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Wednesday, May 31, 2006

Taking Stock

Ever wonder about this pseudo-paradox?

The stock market goes down by x% and the goes up by the same x%. Does it recover its original value?

No, it only reaches a value of 1-(x/100)^2 of its starting point. The percentage positive increase has to equal x/(1-x/100) for a full recovery. Ratchets have a definite mechanical advantage for pulling investors across the bumpy plateau.

Although, or perhaps because, I don't have a significant fraction invested in the stock market and mutual funds, this property has always spooked me. It always seems that any large percentage drop in value takes a much larger counter-ratchet to recover. In a non-growing, oil-limited economy, it seems to me that this inevitably leads to a downward spiral.

Sorry for the pedantic post, but time off has rendered me to refitting the old training wheels. Tom Friedman has also pulled out his training wheels and begins to make some sense by looking at basic math and realizing that GM hasn't a clue.

Wednesday, May 24, 2006

Wha' happen?

Documentary: Who killed the electric car?

Hillary Clinton steps up and triangulates on energy policy.

But George W. Bush continues on with his idiotic reign, flaunting his pure child-like stupidity:
"We're spending your money again on research to help fund breakthroughs for battery technologies that will enable you to drive a plug-in hybrid battery."

Tuesday, May 23, 2006

Bomb Thrower?

Investigative journalist Greg Palast makes it a habit of getting people to think and perhaps get a little annoyed at the same time. Somebody at PeakOil.com posted a Palast article that made it look like he had become a peak oil denier.
Nevertheless, like believers undaunted by the failure of alien spaceships to take them to Mars on the date predicted, Peak enthusiasts keep moving the date of the oil apocalypse further into the future. In the new, revisionist models of Hubbert's prediction, the high point in the curve of discoverable oil on our planet will come in a decade or so. Though we have a reprieve, goes the new theory, still, we're running out of crude, dude!
I figured that Palast had too much of a common-sensical streak to believe all of the anti-PO arguments and figured he had just engaged in a bit of rabble-rousing, so I wrote this quickly in his defense:
I think it rather smart for Palast to come up with this bombshell of sorts. You have to remember that progressives know how to deal with this kind of "wedge" issue. Liberals and progressives always deal with uncertainty and shades of gray. Now of course I don't agree with what Palast thinks about this in a long-term, strategic sense, but in a tactical, short-term sense, I think he can make some headway. The headway comes because he can open up the discussion and expose some gaping holes in the 'minionist ranks. Imagine when the Cheney's of the world start attacking Palast and forget to protect their soft-white underbelly and all the maggots start crawling out. "Errr, Hubbert was right, ... no, strike that, he was wrong". Really, all that matters is getting the power mongers of the world to show their cards.

On the other hand somebody like Corsi becomes an open-sore to those in the conservative ranks. They do not allow dissension and these kinds of wedge issues drive their flock absolutely insane. A significant fraction will either all move to Corsi or move to some other POV. In the end, the conservatives will split, and you will see this happening with a host of issues, from ethanol to the rise of China as an energy consumer.

Think about it, do you really believe the questionable utility of ethanol and its rather poor EROEI has the liberals up in arms? No, because it serves as a rallying point. The shades of gray in the ethanol debate attract progressives, whereas it completely alienates the conservatives, and they go wingnut crazy over these issues.

Progressives => open to dissension, tolerate wedge issues
Conservatives => closed to dissension, sensitive to wedge issues

More power to Palast for being a bomb-thrower. He's going to rattle a few cages and stir the vermin out of their hiding holes.
Based on some of his recent articles and appearances, I had a feeling that Palast would bring a peak-oil denying argument up because of our problems in distinguishing between (1) peak oil as a convenient excuse for raising prices and (2) controlling oil-rich regions as a means to set prices.

In this "offensive" article, Palast essentially adds a needed viewpoint to the mix. I had read some of his recent articles on using the Iraq conflict as a controlling mechanism. He had to write the peak oil article to clearly demonstrate the schism. He might have gone too far in his zealousness but it certainly left a mark.

But hold on, I almost go punk't.

He had also written as a companion piece, this article, Why Palast is wrong : And why the oil companies don't want you to know it, as an excerpt from his recent book "The Armed Madhouse". So all his talk of a Hubbert Peak scam in the previous article turned into a clever strawman and devil's advocacy for the payoff article.
A closing note of caution: I fear that some may take my noting the super-abundance of oil remaining on the planet as approval for our using it. Far from it-getting off the oil habit is an urgent working- class issue. First, because cheap, good air and water are in limited supply. We can't keep pooping combustion contaminants into the sky unless expect we expect our children to grow gills that will metabolize sulfur. There's lots of arsenic on the planet. Don't eat it. There's lots of oil. Don't burn it.

