/* Added by TWP, 10/12/2012 */ /* End of addition */

One of the live oaks that bless my home

Sunday, May 27, 2012

What To Do?

When I share with people my assessments of where the Earthlings are stumbling rather blindly, my listeners often say: "Oh, you are such a pessimist! What would you do differently?" My short answer is: "Stop, face reality, and think. Facing reality is not pessimism. Do not try to be a better, more obedient sheep, whose sheephood is certified by a Harvard et al. at a huge expense.

Squealer teaching Molly a new slogan she will  recite with unbending conviction and lead other sheep in repeating it.  Think of Fox News, MSNBC, Facebook, Rush Limbaugh, most newspapers, and almost all glossy magazines on sale in the U.S.  I can think of only four magazines that appear not to be run by the U.S. pigdom.
For those who have read and understood "Animal Farm" by George Orwell, let me remind you the fate of Boxer, a powerful horse, who dedicated his life to hard labor for the good of others, and was greatly admired by all animals. With his strong muscles and persistence, Boxer created the prosperous Animal Farm, but when his lungs gave out he was immediately sold by the ruling-class pigs to Alfred Simmons, Horse Slaughterer and Glue Boiler.  The semi-literate animals were told that Boxer was being transferred to a hospital and later to a retirement house, where he would be able to rest and enjoy fruits of his hard labor. Only the clever and well-read donkey, Benjamin, was not deceived and tried to warn the naive animals, but he was too slow in convincing his fellow four leggers, and Boxer disappeared from the farm forever.

I often find myself in Benjamin's position. Whatever I attempt to do is too little too late, and the current generation of pigs - Squealers more precisely - knows even better how to deceive, divide, and control a multitude of the honest, well-meaning and hard-working Boxers in our society; soldiers, for example.

My other advice is: Educate yourself. Here "educate" does not mean "get certified," or "buy mediocre, useless education from the most expensive, for-profit outfit." When I say "educate," I mean give yourself a way of discerning between lies and misinformation you are fed each second of every day and truth as best as you can establish it by whatever means.

Two examples come to mind. The first example was pointed out by my well educated son: Will Americans Make Tradeoffs They Don't Understand? This example touches upon the all-important concepts of energy and fuels. Without the high energy density, fungible fuels flowing at high rates through our complex civilization, our society will cease to exist within 20-30 years from today.

A Public Agenda survey in 2009 found nearly 4 in 10 Americans (39 percent) couldn’t name a fossil fuel. Nearly half couldn’t name a renewable energy source. More than half of the public (56 percent) says incorrectly that nuclear energy contributes to global warming. About one-third of the public (31 percent) thinks solar energy contributes to global warming. While the survey is a few years old, I am skeptical that public knowledge has improved all that much. I know first hand, because I am a Benjamin who teaches these concepts to college-level engineers. Since my blog is dedicated to the issues of energy, society and ecology, I'll only state that this particular ignorance is deadly for a society that makes no efforts to diversify itself away from personal automobile and to densify its cities.

The second example has to do with Facebook's IPO. Almost all media reactions (please have a second look at Molly) focused on the failure to price the stock sufficiently low, so that the pigs at the trough could make a one-day killing by flipping the fast appreciating stock for cash. This is considered to be in bad taste in the casino that used to be known as U.S. economy. When a new company wins by being well-financed with its IPO, that's bad. But when pigs make oodles of cash they did not earn, that's good.

Now please do not get me wrong. I think that Facebook epitomizes what is wrong with us.  The largest IPO in recent history is for a company whose business plan is to inject pigdom into the lives of a bunch of narcissists (from Greek narcissus, meaning "sleep" or "numbness") and voyeurs, while pretending to be a socially responsible agent. The unquestionable social benefits of Facebook appear to be incidental and orthogonal to its money-making mission.

I am still waiting for a multitude of IPOs of manufacturing companies, oil companies, mineral mining companies, mass transit companies, computer hardware companies, organic farming companies, healthy food companies, solar water heater companies, or cheap drug companies; anything that would make me believe that there is a way to cure my beloved but confused country from the self-inflicted wounds.  These companies do not have to be big and should serve their local communities.

And if you believe that Facebook catalyzed change in the world, this may be so, but please remember that the overthrow of communism in Poland and Eastern Europe, the most important event in the last six decades, succeeded without Facebook or cell phones. Educated, determined, and ethical people did it.  Those people got really fed up with their pigs.

