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.

Mexico closes main oil ports due to bad weather

Originally found at the Oil Drum. Mexico is 9th in the world’s exporters, but 3rd in terms of US sources of oil.

Mexico closed all of its main oil exporting ports on Sunday due to bad weather, the transport ministry said on its Web site.

…

Mexico’s exports have been repeatedly disrupted in recent months by bad weather that has halted shipments for days at a time and, in some cases, triggered the evacuation of oil rig workers.

This relates to an ongoing discussion I have with people – the price of oil vs. gasoline. The latter has benefitted mightily from the buffer of (a) refining stocks in the US, and (b) refining capacity (demand generating enough monopsony power that the US can get better prices). But US refinery stocks of gasoline haven’t been doing so well (I was too lazy to make a nice graph):

And raw material stocks aren’t performing any better – to the extent that there is little in the way of a buffer.

Data courtesy of the US government’s Energy Information Administration. This data extends only to October 2007 – meaning it does not include 2 more months of probable running-down of those stocks.

So pessimism, basically, is my point – don’t expect those gasoline prices to fall far, too soon.

Mind you, Mexico’s peak has come and gone – its position in the field of US suppliers will most likely do the same (image stolen from the Oil Drum’s Oilwatch Monthly).

We shall see, by and by, what the US Government’s adeptness at Supply Chain Management is like.

EU vs. biofuels

Class participation! In my first Eco 1 lecture, I raise the issue of biofuels as the best modern example of the Economic Problem (unlimited wants: in this case food and energy, vs. scarce resources: top-soil). The original paper I typically use is this piece in Foreign Affairs, an early and excellent contribution to the debate.

So to the EU (via the IHT, via the student who emailed me the story. I read the IHT anyway, but I’m impressed that one of my undergrads also does, let me tell you):

In a sign of shifting attitudes toward biofuels, European Union officials are proposing to ban imports of certain fuel crops whose production could do more harm than good in fighting climate change, according to a draft law seen Monday.

The proposals, to be unveiled next week, are aimed at enhancing the environmental credentials of biofuels like biodiesel or ethanol to counter concerns that European drivers are playing a role in destroying wetlands, forests and grasslands in areas like Southeast Asia or Latin America each time they fill up their tanks.

In its draft, the EU requires that biofuels from crops grown on some kinds of land covered in forest, wetlands and grasslands as of January 2008 should be banned for use in the 27-nation bloc. The commission also would require that biofuels used in Europe should deliver “a minimum level of greenhouse gas savings.”

The text, which could change before European commissioners meet Jan. 23 to adopt a final version, also emphasizes that areas like rainforests and lands with high levels of biodiversity should not be converted to growing biofuels.

At the same time, the EU does not want to abandon biofuels because of the contribution they could still make to increasing Europe’s energy independence.

Funnily enough, it was only yesterday that I was discussing the detrimental effect of European market choices on ecological diversity loss in our oceans, but baby steps, I supposed. Any move in the ‘right’ direction is a ‘good’ move.

An issue not – apparently – addressed specifically (or initially) by the EU, but a big factor in the use of bio-fuels (this is, to save unnecessary debate, as opposed to waste-based bio-mass), is mentioned in the article:

In the United States, ethanol produced from corn has boomed, as has sugar-cane ethanol in Brazil. In Europe and to a lesser extent in the United States, vegetable oils have been converted into a type of diesel fuel by a simple chemical procedure.

In principle, these biofuels promise not only to displace imported oil but also to lower the amount of greenhouse gases being dumped into the atmosphere. The crops absorb carbon dioxide, the main greenhouse gas, as they grow, and the fuels made from them re-emit that same gas when they are burned a few months later.

But it is turning out that fuel crops hold the potential for considerable environmental harm.

Not only is native vegetation, including tropical rain forest, being chopped down in some cases to plant the crops, but the crops also are often grown using fossil fuels like diesel for tractors – and they demand nitrogen fertilizer made largely with natural gas.

Moreover, turning the crops into fuels can demand huge amounts of water.

Many bio-fuels are a lot like shale oil, tar-sand oil, etc.: maybe cost-effective, but not energy-cost-effective to pursue. As before, though, any government over-sight is better than none. It’d be nice if the US would follow this sort of thinking – they have the greater capacity to affect conservation.

Oil options, oil’s future

From Bloomberg,

The fastest-growing bet in the oil market these days is that the price of crude will double to $200 a barrel by the end of the year.

Options to buy oil for $200 on the New York Mercantile Exchange rose 10-fold in the past two months to 5,533 contracts, a record increase for any similar period. The contracts, the cheapest way to speculate in energy markets, appreciated 36 percent since early December as crude futures reached a record $100.09 on Jan. 3.

The most interesting part of the piece, for me, was this quote:

“One hundred dollars a barrel is actually 14.9 cents a cup, so we’re still talking about oil being remarkably cheap,” said Matthew R. Simmons, chairman of Simmons & Co. International, a Houston-based investment bank that focuses on energy.