Second, massive oil use is like any other addiction-it sickens the user and only enriches the pusher; in the case of oil, that would be ExxonMobil, OPEC and Vladimir Putin. Get the petroleum needle out of our veins and we get the extra bonus of watching Citibank go through agonizing petro-dollar withdrawal.
Go to GregPalast.com for his latest rants, and to see how he set up the strawman that fooled more than a few people into really getting PO'd.

For an interesting twist on some real bomb throwing, check out this weirdness in Coon Rapids, Minnesota. Somebody left a 2-3 ft tall artillery shell on a highway bridge (a dummy it turns out).

An improvised non-explosive device left by a non-terrorist I presume, just in time for sweeps week.

Monday, May 22, 2006

Credibility, Shredibility

NYT columnist Tom Friedman falls into the techno-optimist category on the Entropy Production scale of energy-aware people. I notice that the Charlie Rose Show has him on the tube talking to vulture capitalist guest-host John Doerr. Friedman makes very little sense to me and only makes correct predictions because he makes so many of them.

In lieu of saying anything more about Friedman, I remind you of a couple of people who actually did more than spew during their careers. For instance, a cornucopian at PeakOil.com wrote some disparaging comments about Robert L. Hirsch, author of last year's commissioned peak oil report that pretty much got buried by the press.
RGR: Anyone who claims Hirsch is "DA MAN" sure better have checked out his past of crying wolf....such silly proclamations might work among those who haven't been watching this game for awhile and the usual rank amateurs who want the world to end for some silly personal reasons.
I didn't find it too hard to track down Hirsch's accomplishments.
  1. Hirsch-Meeks Fusor (1960's): "Things changed dramatically with the arrival of Robert Hirsch at the lab. He proposed an entirely new way of building a fusor without the ion guns or multipactor electrodes. Instead the system was constructed as two similar spherical electrodes, one inside the other, all inside a larger container filled with a dilute fuel gas. In this system the guns were no longer needed, and corona discharge around the outer electrodes was enough to provide a source of ions. Once ionized the gas would be drawn towards the inner (negativily charged) electrode, which they would pass by and into the central reaction area." [link]
  2. "During the 1970s, he (Hirsch) ran the US fusion energy program, including initiation of the Tokamak fusion test reactor."[link]
  3. The Energy Plateau (1996) where Hirsch started writing about implications of the peak.
  4. 2003 "A recent washington post article notes that our own Robert Hirsch was fired from Rand corporation because he poo-poo'd fusion efforts as being viable for future energy needs based on the current methodolgy of looking for fusion solutions.

    It appears he was doing a special report for Rand under contract by DOE to study future energy trends and what systems looked viable.

    Hirsch thumbed his nose at DOE's fusion efforts (which we know was the right thing to do). This ticked off DOE officials, thereby, starting the usual ripple effect down through the chain of command at Rand. Hirsches part of the report was suppressed or "politically corrected" and all was roses again between Rand and DOE. Hirsch got the axe."
And then you realize what happens when you POOP (Point Out Obvious Problems) on the big guns. "Ya Fired!"

So, given that a scientist who made a name for himself in a very difficult and arcane field, and who has shown courage to confront insane ideas in his own field of study, wouldn't you want to defer just a teeny bit to the man's opinions?

Just like I would tend to listen to the opinions of a 40+ year veteran war correspondent before a Rumsfeld apologist. Read this Joe Galloway vs Larry Di Rita exchange for ideas on how to win a war on credibility.

With a choice between getting your hands dirty (ala Hirsch) and getting in the trenches with the grunts (ala Galloway), I don't think Friedman has done either. And but for that rationale, I tend to ignore Flatland Friedman.

Sunday, May 21, 2006


I had to pile on this entertaining post at Entropy Productions with my two yaps worth of comment. Go to EP and you see a taxonomic narrative that essentially describes this tree of peak oil personality types:

Cornucopians - stereotypical

Traditionalists - Plebeians

One-shot Johnnies
Technopeakers - Techno-optimists

Doomer powerdowns
Doomers - Doomer nihilists
I don't have any problems with the hierarchy apart from one vital missing link. As the "doombat" represents the politically active end of the depletion crowd (a combination of "doomer" and "moonbat"), I figured the much larger fraction at the other end of the spectrum needed representation. I appreciate the cleverity of the term doombat but ultimately think we should consider only two groups -- people that want to try to identify and figure a way out of this oil predicament and people oblivious to it all. The missing links in the depletionist hierarchy populate the latter group. Remember that with the high profile that oil prices and oil wars present us every day, every citizen becomes a depletionist to some extent.

So scattered among the apparently-oblivious masses, we have to add the category wingpawns.

