World Made By Hand

New Book!

In the best-seller The Long Emergency, James Howard Kunstler explored how the terminal decline of oil production had the potential to put industrial civilization out of business. With World Made By Hand Kunstler makes an imaginative leap into the future, a few decades hence, and shows us what life may be like after these coming catastrophes—the end of oil, climate change, global pandemics, and resource wars—converge. For the townspeople of Union Grove, New York, the future is not what they thought it would be. Transportation is slow and dangerous, so food is grown locally at great expense of time and energy. And the outside world is largely unknown. There may be a president and he may be in Minneapolis now, but people aren’t sure. As the heat of summer intensifies, the residents struggle with the new way of life in a world of abandoned highways and empty houses, horses working the fields and rivers replenished with fish. A captivating, utterly realistic novel, World Made by Hand takes speculative fiction beyond the apocalypse and shows what happens when life gets extremely local.

Full disclosures: first, I like James Howard Kunstler. I like the way he thinks and I agree with a great deal of what he says. We also share the same middle name (although I should be bloody amazed if it was for the same reason). Second, his publishers sent me a review copy of the book. Which is to say, I’m kindly disposed towards it, him and them in turn.

That said, it’s an excellent book. Alan Weisman, whose review also graces the dust-jacket, describes the book wonderfully as provocatively convincing. Kunstler’s world made by hand is post-oil, which is to say agrarian post-science. It reminded me a lot of the Tripods (except far better-written, and without aliens), the Drowned World (except far easier to read), and the like. We are without oil, cars, plastic, electricity, TV, medicine – you name it.

A couple of great things about the book, and then I’ll stop.

One, in a world where we tend to be beset by the trials and heroisms of pre-catastrophe story-telling, I love having a book that is post-catastrophe.

Two, Kunstler never really deals with the catastrophe. We are let in, with vague detail, on what happened: increasing demand for peak oil, an attack, etc. We simply know that oil disappeared. With it went science, government, modernity. We are back to eating what we can grow and catch, trading whatever we can move up and down rivers.

Similarly we also never are told about the world. The next town is outside of one’s world. We aren’t made to read about what happened, exactly, to DC, or New York, or Canada. It’s just not within the world about which we’re reading. This is just one period in one town, as it makes a transition from occupying a dead world (this would be where the resemblances above come in) to re-crafting their own. The point at which a community lets go of electricity, of (big G) Government, of living in a past of food and clothing that just doesn’t exist, and won’t come back.

This includes, by the by, steam and coal, which are notably absent from Kunstler’s world, but more curiously so than problematically. We are allowed to believe that (a) perhaps they do have technology elsewhere, and/or (b) the technology died with the people in the big cities.

Anyway. Very cool book. One of those weird ones that really moves at a non-frenetic pace, yet manages to move a lot of events through the story.

“The endgame of biofuels is price parity between food BTUs and energy BTUs”

This quote comes from a comment beneath a story on Grist, Biodiesel in the dumps – original source (for me) of this article from the Atlanta Journal Constitution.

Biodistillers nationwide now realize that their industry’s survival depends on the vagaries of world trade. Cheaper soy and palm oil from Asia, Africa and Latin America increasingly replace domestically grown soy oil. Environmentally conscious Europe takes most of the U.S.-produced fuel.

Globalization of the American biodiesel industry, though, wouldn’t be possible without lucrative assistance — a $1-per-gallon tax break — from Washington. Alterra and other biodiesel producers receive the excise tax credit for each gallon of alternative fuel that is mixed with regular diesel.

And, since most of the biodiesel is shipped overseas, Congress essentially subsidizes the price European drivers pay for fuel.

“And we’re not really lessening our dependence on foreign fuel supplies,” said Mark Ash, an economist with the U.S. Department of Agriculture.

…

The blame falls mainly on the skyrocketing price of soybean oil used in 80 percent of the nation’s biodiesel production. Soy oil cost 22 cents per pound when Johnson broke ground in Plains. Wednesday, a pound cost 56.4 cents.

