Second oil-related post

What if peak technology occurs roughly in the same wave as peak energy?

All those oil stories (below) got me to thinking along slightly different lines. Jim Kunstler’s latest post over at Clusterfuck Nation brought it about. By-passing the back-handed shots at NASCAR fans, he’s talking about what we might consider ‘the usual’ for Kunstler, but with something interesting. The idea of peak technology:

…another nearly universal expectation is that we will go through an orderly transition between the end of the oil fiesta and whatever comes next – implying, naturally, that some new sovereign energy resource is out there in destiny’s green room, getting prepped up, waiting to be sent on-stage. The confusion about this, induced by strenuous wishing, is such that most people expect the next energy resource to consist of technology itself.

This has been the heart of my beef with the rosy future crowd. Energy and technology are not the same thing, not interchangeable or substitutable. If you run out of one (energy), you can’t just plug in the other (technology). I certainly believe other energy resources exist besides oil and methane gas, but I maintain that we will be grossly disappointed by what they can do for us, given what we are currently running in society. Nor am I categorically against the idea of using these other things: solar, wind, bio-fuels, what-have-you. I can even be persuaded on nuclear with its many hazards, if that’s the only way to keep the lights on. But all of these things will not preclude the extreme necessity to make severe changes in our manner of daily living – and to do so rather quickly.

This is something that gets mentioned here and there (and here). One of the great things about oil, relative to other fuels, fossil, nuclear or renewable, is that it can, with relatively little work, be poured into a car and combusted (you heard me). Bio-fuels too, which is probably their main appeal relative to non-stupid alternative fuels.

What Jim Kunstler has found, and to which he is responding, is this idea, everywhere from thinktanks to the Wall Street Journal to State of the Union addresses, that we’ll just be saved. That technology will come along in the nick of time. That – to use Kunstler’s words – some new sovereign energy resource is out there in destiny’s green room, getting prepped up, waiting to be sent on-stage.

I also liked this anecdote:

Last year, for example, I was shown the new bio-medical research “facility” at the University of Michigan, a building at least the size of a Cunard ocean liner, and wondered as I beheld it exactly how they were going to heat the goddam thing ten years down the line. But one might as well ask how the U might fund the paychecks of the building’s occupants as Michigan’s economy falls into an ever-larger crater. Such is the hubris-induced weakness of mind among those in charge of things that these mundane questions are not even asked.

I try not to think of that part about the costs of academics, relative to their value. That’s where come in (or rather, go out into the cold with no valuable skills. Actually that isn’t true. I’m not Australian for nothing). Now, back to oil. The choice of USD60-65 per barrel as the appropriate price for oil, in particular.

“A price of $60 to $65 is appropriate for consumers and producers, because it boosts means of investment in the oil industry in light of growing demand for oil in the coming years,” state firm Kuwait Petroleum Corporation’s (KOC) monthly newsletter quoted Hasan Qabazard as saying.

If he meant investment such as that of hedge funds’ speculation, then sure. If he meant investment in the finding of new oil (i.e. in the industry from an industrial perspective), I don’t follow him. I used these two graphs from the Oil Drum a long while back (except I’m now not hot-linking them, because I’m trying not to be a dick to blogs I like):

That’s flat-to-declining oil production coupled with massively-increasing oil rigs. Will there be a use for this infrastructure, when there just isn’t any oil? Remember also, importantly, that exports are important, not production. As production wanes, and OPEC domestic demand increases, OPEC exports fall much more quickly than mere production. We would also hope to have found our alternative prior to that last drop that’s drawn. I just don’t see the value of long-term investments.

Oddly, a colleague of mine made a very interesting suggestion in a vague email-debate concerning turbine power. He suggested that there are a few areas with open space, wind (or tides/waves) and current-or-intended occupation by Big Oil, making them prime contenders for private industrial establishment of the sort of large-scale infrastructure needed. I was at least immediately taken with how funny such a move would be, in terms of wrong-footing screaming lefty tits like me.

The inestimably-good blog the Big Picture has commented a few times that, every time they hear that the sub-prime/CDO/hedge fund fall-out is “contained”, they are reminded of this scene from the Princess Bride:

[Vizzini has just cut the rope The Dread Pirate Roberts is climbing up]
Vizzini: HE DIDN’T FALL? INCONCEIVABLE.
Inigo Montoya: You keep using that word. I do not think it means what you think it means.

