The Crash of 2015: On Track, Behind Schedule

As demonstrated in Paris in 1895, what matters is not whether the train wreck was on time. What matters is that it’s a wreck. (Wikipedia Photo)

As demonstrated in Paris in 1895, what matters is not whether the train wreck was on time. What matters is that it’s a wreck. (Wikipedia Photo)

The dominoes are toppling, just as we have been expecting for nearly a year now, but slower than we thought. The fact-resistant strain of humans (Thank you, Borowitz Report) now in charge of the world are trying to use vast amounts of money to counteract gravity, and, counterintuitively, succeeded in slowing the dominoes’ fall. But not for long.

To review our expectations of last summer: the hideous decline rate of fracking wells (of up to 90% in three years) was forcing frackers to borrow huge amounts of money to put up large numbers of new wells at a breakneck pace in order to preserve the illusion (it was always an illusion) of a revolution in American oil leading to prosperity and “energy independence.” On average, it cost the frackers over $4 to get $1 of revenue in the door during the first quarter of this year. A year ago, with oil commanding $100 a barrel, they were still spending $2. As the old joke goes, the only way to make any money when you’re losing on every transaction is to make up for it with volume. But since most of the money spent was capital expenditure — i.e. new wells — their operating statements showed profits and nobody looked at the balance sheets. Continue reading

Pacific Apocalypse: The Great Dying Continues

A passel of starving sea lions, rescued from the beach by volunteers, in a California rehab center. They get a lot of attention because they’re cute. But crabs, oysters and anchovies are dying just as fast.

A passel of starving sea lion pups, rescued from the beach by volunteers, in a California rehab center. They get a lot of attention because they’re cute. But crabs, oysters and anchovies are dying just as fast.

The Pacific Ocean appears to be turning toxic to all life, a prospect with unimaginably dire consequences for humanity. News stories about it are fragmented, and slotted into the “Environment” category, and thus easily ignored by the rich and famous and their news channels. (Breaking News: Donald Trump Running Mate May be Caitlyn Jenner!) In just the latest manifestation of this calamity, what may be the largest bloom of toxic algae ever detected is poisoning sea life from California to British Columbia — with toxin from it detected not far off Alaska. Crab and clam fisheries have been shut down in two states so far, and the so-called red tide is still growing. In Monterey Bay, California, the concentration of domoic acid secreted by the algae is the highest ever recorded. Continue reading

There is No Such Thing as a Civil War

War used to be up close and personal. Then, with artillery, we achieved enough detachment that people started to like it. (Photo by walterpro/Flickr)

War used to be up close and personal. Then, with artillery, we achieved enough detachment that people started to like it. (Photo by walterpro/Flickr)

Neocons and candidates for president and others trying to establish their patriotic bona fides bray for war — with ISIS, or Iran, or China or Russia, virtually anyone will do. When those of us who have either experienced war, or read a book about it, object that to choose war is lunacy, they condescend to reassure us. It will be a surgical strike, they say; or we will just train and advise a surrogate country, and it will do the messy part; we’ll use air power, so neither you nor any of your children (Wait, none of them is a pilot, right? Good.) need worry about it. Continue reading

Doomstead Diner Discussion: Whither China?

On Sunday afternoon, June 15, the Doomstead Diner hosted a video discussion of the prospects for China. In addition to Doomstead‘s RE and Monsta (or whatever their real names are), the discussion included me, Tom Lewis, of The Daily Impact and Ugo Bardi of the University of Florence, Italy and the blog Cassandra Legacy. Or whatever our real names are. Running time is just over an hour — an hour you will never get back.

It’s Official: The Shale-Oil Boom is Over

A Halliburton fracking setup in North Dakota’s Bakken play. “Whaddaya mean it’s over? We just got this thing connected!” (Wikipedia Photo)

A Halliburton fracking setup in North Dakota’s Bakken play. “Whaddaya mean it’s over? We just got this thing connected!” (Wikipedia Photo)

It comes now from the US Energy Information Agency, and is headlined by Bloomberg Business, so yes, it’s official. As Bloomberg put it, “US Shale Boom Grinds to a Halt.” Which, actually, is overstating the case by a good bit, there isn’t going to be a “halt.” Nevertheless, as sane people everywhere have been insisting for years, the shale boom is, as it always was going to be, a bust.