It takes 7.7 pounds of soy oil — or $4.34 — to produce a gallon of biodiesel, according to the Food and Agricultural Policy Research Institute. Add overhead and other processing costs (about 70 cents per gallon), federal and state taxes (54 cents) and subtract the dollar tax credit and a gallon of biodiesel could sell for $4.58 at the pump.

Regular diesel sold for $3.86 a gallon Wednesday in Atlanta.

“How’re you going to sell it at that price?” asked Davis Cosey, who owns an idled biodiesel factory in Perry. “The industry’s horrible. It’s in the ditch.”

Farmers aren’t doing producers any favors. In 2006, more than 75 million acres of soybeans were planted in the United States. Last year, only 64 million acres were planted, according to the USDA. Congress’ ethanol mandate — 37 billion gallons annually by 2022 — fueled the switch from beans to corn. In addition, rapidly developing China and India boosted soybean demand, and prices.

Interesting article (“Only federal subsidies keep the industry afloat” – one for the small-government-ers), if including odd lines like

“The American public, with rare exception, is 100 percent price-sensitive,” Johnson said. “They will not pay a penny more to go green.”

I kind of follow the argument – but 100% price sensitive? Dude, we’re all 100% price sensitive. It’s how sensitive we are that defines our markets (and in this “Johnson” is mistaken – of course we will pay more to go green. We just aren’t stupid enough to call something as daft as crop-grown biofuels shipped half-way ’round the bloody world and back “green”).

So US biodiesel manufacturers are importing soy and palm oil (the latter a truly horrible product, vis, the environment) in order to make biodiesel that is shipped to Europe because the market here is too small – meanwhile only surviving thanks to subsidies (meaning your tax dollars are subsidising European motorists).

Stop me when you can’t take the stupidity any longer.

So this would be where the comment came from. Personally I don’t fancy their chances, however much I agree with their sentiment. For a start food BTUs aren’t at all close to being adequately priced – but, then, neither are things like biofuels, oil shale, etc. Maybe one day. One day when we stop IV-subsidies to wasteful industries and make agriculture compete like everyone else.

The clean-ness of nuclear energy

Nuclear power always wins the argument of what is most “green” by ignoring things like the cost of cleaning up afterwards (and wins economically by ignoring things like just how little Uranium there really is, in the world). Monbiot wrote an excellent article about this, a while ago now.

And today? Today:

Each circle entombs a nuclear waste canister near Aiken, S.C.

Forgotten but not gone, the waste from more than 100 nuclear reactors that the federal government was supposed to start accepting for burial 10 years ago is still at the reactor sites, at least 20 years behind schedule. But it is making itself felt in the federal budget.

With court orders and settlements, the federal government has already paid the utilities $342 million, but is virtually certain to pay a total of at least $7 billion in the next few years and probably over $11 billion, government officials said. The industry said the total could reach $35 billion.

The payments come from an obscure and poorly understood government account that requires no new Congressional appropriations, and will balloon in size, experts said.

The payments are due because the reactor owners were all required to sign contracts with the Energy Department in the early 1980s, with the government promising to dispose of the waste for a fee of a 10th of a cent per kilowatt-hour. It was supposed to begin taking away the fuel in the then far-off year of 1998.

Since then, the utilities have filed 60 lawsuits. The main argument — employing legions of lawyers on both sides — is when the government would have picked up the fuel if it had adhered to the original commitment, and thus how much of the storage expense would have fallen on the utilities anyway.

But the damage number is rising. If the repository that the government is trying to develop at Yucca Mountain, near Las Vegas, could start accepting waste at the date now officially projected, in 2017, the damages would run about $7 billion, according to Edward F. Sproat III, director of the Office of Civilian Radioactive Waste Management.

…

Each reactor typically creates about 20 tons of waste a year, which is approximately two new casks, at roughly $1 million each. If a repository or interim site opened, clearing the backlog would take decades, experts say. At present, waste is in temporary storage at 122 sites in 39 states.

Emphasis added.

Biofuel farms make CO2 emissions worse

From today’s Guardian:

US researchers calculated that converting natural ecosystems to grow corn or sugarcane to produce ethanol, or palms or soybeans for biodiesel, could release between 17 and 420 times more carbon than the annual savings from replacing fossil fuels.