The idea being that “contained” does not mean what many people (Bernanke included) think it means. I have the same reaction to the Peak Oil issue. Take your pick: “oil”, “energy”, “technology”. I do not think these words mean what a lot of people out there seem to think they mean (hint: they do not mean, “relax, divinity has got your back”).

First oil-related post

Crude prices ‘could be poised for rapid fall’

Found some oil news, waiting for my wife’s bus (actually I waited for several buses, but stopped doing so with the one carrying my wife).

First, someone at the Financial Times insisting oil prices could be about to plunge:

Crude prices fell more than $1 a barrel Monday as hedge funds took profits after their rise to near-record levels.

Frederic Lasserre, head of commodities research at Société Générale, said that some hedge funds were sitting on huge gains and that profit taking could start a rapid downward spiral for oil prices.

Indications are that speculation on appreciating oil prices is also drying up. This is not, to my mind, evidence that a sell-off is about to begin, nor is it evidence that hedge funds will dump their oil in a depreciating market. Do the writer actually need to be reminded that oil is running out? Faster than we appear likely to come up with a replacement?

I became immediately fond of a quote later in the same piece:

Pressure is mounting on the Organisation of the Petroleum Exporting Countries to raise production quotas at its next meeting, in September.

“Opec is quite simply not producing enough oil,” said analysts at the Centre for Global Energy Studies. “The world is short of crude and Opec needs to relax its output restraints immediately if it really wants to ensure a balanced market with prices around $60 a barrel.”

This sort of thing is beginning to do me in (the price reference is to another story about OPEC’s preferred crude price being USD60 to 65 per barrel – further evidence that, if they could fix it with increasing their quotas, or even meet increased production quotas, which is doutbful, they would).

Globally, demand is simply too high for the prices people ‘want’. Supply and Demand is quite simple to apply. If Demand increases but Supply does not increase, the price goes up:

Giving higher prices (from P₁ to P₂) and higher quantities at equilibrium (from Q₁ to Q₂). What the people apparently in charge (or those behind the voices in the ears of the first), keep trying to wish into existence, is a counter-acting increase in supply:

Which would still give us those higher quantities (Q₃, this time), but prices stay at P₁. The trick is the assumption that (i) supply is reasonably elastic in the short run, and that (ii) supply can be increased. Their wishes-that-aren’t-horses fail when supply of oil is something like this:

which, near as most can agree, it more or less is, both in the short run and the long run. Notice in this version that the Quantity does not increase. Now, supposing Supply does look like this, and Demand is constantly increasing (and at a fairly significant rate, to boot), what do you think will happen to prices? Hedge funds may very well dump their speculative stock – ’plunge’ is not likely to be the word I’d use to describe it.

Mind you, from what I read in the newspapers, editors these days seem to have a team of Bears and a team of Bulls writing for them, releasing each on alternating days. What would I know?

The value of the dollar is a potential factor here, as well. A falling US dollar means declining values of wealth and income for OPEC members, in the face of appreciating Pounds, Euros, etc. Given the above (i.e. demand is easily above supply, meaning what you produce is guaranteed a market), why would they increase production and cut prices, even if they could?

A quick characteristic of elasticity. With relatively inelastic demand/supply, price increases/decreases have little effect on quantity. Ergo, a shift in supply will affect a bigger drop in price than the increase in quantity – meaning a loss in revenue and profit. Meaning, also, that they’d hardly go for it out of their own self-interest.

Given the problem is demand-based, and in the US refined-supply-based (which is a US, not an OPEC, problem), there’s really no reason for OPEC to bend to the demands of the rest of us (again – even if they could). I could be wrong, of course. Come September we could win in Iraq and finally get all of their fields on-line. The drunkards’ luck of President Bush might come to his aid on this one.

Low-Key Recall of AIDS Drug Hits World’s Poor

While I think about it, the Kaiser Foundation site is hosting webcasting of the 4th IAS Conference on HIV Pathogenesis, Treatment and Prevention. If it’s your thing. Play it in your cubicle instead of ESPN; see what happens around you..

This story, courtesy of an email from a former colleague:

ROME, July 21 — A total recall of an important AIDS drug widely used in developing countries has disrupted treatment for tens of thousands of the world’s poorest patients, with no clear word from the manufacturer on when shipments will resume.

