Twin Peaks: Stock-Market Fear, Oil Panic

This is where stock and gas prices are going. To see the panic index, turn your screen upside down.

This is where stock and gas prices are going. To see the panic index, read from right to left.

Gasoline is below three dollars a gallon and the stock market is at an all-time high. Well, yes, that was last week but still. What could be wrong with this picture? Like a face that has had way too many plastic surgeries, this one is stretched a little thin, with eyes bugged out and droplets of sweat all over it. The market, which all concerned promised would go up and up and never come down (Does anybody remember them saying the same thing about real estate? Anybody?) has lost 7% of its value in a week and, yesterday at least, could not pull out of the nose dive. A 10 percent drop is a correction. Twenty percent is a crash. And the low gas prices are being celebrated by everyone but the frackers who brought them to us. For them, low oil prices mean almost-immediate ruin. Continue reading

Letting Go of the Tar (Sands) Baby

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

Shale Oil Boom Breaking Down

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

Rats Start to Leave the Fracking Ship

What top oil people are starting to do about the fracking revolution. Abandoning ship.

What top oil people are starting to do about the fracking revolution. Abandoning ship.

The first sign of a doomed ship is said to be the urgent departure of its rats; the first sign of fire in a crowded theater is not the guy who shouts it out, but the several people with good noses who start to sidle quietly but purposefully toward the exits. In the world of America’s bogus oil and gas fracking revolution, the nostrils of the rats and the smoke-sensitive alike are beginning to twitch. Let us watch those noses.

Must we review the industry’s propaganda again here? How hydraulic fracking has changed everything, America now has abundant gas and oil, we’re surpassing Russia and Saudi Arabia, we’re number one in the world again, we’re headed for energy independence? (No one has yet had the chutzpah to predict we’re going to get to energy independence, since it’s mathematically impossible, but it shouldn’t be long now, they’re getting desperate.) The latest iteration of the industry line is an essay that appeared in the New York Times  titled “America’s Oil Bonanza,” a song of oil without end, amen. Continue reading

The Scariest Picture in the World

Just a garden-variety protest in some Middle Eastern county, you say, nothing to be afraid of here? Wait till you find out where these people are. (BBC Photo by Safa Al-Ahmad)

Just a garden-variety protest in some Middle Eastern county, you say, nothing to be afraid of here? Wait till you find out where these people are. (BBC Photo by Safa Al-Ahmad)

What, this picture? It’s almost a cliche, right, more Arab Spring stuff? Yes, except for one thing. This uprising, inspired by the so-called Arab Spring three years ago, and unquenched since then, is happening in Saudi Arabia. The protesters are minority Shia Muslims in Saudi’s Eastern Province, the center of gravity of the country’s oil industry. This picture represents the worst nightmare of the Saudi royal family, and of all industrialized nations. If Saudi Arabia comes unglued, so do we all. Continue reading

Oil Storm Flags Up: Take More Cover

Coming soon to an economy near you: a two-train wreck.

Coming soon to an economy near you: a two-train wreck.

The second train wreck about to sledgehammer the world’s economies is the implosion of the oil-and-gas renaissance scam. This implosion, most likely to occur in 2015, may occur before Train Wreck Number One (the financial “correction,” see the previous post, Financial Storm Flags Up: Take Cover) and bring it on, or it could kick in just afterward as the panicked Masters of the Universe run for the lifeboats. The cumulative effect of the two events will be devastating and lasting. They are not likely to bring on, quite yet, the ultimate crash of the industrial age — there is a lot of momentum left in the old battleship yet. But they will come close. Because while the financial implosion may not be quite as bad as that of 2008, the end of the oil scam, in itself, will be devastating to the world. Continue reading

Peaked Oil: Waiting for the Swords to Drop

Damocles learned that when you know about the sword up there, it's hard to enjoy a life of luxury. Bingo.

Damocles learned that when you know about the sword up there, it’s hard to enjoy a life of luxury. Bingo.

In the fable that bears his name, Damocles was unnerved in the midst of luxury and power by the threat of a single sword (representing the ever present possibility of failure) hanging precariously over his head. We, who because of cheap oil enjoy luxury and power in our ordinary lives beyond the imagination of the kings of old, live beneath a veritable forest of deadly blades, all of which are just about to fall. Unlike Damocles, we refuse to look up, let alone move out of the zone of impact. When they tell our fable, nobody’s going to believe it. Continue reading

Indian Summer: Apocalypse Rehearsed

Australian heatwave causes wildfiresThis is a shape of things to come: intolerable heat persisting for unprecedented lengths of time; failure of the electric grid when it’s needed most; hundreds of deaths from the searing heat; unreasoning violence spreading across the county like fire. India had it all last week, and the relief brought by the (late) onset of monsoon rains may be scant and temporary. This is the specter of climate change made real, made explicit, in the present tense. And still the world acts as if it’s the other guy’s end of the boat that’s burning, no worries here. Continue reading

Natural Gas: Flaming Out?

Seen from above, natural gas being flared at night bears a remarkable resemblance to the ill-fated Hindenburg. (Photo by Phudpucker.com)

Seen from above, natural gas being flared at night bears a remarkable resemblance to the ill-fated Hindenburg. (Photo by Phudpucker.com)

A little known crisis is approaching in the world of natural gas, one that threatens the most successful part of the largely imaginary New American Bonanza (NAB) in oil and gas brought on by hydraulic fracking. The gas frackers did manage to increase domestic supplies, so much so that two things happened: every electric generator that could switch from coal to gas, did so; while the glut drove the price down so far that the gas producers started losing money. Their output, which had grown by seven percent in 2011 and five percent in 2012, managed to inch up one percentage point last year. Now the entire industry has an iceberg just off the starboard bow. Continue reading

Don’t Like Global Warming? How About Global Rioting?

You thought the unrest in Ukraine was all about Russia? Or the West? Try food. (Photo by Yaruslov Kharandiuk/Flickr)

You thought the unrest in Ukraine was all about Russia? Or the West? Try food. (Photo by Yaruslov Kharandiuk/Flickr)

The boiling point of a country is 210; not degrees on a thermometer, but points on a scale of food prices devised by the UN’s Food and Agriculture Organization. Reach that mark, and your population, on the brink of starving, will be in the streets kicking ass and taking heads. Pundits natter on about masses yearning to be free, loving democracy, spurning Islam, suddenly intolerant of dictators they were fine with for decades. In reality, the flame that lit the Arab Spring and the Syrian Civil War and the Crisis in Ukraine was a food price index of 210; and the same torch is spreading the flames around the world. The outbreak, according to Dr. Nafeez Ahmed (a security expert and writer for the Guardian of London), is a tsunami of civil unrest  “on a scale that has never been seen before in human history. This month alone [February] has seen riots kick-off in Venezuela, Bosnia, Ukraine, Iceland, and Thailand.” Continue reading