This is due to the carbon contained in the original plants and soils which is released as CO2 when the vegetation rots after it is cleared. The researchers said this carbon debt must be paid before biofuels produced on the land could count towards reducing greenhouse gas emissions.

…

In Indonesia the researchers found that converting land for palm oil production ran up the worst carbon debts, requiring 423 years to pay off. Producing soybeans in the Amazon would take 319 years of soy biodiesel to offset the carbon debt.

Honestly, I wouldn’t have thought people needed this explained to them. Carbon is emitted anyway – our problem is emitting it so bloody quickly, burning things. It’s still emitted as nature dies and breaks down. Burning out or otherwise clearing land for biofuels is most certainly going to convert living matter to dead matter – releasing all its stored carbon in the process.

Getting back to the article, we see that markets are at the heart of the problem – and the solution:

Stephen Polasky of the University of Minnesota, one of the authors of the study, published today in the journal Science, said: “We don’t have proper incentives in place because landowners are rewarded for producing palm oil and other products but not rewarded for carbon management. This creates incentives for excessive land clearing and can result in large increases in carbon emissions.”

Palm oil is a horrendous product. An interview with the primary author can be found over at nature.org.

So what happened? Basically, the pressure to establish a market to counteract the non-market externalities of energy-generation (including the use of oil, but we’ll lump all fossil fuels together – why not?) has given us a market that itself has non-market externalities. The solution? Austrian Economists, where are you when we need you? There are two arguments:

First, this would seem to indicate that the pressure to establish “solutions” is, potentially, doing more harm than good. Perhaps we need to back the hell up. Does a bull ever have good luck in a china shop? We need to ease off, sit down and realise that accuracy over speed will be what saves the planet in the long run.

We need to give more consideration to the sorts of market mechanisms we would like to use to overcome the tragedy of the commons (the depletion of fossil fuels: it is the intensity of this depletion that is both leading to things like Peal Oil as well as creating the condition for so-called Catastrophic Climate Change (I say “so-called” because it is a term of art, not because I dis-believe the sentiment)).

Second, or alternatively, we need to plow ahead, tacking markets onto markets onto markets. I’ve no doubt that throwing market incentives into this market to deal with the follow-on environmental costs will probably generate another set of unintended outcomes – it always does. This argument would base its urgency upon the urgency of the problem, and the absence of time to wait.

I favour the first, personally – or a variation thereof. When we make certain crops highly valued, that incentive will overcome most others – how do you think these problems arose in the first place? Farmers in middle-income countries don’t consider their contribution to the global problem (anymore than first-world agriculturalists): they respond to the enormous difference the market will make to their household income. Once those trees are gone, however, they’re gone – land cannot be un-burnt (trust me: I’m Australian). Reclaiming and de-pastorialising land takes a bloody long time.

Mostly, I take this as more evidence that biofuels are shit. We aren’t trying to ‘fix’ our energy problem: we’re trying to stay behind the wheels of our cars as long as possible. The reason I think we need to step back and reconsider is because the problem we’re trying to solve is such a narrow and self-interested one.

The only thing heating up in China is commodity prices

Officially, fuel is up anywhere from 8 to 11% over last year, in China (click for larger image):

Of course these are official statistics – possibly implying they are subject to bias but, more specifically, that they are subject to local temporal and geographical variation. Big variation, sometimes: forget not the death-tainted sale of cooking oil in China, last year.

So, given this story:

Severe snowstorms over broad swaths of eastern and central China have wreaked havoc on traffic throughout the country, creating gigantic passenger backups, spawning accidents and leaving at least 24 people dead, according to state news reports.

In many areas, where snow has continued falling for several days, the accumulation has been described as the heaviest in as many as five decades.

…

“Due to the rain, snow and frost, plus increased winter use of coal and electricity and the peak travel season, the job of ensuring coal, electricity and oil supplies and adequate transportation has become quite severe,” said Prime Minister Wen Jiabao in a statement issued late Sunday.