…

The recall of the drug, Viracept, by Roche Pharmaceuticals of Switzerland, went largely unnoticed in the developed world when it was announced in early June, after the company had discovered that some batches made at its Swiss plant contained a dangerous chemical. But the recall has caused growing concern among global health officials and in AIDS programs in many poor nations. They say the company did an inadequate job of informing patients and officials about the potential risks and helping them find affordable access to newer alternative drugs.

Roche said that it had been actively working with health officials across the globe and that the risk from the affected batches was low.

The Precautionary Principle applies strangely, here. The IHT has considered it already:

Just when it looked like things were getting better for carriers of HIV in poor countries, old-fashioned negligence has thrown a monkey wrench (or spanner, if you prefer) into the works.

Perhaps erring on the side of caution, Roche recalled the drug worldwide after discovering that lots containing a cancer-causing chemical were shipped to at least 35 countries. Some countries might have received untainted lots, but their doctors have no way of knowing; even if Roche knows, it won’t say.

This is a problem because alternatives to the low-cost drug aren’t easily available. So doctors in poor countries – mostly in Latin America, Africa and Asia – may be sending back a perfectly good treatment, leaving their patients with nothing.

One side dictates the global recall; the other dictates, what? Less-than-global, I suppose. A warning, without a recall, and then some very fast and clever work on engineering some test, to detect the ‘bad’ drugs? It depends upon how ‘harm’ was defined. One gets the impression that harm to Roche was, naturally, a big consideration. Better to be criticised by these (poor) countries for treating them badly, than be known for sending out drugs that did more harm than good. I think. Honestly, would we even care? Our newspapers barely mention train wrecks that kill hundreds, and can anyone even name the places where the Asian Tsunami hit (Prof. Gunter is disqualified from answering)?

I’m being cynical, if with good cause.

Back at the New York Times:

Officials at the WHO in Geneva and the European Medicines Agency in London said Roche had not provided information they consider essential for safeguarding public health: which countries the tainted medicine was shipped to, the concentration of the contaminant and what the company will do for its patients. The European agency, which regulates drugs for the European Union, has canceled Roche’s license to market the drug.

Dr. Rago called the recall “sort of a disaster” for patients in very poor countries. He said of Roche, “They failed in communication.” Roche has denied the accusation. The company, which had revenue of $35 billion last year, said it promptly notified health providers in the affected countries to discontinue use of the drug, which is dispensed in both pill and powder form. It also said it would cover the “reasonable costs” of the recall. It did not define “reasonable co

I like the “sort of a disaster” although, to be fair, developing countries can give the rest of us lessons is disasters. Like cover-ups and crimes, it seems Roche is suffering less for the problem, or the recall, than how bloody badly it has managed the affair, and how little it is sharing with self-declared (but broadly agreed-upon) organisations of oversight. Losing the European license for their HIV/AIDS drug hardly bodes well for the company that has a license for Tamiflu, there – for those who fear avian influenza (I would remind you that God promised fire, not bird ‘flu, and that’s how we measure risks in the USA).

One benefit of a global recall is that it prevents a targeted recall being sent to hell by grey or black markets in these drugs. It is possibly better to assume all drugs are bad, than have good drugs in your country after your country’s allotment was already recalled. Again, allow for the fact that I’ve lived in only very highly-developed countries, disease free. For which I’m more and more grateful.

Seriously, though, what a mess. As the IHT’s blog asks, though, who can call Roche to account?

Knowledge 2.0: new media and the jamming of everything

If some hack out there steals this for their next book title: I’m coming for you. In the famous words scrawled on a wall in Newtown, Sydney, after Howard won the 2004 general election:

I don’t know where you live, but I’m very good at research.

Absent any interesting economics (oil prices, meh) or political (Costello less popular even than Howard, meh) news, openDemocracy has provided a very good essay today, and one last week, on media, information, knowledge and wisdom. Tony Curzon Price, new CEO of openDemocracy, has written about an ongoing, if not enduring, interest of his: knowledge-based understanding, and how new media influences it. A week ago, departing editor Isabel Hilton wrote a fond farewell to her friends. More on that later.

