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04 July 2015

Press review 04-07-2015 - Nai i Ochi

Within hours of the last press review events in Greece developed precipitously with the call for a referendum on the Eurogroup proposals. This Sunday Greeks will be apparently opting between hard labour for life and the cicuta cup. But there is certainly more here than meets the eye, with perhaps more surprises along the road.

At this crucial juncture it is important to look past the debate between those that consider Greeks a chronically lazy folk and those that point the finger to the delusional policies enforced by the creditors. Five years have past since I created the graph below and so far little stock has been taken from it. Growth remains the absolute goal of economic science and practice; ultimately, all policies based on this predicate will fail.



28 June 2015

Ready for tomorrow?

After all, things in Greece precipitated to an ending within hours of the last press review. Greece was left between the sword and the wall and the Greeks opted for the former. Portugal is next in the line of fire, but an eerie serenity reigns in the country. The mercury is up and most folk are at the beach this weekend; the media speak of football and hockey.

In reality much has changed since yesterday, and Portugal, even if not yet aware, is today a much more fragile country. Events will go sour, and possibly much faster than most expect. Hereby a short list of the gravest developments that are to take place from tomorrow onwards.

27 June 2015

Press review 27-06-2015 - Stepping back for the bigger picture

Once in a while it is good to step back from the daily precession of events and reflect on the bigger picture. Why are energy and other resources important today? Why are they the main motivation for this weblog?

This time this reflection can be made through the pen of Herman Daly, with whom the publication of an essay is an event in itself. Daly elaborates on the steady-state economy that will impose itself throughout this century and asks once more for a revision to the goals of Economics. Not only Neo-Classical economics, but also its Keynesian nemesis, were developed with the underlying assumption of infinite growth.

Economic growth is not a physical measurement and as such can grow indefinitely. But in a scenario where the flows of matter and energy through the economic system cease to expand the economic policies used heretofore cease to function as expected. What Herman Daly lays down is a real challenge in this transition, in a dimension that is rarely contemplated.

20 June 2015

Press review 20-06-2015 - stealing the Sun

A man from the past. Photo by Zimbio.
"Eventually, we'll all go 100% renewable." A friend employs this sentence often, and even though we disagree in most things energy related, we perfectly agree on this point. The Energy Transition is not an option, it simply imposes itself. As a society, our options are pretty much restricted to the shape and structure of that eventual fully sustainable economy.

Naturally not everyone agrees. Some go even further and try to impose the fossil fuel based infinite growth economic model by decree; along the way concentrating economic power in oligopolies. Such is the case with the present Spanish government, lead by Mariano Rajoy. This week one more cog in the energy Manorism system it is trying to impose on its citizens was announced, with a new round of taxes on renewable energy technology.

Spanish folk are not dumb and will certainly have the opportunity to evaluate Mr Rajoy's actions in the general election next November. Less than 5% of the electricity consumed today in Spain is generated by solar technologies; a future oriented government can easily triple that figure with a relevant reduction in cost to consumers.

13 June 2015

Press review 13-06-2015 - Geo-political risks

Geo-political events have clearly dominated the shape of the petroleum curve in the XX century - the post II World War growth, the 1970s OPEC embargo, the fall of the USSR. This century will be no different and Peak Oil will likely be marked by a similar event.

For this reason, this review has followed closely the Sunni-Shiite wars since news broke up of armed combat in Iraqi territory two years ago. The Sunni slowly took control of the Euphrates; the first attacks on Ramadi and Falluja would take place in January of 2014 and six months later the offensive veered northwards. From then these wars spread on to Libya and Yemen.

Behind the scenes two different forms of Islam fence: Arab Sunnism against Persian Shiism. An open conflict would be a world catastrophe, but even if it is avoided, one of these proxy wars can easily unravel and hit the regional source of power: petroleum.

06 June 2015

Press review 06-05-2015 - Peak Coal getting louder

This was a week of nerves as media, markets and pundits tried to guess the outcome of the OPEC meeting yesterday. The cartel did not change their present policy and Brent broke down from its 65 $/b plateau after moments of great volatility.

Meanwhile the Peak Coal talk intensifies. For a decade we got used to see double digit growth figures on everything related to China; an 8% decline in coal consumption in just four months is well beyond unexpected. Almost 2 years ago I wrote a short article on the water demands of the Chinese coal industry; at that time it seemed clear China was reaching the limits of its mining industry and would have to take up a considerable share of the international markets to meet its needs. Facing such scenario, the Chinese government has opted to tackle down consumption and the results are visible. The visions of infinite growth fed on the public by the IPCC and the IEA are now definitely in question.

But is this really the end of the line for coal? It could well be, but I won't be joining the Peak Coal camp so soon. It is not clear yet how fast electricity consumption in China will grow; the price collapse in international markets might drive other countries to extend their consumption a while longer. However, something substantial is clearly changing in the world energy system.

30 May 2015

Press review 30-05-2015 - Entering the dolldrums

Commodities markets were generally down this week and petroleum was no exception. The Brent index was particularly hit in the first days of the week but would eventually recover throughout Friday, pretty much to where it started the week. The month of May goes by leaving the index hardly unchanged at 65 $/b.

In terms of relevant news this was in general a quiet week, perhaps reflecting the stagnation in prices. There is some buzz rising above the background noise around a decline of crude inventories in the US. Some claim it is refining picking up ahead of the "driving season", others say the it is "shale oil" extraction giving in to low prices. In reality these are relatively small movements that square well with a nearly flat futures curve. The hard data that will eventually tell who is wrong and who is right in this debate will only be available by year's end.