Shanghai’s weather is, according to the BBC, not all that bad:

But (a) I’m not poor. I live in a rich country, making more than enough money to keep myself in heated (in New York, of course, you’ve no choice. Half the time we’re opening windows to keep from being baked alive: NY apartments represent, for me, exactly why building-wide heating is a daft idea), (b) I live where it’s routinely that cold. I’m prepared, my clothes are appropriate, my diet is appropriate (I can cook) and my buildings are made appropriately.

Shanghai – historically – hasn’t had all that bad a January, to date. At its worst, however, its minima have still been at or above freezing, looking at the last 10 years:

Nothing that would prepare a people for snap freezes – particularly poorer/rural people with less insulation (or, mid-winter, spare heating/cooking fuel). It will be interesting to see how cooking and heating oil prices do, for the rest of their winter.

Hydrogen-powered, emissions free, mach 5 Awesomeplane

Nnng!

The LAPCAT project is a study, funded by Europa General R&D, that seeks to determine whether or not it is possible to create a plane that can cover long distances in a very short amount of time. The result? The A2 Mach 5 Civil Transport Concept.

The concept has been developed by Reaction Engines, which was formed by Alan Bond, John Scott-Scott and Richard Varvill. It is made out of two different pieces of technology. The First one is a hydrogen powered engine concept which can power an airplane up to speeds of Mach 5, that is, five times the speed of sound.

Why hydrogen? In order to achieve Mach 5, more power is needed than what would be commonly available from the common fossil fuels. The other innovation lies in the A2 Airframe. The Airframe is designed to withstand velocities that are five times the speed of sound, and carry up to 300 passengers.

I will sit and anxiously await its hitting the market. I’ll probably have to line up behind all the wankers who used to take the Concorde, I guess.

Again, this is why we do not privatise public utilities

We’ve been down this road: with water (also here), with public roads, with rail. With electricity.

And again with electricity:

NSW taxpayers could be forced to pay more than $15 billion to indemnify private companies bidding for the state’s power assets, a report has found.

The indemnities – against losses that privatised coal-fired power stations would face under a new national carbon trading scheme – would wipe out the $15 billion revenue boost the Iemma Government expects to gain from the privatisation.

An analysis by the independent think tank the Australia Institute has revealed the carbon trading scheme the Federal Government intends to introduce to combat global warming would dramatically reduce the value of coal-fired generators.

According to the author of the report, economist and institute director Clive Hamilton, the cost of the indemnity could reach $15.4 billion.

“This amount would be the cost borne by NSW citizens if the NSW Government indemnifies private buyers against future carbon liabilities,” he concludes.

Maybe, maybe not:

The State Government has challenged the institute’s findings. Alison Hill, a spokeswoman for the Premier, Morris Iemma, told the Herald last night: “There will not be an indemnity.”

But the Iemma Government has set a precedent by indemnifying Bluescope Steel for the next 25 years to ensure new investment in its Port Kembla steelworks.

“The Government has form on this issue,” Dr Hamilton said. “And they will come under even greater pressure from potential buyers to offer them indemnities, too. There is nothing to say the Government could not, and would not, do this in secret, using all sorts of commercial-in-confidence provisions, and the public may know nothing about it for 20 years.”

The NSW Government said last night the indemnity given to Bluescope did not apply if a carbon trading regime was introduced.

Of what is and is not a part of the conversation, Clive Hamilton made this excellent point:

“It’s a bad time to be selling electricity assets when there is so much uncertainty about the carbon liability of coal-fired power plants,” Dr Hamilton said.

The institute’s report warns that no prudent investor would commit to major expenditure in such a risky commercial environment, predicting that “carbon liability and the indemnity issue will dominate negotiations in the sale process”.

If there is one truth to privatisation, it is that the private capital folk make damn sure there will be no bag-holding done by them. The risk is always pushed into the future, and onto taxpayers – the group without a seat at the table. There is no reason why this will go any differently for NSW citizens.

In fact, if the government is serious about forming any manner of trading scheme, it makes sense for them to retain, securely, control over any public utilities that will form key components of such a scheme. Selling them off and then going for cap-and-trade regulation is not at all the sensible order of things.

The Jim Kunstler preparedness check-list

From yesterday’s Clusterfuck Nation (this is an abridged version).

