Tag Archives: oil

Will oil drown the Arab spring?

A recent article by Michael L. Ross talks about how oil money may yet destroy the democratic gains of the Arab Spring:

Oil has not always been a barrier to democracy. Until the early 1970s, oil—producing countries were no less likely to be democratic than any other state. Ironically, this was because until that point, the so-called Seven Sisters, a handful of giant Western oil companies, dominated the global oil industry and collected most of its profits.

Then the Arab-Israeli war happened, and:

Eager to capture the resulting windfalls, virtually all developing countries expropriated the foreign oil companies operating on their soil. These nationalizations brought with them massive influxes of new wealth and so were hugely popular; they made the careers of many politicians.

The reason being:

Since then, control over oil revenue has helped autocrats stay in power in three main ways. First, it has allowed them to buy off citizens by providing them with many benefits and virtually no taxation.

For example, Saudi Arabia offers universal healthcare. It manages to do so without the kind of taxation required in European countries. This was pointed out to me by a libertarian expat in Saudi Arabia. I noted that the economy of Saudi Arabia probably wouldn’t be sustainable once the oil ran out in a few decades. (Nevermind the irony of a libertarian apparently proposing a socialized oil industry.)

But it’s worse than that:

Second, petroleum—based autocrats use their national oil companies to cloak their countries’ finances. Secrecy helps give oil wealth its democracy-repelling powers: citizens are satisfied with low taxes and seemingly generous benefits only when they do not realize how much of their country’s wealth is being lost to theft, corruption, and incompetence.

Finally, oil wealth allows autocrats to lavishly fund—and buy the loyalty of—their armed forces.

The full article is behind paywalls at Harper’s and Foreign Affairs, but you may be able to find a copy out there on the Internet via Google.

The mystery of the severed cables

So, 5 undersea cables have now mysteriously been severed. Iran’s telecommunications connectivity is almost destroyed. Why on earth is this happening?

Meanwhile, Iran was due to start an international oil trading organization by February 11th, which would allow oil to be traded in currencies other than US dollars.

You know who else started selling oil in currencies other than the US dollar? Iraq, in 2000.

Hmm, what a coincidence.

In case anyone’s missing the significance: the only thing propping up the value of the dollar is that everyone needs oil, and you need dollars to buy oil. If countries could buy all their oil in (say) Euros, they’d stop dealing in dollars, stop lending the US money to run the deficit, and make it impossible to run the US economy as it’s currently being run. Or as the Economist puts it:

A shift towards a looser peg in the GCC would undoubtedly hurt the greenback. At the very least, dollars would be purchased at a slower rate—leading to what Mr Lyons calls “passive diversification”. At worst, the policy might encourage others to follow, sparking panic sales of American assets.

i.e. a very real chance of the US economy entering another Great Depression.

Liquid engineering

One of my random Internet pastimes is answering surveys. Partly I do it because I suspect I’m an interesting edge case for their data set, the exception that will prove their rules. Also, at the end they offer some of the statistics they’ve gathered, which can be interesting. And sometimes, the act of answering trivial questions can lead me to odd insights about myself.

Like just now.

It was a survey about motor oil. Since I’ve only been driving for a little under 3 years, and since we’ve always taken the car to the dealer for its oil change, I’ve not had much occasion to learn about oil, or the oil changing process.

In fact, while answering the survey I realized that the sum total of my knowledge about oil changes is what I learned from the ubiquitous Castrol GTX ads on UK television in the early 80s.

Specifically, I know three things: I know that Castrol GTX is a brand of oil. I know that it is viscous and golden in color.  And I know that if you pour it gradually onto a sheet of metal on which a metal spanner is resting, it will cling to the edges of the spanner and flow around it.

And now that I pause to think about it, two of those things might be totally untrue.

But there’s something a little disturbing about the idea that if I had to go buy oil for the car right now, I’d probably buy Castrol GTX, simply because of a TV advert shown 25 years ago (and thousands of miles away); an ad that didn’t really work on any level beyond pure abstract brand awareness.

And even more amazing is that with less than a minute of effort I managed to locate the ad on YouTube.

Statshot

Number of Starbucks stores today: 12,440.

Number the company is aiming to have: 40,000.

Relevant quote:

“Going to the other side of the street can be a barrier,” said Launi Skinner, senior vice president in charge of Starbucks’ store development.

Annual GDP of the United Arab Emirates: $98.1 billion.

Annual GDP of Kuwait: $52.76 billion.

Exxon Mobile revenue, 3Q2006: $99.59 billion.

Costs per gallon:

Crude oil: $1.32.1

Starbucks coffee: $40.2

Inkjet printer ink: $3,800–8,000.3,4.

Quelle barbe

In which a skeptical modernist learns to appreciate 19th Century technology.