Wingpawns - sinister
Wingpawns consist of denizens of the wingnuttia blogosphere who go overboard to avoid talking about any ills the country or the world may face. These people actually might know about the potential pitfalls that we may encounter, and you can sometimes infer it from their writings (see Powerline for evidence of this), but through careful framing of their arguments they can completely obfuscate the ideas that the traditionalists and doombats put forth. And the wingpawns don't necessarily fall under the "conucopian" category. Wingpawns talk relentlessly about such tangential energy issues as Saddam's "oil for food" program and opening up "Anwar" as some kind of final solution. But then they let slip out a telling reference to stripper wells, which indicates they know more than they let on.

Most of the wingpawns get their talking points from conservative think-tanks and who knows where (strange little colleges like Claremont and Hillsdale pop up all the time, harboring the only college president that demonstrates outright warmongering). In contrast, they would counter-claim that doombats get marching orders from George Soros. The question ultimately facing the wingpawns remains how much longer do they need to play this game. The price of playing the pawn may not prove worthwhile, as pawns usually become the most expendable pieces.

Although most wingpawns inhabit the sphere of pure right-wing punditry and bloviation, a few visible ones show signs of hedging their bets. You have people like neo-cons Frank Gaffney and James Woolsey doing sensible things without trying to hide it. These neo-pawns will most likely make the cleanest break at some point, because they have left their options open.

I make a special category for myself. I belong to the group that antagonizes the wingpawns with a borrowed motto which states: "Have I told you yet today how much I hate these people?"

General Michael Hayden appears to represent a different kind of wingpawn. The guy throws around science jargon like he knows what of what he speaks, yet appears nothing more than a big phony. He has a history degree.

During the hearings, Orrin Hatch asked him whether we could have prevented 9/11 had we had eavesdropping in place:
(from the Al Franken show) HAYDEN: I've said publicly -- and I can demonstrate in closed session, how the physics and the math would work, Senator -- that had this been in place prior to the attacks, the two hijackers who were in San Diego, Khalid Almihdhar and Nawaf Alhazmi, almost certainly would have been identified as who they were, what they were and, most importantly, where they were.
How the physics and math would work? Say no more, BushCo has just found another useful pawn.

Friday, May 19, 2006


Monsanto : Retarded children are a small price to pay for immaculate golf courses. - Jim Earl
Heard on the Marc Maron radio show.

Seacrest out.

Thursday, May 18, 2006


Looking at the stock market the last few days, I have little doubt, however naive, that the professional profiteers earn their keep by keying on sudden drops in valuation. I usually hear it referred to as "profit taking". The amateur investors chug along the upslope and earn money gradually over the long term, but never respond quickly enough to the "market correction dips" and so predictably and routinely contribute to the transfer of wealth from the hoi polloi to the oilogopoly.

Since the investor class has virtually invented this collapsing Ponzi scheme to making money (perhaps more properly extracting money), it would not surprise me if resource consumption, when left to purely market forces, follows this same profile. Unfortunately, or fortunately, depending on you point of view, the collapse can only happen once.

I modeled this previously in an oil depletion context; looking back it essentially demonstrates that given powerful enough extractive techniques, big oil may just create the biggest, longest Ponzi scheme ever encountered. With but one twist. The rebound can't depend on the sucker class getting lured back in, because oil molecules don't have gullibility genes. It will end in The Overshoot Point and we will, for the long term, have to get use to different levels of productivity and sustainability.

The oil companies will eventually run out of petrol, but by that time, they will own everything in site from earlier bubble bursting exercises, the cashout from Wall Street earnings into hard currencies providing all the leverage necessary.

First ketchup as a vegetable, then trees polluting and now CO2 as a miracle gas.

A couple of know-it-alls, John Stossel and Peter Huber, engage in a mutual admiration videoclip here, as they discuss a rosy oil-rich future. For some reason, this preposterously absurd quote from Star Trek seems fitting:
Daystrom:"Twenty years of groping to prove the things I'd done before were not accidents... seminars and lectures to rows of fools who couldn't begin to understand my systems... colleagues, laughing behind my back at the 'Boy Wonder' and becoming famous, building on my work -- building on my work!"

Bones: "Jim, he's on the edge of a nervous breakdown, if not insanity."
Stossel: libertarian wonder boy.

Wednesday, May 17, 2006

Linearity and Conservation

Human beings appreciate linearity. We cope with an analog world by applying linearity. For example, most audio systems use principles of linearity to avoid distortion and provide a wide dynamic range. Linearity enables an audio amplifier to range from a whisper to a scream with nary a change in a waveform and allows the use of the same electronic analog filter independent of volume.

The oil shock model exhibits the same properties of linearity. Acting as a response filter on an initial discovery impulse, given the same scaled input stimuli, we should expect the same scaled production profile, assuming that we keep the same rate parameters.

But, in the real world, should we expect this scaling to naturally occur? In short: yes. And the simple reason why: greed.