I guess? How many cups of gasoline does your car take? USD200 per barrel would impress me mightily, I have to say – though a year is a long time, and growth in OPEC, India and China alone could certainly push it.

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).

Oil alliances

When I’m less busy (revising, vising, etc. research papers), I would like to pull together, in one discussion, the various hook-ups that Peak Oil is generating, these days. Iran, China, Russia, etc. It’d be handy to see it all laid out.

Until then:

Gazprom’s offer to take control of Serbia’s state-owned petroleum monopoly has divided the Serbian government and sounded alarm bells about the cost of Moscow’s political support.

The Russian state-run gas group aims to pay €400m ($590m, £290m) for 51 per cent of Petroleum Industry of Serbia, or NIS, without facing rival bidders.

…

The Russians have also promised to boost Serbian “energy stability” by activating a gas storage site. In return, Gazprom, its subsidiary Gazpromneft, and NIS would retain a monopoly on refining and a protective ban on private-sector oil and gas imports for five years.

NIS holds nearly 60 per cent domestic market share for natural gas, and more for heating oil, petrol and diesel. It is to be privatised with an initial 25 per cent stake to the winner of a bidding process involving Russia’s Lukoil and several central European oil companies early next year, after repeated delays resulting from Serbian elections.

Mladjan Dinkic, Serbia’s economy minister, called the offer to pay less than half of NIS’s $1.2bn book value “humiliating”, even though Gazprom would also invest €500m from 2008 to 2012.

Very interesting indeed.

Retail didn’t make it, after all

Not – former Eco 1 students will know – that it was ever going to. By the numbers:

1) Retail sales just weren’t … ooh, what’s that word? Good.

Last-minute purchases over the pre- Christmas weekend failed to salvage what may be the slowest- growing holiday spending season in five years.

2) Taking retailers – and Wall Street – with them.

U.S. stocks dropped for the first time in four days on concern slower sales at Target Corp. and the biggest drop in home prices in at least six years signal consumer spending may weaken more than expected.

3) And onwards and outward. In fact, we can add appreciating oil prices and declining gasoline stocks (meaning future appreciation in gasoline prices, meaning less post-gas disposable income, and more cost-push inflation in prices) to the big drop in house prices (meaning that people have less household wealth to back their consumption, just as their incomes are in trouble).

Crude oil rose above $96 a barrel in New York on speculation an Energy Department report tomorrow will show that U.S. inventories fell for a sixth week.

Supplies dropped 1.75 million barrels in the week ended Dec. 21, according to the median of nine responses in a Bloomberg News survey of analysts. Prices also rose after Turkish jets bombed suspected Kurdish rebel camps in northern Iraq, the military said on its Web site.

Home prices in 20 U.S. metropolitan areas fell in October by the most in at least six years, a private survey showed today.

Property values fell 6.1 percent from October 2006, more than forecast, after dropping 4.9 percent in September, according to the S&P/Case-Shiller home-price index. The decrease was the biggest since the group started keeping year-over-year records in 2001. The index has fallen every month this year.

So much for that killer 1.1% increase in consumer spending. The blog The Big Picture has an excellent re-cap of it “all”, also – particularly with regard to the numbers being bolstered by (i) purchases of gasoline and dinners at restaurants and (ii) things marked-down heavily.

Dear Sir, I have a complaint

Sorry. I’ve been listening to Radiohead.

Two perspectives on the climate change ‘stuff’ of Bali: Politics-as-usual

Nobel laureate Al Gore accused the United States on Thursday of blocking progress at the U.N. climate conference, and European nations threatened to boycott U.S.-led climate talks next month unless Washington compromises on emissions reductions.

…

The United States, Japan and several other governments are refusing to accept language in a draft document suggesting that industrialized nations consider cutting emissions by 25 percent to 40 percent by 2020, saying specific targets would limit the scope of future talks.

European nations said they may boycott a U.S.-led climate meeting next month unless Washington compromises.

“No result in Bali means no Major Economies Meeting,” said Sigmar Gabriel, top EU environment official from Germany, referring to a series of separate climate talks initiated by President Bush in September. “This is the clear position of the EU. I do not know what we should talk about if there is no target.”

The second, fairly basic logic (I had seen this earlier in the Guardian, but not gotten around to mentioning it).

On a filthy day last week, as governments gathered in Bali to prevaricate about climate change, a group of us tried to put this policy into effect. We swarmed into the opencast coal mine being dug at Ffos-y-fran in South Wales and occupied the excavators, shutting down the works for the day. We were motivated by a fact which the wise heads in Bali have somehow missed: if fossil fuels are extracted, they will be used.