To begin with the Price article:

Neither panacea nor plague, the web continues to confront us with the hard questions of knowledge making. Today, it is clear that the Enlightenment faith in understanding must have consequences for how we produce knowledge, and that the new technologies of knowledge-making will change what we can know. In the ideal, understanding subsumes authority: nothing is taken for granted, no opinion believed just because it comes from the pulpit.

This ideal, influenced both by technological utopianism as by a consumer-centric world view, pervades current social attitudes towards media and other knowledge-making institutions. Increasingly people want to base what they think and believe on their own experience and authority and do not want to be preached at.

I liked this point:

Increasingly people want to base what they think and believe on their own experience and authority and do not want to be preached at.

I’m not sure I agree exactly. In a polarised world (up yours, Joe Lieberman), I think our experiences are the that the numbers, the split or the ratio of people who fit Price’s first category are probably increasing, but more importantly how strongly each believes that has increased more. I would suggest that the masses being lectured to, or more importantly talked down to, by Fox “News” (come on, seriously now), CNN, etc., are more and more vehement that they continue to be infotained in that fashion – and react with near-violence to ‘our’ attempts to point out that such media outlets are not informing them, but lying to them. Making them more stupid, more fearful, poorer citizens (I can’t imagine why they take it so personally).

Meanwhile my exposure to this, and the time I spend thinking about this, is not a patch on that of Tony Curzon Price, so I would still concede his point, if pressed. Mostly I don’t believe my disagreement makes a difference, in the end.

How does this relate to culture jamming? Consider the three illustrating examples Price offers:

… people are also finding it harder than ever to know who or what to believe. To take three examples:

• science no longer enjoys the respect and authority it did a generation ago: from reproduction to genetic modification, from creationism to technophobian ecology, science is doubted or ignored
• the defining media, such as CBS and NBC or the New York Times in the United States, the BBC and the Times in the United Kingdom, Le Monde in France, which were once highly trusted sources are now much less so
• organisations of commitment such as political parties, churches, unions, are much weaker

I would consider the latter two good things, products of healthy skepticism and a step forward on a given path of enlightenment and intelligence. I would consider the first a step backwards. I have a colleague, with whom I otherwise agree, who would disagree with this (he is skeptical of climate change science and I believe is basically creationist, for example). I have a great friend and former colleague who would consider all of them wonderful – he is a big believer in culture jamming. Sometimes I am with him, other times not. It depends on how much I wish to have a trustworthy source at a given time.

We, as ‘consumers’ (and here I am possibly defining completely different people to those Price is), have come to distrust what were formerly considered to be eminently trustworthy sources of information, and it is thanks to the internet and new media, who blew their cover. For those of us who do know better, it is our access to dozens of sources of the same story that tell us that CNN is lying, that the New York Times is pushing the Bush agenda on domestic wire-tapping, that the BBC is a more measured source of journalism, generally, etc.

This is what Price calls the “crisis of trust”:

“How much can you trust this institution to do what is right?” When asked this in an Edelman “Trust Survey”, European and north American respondents place media lowest, with government next and NGOs and business coming top. The downward trend for media has been worsening in the past five years, and is consistent in Europe and the US. The trends there suggest that trust is coming from commitment: people trust “doers” rather than “talkers”, people whose everyday actions in the field exhibit commitment.

Drilling down to different sources of media, the new digital media do poorly. Throughout the world, nationally-based television and newspapers achieve – at least relative to other media – high trust ratings, while blogs and news websites achieve the lowest ratings. Despite this, when an individual loses trust in a traditional media source, they tend to switch to online sources. Therefore, the trend is of a growing audience for the least trusted sources of news. In fact, the fastest growing source of information is online media, and it is also the least trusted. There is a real need for ways of establishing trust in online information.

I think, first, that the problem lies in the question (and/or, for me, the ‘American’ part, given that I am not). How can one distrust ‘new digital media’? I can (and do) distrust ‘old print media’, because each is a source, usually not fact-checkable without other sources, usually new media ones. In the famous words of the Herd, never trust a cop, a politician or a TV set (and I suppose they just don’t read newspapers, much). A respondent to such a question, though, cannot consider ‘a’ source for new digital media. I don’t trust any single source online, no: some are more trustworthy than others, to me, but I know to screen Jim Kunstler’s Clusterfuck Nation, for example, according to what I know his views to be.