1. Stop all highway-building altogether. Instead, direct public money into repairing railroad rights-of-way. Put together public-private partnerships for running passenger rail between American cities and towns in between. If Amtrak is unacceptable, get rid of it and set up a new management system. At the same time, begin planning comprehensive regional light-rail and streetcar operations.
2. End subsidies to agribusiness and instead direct dollar support to small-scale farmers, using the existing regional networks of organic farming associations to target the aid (this includes ending subsidies for the ethanol program).
3. Begin planning and construction of waterfront and harbor facilities for commerce: piers, warehouses, ship-and-boatyards, and accommodations for sailors.
4. In cities and towns, change regulations that mandate the accommodation of cars. Direct all new development to the finest grain, scaled to walkability.
5. Institute “locational taxation” based on proximity to the center of town and not on the size, character, or putative value of the building itself. Put in effect a ban on buildings in excess of seven stories.
6. … begin a public debate about whether it is feasible or desirable to construct any new nuclear power plants. If there are good reasons to go forward with nuclear, and a consensus about the risks and benefits, we need to establish it quickly.
7. … prepare psychologically to downscale all institutions, including government, schools and colleges, corporations, and hospitals. The centralized high schools all over the nation will prove to be our most frustrating mis-investment. We will probably have to replace them with some form of home-schooling that is allowed to aggregate into neighborhood units. A lot of colleges, public and private, will fail as higher ed ceases to be a “consumer” activity.
8. Corporations scaled to operate globally are not going to make it. This includes probably all national chain “big box” operations. It will have to be replaced by small local and regional business.
9. Take a time-out from legal immigration and get serious about enforcing the laws about illegal immigration.
10. Prepare psychologically for the destruction of a lot of fictitious “wealth” — and allow instruments and institutions based on fictitious wealth to fail, instead of attempting to keep them propped up on credit life-support.
11. Prepare psychologically for a sociopolitical climate of anger, grievance, and resentment. A lot of individual citizens will find themselves short of resources in the years ahead. They will be very ticked off and seek to scapegoat and punish others.

I believe thought-provoking is the usual compliment. Debate-provoking would be a lot more useful, but that stronger criterion depends more heavily on the rest of us.

I, for one, am with him completely on rail, light rail and shipping commerce. Rail here is worse than a joke: it’s plain insulting to a country as wealthy and richly-resourced as this. His arguments concerning civic infrastructure (including hospitals and schools) make for a very interesting wool-gathering spending of time. The immigration issue is equally interesting (not sure I agree, but I believe he is being pragmatic and, ultimately, he is right: the way things will be is the way things will be. There will be little time or space for normative time-wasting, cometh the hour).

Going nuclear

A confluence of new pieces of information today. First, a very interesting (not to mention, for many, contentious) contribution by Sir David King, in whose new book the “green movement” comes under fire for its, well, ways:

Sir David King, who stepped down last month after seven years as the government’s chief scientific adviser, says any approach that does not focus on technological solutions to climate change – including nuclear power – is one of “utter hopelessness”.

He says: “There is a suspicion, and I have that suspicion myself, that a large number of people who label themselves ‘green’ are actually keen to take us back to the 18th or even the 17th century.”

He characterises their argument as “let’s get away from all the technological gizmos and developments of the 20th century”.

“People say ‘well, we’ll just use less energy.’ Come on,” he says. “And then there’s the real world, where everyone is aspiring to the sort of standard of living that we have, which is based on a large energy consumption.”

King calls global warming the biggest challenge our civilisation has ever faced, and famously, in a 2004 article in the journal Science, berated the US for its inaction, describing climate change as “more serious even than the threat of terrorism”. But his vocal support for nuclear power and genetically modified foods has led to tensions with environmental campaigners.

…

His book prescribes a barrage of technological measures based on nuclear energy, wind power, cutting emissions from cars and buildings, increasing the global area of solar panels by a factor of 700, and capturing and storing emissions from fossil fuel power generation. Only with a nuclear component, he argues, might Britain “just about manage” to reach its commitment to reduce CO2 emissions by 60% on 1990 levels by 2050.

