Tuesday, April 15, 2014

moving through New York

moving through New York from geoff tompkinson on Vimeo.

Has Crude Oil Production Actually Peaked?


While production numbers increase, it depends on what the definition of crude oil is:
When the industry and the government talk about the price of oil sold on world markets and traded on futures exchanges, they mean one thing. But, when they talk about the total production of oil, they actually mean something quite different--namely, a much broader category that includes all kinds of things that are simply not oil and that could never be sold on the world market as oil.
I've written about this issue of the true definition of oil before
. But Texas oilman Jeffrey Brown has been bending my ear recently about looking even deeper into the issue. He makes a major clarifying point: If what you're selling cannot be sold on the world market as crude oil, then it's not crude oil. It's such a simple and obvious point that I'm ashamed to have missed it. And, Brown believes that if we could find data that separates all these other non-crude oil things out, the remaining worldwide production number for crude oil alone would be flat to down from 2005 onward....
"Basically, crude oil peaked [in 2005], but natural gas and natural gas liquids [including lease condensate] didn't," he believes. Natural gas production has continued to grow, and as it has, its co-products have also grown--many of which have been lumped in with the oil production statistics....
Here's what's being added to underlying crude oil production and labelled as oil by the oil companies and reporting agencies:
•    Biofuels - Essentially ethanol and biodiesel.
•    Natural gas plant liquids - Butane, ethane, pentanes, propane and other non-methane components of raw natural gas.
•    Lease condensate - Very light hydrocarbons gathered on leased production sites from both oil and natural gas wells, often referred to as "natural gasoline" because it can in a pinch be used to power gasoline engines though it doesn't have the octane of gasoline produced at refineries.
•    Refinery gain - The most puzzling addition of all to crude oil supply calculations. This is merely the increase in the volume of refinery outputs such as gasoline, diesel and jet fuel versus the volume of crude oil inputs. It is due entirely to the expansion of the liquids produced, but indicates no actual gain in energy. In fact, great gobs of energy are EXPENDED in the refinery process to give us what we actually want.....
So, if oil production hasn't really been growing or at least not growing much in the last several years, what's all the hoopla about? As petroleum geologist and consultant Art Berman likes to say, it's a retirement party. There is one last, very difficult, costly and energy-intensive store of oil in low-quality deep shales containing crude. These shales--which are accessed using hydraulic fracturing or fracking--would never have been tapped if we were not already seeing a decline in the production of conventional, easy-to-get crude oil, the kind I refer to as Beverly Hillbillies bubbling crude as seen in the opening credits of the popular 1960s sitcom of that name.
The oil from deep shales (properly called "tight oil") is allowing production to grow in the United States even as production sinks elsewhere in the world. Other countries having shales containing oil will likely try to exploit them. But, the retirement party will only be a few years later for them as a result.
Despite what the public is being led to believe, oil wells in deep shales suffer from very high annual production decline rates--40 percent per year compared to the worldwide average of 4 percent. This implies that swiftly rising production will be followed by equally swiftly declining production in a compressed time frame--a classic boom-bust pattern.
Considering how optimistic all the reports from the Bakken and the Eagle Ford are, remember that before the Iraq war, we hadn't seen $40 a barrel oil.  After a brief spike to $140 during the commodity scam of 2008, we've settled at the what would have been crazy price of $100 a barrel, despite the U.S. producing 2 million barrels a day more "crude oil" than we were in 2009.  When (not if) the shale plays top out, we're going to see much higher prices.