Say that the USA had a single delta discovery of x GBls of oil in 1930. And that this contributed to a production profile that peaked in 1970. Given the same extraction rates per unit volume, we should expect that the profile would look exactly the same except for the height of the peak, if instead of x GBls we had found an extra 10x Gbls worth of oil in the original discovery.

But truly this only makes sense if we add the greed quotient to the equation. With human greed doing its part, the 10x worth of oil would have flowed like water. Civilization would have used the excess cheap oil for outdoor air-conditioners in Palm Springs and a myriad of other activities that we would consider nowadays as wasteful. For the same reason that we can suck every last drop out of the Colorado River or shoot every last passenger pigeon out of the sky, we would have used up the same fractional volume of oil by now, no matter how much we originally had.

Conservation remains the only route to stem the tide.

What not to do? Act like a JackAssMissile.
This morning, the Democrats gave a news conference on energy independence. It was the usual melange of Bush bashing and fantasy; Chuck Schumer said that $3 a gallon for gasoline is a metaphor for the Bush administration's incompetence, and John Kerry said that we need to invent our way to energy independence. A good idea, as long as we aren't counting on Kerry to do the inventing, and we have a plan for what to do in the meantime.

Dim Dick Durbin had the most concrete suggestion: burn corn!

I'm well aware of the political power of ethanol, and of its utility, at the margin, as an energy source. But the idea that burning midwestern corn can replace burning petroleum is absurd. And there has been, for a decade now, a concrete proposal on the table whereby Americans would work at good-paying jobs to produce energy that would reduce this country's dependence on foreign energy sources. But the Democrats have successfully blocked drilling for oil in ANWR, time after time.

"Energy independence" is one more in a long series of issues on which the Democrats have nothing serious to contribute.
Now let's put the thoory of greed to practice. In this case, drilling in the Arctic National Wildlife Refuge would just continue to feed the greed machine. Pointing out any opposition to drilling there, the wingnuts implicitly suggest that enviornmentalists violate the 'minionist's goal to support the linear law of greed. When all else fails, conservation remains the only negative feedback in the loop to keep the mighty wurlitzer amplifier in check.

Ask anyone who has built an audio amplifier the utility of negative feedback, and you will understand.

Update: Interesting link on linearity.
Here’s the fundamental fallacy of linear thinking: if you think something is good, you just do more of it and pretend that this will make the future even better. Such thinking also can be (and has been) used to justify fantastic levels of inequality that more integrated types of thinking would simply see as absurd. If we really are in it together, over the long haul, then of course what happens to any segment of society at any time has an effect on the rest, just as every element in a closed natural cycle is important to the health of the whole. But unhook the parts from the whole, unhook humans from nature and from each other, and set them each on a separate line towards an ultimate end point, and this is what you get: each against all, a society of parents simultaneously bludgeoned and bedazzled into stealing the future from their children, or their grandchildren.

Tuesday, May 16, 2006

Putting Dilbert to shame

Monday, May 15, 2006

Reserve Growth Recap

I have gone around the bend a few times trying to understand the conundrums behind the concept of "reserve growth". What exactly causes the majority of the grief, I can't say for sure, yet I can volunteer the extenuating issues and points of contention:
  1. Hard to tell the difference between reserve growth and new discoveries.
  2. Some reserve growth rates, when extrapolated, point to infinite URR.
  3. Most reserve growth rates as extrapolated won't even begin to keep up with demand.
  4. Areas that show reserve growth look good for awhile but when they get shut down, they get removed from the data set.
  5. (follows from 4) If reserve growth does hit an asymptote, no one ever notices it, because it gets removed from the data set the minute it shows problems. This makes the concept of "reserve growth" a veritable pot'o'gold at the end of the rainbow for the cornucopians, because the contradicting evidence does not exist.
  6. Certain areas show huge reserve growth (e.g. USA) but still hit peak oil. Other areas show little reserve growth, have honest reporting (e.g. UK and Norway) and of course hit peak oil.
  7. Reserve growth predictions become heavily politicized and filled with legal technicalities because of the potential for fraud. The reserve growth effect itself could perhaps result more from an artifact of the reporting technique than anything else. For example, see the SEC regulations prohibiting "speculative" estimates.
  8. Look up the concept of "creaming curves" and try to distinguish creaming from reserve growth without going nuts.
  9. Even though potentially promising regions in the world harbor dictators or fiefdoms or inhospitable natural environments, many people hold out for the hope of unknown amounts of reserve growth there. Daunting prospects, I say.
  10. Lastly, "Mars, bitches!". Because growth extends to the limits of the universe.
As I have struggled with trying to resolve all these point simultaneously, my blog postings on the subject have shown at least a maturing of my understanding.

I started by looking at creaming curves here.