Most of the governments of the rich world now exhort their citizens to use less carbon. They encourage us to change our lightbulbs, insulate our lofts, turn our TVs off at the wall. In other words, they have a demand-side policy for tackling climate change. But as far as I can determine not one of them has a supply-side policy. None seeks to reduce the supply of fossil fuel. So the demand-side policy will fail. Every barrel of oil and tonne of coal that comes to the surface will be burnt.

On the other hand, Big Oil went in on the infrastructure to start with

This is not to suggest that I’m happy with Shell and BP abandoning their renewable energy projects: I just acknowledge that, perhaps, those projects would not have existed, had the likes of Shell and BP not started them up in the first place.

Shell, the oil company that recently trumpeted its commitment to a low carbon future by signing a pre-Bali conference communique, has quietly sold off most of its solar business.

The move, taken with rival BP’s decision last week to invest in the world’s dirtiest oil production in Canada’s tar sands, indicates that Big Oil might be giving up its flirtation with renewables and going back to its roots.

… at a time when interest in solar power is greater than ever, with the world’s first “solar city” being built at Phoenix, Arizona, a small announcement from Environ Energy Global of Singapore revealed that it had bought Shell’s photovoltaic operations in India and Sri Lanka, with more than 260 staff and 28 offices, for an undisclosed sum.

The sell-off, to be followed by similar ones in the Philippines and Indonesia, comes after another major disposal executed in a low-key way last year, when Shell hived off its solar module production business. The division, with 600 staff and manufacturing plants in the US, Canada and Germany, went to Munich-based SolarWorld. Shell has however formed a manufacturing link, with Saint-Gobain, and promised to build one plant in Germany.

The Anglo-Dutch oil group confirmed yesterday that it had pulled out of its rural business in India and Sri Lanka, saying it was not making enough money.

We should also bear in mind that this is photovoltaic energy: hardly the most lucrative or cost-effective of the Renewables – some of which are being retained:

The oil group said it was continuing to move its renewables interests into a mainstream business and hoped to find one new power source that would “achieve materiality” for it. Shell continues to invest in a number of wind farm schemes, such as the London Array offshore scheme, which has government approval. Shell has also been concentrating its efforts on biofuels, but declined to say whether it had given up on solar power even though many smaller rivals continue to believe the technology has a bright future.

There follows a standard form of critique (this was a quote: this is not from the writer of the article):

“… the oil majors, including Shell, had invested time and energy in promoting their plans for renewable energy in the press and on TV, but were not able to lead the transformation the world needs towards renewable energy and energy efficient solutions.”

Who ever said that they should? They’re corporations, not saints. Big, nasty, smelly, evil corporations, sure. They operate according to the profit motive; according to Cost-Benefit Analyses and analysis of what a market will bear. Would we rather they pour more energy into bringing this initiatives in the proper mainstream of base load? Sure – but that doesn’t mean that they should. Why should they?

When we all stop wearing cotton and eating things built almost entirely from corn and soy, we can start moving on the moral high ground.

Until then, we need to accept that markets are made up of free agents. If we want to get upset, we should be upset about such companies receiving sweetheart deals on access to public land. We should be upset that so much Farm Aid goes to corporate addresses in Manhattan, yet almost no real subsidisation of renewable energy exists. Agents in an economy will only do what their incentives tell them to do: corporate incentives are bundled up in the next AGM. Anyone who wants to make a difference should push SRI and investor activism; run for state legislatures on clearly-defined platforms of public investment in renewable energy and protection of the common treasury.

The Gulf Common Market

Question: what is it we don’t like about the EU? The Common Agricultural Policy. Suppose, then, that a common market formed, and in that common market the key commodity was not agricultural production but, say, oil.

Six Gulf Arab states, including Saudi Arabia and the United Arab Emirates, will form a common market from the beginning of next year, said Abdul Rahman al-Attiyah, head of the Gulf Cooperation Council.

…

“The common market aims at creating a unified market in which GCC citizens can benefit from valuable economic opportunities in the Gulf,” al-Attiyah said. “The agreement will open the way for intra-Gulf and foreign investment in the region and increase the usage of available resources in the Gulf countries.”

A Common Oil Policy, then? Bear in mind that, among the key problems associated with peak oil, the fact that oil exports are declining even more quickly than oil production is prevalent, and a big contributor to the so-called ‘crunch’ that the rest of us face. A common market in the Middle East is more likely than not to exacerbate that, given that Market members will be top of the list to get the exports of bigger, superfielded Other Members.

There’s also the matter of the common currency, apparently still slated for 2010 (probably later). For the likes of the US, these are developments probably worth watching: even OPEC itself is “only” some 40-odd percent of oil production in the world, but (still, I suspect – although that Brazilian find will bump this around) two-thirds of oil reserves – hardly the entire market, but more than enough to make a serious difference if, say, oil stopped trading in dollars, and/or Arab states stopped pegging their currencies (or, by then, currency) to the dollar. Add that to the US’s loss of favouritism in getting sweetheart deals for oil, and the US has a pretty big problem.