There are others such as the Oil Drum, David Corn or even the Guardian that I have come, through time and – crucially, to Price’s argument – experience, to trust implicitly. Not, though, with blind loyalty. If I found David Corn taking positions with which I did not agree, or making statements that I would discover to be false or misleading, I would not trust him again in that way. Just as I came to realise the New York Times was, in fact, not trustworthy.

The point is this: the key advantage to establishing trust in new media is its ability to offer us the advice of Ronald Reagan: trust, but verify. New media doesn’t, for me, consist of sources. It might as well be one big newspaper, for how I utilise it. Does old media do this? They cannot prevent the verification part, although they appear not to encourage it. Hilton’s article fits in here nicely. Her experiences were that, as she left print media, most people considered online media derivative, at best. What she found was the reverse.

At openDemocracy we kept a tally of distinguished print journalists whose latest articles were thinly reprocessed versions of something that we, or other sites, had published – material that had been plundered unacknowledged, in a manner that would have been unconscionable for the same guilty parties had the source been in print. Anything on the internet, they seemed to feel, was not only free to read, it was also free to plagiarise.

(incidentally, Hilton has left to attend to the site http://www.chinadialogue.net/, a site about which I had never heard, and which is thoroughly fantastic. Give it a read).

Which is, again, why those of us who know better do know better. We’ve found the same story online weeks previously, we’ve read the blog article about the plagiarism, etc., etc. We read Josh Marshall’s Talking Points Memo site. In terms of the strength of the divide, which I mentioned just previously, consider this. I would be surprised and disappointed if David Corn let me down (if he’s reading this: you’ve been warned!), but it would not fundamentally shake my faith in anything. I would not have to rethink all that I had considered fact for the last however-many years. It simply would not be a watershed moment in my trust of news sources, because I have so many already.

Take some guy in the middle-of-wherever and do the same with his allegiances to Fox, or his local Murdoch newspaper, and that would, probably, be the case. There are people with a lot more invested in the source, or sources, that they trust. And when that source (say, old media) starts on about how the new source is out to get them, they will resist. Each of these people, with limited exposure, are the wagons that old media can circle around themselves. My parents would be good examples. The same newspaper every day, for as long as I’ve known what a newspaper was, and pretty much the same network or two or news programmes, of an evening.

This, then, is the second problem. New media, online media, etc., cannot go around getting broadband internet and laptop computers to the uninitiated (or the time to use them, or the habit of using them), which is where I think the biggest disadvantage lies, as always (Indigenous people never got their stories, editorials or political cartoons into the newspapers while they were being wiped out, either). The point of Price’s article (you will have read it by now) is that credibility needs to be established amongst new media. Established in a manner such that when we read a story on openDemocracy about net neutrality, we know that it is credible because openDemocracy held, hosted, participated in a conference about the issue, for example:

…we need to bring argument and content that comes from the domains that carry their own signals of credibility – activism (including corporate and political action), academia, “people like you and me” – while combining them with the virtues of the best outreach and journalism: accuracy, relevance, and narrative.

Again, though, there’s that problem. We have to know that this credibility exists, and why (which is fine: we will build up that trust over time, and filter out past or current activism as another form of editorial bias), but many people will not know this. They do not have access to the knowledge, and the knowledge does not have access to them.

Do I have an answer? Of course not. If I did, I’d probably ask Tony Price for a job. I just teach economics, and try to convince a couple-hundred students per semester to believe me enough, to give me enough of the benefit of their doubt, to put my argument to the test. To compare what I tell them with that their parents and friends tell them, with what CNN, Fox or the Lehigh bloody Patriot (campus conservative newspaper) tells them.

That is probably the difference, and possibly one of the hurdles to achieving proper cohesion. I’m not trying to work on readers of openDemocracy, and Tony Curzon Price is not trying to work on my students. He just tries to mold the online community under his remit, and I just try to convert my students to knowledge-based understanding, just like any other lecturer. Actually I probably swear more than most lecturers, but the rest still holds.

It’s something for you to think about, anyway. How do you absorb or consume ‘news’? How do you verify what you do hear or read, and how do you engage with the same behaviour by your friends, family or co-workers? Do you trade sources of facts when you disagree? Do you debate which is more reliable, or which sets of beliefs of prejudice may have affected the production of those facts? I hope so. If you do not, I recommend it. At the very least it’s as challenging and rewarding is bloody sudoku, or whatever is popular these days.