I saw some intriguing data on huge reserve growth in the US reported by the USGS, and tried to brush it aside a bit pedantically here.

I almost convinced myself that reserve growth would not have an impact here.

I gave a shot at modeling reserve growth by applying conventional parabolic growth mathematics here.

I finally caught on to understanding SEC regulations on reporting here and added some thoughts on asymptotic limits to growth.

I found a few place where reserve growth showed little potential here.

I started to comprehend how reserve growth will lead to wildly asymmetric depletion profiles here.

And that you could achieve infinite URR without asymptotic limits here but that it makes little difference in the end.

Finally, I give some pointers on how to argue this whole issue from a position of true understanding here.

Trip, strange, long. If that is our destiny, you cannot change it. But do not go in fear, Grasshopper. Fear is eternal darkness. Go instead with inner strength. For it is like a deep river, into which all streams flow. It increases, always moving forward. And soon, there is nothing that can stand in its way.

Sunday, May 14, 2006

Addled Age

Not that I would even consider putting an advertisement on a blog, but the fact that some of these ads promote huge, over-the-top pipe dreams has started to concern me.

Found on Josh Micah Marshall's Talking Points Memo blog, an advertisement for 2 trillion barrels of parking lot asphalt.

Speaking of Marshall's blog, I lifted Cheney's scribblings (see left margin), and thought about his slight improvement in favorable poll ratings. I heard it went from 18% to 20%. To explain this, I figure that perhaps a sixth of the U.S. population consists of rednecks and self-styled militia who would like nothing better than to see (a) Cheney shoot someone or (b) see Cheney make fun of a hoity-toity ambassador. At some point, a pol's ranking should hit some Neanderthal bottom whereby other Neanderthals can actually raise his rating when they see him doing something stupidly Neanderthal. They realize that they have finally found their guy. Ergo facto profundo, Cheney's favorability ratings go up.

And another thing. I figure ordinary spam may turn out as a plus for these BushCo times. Consider that since the spooks in the security agencies have started monitoring everything said over any medium, a flood of meaningless messages should give us a sense of privacy. Before they read my meaningless tripe they have to wade through 1000x as much other meaningless tripe. Random noise can become an ally in our fight against an imperial presidency.

I also bet that given that they have monitored over 2 trillion numbers already, that the number of false positives, such as wrong numbers and inadvertent calls, swamps anything that they would conceivably find as an authentic terrorist lead.

Friday, May 12, 2006

Norway would if they could

Any wonder that Norway should consider going the green route outlined by scandihoovian neighbor Sweden? Someone at peakoil.com recently posted updated Norway oil production data. The fact that Norway, along with the UK, release this information to the public, shows a lot of candor on their part. Commendable, yes, but it still appears that oil production continues to drop like a rock with the March '06 number.

For the model, I used the following extraction rate shock curve to match the earlier data above. If anything, the extraction rate may have increased beyond the conservative cutoff I originally applied, beyond a value of 0.24 depletion of available reserves per year. This means the time constant has essentially dropped well below 4 years.

Graphoilogy used the data to come up with a multiple-oil-field production profile view. The more I look at it, the more it reinforces the notion that a definite bifurcation occurred in production rates. Around 1991, extractive effort has to have ramped up considerably, which has served to sharpen the production profiles in the individual regions. Look closely as the early individual production curves show rather broad profiles (with significant reserve growth in the oldest field) while the later production curves consist of half-widths of just a few years.

Thursday, May 11, 2006

Electric vehicles

This article gives the full media treatment to Ian Wright and his electric car, the X1. During my day job I work on the design of vehicles of the hybrid-electric variety, and so get a kick out of seeing some of the weirded-out contraptions. Frankly, I don't find a lot truly special in the high-performance car; if you think of it as a lightening bolt in a can, it makes intuitive sense on how it could beat a Ferrari or a Porsche. Perhaps a better comparison would involve a rocket engine -- the coupling of energy to tractive efficiency becomes stronger as you reduce the number of parts, with a brushless DC motor, high-current battery, and advanced feedback control acting the equivalent of a controlled rocket.

And perhaps they should give more credit to the motor manufacturer AC Propulsion who have had quite a track record before Mr. Wright conceived of his X1.

Broadcast yesterday, Ed Begley recalls his early exploits driving around Los Angeles in an electric car, essentially a golf cart, on the Marc Maron show here. He also describes how he lives on $600 on green energy per year (interspersed with lots of interesting Hollywood trivia).

Begley admitted to Maron that he still prefers travelling around by bike whenever possible -- something that Maron's cohost Jim Earl and I fundamentally agree with.

Monday, May 08, 2006


Buses, subways, and trains allow passengers to stand up as they travel. This clearly improves the packing potential, and allows a greater capacity of passengers per trip, thus increasing energy efficiency.