I’ve held, and held to, my position on nuclear energy (here, here and here). Re-cap: yes, it is most likely to be the only source of energy sufficient for our needs, that won’t kill us off deterministically. It’s the people in charge of it all, however, that I feel will kill us probabilistically. No recent legislative moves have given me anything but more pessimism in that regard. Which leaves me a bit nowhere (and people wonder why I’m such a miserable bastard).

Ultimately, though, the arguments are not so dissimilar. I fault the people anywhere close to nuclear power, not the technology itself (necessarily). I have no recognised position in the sort of partisan debate that seems to exist at the moment, of course – just look at the rejoinder provided by the Guardian:

John Sauven, executive director of Greenpeace, said it was King, not green activists, who was living in the past. “We need science to get us out of the climate change hole we’re in – that’s why Greenpeace wants to see research funding piled into the cutting-edge low-carbon technologies that can deliver deep emissions cuts in a very short timeframe,” he said.

“We’re talking about technical solutions that can also be safely spread to every country in the world, no matter how unstable. Nuclear power isn’t that technology, but Sir David wants to take us back to the 1950s, the last time we were told it would solve all our problems.”

All our fear-mongering about carbon concentration, terrorists, nuclear waste – when it will be the bloody straw men in every debate that end up being the death of us.

Moving on. The timing and timeliness of Sir King’s book/publicity could not be better: A couple of reports out today hit upon this very same issue. the Pew Center on Global Climate Change have one out: Regional Impacts of Climate Change: Four Case Studies in the United States. Here’s a sample:

In coming decades heatwaves in the Midwest are likely to become more frequent, longer, and hotter than cities in the region have experienced in the past. This trend will result from a combination of general warming, which will raise temperatures more frequently above thresholds to which people have adapted, and more frequent and intense weather patterns that produce heatwaves.

Studies projecting future mortality from heat foresee a substantial increase in health risks from heatwaves. Several factors contribute to increasing risk in Midwestern cities, including demographic shifts to more vulnerable populations and an infrastructure originally designed to withstand the less severe heat extremes of the past. The elderly living in inner cities are particularly vulnerable to stronger heatwaves; other groups, including children and the infirmed, are vulnerable as well.

Adaptations of infrastructure and public health systems will be required to cope with increased heat stress in a warmer climate.

That’s just with regard to the first case-study (heatwaves). There four in total (wildfires, the loss of wetlands and hypoxia). I haven’t, to be honest, looked at the report too too closely (it’s late, here), but it looks like a worthwhile endeavour for either side of the debate. It will certainly feature in my climate change lesson in this semester’s Cost-Benefit Analysis class (coupled with Bjorn Lomborg’s TED talk, probably).

Which brings us again to Sir David King and nuclear energy. All indicators, currently, are that we will not do this without nuclear energy picking up a significant amount of slack. The trouble is (a) my principle fear, as detailed above, and (b) it still isn’t clean. It may be less not-clean, but let’s not kid ourselves. It kills people coming out of the ground, and at every point thereafter.

So to the final new piece of information that I saw this evening: Serious Safety and Security Risks Undercut Nuclear Power’s Role in Minimizing Global Warming, New Report Finds. The report wastes little time:

The life cycle of nuclear power results in relatively little global warming pollution, but building a new fleet of plants could increase threats to public safety and national security.

Nuclear power is riskier than it should—and could—be. The United States has strong safety regulations on the books, but the Nuclear Regulatory Commission does not enforce them consistently. Current security standards are inadequate to defend nuclear plants against terrorist attacks. A major accident or successful attack could kill thousands of people and contaminate large regions for thousands of years.

Um, this report is worth reading if you want to run through the anecdotes and have the shit scared out of you. Frankly, I was paranoid enough beforehand – and that was just from old information.

And that’s the debate. Nuclear energy is clean, relative to other sources. It is cheaper and more dense than any other source of energy. That it’s a deadly (you know, for others) material to mine makes it no different from coal or oil – and that moral dilemma is hardly slowing any of us down. If we’re to get anywhere, at all, with climate change, we will need to grow the hell up and decide that we need to be mature enough to use it safely, and then of course we need subsequently to actually use it safely.

