Author Archives: Tom Lewis

Letting Go of the Tar (Sands) Baby

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A tar sands mine and plant near Fort McMurray, Alberta, Canada. The recipe is simple: scrape the skin off the earth, boil what you find, wash the residue, dilute it with explosive fluids and send it 3,000 miles to where someone can make an inferior product with it. For some reason, the business model isn’t working. (Wikipedia Photo)

A tar sands mine and plant near Fort McMurray, Alberta, Canada. The recipe is simple: scrape the skin off the earth, boil what you find, wash the residue, dilute it with explosive fluids and send it 3,000 miles to where someone can make an inferior product with it. For some reason, the business model isn’t working. (Wikipedia Photo)

Just as is the case in the American tight (shale) oil plays, things in the Canadian tar sands are breaking down fast, and for the same reason: wringing the last few barrels of oil out of the earth is proving to be far more expensive than hoped. Two weeks ago the Norwegian energy giant Statoil postponed for at least three years building a new tar sands project designed to pump 40,000 barrels a day; earlier this year Total SA of France, the fifth-largest oil company in the world, suspended operations at its $10 billion oil sands mine while it tries to figure out a way to make a profit; and Shell announced in February indefinite suspension of work on a prospective 200,000-barrel-a-day mine. (The same Shell that has been quietly folding its 13-billion-dollar hand in the US shale-oil bonanza and tiptoeing from the building? Yes, the very same.) Continue reading →

California: Desperation Rising as Water Runs Out

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Gravity sensing satellites have measured the withdrawal of water from the aquifer underlying California's Central Valley. It's almost over. (NASA images)

Gravity sensing satellites have measured the withdrawal of water from the aquifer underlying California’s Central Valley. It’s almost over. (NASA images)

In more than 500 households in Tulare County, California, over a thousand people have been without running water for months. The reason you have not heard much about them is that they are poor working immigrants who labor in the Central Valley’s pastures of plenty to give us this day our daily lettuce and cilantro. They are homeowners whose homes are now worthless, dreamers of the American Dream who are now forced to buy bottled water to drink, to shower from coffee cans and flush with buckets filled at community tanks (with water from wells in imminent danger of going dry). Children are being kept home from school because they are too dirty. Proud cooks are feeding their families from cans. One resident told the New York Times (in a rare example of industrial media paying attention) “It’s a slow-moving disaster that nobody knows how to handle.” Continue reading →

A United State of Incompetence

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Ebola outbreak? White House intruder? Climate change? Don't worry, we're on it.

Ebola outbreak? White House intruder? Climate change? Don’t worry, we’re on it.

A wise man once told me (no, wait, it was me, talking to myself) that when something bad happens, like a plane crashes, or Congress passes a law, it is usually for one of two reasons: a dark conspiracy by evil people, or rank incompetence. “If there is any doubt about the cause,” he, or I, said, “always assume incompetence. You will almost never be wrong.” The case is being illustrated these days with dismaying frequency.

Ebola in America. Get off a plane from Liberia, go to a hospital in Texas and tell them you’ve just come from West Africa and are desperately ill, they give you an aspirin, send you home and tell you to hug and kiss all your friends and family, it will make you feel much better. (Only that little tiny last part is made up. The rest of it, I wouldn’t dare.) Continue reading →

Miami Beach, October 9: Apocalypse Foretold [UPDATE: Problem Solved]

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High-tide flooding caused by rising seas is impacting Miami and cities as far north as Boston with ever increasing frequency and severity. (Photo by Harold Wanless, University of Miami)

High-tide flooding caused by rising seas is impacting Miami and cities as far north as Boston with ever increasing frequency and severity. (Photo by Harold Wanless, University of Miami)

The projected sea-level rise of the next quarter-century or so because of climate change will occur, albeit briefly, in Miami Beach next Thursday. On that day, the alignment of the sun, earth and moon will produce a King Tide — the highest high tide of the year, a full foot above normal, or about half the sea level rise Miami is expected to experience by 2060. Construction crews are racing to fit plugs in the city’s stormwater drains that dump into the sea and, suddenly, provide a conduit for rising seawater directly to the streets, and to complete installation of four enormous pumps with which to fight the incoming tide. (By pumping the water where? Um, back into the rising sea. Isn’t that a little like bailing one end of a boat into the other?) Thus we get a preview not just of sea level rise, but of the hapless human response to it. Continue reading →

Shale Oil Boom Breaking Down

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No, this is not a Dallas suburb, it’s a fracking field. If you don’t like it now, imagine it in a few years, when it has been abandoned. (Photo by Simon Fraser University)

No, this is not a Dallas suburb, it’s a fracking field. If you don’t like it now, imagine it in a few years, when it has been abandoned. (Photo by Simon Fraser University)

Recent research suggests that fracking causes earthquakes; they have no doubt of that at the fourth largest trading and investment company in Japan — Sumitomo Corporation — which has just experienced a Magnitude 10. The profit Sumitomo expected to make this year, a hefty $2.27 billion, has been all but wiped out. News of the disaster atomized 13 per cent of its stock value in one day.  Its credit rating went to “negative.” And almost all of this was caused by hideous losses incurred in fracking for tight oil in Texas.

