written by swanksalot

October 28th, 2008 at 12:18 pm

Posted in Food and Drink,government

Tagged with

The True Cost of McCain’s Oil Industry Subsidies for Every State

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McCain likes giving his starving oil buddies federal tax dollars: Republican corporate welfare helps keep McCain in office.

Oil and gasoline prices are setting all-time records, helping the five biggest publicly traded oil companies in the world earn a staggering $148 billion in profits over the past year. At the same time, the U.S. government continues to provide massive subsidies to oil companies.

These subsidies for some of the most profitable companies in the world, given directly and through the tax breaks, are a waste of taxpayer dollars and continue tax dollar investments in oil instead of shifting incentives to clean energy alternatives. Subsidies for the oil industry preserve our dependence on oil, which leaves our economy vulnerable to price surges, our security vulnerable to hostile oil-rich nations, and our climate vulnerable to greenhouse gas pollution.

If elected president, Sen. John McCain (R-AZ) would provide $39 billion in federal help for oil and gas companies over the next five years. Some of these subsidies already exist: McCain supports the continuation of many of the current subsidies, which will total $33 billion over the next five years according to a study by Friends of the Earth, “Big Oil, Bigger Giveaways.” While McCain would repeal some of these subsidies, he would also pass a corporate tax cut that would be worth more than $22 billion to America’s five largest oil companies over the next five years.

[From The True Cost of McCain’s Oil Industry Subsidies for Every State]

It isn’t as if the federal government needs money, no not at all.

Written by Seth Anderson

August 14th, 2008 at 8:04 pm

Posted in politics

Tagged with , , , ,

FTC Rule Barring Oil Manipulation

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I’m sure the final rule will have a lot less oomph, and plenty of loopholes.

Under pressure from federal lawmakers concerned about high energy prices, the U.S. Federal Trade Commission proposed a rule prohibiting petroleum-market manipulation, giving the agency authority to levy fines of up to $1 million per violation a day.

The proposed rule — which would cover both spot and futures markets — is designed to increase oversight of the crude-oil, natural-gas, gasoline and other product markets as directed by Congress late last year.

As oil prices surged to nearly $150 a barrel in July, many lawmakers increased pressure on the FTC to promulgate the antimanipulation rule, feeling existing oversight was too weak and laxly regulated. Lawmakers are concerned that excessive speculation — and possible manipulation — in the oil markets helped drive prices to record levels, and are seeking ways to enforce tougher market oversight. Congress is considering legislation designed to rein in speculative trading deemed to be distorting the market.

[From FTC Proposes Rule Barring Oil Manipulation – WSJ.com]

Brass Rust

Potential fines are discussed:

If the agency enacts the rule as it is currently written, it could subject violators with penalties of up to $1 million per violation per day. The FTC said it aimed to conclude the rule-making process by the end of the year. It drew immediate praise from some lawmakers who have been pushing for more stringent oversight of the markets.

This is some serious cheese for violators. As an example, Exxon Mobil’s profit in 20071 was in the vicinity of $4,633,200 per hour, or $111,196,800 per day. A million dollar fine would reduce Exxon Mobil’s daily profit to a paltry $110,196,800 a day! Won’t somebody think of the children! Of course, I’m not sure Exxon Mobil would be covered by these rules anyway, I’m sure nobody at Exxon Mobil is involved in speculation of oil futures, right? but sounds like there will be a lot more discussion before anything gets enacted in any case.

Given that the proposed rule covers the futures market — also the domain of the Commodity Futures Trading Commission — it is likely to upgrade a regulatory turf battle between agencies and spur activity by the CFTC.

Lots of discussion and posturing, and lots of profits to be snatched in the meantime. By the end of the year, Obama will be elected, and the glory years of oil companies might start to sputter.2

Footnotes:
  1. so far 2008 is much higher, so adjust all these numbers by numbers that your calculator can’t even handle []
  2. let us fervently pray so, anyway, though there is no guarantee that Obama will have the intestinal fortitude to tell the oil industry and Wall Street to reign their greed in []

Written by Seth Anderson

August 14th, 2008 at 7:22 am