Back to the crude oil production numbers:
Okay, so what do the worldwide oil production numbers actually look like if we strip out all the non-oil components? Well, we don't actually know. Brown has been unable to find such numbers anywhere. While the search continues, he thought he'd do a back-of-the-envelope calculation of his own. Here's what he came up with:
Estimated Global Crude Oil Production
2002 to 2012 in million barrels per day
2002: 60
2003: 62
2004: 65
2005: 67
2006: 65
2007: 65
2008: 66
2009: 64
2010: 66
2011: 65
2012: 67
(For the technically minded, here are the assumptions behind his numbers: The global condensate to crude plus condensate ratio was 10 percent for 2002 to 2005--versus 11 percent for Texas in 2005--and condensate production increased at the same rate as the rate of increase in global dry processed gas production from 2005 to 2012, 2.8 percent per year, according to the U.S. Energy Information Administration. Crude oil is defined as oil with an API gravity of 45 or less per RBN Energy. Data are rounded off to two significant figures.)
We may see an all-time high based on that definition of crude in 2013 or 2014, but the peak will not be far off if we do.

Tax Day Charts

Where our tax revenues come from:

Where they go to:

Historical share of individual and corporate income taxes as a percent of total revenues:

So who's winning, human people or corporate people?  More charts here.

Bud Light Crushes Rivals In Sales

Beverage Industry via The Atlantic:
 and in the craft beer segment, Samuel Adams leads the revolution:

So Bud Light sells a case of beer for almost every man, woman and child in the country (294 million versus 315 million).  Almost $6 billion is spent on that shit.  It also sells almost as many cases as Sam Adams brings in dollars.  Six of the top eight brands sold are from Budweiser?  That's domination.  Maybe advertising works.

The Only Hope

The 1992-1993 Montreal Canadiens, the last Canadian team to win the Stanley Cup

The Canadiens are the only team from Canada to qualify for this year's Stanley Cup playoff:
Perhaps it is just a random quirk of probability, but the numbers are eye-opening nonetheless. For the first time since 1973, only one Canadian team — the Montreal Canadiens, fittingly — qualified for the Stanley Cup playoffs, which begin Wednesday. Six of the seven Canadian teams will not play in the postseason, while 15 of the 23 teams based in the United States will.
“Everybody in Canada will be following the Montreal Canadiens, whether they like it or not,” said Michel Vigneault, a sport historian who teaches at McGill University and the University of Quebec at Montreal.
It has been a long time since this hockey-loving nation has had so barren a spring. But then again, it has been a long time since a Canadian team lifted the Stanley Cup — 1993, when Montreal won it....
The Toronto Maple Leafs, the most valuable team in hockey, are a smoking ruin. They were in playoff position until an eight-game losing streak in March wrecked their chances. Last week, they hired as their president Brendan Shanahan, a Hall of Famer from the Toronto area who never played for the Maple Leafs and has never run an N.H.L. team. They hope the infusion of fresh blood will lead them to their first Stanley Cup since 1967.
“I’d love to see the Leafs hoist the Stanley Cup on TV,” James said. “In color, instead of black and white.”
The Canadian teams in the Western Conference were even worse:
Just above the Oilers in the Western standings this year were their Alberta neighbors, the Calgary Flames, who have missed the playoffs five years in a row.
In fact, the bottom four teams in the West are Canadian. A Jets team returned to Winnipeg three seasons ago, and it has fallen short of the playoffs in all three. The team can take solace that the original Winnipeg Jets, now the Phoenix Coyotes, did not make the playoffs either.
It looks like another year will pass without the Cup returning to Canada.

Monday, April 14, 2014

Poisoning the Water Well in China


View China's major water pollution incidents since 2005 in a larger map

Marketplace:
Millions of people in the Chinese city of Lanzhou scrambled to buy bottled water this weekend after the city’s water supply was contaminated with Benzene. Levels of the cancer-causing chemical in the city’s tap water were discovered to be 20 times China’s national limit.
All of this comes as China is coming to grips with the environmental damage caused by decades of unprecedented growth. Lanzhou officials are blaming two explosions – one of them 27 years ago, the other 12 years ago – at oil refineries in the area.
They say these explosions caused oil to slowly seep into the groundwater, and that this sudden rise in levels of Benzene shows the decades-old oil is now contaminating the city’s water supply.
“Nearly 80% of chemical industry is built in densely populated city areas,” said Du Sha of Greenpeace China, “So this type of data shows that currently the chemical industry raises the high risk to the public health. The government should take more prevention and more supervised measures to manage these chemical industries.” 
Many residents of Lanzhou say the local government should have informed the public much earlier than they did about the water contamination. The state media is now reporting that city officials waited nine days to tell the public that their water was contaminated. The Lanzhou government now says water quality in the city is returning back to normal.
China is an environmental nightmare, and it is going to cost them a fortune to clean it up.  Poisoning the air, water and soil is such a terrible idea that I think even most Republicans are against it. However, that doesn't prevent our responsible corporate citizens line Freedom Industries or Duke Energy from fouling the water in Charleston, West Virginia or North Carolina.

