From the ‘All it takes is one’ department, a climate scientist has taken the gloves off and is suing a prominent denier in a Canadian court.
Climate- modeler Andrew Weaver, a contributing member of the Intergovernmental Panel on Climate Change is suing climate critic Tim Ball for an article Ball published in the conservative Canada Free Press. Weaver claims the article misrepresented his continuing contribution to the IPCC as well as his competence as a climate researcher.
Pushback from Weaver has seen the Free Press disassociating itself from Ball as fast as possible.
Maybe this is the start of something, when the scientists start kicking the auto/real-estate/energy company whores in the wallet. It would be nice to end the ‘balanced reporting’ charade before the pesky ‘reality effect’ begins dismantling our grand human science experiment in its sprawling entirety.
Weaver is also suing the National Post over disparaging articles written to smear him. Bravo! All it takes is one brave person to stand up to bullying by the ‘marketing’ class.
Meanwhile, more truths told by Kurt Cobb who examines taxation relative to social complexity. Cobb suggests that increases in complexity as described by Joseph Tainter have reached the level of diminished returns in most areas of so- called ‘modern’ living. This is an idea that has ‘been in the air’, lately. This being the shrinkage of the rate of effective innovation over the past hundred years or so.
MY grandmother, who was born in 1905, spoke often about the immense changes she had seen, including the widespread adoption of electricity, the automobile, flush toilets, antibiotics and convenient household appliances. Since my birth in 1962, it seems to me, there have not been comparable improvements.Of course, the personal computer and its cousin, the smartphone, have brought about some big changes. And many goods and services are now more plentiful and of better quality. But compared with what my grandmother witnessed, the basic accouterments of life have remained broadly the same.
This is in the same vein as Thomas Robinson’s article @ Guy McPherson a couple of days ago.
We are not running out of ideas per se, but ideas that actually can change anything other than a plutocrat’s life. We can innovate all kinds of finance derivatives but the brain locks at something that can supplant the lawn mower.
If you think of any human activity there is already a score of products that can intermediate it. The problem is scale. Humans have made too great a commitment to creating large amounts of worthless stuff. After making unsupportable ‘stuff efforts’ there is little capital/enthusiasm for anything else.
Speaking of intermediated human activity, the SEC appears to have awakened and is looking into mortgage securities underwritten by some of America’s Best Known Banks. As deciphered by Financial Times the Fed along with Fannie and Freddie are demanding Bank of America make good on the shitload of bad paper BAC pawned onto them prior to the mortgage meltdown. The money question is whether the shitload of bad loans amounts to a bank death sentence. Since the ‘Bigs’ are on Fed/Treasury life support, it is hard to see them failing due to small recognized losses. The government is the hands animating both the Fannie and bank sock puppets. I don’t see the left hand beating the right hand right now.
Nevertheless, we have to keep an eye on these banks. Shit(load) happens, right?
Meanwhile, what is taking place on Nymex WTI petroleum index is price fixing by traders putting in short positions hoping to keep gas prices from blowing up. The problem is the physical oil has to kept somewhere which means an increasing amount of oil is stored @ Cushing. Sez Platts:
Total U.S. crude stocks increased 2.594 million barrels to 343.159 million barrels. This is slightly less than the 3-million-barrel build anticipated by analysts.Low refinery inputs and an influx of imports, which typically occur in January, have allowed US crude inventories to rebuild 10.047 million barrels.
At 343.159 million barrels, US crude inventories were 19.108 million barrels greater than the five-year average and 14.165 million barrels more than year-ago levels.
Product inventory builds were the beneficiary of declining US oil demand, which declined to a two-and-one-half-month low of 18.839 million b/d.
Demand was down for nearly every product except middle distillates. Demand for middle distillates climbed 181,000 b/d to 3.891 million b/d, due in large part to increased heating oil consumption on the back of exceptionally cold temperatures along the Atlantic Coast.
Oil demand is declining because oil prices are too high. I don’t agree with arbitrage arguments. Some traders are making money selling high priced Brent or Louisiana crudes and buying WTI. There isn’t enough of this trade to change the spread(s) which speaks for itself. The Brent/WTI spreads have been widening since last summer.
People have been shipping crude in and out of Cushing for decades without pipeline restrictions. That is what Cushing is, a pipeline intersection. Arguments for restrictions don’t add up. Domestic consumption hasn’t changed much since 2004. What restrictions?
The simplest answer is the most likely: there is price resistance alongside a flood of funds flowing into the commodities markets. Traders are avoiding high gas/oil prices by ‘exporting’ funds elsewhere. They don’t want to blow up the US economy — and oil prices — if they can help it.
Think about it: oil costs $100 a barrel in Louisiana and $89 in Oklahoma. Why wouldn’t a trader buy oil in Cushing and sell it in New Orleans and ship it by pipeline? Why wouldn’t some trader buy the front month and sell the same contract forward and make some easy money? The answer is nobody will pay the high prices either in Cushing or Louisiana or six months from now. Like the gold market, the silver market, the copper market and other commodities markets the oil markets are broken.
The other question is whether the shrinking demand represents actual destruction or whether a future price fade will leave consumption intact to emerge another day. I think the answer lies in how long the current price regime holds. Another three months of + $80 oil and there will be another recession.
UPDATE: A new batch of Wikileak cables have the US officials discussing oil prices and whatnot with Saudi officials during the Great Oil Spike of 2008. Here is an excerpt:
Queried about Monday’s record surge in crude prices to above $120/barrel, Prince Abdulaziz noted, “We are extremely worried about demand destruction, like in the early 1980s. Aramco is trying to sell more, but frankly there are no buyers. We are discounting crudes, now we’re at a $10 differential between West Texas Intermediate (WTI) and Dubai Light, sometimes as much as a $12-$13 differential. Our buyers still bought less in April than they did in March.” Prince Abdulaziz attributed the lack of willing buyers to the current low refining margins. He indicated that that current high crude prices were squeezing refining margins, as refiners were unable to pass on the full brunt of crude prices to the end consumer. “There are no refining margins, refining margins have been shocked. It’s purely technical, not policy-induced. There are commercial impediments.” The consequence of poor refining margins was a declining refining utilization rate. Prince Abdulaziz fretted, “the U.S. refining utilization is 84 percent now, it’s usually above 90 percent. The quickest relief would be if crude prices would come down from these highs, if some of these political crises would resolve.” He queried if the USG could do anything to assist current political situation in Nigeria.
The price- demand situation in WTI relative to Brent and other benchmarks is identical to the price squeeze that was taking place in 2008. As then, prices are too high with the market out of synch with itself.
People who follow the Peak Oil story or who have read anything by Matt Simmons will not be surprised by the cables or the reports. Since the messenger is a Saudi Aramco big the story is hard to spin:
On November 20, 2007, CG and Econoff met with Dr. Sadad al-Husseini, former Executive Vice President for Exploration and Production at Saudi Aramco. Al-Husseini, who maintains close ties to Aramco executives, believes that the Saudi oil company has oversold its ability to increase production and will be unable to reach the stated goal of 12.5 million b/d of sustainable capacity by 2009. While stating that he does not subscribe to the theory of “peak oil,” the former Aramco board member does believe that a global output plateau will be reached in the next 5 to 10 years and will last some 15 years, until world oil production begins to decline. Additionally, al-Husseini expressed the view that the recent surge in oil prices reflects the underlying reality that global demand has met supply, and is not due to artificial market distortions.
al-Husseini might now subscribe to Peak Oil but there will be a lot more subscribers, tomorrow …