P.S. As a timely addition to my blog, please read this New York Times article on local TV coverage. Local news(?) is still the number one source of information(?) for Americans.  Thus, it is instructive to understand that now it does not matter which station you are watching.  The agreed-upon coverage will be the same in most markets. I do not watch anything on TV, but PBS and - occasionally - Comedy Central between 10 and 11 p.m.  Jon Stewart and Stephen Colbert bring the only solid, fact-checked, and informative news U.S. citizens can count on outside of NPR and PBS. How funny and sad at the same time.

Friday, May 11, 2012

Tales of Two Earths

...As sheep, that step from forth their fold, by one,
Or pairs, or three at once; meanwhile the rest
Stand fearfully, bending the eye and nose
To ground, and what the foremost does, that do
The others, gath'ring round her, if she stops...

Dante Alighieri, Purgatorio, Canto 14

Most economists make it all too easy to bash them. When I think of how eerily detached from reality the main stream of economics is, I also recall the situation with corn ethanol in 2005.  Only two U.S. faculty, Dr. David Pimentel and I, went public against the nonsense that was being propagated throughout the society by the ill-informed greens, scientists, lobbyists, economists, venture-capitalists, lawmakers, and almost everyone in the media.  We were both savaged at the time and for a few more years.  Now everybody shrugs their arms and says pretty much what we were saying all along. 

Today, Chapter 2 of the same nonsense, or the "second generation biofuels," is being closed at a great cost to the society and the environment.  Shell finally pulled the plug on Iogen in Ottawa, 5 years after I had presented ample evidence against Iogen in the presence of the highest Shell management.  Amyris in Berkeley, an offspring of the BP-Berkeley-Monsanto-DuPont bout of greed, is in its final death throws.  Again, 5 years ago, I was on record showing the nonsensical assumptions behind that deal.  In no small measure my opposition to the doomed yet harmful GMOs-for-biofuels hastened my departure from the biotechnology-crazed, irrational Berkeley.

Here I'll use but one of a multitude of recent examples that illustrate what's wrong with main-stream economics implemented with vengeance by nation-states, IMF, and the particularly harmful World Bank. This example is  "Never Mind Europe. Worry About India," by Dr. Tyler Cowen, published by the New York Times in the Sunday Business Section on May 5, 2012. I have picked this particular example, because Dr. Cowen's arguments are identical to the talking points used to neutralize my public activities over the last 8 years. I guess there must be a single master list of standard arguments of the Free Marketians.

According to Dr. Cowen's auto-panegyric in Wikipidia, he occupies the Holbert C. Harris Chair of economics as a professor at George Mason University and is co-author, with Alex Tabarrok, of the popular economics blog "Marginal Revolution." He currently writes the "Economic Scene" column for the New York Times, and he also writes for such publications as The New Republic, The Wall Street Journal, Forbes, Newsweek, and The Wilson Quarterly. Cowen is also general director of the Mercatus Center at George Mason University. In February 2011, Cowen received a nomination as one of the most influential economists in the last decade through a survey by the Economist. He was placed #72 as the most influential Thinkers of 2011 by Foreign Policy Magazine.

Try to imagine over 7 billion people, who are at once less thoughtful and mean less than Dr. Cowen to the prosperous future of the ever-growing Global Economy. What an unbearably heavy weight to carry on one's economic and political shoulders!

The foundation of Dr. Cowen's argument is that
China’s population is likely to peak relatively soon while India’s will continue to grow, so under even modestly optimistic projections the Indian economy will be No. 1 in terms of total size.
But, while nicely exploding her population, India has made some fatal missteps that slow down her progress towards economic bliss:
  • They did not let Wal-Mart in.
  • The glorious green revolution has eluded them.
  • They do not mine enough coal and do not generate enough electricity to grow the economy even faster.
  • They ceased growing their service economy because "call centers, for example, have succeeded by building their own infrastructure and they often function as self-contained, walled minicities." 
  • And so on...
Unfortunately, Dr. Cowen never mentions the physical Earth and her ecosystems that no longer can save the bulging Indians from themselves:
  •  A population explosion to 1.5 or 2 billion people tests the carrying capacity of the Earth, not just the Indian subcontinent - with or without Wal-Mart.
  • Using intensive and sustainable agriculture, India, China and Japan were able to feed themselves for two thousand years before anyone could spell "Monsanto."  Today, the 800 million people who live off of land in India are more than the populations of Europe and North America combined. They cannot be replaced by huge machines, Monsanto's patented self-destructing GMO seeds, and lots of water and chemicals.
  • Groundwater and river water are running out in India, and no longer support people's lives, agriculture, and coal mining.
  •  Indian coal generally has a high sulfur content and is not suitable to use for power generation.
In summary, Dr. Cowen is a card-carrying member of the powerful, omnipresent Society of Flat Earth Economists (SOFEE) that now controls most if not all departments of economics in the U.S. His arguments for growth would hold only if the Earth were flat and infinite, her resources were infinite, and her capacity to absorb and process human-made toxins were also infinite. Unfortunately, none of these conditions obtains on our physically observable planet.