This — now official — assessment is in the form of a set of projections by the EIA, which, we should remember, has pretty consistently been overly optimistic in its assessment of the oil business. Remember, they were the folks who estimated that the Monterey Shale in California held 14 billion barrels of recoverable reserves — two-third of America’s total oil wealth — until they ran the numbers again and re-estimated the Monterey at 96% lower. Continue reading

China, the Paper Tiger

Is China a paper tiger or a pussycat? It depends on which numbers you look at.  (Photo by Jinzl’s Public Domain Photos/Flickr)

Is China a paper tiger or a pussycat? It depends on which numbers you look at.
(Photo by Jinzl’s Public Domain Photos/Flickr)

The punditocracy assembled yesterday, as they do every Sunday, to yelp their yin-yang talking points that pass, these days, for wisdom. Mostly they want to talk about who, a year and a half from now, might be chosen as the new captain of the Titanic — Hillary or anti-Hillary? Then, like the proverbial elephant terrorized by a mouse, they vent about the latest pimply-faced adolescent who, dreaming of celebrity and inspired by an ISIS website, takes the first giant step toward jihad: gets in touch with an FBI informant for his very own ACME bomb-making kit. Then before the pundits rest, they make their fervent nominations for our next war. Continue reading

Coming Soon to Us All: The Choice Worse Than Sophie’s

Sophie had to choose which child would live and which would die. Now multiply that problem by a couple orders of magnitude. (Photo by Bill Strain/Flickr)

Sophie had to choose which child would live and which would die. Now multiply that problem by a couple orders of magnitude. (Photo by Bill Strain/Flickr)

In the aftermath of Hurricane Katrina, desperate citizens of New Orleans seeking water, food and shelter began streaming by the thousands out of the city on foot over the US Route 90 bridge across the Mississippi River and into to the city of Gretna, Louisiana. The city had no electricity, no water, no medical services and little in the way of a functioning government. It had been this way for three days when the refugees began streaming in, and unless conditions improved almost immediately, the people of Gretna were looking at severe privation. So they closed the city. Put a line of armed police across the Interstate Bridge and turned the refugees back. Sorry. Can’t help you.

The story has haunted me for nearly ten years. Not just because it is one of the gnarliest ethical problems I have ever come across. But also because in the aftermath of the crash of the Industrial Age — perhaps well before the crash, during the current preliminary stresses — every one of us is going to face the kind of decision Gretna had to make. We will be asked to give help to distressed neighbors when giving that help will endanger our own survival. How will we answer? Continue reading

Oil Money: Too Dumb to Fail

bankers

Bankers on the trading floor at CITI make a market in the latest derivatives of derivatives. (Photo by Mike Licht/NotionsCapital.com)

We interrupt the Crash of 2015 for a brief word from some people who are not participating, on the belief that the oil boat — having been hit by two icebergs, dwindling resources and plunging prices — is not sinking, it is merely bobbing in a trough between two lovely crests. We will return to the previously scheduled sinking as soon as these folks discover once again that no matter how much stupidity and cash you pump into a ship with an enormous hole in the hull, you can’t save it. Continue reading

First the Fuel Subsidies Come Off. Then the Wheels.

(Photo by okinawatakarabako.com)

“Damn! I can’t afford this! I just filled up with gas!” (Photo by okinawatakarabako.com)

A funny thing happens when countries can no longer afford massive subsidies to keep down the cost to consumers of fossil fuels: the governments stop paying, and their country stops dead, or changes governments. Cheap fuel was once a perk for anyone who happened to live in an oil-rich country. But the perk has become an entitlement, and woe betide the country who, upon discovering it is not in fact oil rich anymore, tries to balance the books by charging its people the actual cost of fuel.

Nigeria is Africa’s largest oil exporter, and third largest economy, yet it has desperate needs for investment in roads, power generation and water systems. The two principal reasons these needs have been unmet are generations of rampant government corruption, and the roughly $8 billion a year in fuel subsidies. In March, a new government won election on promises to stop the corruption and the subsidies. Continue reading

The Crash of 2015: Going Global

Titanic_sinking,_painting_by_Willy_Stöwer

First you get some stowaway yelling avbout being “king of the world.” Then there’s this iceberg….

Just in the past week, the headlines have been coming like triphammer blows: in Bloomberg News, “Something has gone wrong with the global consumer,” (according to JP Morgan); in International Business Times, “G7 Finance Ministers to address faltering global growth;” in London’s Telegraph, “HSBC fears world recession with no lifeboats left;” in OilPrice.com, “Clock running out for struggling oil companies;” and even in the mainstream vanilla Washington Post, a column by Robert Samuelson predicts “China’s coming crash,” then puts a question mark at the end to make sure we don’t worry too much.

When you add these concerns to longer standing ones about wild gyrations in the world’s stock and bond markets; the advent of peak oil in pretty much every oil-exporting country in the world; the onset of the effects of global climate change in California, the Middle East, North Africa, Brazil and elsewhere; it becomes apparent that optimism ought to be listed as a disorder requiring medical intervention. Continue reading