The NY Times thought that Airbus had considered doing this at some time. The paper eventually retracted the story as no one could find firm evidence as to the validity of the assertion.

Hilarity ensues when some right-wingers mock and debunk the innocuous NY Times reportage, all the while lying and then trying to cover up their own wild-eyed assertions. They don't succeed however, as ordinary blokes can record the lies for posterity.

Friday, May 05, 2006

Victory at Crappomattox and Bullsh*t Run

A wedge issue that many had predicted would happen has really started to split open in the Republican ranks.

First off, note the right way to approach the issue. The Dems, as always, handle the situation effectively. Witness that Ed Schultz had both sides of the ethanol debate on his radio show recently [MP3].
Bruce Dale of Michigan State University squares off on ethanol with David Pimentel of Cornell University. Dale claims ethanol yields more energy than it takes to make it. "The debate over how much energy it takes to make ethanol has obscured its main benefit," says Dale. Pimentel says even with more efficient production techniques, ethanol is still an energy loser.
On the other hand, Schultz-sound-alike Rush Limbaugh has probably never talked about a potential energy shortage, yet there he goes yapping about T. Boone Pickens' prediction of peak and the need to drain the Arctic National Wildlife Refuge and go nuclear. Really, I should care less what Limbaugh says (as he has Jim-Jones-brainwashed his audience for the last 15+ years and they won't recover from their cult-driven trance, ever), but Schultz has pushed the ethanol/biodiesel thing really big the past year, and so to bring Pimental on makes a lot of progressive sense. Consider also that Schultz's home-base on the Red River in NoDak means that he can make a whole crop of sugar beet farmers more than a bit upset.

And we find fundie 'minionist and former presidential candidate Gary Bauer once saying this in a debate:
Resources are there to be used
But now he changes his tune a bit.
The Republican Party is obviously worried about a backlash at the polls in November, and today President Bush took action in a number of areas that may help stabilize prices and, perhaps, relieve some of the pressure. Unfortunately, there is no "quick fix" or easy solution to America's energy needs. But, instead of buying into socialist rhetoric, the administration and conservative members of Congress would be better off explaining the role failed liberal policies have played in higher gas prices.
But this day will go down in blogosphere history as the lawyers at Powerlyin'blog finally posted something on our energy predicament. They clearly have never wanted to mention it in the couple of years I have followed their antics, preferring instead to talk about inconsequential drama such as Saddam Hussein's "Oil for Food" deal or only indirectly via knee-jerk Arctic National Wildlife Reserve drilling Republican talking points. But now read what the head lawyer Hindrocket has to say as his head furiously spins off his body in trying to counter rabble-rousing Michal Kinsley's editorial calling for a kind of windfall profits tax on domestic oil:
And, critically, note that it doesn't matter WHO owns the resource -- if Chuck Schumer or the U.S. government itself owned ALL the oil they would still face the necessity of recovering the same "user cost" as ExxonMobil or a rancher with 10 stripper wells!! Indeed, when the government leases oil rights, royalty schemes are devised precisely so an estimate of the "user cost" can be recovered and the resource extracted so as to optimize society's wealth.

What happens if you tax away as "excess profits" the resource owner's user cost? Kinsley claims there would be "no effect on the incentive to extract more oil" and so presumably social wealth is not diminished. But is this true? And is it the entire story?

It might be true for already discovered resources; theoretically, the resource owner might be as well off producing as not, since under Kinsley's scheme he does receive "fair" profits plus direct costs. But there is also the possibility that if the new tax regime were thought not to be permanent...and is it realistic that such a draconian scheme would be?...capital could "go on strike," as it were, and owners could simply leave the oil in the ground and refuse to produce...and the large integrated companies, especially, could simply buy their crude -- for cash at the full global market price -- from foreign producers!

On the other hand, if the tax regime WERE thought to be permanent, the incentive of resource owners would be to "drain America first" by pumping out as much as possible as fast as possible, since they themselves would not be able to recover the opportunity cost of the oil's value in the future. This is clearly suboptimal, and, indeed, unsustainable -- because it would in essence be acting as though today's consumption would NOT induce increased future scarcity; in other words, that the "user cost" is zero.

Either way the incentives to resource owners of such an "excess profits" tax regime are perverse. The justification of this "excess profits" scheme, in addition to getting wrong a fundamental feature of non-renewable resources, is insidious as well. It amounts to de facto expropriation: since the oil companies have already "sunk" the discovery costs and found the oil, and the value can be taxed away with impunity, the resource owners are placed in the same position as if they had not owned the resource in the first place.