Friday, May 4, 2012

Peak Oil? - In Norway

Who would you rather believe, a renowned professor at BI Norwegian School of Management and consultant to IMF, The World Bank, the governments of Denmark, Norway, Canada and the U.S., etc., or your own lying eyes? If you follow the April 2012 issue of the World Oil, the good professor wins.

After having read the convincing "Peak Oil? - Not in Norway" piece in the World Oil, you may want to recalibrate your senses by looking carefully at the four graphs below. Click on each one of them if you want to see a high-resolution image.
Oil production rates from the North Sea and Norwegian Sea oilfields on the Norwegian continental shelf are a set of 65 approximately independent random variables. The total production from these 65 fields is then a random-sum process that yields a Gaussian distribution, in this context known as a "Hubbert curve" or "Hubbert peak." The thick blue line is the rate of oil production from Ekofisk. The Ekofisk production curve has two peaks and is highly asymmetrical. Note that in 2007, the Ekofisk field was producing at a higher rate than in 1978. This means that Ekofisk will continue to produce substantial amounts of oil for years to come. Data sources: The Oil and Gas Journal (2009), The Norwegian Petroleum Directorate. For more discussion, see Appendix A in Patzek and Croft (2010).
The cumulative oil recovery from Ekofisk (the area under the thick blue line in the plot above) expressed as a percent of the oil in place (OIP). Oil production started at Ekofisk in 1972, as a compaction drive. The reservoir pressure decreased below the bubble point (gas started to evolve from the depressurized oil) in 1976. The solution gas drive production peaked in 1978, and water injection to maintain the reservoir pressure and displace more oil was started in 1983. Since 1995, horizontal wells, multilateral wells, and infill wells have been drilled. The cumulative oil production reached 40 percent of OIP by 2007, and was still going up nicely. Because of the improvements in well technology and secondary recovery processes, Statoil expects to recover well above 50 percent of OIP from Ekofisk. And this will be a world-class achievement of petroleum engineering.
When oil production rates from all the 65 fields in the first graph are summed up, a fundamental Hubbert curve emerges with a clearly visible peak in 2001-2002.  The most recent data (the blue step line) from the Energy Information Administration end in 2011.  The new deposits of oil in the old fields - accessed with waterfloods and smart multilateral wells - give rise to the small blue Hubbert curve that in no way can reverse the overall decline.

The same data and Hubbert curves as in the graph above, but now we assume that an additional 7 billion barrels of oil will be rapidly produced from the newly discovered and undiscovered reservoirs in the North Sea. Today there are 51 active oil and gas fields on the Norwegian continental shelf, and even after 35 years of production the Norwegian Petroleum Directorate believes that Ekofisk still has the largest reserves. In total, nearly 40 percent of the discovered marketable oil resources on the Norwegian shelf have not yet been extracted, they say. In addition, there are probably many undiscovered fields. The Petroleum Directorate estimates that the undiscovered resources alone amounts to 7.3 billion barrels of oil.  Read more here. You may agree that the peak of the total oil rate from the Norwegian offshore fields was reached in 2002, assurances to the contrary by the good Norwegian professor notwithstanding.

So here is the bottom line:
  • Am I suggesting that no more oil will be discovered on the Norwegian continental shelf, especially up north towards the North Pole?  Of course I am not, and significant new oil will be discovered.  
  • Will the ultimate oil production from the Norwegian shelf be more than shown in the last figure?  Yes.  
  • Will Statoil and other operators be able to reverse the generally declining production rate and exceed the 2002 peak?  Almost certainly not.
  • Will Statoil rest on its considerable laurels?  Never. Statoil is rapidly expanding its operations to North and South America, and Africa.  Statoil's research budget in North America is now 1/2 of its global research outlays. 
  • Do most professors of management, and IMF or the World Bank experts, understand rudiments of oil production?  Choose your answer carefully, because this is a test.  If you answered "no," you passed.