Author Archives: Tom Lewis

Oil Money: Too Dumb to Fail

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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.

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(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

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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 →

What’s Next — Evolution or Extinction?

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(Poster by sorah42/funnie.st)

Our friends at the Doomstead Diner (they frequently repost Daily Impact essays) have caused a bit of an uproar among doomers — their term for people who believe the crash of industrial society is imminent — by conducting a poll on whether and when all humanity will be extinguished by the collapse. The Human Extinction Survey immediately revealed strong differences and strong feelings among the doomers surveyed. Just a few years ago it was controversial in the extreme to raise the prospect of collapse; now the idea is moving to the mainstream but wait, extinction? Yikes. Continue reading →

GOP and Coal Launch War on America

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This is how the Republican Coal War will look, fought not with artillery but smokestacks. It’s a war no one can win. (Photo by alohaspirit/iStock)

This is how the Republican Coal War will look, fought not with artillery but smokestacks. It’s a war no one can win. (Photo by alohaspirit/iStock)

To celebrate their coming to power in the United States Senate, Republicans this week launched their answer to the imaginary “War on Coal” by declaring war on clean air, and thus on all of us. Newly elected West Virginia Senator Shelley Moore Capito introduced a bill that would make it impossible for the Environmental Protection Agency to regulate emissions from coal-burning power plants. Climate-change-denier-in-chief James Inhofe, celebrated for bringing a snowball onto the floor of the Senate in February to prove that global warming is a hoax, cheered Capito on from his throne at the Senate Environment and Public Works Committee. Continue reading →

New U.S. Recession Already Here

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** ARCHIV ** Hostess Kim Sturmhoefel geht am 19. Maerz 2004 am Microsoft-Stand auf der Cebit in Hannover eine Treppe hinab. Dem Software Hersteller droht eine Strafe der Europaeischen Union wegen Verstosses gegen EU-Wettbewerbsregeln in der erwarteten Rekordhoehe von 497 Millionen Euro. Am Mittwoch, 24. Maerz 2004, will Wettbewerbskommissar Mario Monti die Entscheidung verkuenden. (AP Photo/Joerg Sarbach) --- Hostess Kim Sturmhoefel steps down some stairs at the booth of U.S. software giant Microsoft at the Cebit 2004 in Hanover, northern Germany, March 19, 2004. The European Union treathened Microsoft with an expected record fine of 497 million euro (US$ 612 million) for alleged antitrust abuses. An EU decision is expected Wednesday, March 24, 2004. (AP Photo/Joerg Sarbach)

We hear every day from the bean counters whose jobs require them to play in the Don’t-Worry-Be-Happy Band, whose favorite numbers (by which I mean their favorites, not ours) are “Recovery is Bustin’ Out All Over,” “Happy Days are Here Again,” and “When I am a Rich Man.” The other, independent bean counters are hard to hear amid the blaring brass, but if you pay attention you can hear what they’re yelling: the next recession has already started.

When the federal government reported yesterday on the growth of retail sales last month, there wasn’t any. Growth, that is. Continue reading →

Oil: A Fit of Peak

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“Rex [Tillerson, CEO of Exxon Mobil] knows his company is in liquidation and he’s terrified his stockholders are going to find out.” — Arthur Berman. Is this what Rex sees when he dreams?

Arthur Berman is perhaps the most credible debunkers of oil hype on the planet because he is a highly qualified petroleum geologist and a longtime, top-tier employee of the oil industry. In a presentation early this year, he made an offhand remark in answer to a question about Exxon Mobil CEO Rex Tillerson. “Oh,” Berman responded, “Rex knows his company is in liquidation and he’s terrified his stockholders are going to find out.” I don’t know if anyone else heard a thunderclap at that moment. The discussion moved quickly onward, but I sat stunned (as I listened to the tape). It seemed to me I had just heard spoken aloud the essential truth of our industrial age: it’s in liquidation, and the people in charge are terrified we are going to find out.

Liquidation, also known as a going-out-of-business sale, is a stunning word to use about the oil industry, unless you think about it for a minute. Continue reading →

Global Pandemic Affecting Growth

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A heartbroken teenager absorbs the news that his growth rate is slowing and may soon stop altogether. Given his bleak prospects, thoughts of suicide cannot be ruled out. (Photo by bngdesigns/pixabay)

A heartbroken teenager absorbs the news that his growth rate is slowing and may soon stop altogether. Given his bleak prospects, thoughts of suicide cannot be ruled out. (Photo by bngdesigns/pixabay)

A mysterious affliction that is affecting human growth rates has apparently spread unnoticed around the world. “We are seeing normal growth rates of three or so inches a year decline, over the space of a few years, to a half inch or even less,” said one scientist who asked not to be named because he was not authorized to take the blame. “For some reason it seems to be affecting young people, in their late teens.”

“Growth is essential to the economy,” said an economist who preferred not to be identified because he’s tired of all the ridicule. “The clothing industry depends on it, as does the basketball industry, just to name two. The effect on them is likely to be catastrophic.” Continue reading →

World Water War I: Already Under Way

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A common misconception: the wars of the future will be fought, not with water, but over it. There will be a lot of them. Soon. (Photo by Radio Free Asia)

A common misconception: the wars of the future will be fought, not with water, but over it. There will be a lot of them. Soon. (Photo by Radio Free Asia)

The stresses that are rearranging the world’s maps, uprooting populations, destroying nation-states and destabilizing the planet have less to do with extreme “-isms,” geopolitics, hegemony or nuclear armaments than they do with water. Overuse, misuse and pollution of water, combined with spreading drought, a consequence of climate change, are imposing on larger and larger regions of the world an inexorable sequence of deprivation leading to desperation, then disintegration. About halfway through the progression, as desperation begins to bring on disintegration, the violence begins, and from then on the Four Horsemen of the Apocalypse ride hard. Continue reading →

The Crash of 2015: Vultures vs. Jackals

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So. How have you frackers been feeling, lately? Just checking. (Photo by docentjoyce/Flickr)

So. How have you frackers been feeling, lately? Just checking. (Photo by docentjoyce/Flickr)

The crash of 2015 has been paused temporarily by a curious circumstance: a brawl among the financial scavengers who by now should have carted away the body parts of the great American fracking boom. Against all logic, financial vultures are fighting with financial jackals for possession of the corpse, and while doing so are pumping transfusions into it even though decomposition is already well under way. Here’s what’s happening:

The Vultures believe the decline of American oil fracking is only temporary, a product of the sudden decline in oil prices that struck last fall, and that with the inevitable return to $100-a-barrel oil, the frackers will return to profitability. Continue reading →