More pessimism. I’ll leave you with this thought: George W Bush won the White House in no small part because he was likable: people wanted to have a beer with the man. His administration has been the one keeping safety procedures held down and back, on behalf of industry, since the word go. The answer is not that we all need to grow the hell up – but we won’t find the answer until we do.

Absent any reliable enforcement even of safety regulations already in place, how can we trust a new generation of nuclear power plants? We can’t. Here is a market in which “the market” cannot help us: we can’t punish a company by not buying their energy after they blow half a freaking town away. And we just don’t get the information required to make safety-based purchasing decisions as consumers. As citizens our own government isn’t doing for us what we cannot do for ourselves – protect us – but, as an electorate, we are hardly making responsible choices when offered the chance to force them to do so.

Alternatively, did you hear about Britney Spears running around crazy and naked?

This is among the reasons why being in the Green Lantern Corps ranks as my favourite job. I’m pretty sure I wouldn’t have to worry about this sort of thing if I was the Green Lantern. Galactic conflict, sure – but I’d be the Green Lantern, man.

Iraqi dividends

First, a welcome to the very strange spike in people viewing this post (I believe all they’re interested in is the map of the Underground – go figure).

Second, Iraq: delivering oil. Finally.

Iraq’s oil exports shot up in the last quarter of 2007 and the ministry in charge of production forecast on Wednesday that it will reach 3 million barrels per day by the end of the year.

Ministry spokesman Assem Jihad said Iraq’s average production was 2.4 million barrels per day in November, nearly a half million more than the post-2003 average. Exports stood at around 1.9 million barrels per day, sold at an average price of $83.87 per barrel.

…

“The ministry’s ambition is to increase the production for more 3 million bpd by the end of 2008 and to pass the national oil law which will enable us to draw foreign investment to our oil resources,” Jihad told The Associated Press in a telephone interview.

But

Iraq’s political factions last February drafted the first version of a bill to regulate the country’s oil industry in an effort to share its revenues among Shiite, Sunni and Kurdish communities.

But the effort bogged down in parliament, mostly over delicate power sharing issues involving the central government in Iraq. The Kurds, for example, want a greater say in managing oil fields in their self-ruled area of the north.

Sunni Arabs fear that they will be left out of oil profits as the provinces where they are dominant have few proven reserves. Most of Iraq’s oil reserves are in the Kurdish north and the largely Shiite south

…

In August, Iraq’s semiautonomous regional government of Kurdistan passed its own oil law and signed more than a dozen production-sharing contracts with international oil companies. The Oil Ministry has said it considers these deals to be illegal and has threatened to blacklist the foreign companies that are involved.

I’m not so sure that a “semiautonomous regional government of Kurdistan” will along with the idea that the Oil Ministry gets to call its contracts illegal, while putting out those of its own.

Now, to those numbers: Of the 2.4m bpd being produced in Iraq, 80% is being exported. If they’re talking about exporting 3m pbd, that would mean a nearly-60% increase in production – while the government cannot seem to get adequate legislation in place to manage reserves or revenues.

Broadening our vision, somewhat: Iraqi oil is supposed to have been the dividend of invasion. Iraq itself is supposed (in the passive sense) to be one of the two potential sites of any remaining oil superfields (I believe Siberia is the other). If we can stabilise that sort of production, we’d be laughing (currently 3m bpd is less than 5% of total world production). In the meantime:

The 2005 oil peak remains thus (from The Oil Drum’s Oilwatch Monthly):

Unconventional production is going along, nicely. Nothing like the same level, though.

OPEC still pushes the trend, with non-OPEC production looking (a) random, and (b) like it might be declining in the last couple of years.

More locally of interest, gasoline stocks in the US are a lot like those elsewhere – low. Meaning that the idea that Iraqi oil may somehow keep prices down at the bowser simply should not form.

According to a the OPEC Review, in fact, demand may just not be met, next year (you can find the article, Theoretical limits of OPEC Members’ oil production, if your university has access).

So not much slack, possibly, for 2008. Petrol prices may just have to stay high (your food prices, too. Your real incomes and house prices? Not so much). If real demand crunches hit during likely-recession-heavy 2008, hell, Iraq’s production may not even register (or it may become hugely politically sensitive, domestically and internationally).