The Oil Shale Bubble

You really should read this. Connects the dots between the financial impropriety and ecologically disastrous energy policies.

Wall Street culture—not to mention the entire suite of economic expectations that guides the behavior of governments, businesses, and most individuals in today’s America—assumes that the close-to-zero return on investment that’s become standard in the last few years is a temporary anomaly, and that a good investment ought to bring in what used to be considered a good annual return: 4%, 6%, 8%, or more. What only a few thinkers on the fringes have grasped is that such returns are only normal in a growing economy, and we no longer have a growing economy.

Sustained economic growth, of the kind that went on from the beginning of the industrial revolution around 1700 to the peak of conventional oil production around 2005, is a rare anomaly in human history. It became a dominant historical force over the last three centuries because cheap abundant energy from fossil fuels could be brought into the economy at an ever-increasing rate, and it stopped because geological limits to fossil fuel extraction put further increases in energy consumption permanently out of reach. Now that fossil fuels are neither cheap nor abundant, and the quest for new energy sources vast and concentrated enough to replace them has repeatedly drawn a blank, we face several centuries of sustained economic contraction—which means that what until recently counted as the groundrules of economics have just been turned on their head.

You will not find many people on Wall Street capable of grasping this. The burden of an outdated but emotionally compelling economic orthodoxy, to say nothing of a corporate and class culture that accords economic growth the sort of unquestioned aura of goodness other cultures assign to their gods, make the end of growth and the coming of permanent economic decline unthinkable to the financial industry, or for that matter to the millions of people in the industrial world who rely on investments to pay their bills. There’s a strong temptation to assume that those 8% per annum returns must still be out there, and when something shows up that appears to embody that hope, plenty of people are willing to rush into it and leave the hard questions for later. Equally, of course, the gap thus opened between expectations and reality quickly becomes a happy hunting ground for scoundrels of every stripe.

Iraq Oil War

Everything you cynical people thought about the Iraq War was ... er ... right

Secret memos expose link between oil firms and invasion of Iraq

You know, I was actually wrong on this. I thought that the UK government wasn't so influenced by the immediate oil angle as it was by a more general global realpolitick. Guess I was naive.

Kunstler :

For those of you interested in the reality side of things, here's the scoop: The price of oil is going to go way up, and way down, and way up again, and way down again until everyone is too broke to ask for any, and companies are too ruined to go get it for them, and governments are too broken to interfere in the process.

Five months before the March 2003 invasion, Baroness Symons, then the Trade Minister, told BP that the Government believed British energy firms should be given a share of Iraq's enormous oil and gas reserves as a reward for Tony Blair's military commitment to US plans for regime change.

Proof

Essential viewing. Watch it, even if you assume you know it already.

Hat-tip Zby : Reviews of an interesting book on Venezuela.

Couple of Brazil related links on oil and food.

Oli asks wrt Superstruct :

Have I missed something?

It looks like this 'massively multiplayer' game is basically a themed blog where people 'play' by playfully imagining the future.

Which is clearly my cue to say a bit more.

No, you pretty much got it. It's "role-playing" in the good old fashioned "use your imagination" sense rather than the video-game-inna-dungeon sense.

The assistant game-master role is a kind of moderator / collator. Somewhere between stimulating discussion by starting forum threads, finding the best posts on the subject, highlighting them, and bringing them together into a wiki to create a more intelligible permanent record. There's also some giving of feedback to players in the form of rewards for "good ideas" or "good play". Which is obviously going to be subjective (although based on more than one moderator's assessment.)

Oli's also right that this is coming from the science-fictional wing of futurology; the super-threats are deliberately played-large. Think "scenario planning" not "forecasting"; we're not aiming for the most accurate prediction of the near future but to stimulate the most creative thinking about it. The fascination is in the new institutions that the players (representing humanity) have to invent to help cope with these threats. The aim is quite serious, to use a game-like format to gather a wide-range of opinions and suggestions, which the Institute of the Future will then "reduce" into more accessible form.