Sumitomo samurai rolled into Texas just two years ago (seems like only yesterday) with a $2 billion dollar investment in the Permian shale-oil play, in partnership with Devon Energy of Oklahoma. So here we have Japan’s fourth-largest trading company, along with one of the largest US fracking companies, going into the (potentially, according to the oil interests) richest tight-oil basin in the United States in the midst of a tight oil boom. What could possibly go wrong? Continue reading →

I Hear America Rotting

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The deadly collapse of an Interstate Highway bridge near Minneapolis in 2007 brought a horrified nation to its feet. Then the nation sat down again. (Photo by mtellin/Flickr)

The deadly collapse of an Interstate Highway bridge near Minneapolis in 2007 brought a horrified nation to its feet. Then the nation sat down again. (Photo by mtellin/Flickr)

She was elderly, spry, energetic, and she lived alone in the remains of a genteel Southern plantation, with its Tara-like mansion and sprawling lawns. She was not without means, but she was entirely without staff.  She was telling me how she had recently paved with flagstones the banks of a fairly sizable pond near the mansion’s rear patio. Herself. Mightily impressed, I asked her what she did with her spare time. “Oh,” she sighed, “I like to get a glass of iced tea and just sit out here and listen to the house rot.”

Which is what we Americans have been doing since 1980, when we decided that taxes are evil and must never be raised again for any reason. We’ve been sitting around listening to the country rot. Continue reading →

Miracle of the Loaves, Fishes and New Home Sales

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If the housing market in the US were in fact recovering, it would be a miracle. Alas, (Wikipedia Photo)

If the housing market in the US were in fact recovering, it would be a miracle. Alas, (Wikipedia Photo)

To call it a miracle is to misunderestimate it by at least an order of magnitude: according to the US Commerce Department, sales of new single family homes in August surged 18% from July, and 33% from last year, “offering confirmation,” swooned CNBC, “that the housing recovery remains on course.”

Even while humming its charming little refrain of “Happy,” CNBC, like the many others who sang from the same sheet music, slipped in a few clunkers without elaborating or explaining: one, that new home sales account for only nine percent of the market, and thus (despite CNBC’s offered confirmation) are hardly determinative; and two, that despite the rise in sales, the stock of new houses still unsold hit its highest level in four years. Wait, what? You sell more than you have in six years, and end up with more unsold inventory than you’ve had in four years? Continue reading →

Perfect Storm Gathering off America’s West Coast

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Sea Storm

A storm gathers over Manhattan Beach, California. But the real threat to the West Coast is from what’s happening in the water, not in the air. (Photo by Neil Kremer/Flickr)

When three or more meteorological disturbances merge, the result is called a “perfect” storm to signify that it is more destructive than the sum of its parts. In the Pacific Ocean off our West Coast, a confluence of dire events is forgathering whose cumulative effect may destroy more life on earth than anything that has occurred in 300 million years. That is not hyperbole, it is the considered opinion of a number of oceanographers who have begun to look at the threats cumulatively, rather than in the confines of one specialty or another. What happened 200 million years ago is called the Great Death of the Permian Age, during which most living things on Earth died.

What is happening today in the eastern Pacific Ocean is thought by some experts to be a runup to just such an event, beginning, as did the Great Death, with the extinction of most life in the ocean. Continue reading →

More Warnings from Wall Street: The Party’s Over

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On Wall Street the party's almost over, and the music is about to stop. Wall Street's response: dance harder. (Image by Stock Graphic Designs)

On Wall Street the party’s almost over, and the music is about to stop. Wall Street’s response: dance harder. (Image by Stock Graphic Designs)

The warnings are coming thick and fast now, from inside the redoubts of the Masters of the Universe, that their world is spinning out of control. I am especially interested in the warnings from the MOTUS themselves, not because they have demonstrated any special ability to forecast, but because they are making noises in a large herd of bulls, knowing that if they set off the stampede they will get hurt.

There is no bigger bull than UBS — it’s the largest asset manager in the world, with nearly two trillion dollars in assets. It told its clients in a newsletter last month that it no longer likes stocks, and it no longer likes bonds. Where you gonna put two billion dollars? Baseball cards? [Thanks to Wolf Richter on WolfStreet.com for bringing this to light.] Continue reading →

Housing Bubble II: Deja Vu, Again

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FOR RENT in tony neighborhood, handyman special, low low rent, tenant responsible for maintenance. Any problems, call 1 800 BITE ME. (Photo by Kevin Dooley/Flickr)

FOR RENT in tony neighborhood, handyman special, low low rent, tenant responsible for maintenance. Any problems, call 1 800 BITE ME. (Photo by Kevin Dooley/Flickr)

I knew a woman with lung cancer who almost blew her face off while sneaking a smoke under an oxygen mask. Wall Street reminds me of her. The Masters of the Universe (hedge fund guys, private equity managers, parasites, whatever you wish to call them) are so addicted to subprime lending they can’t give it up, even though they are still in traction from the last time it blew them up (and evicted ten million Americans from their homes).

Immediately — and I mean, immediately — after the collapse of the subprime-mortgage bubble brought the entire world’s financial system to its knees, the MOTU decided that the remedy to the destruction wrought by subprime mortgages was — subprime rental contracts. (Not to mention subprime auto loans, which is another story.) Continue reading →