The Bundy Ranch and the Nevada Constitution

The Atlantic:
But Bundy's understanding of states' rights is far different. As he told Sean Hannity in an interview last week (emphasis added):
Well, you know, my cattle is only one issuethat the United States courts has ordered that the government can seize my cattle. But what they have done is seized Nevada statehood, Nevada law, Clark County public land, access to the land, and have seized access to all of the other rights of Clark County people that like to go hunting and fishing. They've closed all those things down, and we're here to protest that action. And we are after freedom. We're after liberty. That's what we want.
Bundy's claim that the land belongs to Nevada or Clark County didn't hold up in court, nor did his claim of inheriting an ancestral right to use the land that pre-empts the BLM's role. "We definitely don't recognize [the BLM director's] jurisdiction or authority, his arresting power or policing power in any way," Bundy told his supporters, according to The Guardian.
His personal grievance with federal authority doesn't stop with the BLM, though. "I believe this is a sovereign state of Nevada," Bundy said in a radio interview last Thursday. "I abide by all of Nevada state laws. But I don’t recognize the United States government as even existing." Ironically, this position directly contradicts Article 1, Section 2 of the Nevada Constitution:
All political power is inherent in the people. Government is instituted for the protection, security and benefit of the people; and they have the right to alter or reform the same whenever the public good may require it. But the Paramount Allegiance of every citizen is due to the Federal Government in the exercise of all its Constitutional powers as the same have been or may be defined by the Supreme Court of the United States; and no power exists in the people of this or any other State of the Federal Union to dissolve their connection therewith or perform any act tending to impair, subvert, or resist the Supreme Authority of the government of the United States. The Constitution of the United States confers full power on the Federal Government to maintain and Perpetuate its existence, and whensoever any portion of the States, or people thereof attempt to secede from the Federal Union, or forcibly resist the Execution of its laws, the Federal Government may, by warrant of the Constitution, employ armed force in compelling obedience to its Authority.
The paramount-allegiance clause, a product of the era in which Nevada gained statehood, originated in Nevada's first (and unofficial) constitutional convention of 1863. Some 3,000 miles to the east, the Civil War raged between the federal government in the North and West and the rebellion that had swallowed the South.
I can't believe these loons are out there with guns defending this guy's right to graze cattle on federal land without paying grazing fees.  The West is so full of people living off of the federal government and hating it at the same time.  Freaking idiots.

Happy Birthday, Hit King

Happy 73rd birthday to my all-time favorite player growing up. If there was any player I tried to emulate (on the field), it was Pete.

If El Nino Returns, It Could Be Massive

Wired:


Official NOAA Climate Prediction Center estimates peg the odds of El Niño’s return at 50 percent, but many climate scientists think that is a lowball estimate. And there are several indications that if it materializes, this year’s El Niño could be massive, a lot like the 1997-98 event that was the strongest on record.
“I think there’s no doubt that there’s an El Niño underway,” said climate scientist Kevin Trenberth of the U.S. National Center for Atmospheric Research. “The question is whether it’ll be a small or big one.”
On top of some late-’90s nostalgia, a strong El Niño would bring pronounced changes to weather patterns around the globe, and possibly relief from some of the less-pleasant weather trends that have dominated headlines this year. After a Polar Vortex-fueled, unbearably cold winter in the U.S. Midwest and East Coast, a strong El Niño could bring warmer, drier weather in late 2014. And to parched California and its prolonged drought, El Niño might provide drenching rainstorms to fill up reservoirs. But the news won’t all be good. Rainstorms in California could mean floods and mudslides and, coupled with climate change, El Niño could bring harsher droughts to parts of Australia and Africa....
Should the warm pool make it all the way to the South American coast, a much stronger “full-basin” El Niño will appear. And then we could be in for some big weather changes.
A strong El Niño could start affecting the world as early as the fall. The Pacific hurricane season, which gets active around September, is greatly enhanced during El Niño. This likely means more tropical thunderstorms that could affect eastern Pacific areas such as Mexico. In contrast, Atlantic hurricanes are suppressed, meaning fewer and less severe storms with a lower chance of making landfall and doing damage.
The winter is when El Niño really gets going, though. Moisture flows from Hawaii to southern California in an atmospheric river colloquially known as the “Pineapple Express.” This creates heavy rainfall that dumps on the region. Though this could bring some relief from California’s drought, it also comes with the risk of flash floods and mudslides because the ground has been so hard and dry.
El Niño has other effects further into North America. It tends to enhance the jet stream, creating a wall that prevents Arctic air (and the Polar Vortex) from dipping down to mid-latitudes. East Coast winters are generally drier and warmer during El Niño years, which is probably good news to those still smarting from this recent frigid season. The mild winter has interesting downstream effects, like a boost for the U.S. economy during the Christmas season.
El Nino usually leads to cooler and wetter weather to the growing season, and warmer, drier weather in the winter to our area.

Brazilian Megaprojects See Megaproblems

One example, a massive rail project:
The Transnordestina, a railroad begun in 2006 here in northeast Brazil, illustrates some of the pitfalls plaguing projects big and small. Scheduled to be finished in 2010 at a cost of about $1.8 billion, the railroad, designed to stretch more than 1,000 miles, is now expected to cost at least $3.2 billion, with most financing from state banks. Officials say it should be completed around 2016.
But with work sites abandoned because of audits and other setbacks months ago in and around Paulistana, a town in Piauí, one of Brazil’s poorest states, even that timeline seems optimistic. Long stretches where freight trains were already supposed to be running stand deserted. Wiry vaqueiros, or cowboys, herd cattle in the shadow of ghostly railroad bridges that tower 150 feet above parched valleys.“Thieves are pillaging metal from the work sites,” said Adailton Vieira da Silva, 42, an electrician who labored with thousands of others before work halted last year. “Now there are just these bridges left in the middle of nowhere.”
Brazil’s transportation minister, César Borges, expressed exasperation with the delays in finishing the railroad, which is needed to transport soybean harvests to port. He listed the bureaucracies that delay projects like the Transnordestina: the Federal Court of Accounts; the Office of the Comptroller General; an environmental protection agency; an institute protecting archaeological patrimony; agencies protecting the rights of indigenous peoples and descendants of escaped slaves; and the Public Ministry, a body of independent prosecutors.
Still, Mr. Borges insisted, “Projects get delayed in countries around the world, not just Brazil.”
Mr. da Silva, who oversaw the start of work on the Transnordestina eight years ago, was frank about the role of his Workers Party, once the opposition in Brazil’s National Congress, in creating such delays. “We created a machinery, an oversight machinery, that is the biggest oversight machinery in the world,” he said, explaining how his party helped create a labyrinthine system of audits and environmental controls before he and Ms. Rousseff were elected.
“When you’re in the opposition, you want to create difficulties for those that are in the administration,” Mr. da Silva said. “But we forget that maybe one day we’ll take office.”
Another example, wind farms that are constructed, but their transmission lines are not.  The hot money flows into China, India and Brazil during the recent developing market boom hit countries ill-prepared to deal with such projects.  It is hard to overestimate the massive amounts of wasteful spending.  I think we'll be looking at a long slowdown in these markets, and that should puncture most commodity markets.