For me there are two reasons I'm excited to participate :

1) the scenarios are obviously interesting in themselves. My personal expectations are not as apocalyptic as the game's, but I do think that peak-oil and the end of cheap-energy, climate change and the disruption of our food-production patterns, the break-down of the nation-state, and pervasive, non-state-controlled surveillance technologies and weapons, are almost inevitably coming in the next 20-40 years. I believe that new diseases and large scale migrations are quite possible.

So what are we going to do about them? Are we just going to carry on as normal until we crash into circumstances? Or can we start doing some planning at least?

2) The other interest is the method itself. How good are the internet and the social software tools we have at enabling constructive discussion and problem solving? Does this kind of "game" help? As you know I vary between enthusiastic boosterism and occasional crises of doubt.

I believe that the overall trend is good, but there's a need for new tools and styles of discussion. There's a danger of ignoring and talking past those you disagree with; you can destroy intelligent public discussion in a hail of FUD.

Here's a chance to work with people trying to apply the tools and the "game" milieu to this problem. Let's see how it works or how it can be made to do so.

As I see it, the game occupies an interesting position (assuming that we get the expected numbers of players). To gather information from larger groups of people you usually use something like a market (eg. a prediction market) or maybe large scale opinion polls or "market research". All of which reduce the information contribution of the individual dramatically. On the smaller scale you have journals that bring together papers by multiple researchers or reports with for or five authors.

Superstruct sits somewhere between : there's an attempt to systematically gather ideas from an order of magnitude of 1000s using a mixture of human selection (organized in a fairly flat hierarchy) with some automation (the social software tools) and some game-mechanics to structure the contributions. I don't know how it will work out, and I suspect the organizers don't either. But it will be fun finding out.

All readers of this blog are invited (and positively encouraged) to join in, of course.

Disclosure, this is actually a (modestly) paid gig (ie. being a game-master). Although clearly I wouldn't have applied if I hadn't believed it was interesting.

Compare and contrast : Brazil's coming golden age with what's going on on the ground.

Must read Winer :

See, that's the joke. We all know it's about the oil, we want the oil, we're taking it by force and we know it, no one wants to say it, and no one is complaining.

Update : I'm mystified that Bill Seitz thinks Winer's commentators do a good job of countering his claims.

Of all the attempts to counter Dave's argument there, the "we could have just bought the oil" is the most naive.

Of course the US couldn't have just *bought* the oil from Saddam Hussain. It would have a) given Saddam rivers of cash, b) let him spend that cash rearming, and so c) put US interests (and military presence) in Kuwait and Saudi at risk again. After 9/11 and two years a year of FAIL against Al-Qaeda in Afghanistan, at least the Neocons (crazy as they were) were smart enough to realize that the US was caught in a trap : they couldn't stay in Saudi indefinitely (that was a pressure cooker) nor could they leave, giving up the no-fly zones and punitive attacks and containment of Iraq; and so allowing Saddam to regather his strength.

Something drastic had to be done. Their Big Hairy Audacious Goal (which was always a kind of open secret) was to re-organize the middle-east entirely : to rescue the comparatively secular people of Iraq from Saddam, thereby creating a pro-American democracy in the heart of the middle-east, which would represent American interest, offer a role model for reforming Arabs in neighbouring countries etc. etc.

Of course, being able to blag the Iraqi oil industry for big business was a useful sweetener, it probably looked pretty good to influencial media barons and helped persuade politicians and their lobbyist masters to get behind the program. But, sure, straight larceny wasn't the strategic objective.

But the fact that this part of the world was considered so important to the US? The fact that the US had to have troops there. That it went to war to roll-back Iraq's invasion of Kuwait. That it "cared" enough about the suffering people of Iraq to throw billions of dollars into fighting Saddam. These are all, ultimately, driven by the requirement for preferential access to a reliable, cost effective, supply of oil.

Naomi Klein is good here.

"This is only going to happen more. This is very very bad news for the economy," Mr Watters added.

Yeah, but great news for the planet, perhaps ;-)

Oil prices driving people to public transport.

Hmmm ... oil at $200 dollars?

Scare story or the inevitable over-peak kicking in?

UN continues it's campaign against biofuels.