Moreover, it would essentially be inviting the oil companies to exit the business of exploration and development of NEW oil resources anywhere the U.S. government could tax them. An "excess profits" tax implicitly assumes that we have already found all the oil in the U.S. that we will ever either need or can find --- somewhat of a self-fulfilling prophecy since the incentive for exploration and discovery, if not production from existing resources, would certainly be substantially diminished.

An "excess profits" tax regime as advocated by Kinsley is an assault on the very concept of private property in natural resources, would entail massive government control of this sector of the economy, and would not be without damaging consequences. But here's the question I have: I wonder if Kinsley wants to apply the logic of neo-George-ism to any real estate he may own....after all, what did he do to earn any capital gains in the land values? Any run-up in the value of his property is "excess," isn't it?
I posted lots of the text because you can see that the powerlier knows a bit more about oil than he has forthrightly admitted to in the past (note the critical mention of extremely low productivity stripper wells).

Today marks the day that we have won a battle. Discussion of oil depletion has entered the ranks of the right-wing blogosphere feverswamps. The AssMissile will lose the debate, because it turns into a zero-sum game. His legal team of asshats has never wanted to admit "the end of oil" to their audience, but as you see, he still went ahead and did it. They basically let the genie out of the bottle, and Powerline readers will either wedge out or veg out, depending on their indoctrination level. One thing that their readership will never accomplish: to try to turn Hindrocket's rant into talking points that they can regurgitate with the ease of a corporate lawyer.

As of right now, it doesn't matter if the pro-tax or anti-tax sentiments gain more traction. The fact that this gets discussed at all generates just one victory. (Todd won the other one)
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Thursday, May 04, 2006

Wring the peepers

The right-wingers have climbed aboard the energy cacophony with insane ramblings. I especially like how they try to downplay serious issues while measuring their own patriotic greatness with strawman arguments. The nano-sized Instapundit quotes Max Boot:
Of the top 14 oil exporters, only one is a well-established liberal democracy -- Norway. Two others have recently made a transition to democracy -- Mexico and Nigeria. Iraq is trying to follow in their footsteps. That's it. Every other major oil exporter is a dictatorship -- and the run-up in oil prices has been a tremendous boon to them.
Forgetting to mention that the USA at one time had all the oil it could use, yet never turned into a dictatorship. Er, I mean imperial presidency. Well, you get the idea. (I hate when that happens)

Tim Lambert at Deltoid pointed to some of this gibberish, which leads to a veritable treasure trove of inanities. This allows us to follow Instapundit as he goes completely circular on us and reveals the real reason for the war:
Of course, if we seized the Saudi and Iranian oil fields and ran the pumps full speed, oil prices would plummet, dictators would be broke, and poor nations would benefit from cheap energy. But we'd be called imperialist oppressors, then.
And he uses Dilbert cartoonist Scott Adams to back him up. Unfortunately, for the Instapundit, he somehow forgets that Mr. Adams has a thriving career as a satirist.
War for Money

When people say America attacked Iraq "for money" or "for oil," they're talking about two different but related concepts:

1. President Bush attacked Iraq to make his evil capitalist overlord friends richer.

2. President Bush attacked Iraq to protect the overall economy.

While I do not approve of starting wars to make evil capitalist overlords richer, an argument can be made that the well-being of much of the planet depends on economics. Poverty kills lots of people.

In theory, a well chosen war "for money" can save a huge amount of lives in the long run.

Suppose you believed that the world is soon reaching an oil supply crisis. Many experts believe that. And suppose the consensus of economists is that unless the oil supply problem is solved, America will be plunged into a spiral of depression the likes of which has never been seen.

If America goes down, the rest of the industrial world will too. Starvation will follow. Health services will crumble. Crime will soar. Lots of people will die. Imagine China losing half of its customer base in a year. Could 100 million people die from a large economic disaster? I think so.

Now suppose America's experts thought that a smallish war to depose an evil Iraqi dictator was all that was needed to buy another 20 years of reliable oil supply -- long enough to develop alternative energy sources that are economical.

Under my hypothetical scenario, would America have a moral obligation to attack Iraq under false pretences if its experts believed that doing so protects the most lives in the long run?

Now sit back and enjoy seeing how few people can deal with a hypothetical question designed to clarify thinking. Bonus points to the first idiot to point out that the real situation wasn't at all like my hypothetical.

Of course, Mr. Adams readers' catch on pretty quick to cartoonish strawmen.
Scott - can I call you Scott? - suppose you are Japan, and your only export is cars. American Cars suddenly become hot again. Wouldn't a full-scale attack on Detroit, like the Pearl Harbor invasion, be justified? At least until Japan's economy could diversify? Hypothetically.
Think of what has happened recently. In a few short weeks, the tepid backwaters of the right-wing lagoons have transformed from a dead zone of energy talk into a chorus of spring peepers. Saying nothing important, but saying it all in unison. Of course, with the beginning of summer, and along with some market corrections, the sounds will die off. In right-wing land, short-term memory loss will set in ... until we see it repeated next go-round.