Shaving has always been an unpleasant experience for me. My skin is sensitive, dries out easily, and I get allergic reactions to a lot of chemicals. At the same time, the bristle of my ever-nascent beard is incredibly rough and wirey. I tried electric razors, I tried disposables, I tried twin blades. I even considered giving up entirely and growing a beard, but that just itched even worse.

The least-bad option had turned out to be the Gillette Mach 2, and later the Mach 3. The M3Power helped a little, but not much—the vibro action helped get through the bristles without tugging on them, but that was all. The main plus of the Mach 2/3 was that at least it didn’t immediately clog up the way a Schick (Wilkinson-Sword) twin blade did; there was a good clean gap between the blades, without too much plastic in the way.

Then one day I found myself reading an article about old-style shaving. And by “old style”, I mean over a century old.

Continue reading →

Peak Oil update

Gasoline prices have gone over $5 a gallon in Atlanta. While it’s just a short-term spike caused by the hurricane, I suggest treating it as a rehearsal for the next few years.

The theory that we are hitting Peak Oil may be ‘controversial’ with politicians, but the situation is sufficiently serious that the oil companies are starting their PR campaigns now. Chevron now has a flashy new consumer web site warning bluntly that “the era of easy oil is over”.

Maybe you live down a dirt track and haul farm equipment. That’s great. But if not, I would strongly suggest selling that SUV while it still has some second-hand value. In a couple of years when gas prices are hovering at $4-$5 all the time, not many people are going to want to drive a 12 mpg behemoth.

Peak Oil

Someone should tell the chimp:

The head of one of the world’s biggest oil companies has admitted that the threat of climate change makes him “really very worried for the planet”.

In an interview in today’s Guardian Life section, Ron Oxburgh, chairman of Shell, says we urgently need to capture emissions of the greenhouse gas carbon dioxide, which scientists think contribute to global warming, and store them underground—a technique called carbon sequestration.

“Sequestration is difficult, but if we don’t have sequestration then I see very little hope for the world,” said Lord Oxburgh.

—The Guardian, Thursday

Also covered in Forbes and sent out on the AP newswire… yet if Google is to be believed, it didn’t rate a mention in a single US news outlet.

Now, maybe it’s just me, but I think that when the head of a major oil company says that our only hope to avoid environmental disaster is to engage in some kind of science fiction project to store CO2 underground, I think that’s big news.

Peak Oil?

At ASPO’s recent conference in Berlin, companies such as BP and Exxon and men such as Fatih Birol, chief economist of the International Energy Agency, began to talk to the proponents of the peak oil theory.

Whilst they may not agree with Dr Campbell’s theories, their attendance highlighted ASPO’s emerging importance in the oil debate.

In public, Mr Birol denied that supply would not be able to meet rising demand, especially from the buoyant economies in the USA, China and India.

But after his speech he seemed to change his tune.

For the time being there is no spare capacity. But we expect demand to increase by the fourth quarter (of the year) by three million barrels a day.

He pinned his hopes for an increase in production squarely on troubled Saudi Arabia.

If Saudi does not increase supply by 3 million barrels a day by the end of the year we will face, how can I say this, it will be very difficult. We will have difficult times. They must invest.

But even Mr Birol admitted that Saudi production was about flat.

Three million extra barrels a day would mean a huge 30% leap in output in just a few months.

When BBC News Online followed up by asking if this giant increase in production was actually possible rather than simply a desire he refused to answer. You are from the press? This is not for you. This is not for the press.

Asking other delegates—admittedly supporters of the peak oil theory—whether such a steep increase was feasible, the answers were unambiguous: absolutely out of the question, completely impossible, and 3 million barrels—never, not even 300,000.

One delegate laughed so hard he had to support himself on a table.

Some recent figures tend to back up ASPO’s outlook.

North Sea production is declining at an increasing rate, having peaked in 1999.

Not at the predicted flat rate of decline of 7%, but gradually accelerating from 7% to 8.5% to 11%.

And the number of major new oil fields discovered around the world fell to zero for the first time in 2003, despite an obvious increase in technological expertise.

—BBC

The Guardian takes up the story today:

The world’s problem is as follows. We now consume six barrels of oil for every new barrel we discover. Major oil finds (of over 500m barrels) peaked in 1964. In 2000, there were 13 such discoveries, in 2001 six, in 2002 two and in 2003 none. Three major new projects will come onstream in 2007 and three in 2008. For the following years, none have yet been scheduled.

Attention, voters

The military are drawing up plans for a special selective-service draft. They would be particularly targeting computer specialists.

So when Bush gets back in and we start bombing Iran (currently refusing nuclear inspections, and in possession of the world’s largest stockpile of oil), I look forward to seeing right-wing computer geeks rounded up and shipped into combat.

(Remember, Private Jessica Lynch was a file clerk.)