As Mike Malloy of AAR would say, "Have I told you yet today how much I hate these people?".

Wednesday, May 03, 2006

Cosmic Slop

Dipping from the well for a bunch of obscure songs about the 1970's oil crisis.

WFMU archives all the songs they play; check out the Byron MacGregor/Gordon Sinclair spoken word bit for a real 70's flashback.

Captain Ed provides a time capsule for the right-wing's rambling on our current oil predicament -- which doesn't amount to anything of substance at all. People from the future, listen up: when you dig this thing up and crack it open, save the displaced dirt for its cash value.

Tuesday, May 02, 2006

Foot, note in mouth

In a footnote the other day, I archived what seemed like an offhand comment:
1 If you think this curve a bit far-fetched, remember that some reserve growth predictions, by the USGS no less, generate parabolic growth laws. If real, these may even have longer tails than we show above.
This leads to an incredible conundrum that peak oil deniers like Michael Lynch must face up to, based on their quotes of very large reserves. How big can these reserves get? Well, the reserve growth that some USGS analysts predict follows what looks like a parabolic growth law:

The name of the law refers to the quadratic or parabolic shape you get when plotting Amount versus Time (hint: tilt your head sideways to the right). More typical, if we plot Time on the x-axis and Amount on the y-axis, it turns into a square-root relationship. If we stopped right now and relied only on reserve growth, Q(t), then production can only proceed by at most the derivative of this number:
Q(time) = Integral (P(t)) = k*squareRoot(t)

dQ(t)/dt = P(t) = 0.5*k/squareRoot(t)

The production number shown drops off like 1/t1/2, which provides an even slower drop-off than the 1/t dependence I conjured up earlier. Like my hypothetical curve, the USGS's curve also appears to generate an infinite supply of oil.

Got that? The bureaucrats at USGS lead us to believe -- perhaps just a sin of omission -- that reserve growth will generate an infinite supply of oil. I say they "lead us to believe" this, because no where do they say a limiting factor appears. This kind of sloppy analysis gives apologists like Lynch ample ammunition to spew forth a cornucopian outlook on the population.

However, the conundrum still remains. While reserve growth could hypothetically continue to grow as a square-root against time, the production will still drop off by the reciprocal of this number. If we indeed have reached a peak, then the reserve growth will still not make up for depletion losses and we will continue to face relentlessly diminishing supplies in the future. Only lots of new discoveries, sufficiently removed from known reservoirs will prevent the decline.

As a general rule, the deniers will always insert foot into mouth and generate just enough rope to hang themselves with -- evidently they can't even win an argument with an infinite supply of oil on their side of the equation.

Monday, May 01, 2006

Latas for Congress

I live far away from Tucson, but I pitched in a few to the Jeff Latas for Congress campaign. I initially contributed because I heard that his veteran son needs a bone marrow transplant, but now that I looked at his platform I really have a feeling that the Fighting Dem can make a difference. Latas has a degree in aerospace engineering and spent most of his career as an fighter pilot, and likely developed a good perspective from the first gulf war:
We're now paying nearly three dollars a gallon for gas. But the cost is really much higher. What most Americans don't see is the additional cost of the occupation of Iraq, a misguided attempt to stabilize the Middle Eastern region to keep a steady flow of oil to fuel our economy. This occupation has a price tag of $160 billion a year. That's over $500 per American citizen per year! The highest and latest cost of our oil addiction is being paid by the families of the nearly 2400 Americans who died in Iraq, and the untold others who have died after their return home. This is too much for me. It should be too much for the rest of America. We must end our addiction to oil now. Doing so is healthy for our country. Our national security improves, our environment improves, our economy improves, we become a stronger nation, and we can once again become the global leader in innovation and technology. The current gas crisis is only the tip of this iceberg. Every year at this time, gas prices spike. Last year, the big news was gas prices over $2.25 a gallon. By summer it was over $2.80. It will go higher this year, and even higher next year. Oil is harder to find and extract. Half of the oil on our planet is gone. That took around 100 years. At our current consumption rate, we may have only 30 years remaining. Supply and demand rules here. Supply is limited and demand has increased radically in only the last five years. We have no choice but to end our dependence on oil; it's up to us to select when. I say we must start now, because we should have started in 1974, when the first warning shot was fired with the oil embargo. We are behind, and our standard of living will suffer. You have a choice to send someone to Congress who understands this extreme problem. I am the only engineer running for this Congressional seat and I will be one of the few engineers in Congress. This is one of many technological problems this nation will face, and we need representatives in Congress who understand technological solutions.
Latas has a diary over at Daily Kos.

I uploaded an audio interview of HeadingOut from TheOilDrum along with an economist here (MP3).