Sunday, August 28, 2016

Monsanto, temptation and some 'adolescent' farmers

"I can resist everything except temptation," one of playwright Oscar Wilde's characters tell us. But, the management of Monsanto, the agribusiness giant, must not be fans of the theater. As a result Monsanto has done the equivalent of giving a teenage boy the keys to the family car and then telling him that he can't drive it. We know what comes next.

The way this has manifested itself is widespread damage to soybeans, peaches and other crops from drifting herbicide. The problem has gotten so bad that the U.S. Environmental Protection Agency (EPA) has issued an advisory reminding farmers that the offending herbicide, dicamba, is not yet approved for spraying on dicamba-resistant soybeans and cotton (produced by Monsanto). That approval is under review, but only for a special dicamba formulation from Monsanto which supposedly reduces drift.

In the meantime, state agricultural officials in Arkansas have become so alarmed they've banned dicamba for use on row crops.

To understand how this happened, first we need some background. Monsanto is famous for its genetically engineered crops that resist its Roundup Ready brand herbicide. The herbicide can be sprayed on a resistant crop such as soybeans or cotton, and it kills unwanted weeds in the field while sparing the crop.

As weeds have evolved to resist glyphosate--the generic name for Roundup--Monsanto realized that it would have to engineer its crops to resist another herbicide or lose business.

Because new agricultural chemicals must be reviewed for approval through a lengthy and costly process, Monsanto decided to add resistance to the old, already approved herbicide dicamba which has been in use since the 1960s.

Dicamba is good at killing certain kinds of plants, the kind that farmers don't want in their fields. But it can also harm crops. Here is an explanation from the directions for using Banvel, a brand of dicamba:

BANVEL may cause injury to desirable trees and plants, particularly beans, cotton, flowers, fruit trees, grapes, ornamentals, peas, potatoes, soybeans, sunflowers, tobacco, tomatoes, and other broadleaf plants when contacting their roots, stems or foliage.

It's a pretty long list. The trouble is, dicamba can drift and affect crops on other farmers' property.

The next thing you need to know is that Monsanto began selling its dicamba-resistant soybean and cotton seeds last year. It told farmers that the special dicamba formulation which the company designed to minimize dicamba drift would, however, be unavailable since the EPA had yet to approve it. (Approval is still pending.)

Some farmers decided not to wait for that special formulation and have used other dicamba products illegally which are prone to drift and with predictable results. (The kid, the car keys...you get the analogy.) The mess has cast a cloud over the farming community and supporters of the latest generation of herbicide-resistant crops.

Keep in mind that it is practically impossible to prevent all drift from a pesticide applied to an outdoor field. And, even if Monsanto gets approval for its special dicamba formulation, that doesn't mean that all farmers will use it when cheaper formulations may be available. Moreover, because drift may be impossible to stop, farmers growing soybeans or cotton may be forced to buy Monsanto's dicamba-resistant seeds to protect themselves from damage. Farmers raising other crops that have no resistance may be faced with widespread damage to their fruits, vegetables and other crops.

On an analogous topic I wrote previously that Monsanto and other companies producing genetically engineered crops do not take genetic contamination of non-engineered crops very seriously. After all, if these companies can inflict enough contamination on other crops, they will be able to make it impossible to grow non-GMO (genetically modified organism) crops--which are becoming a threat to their market share. I would style this strategy as contaminate and conquer.

Likewise, if these same companies get their new herbicide-resistant crops and herbicide formulations approved, this could become yet another way to frighten farmers into their customer base and eliminate the competition.

And, yet I don't think this latest misstep will turn out quite the way the industry wants it to. As long as there continues to be significant drift, there will be significant damage. The stories we see today come from only a relatively small number of acres compared to the 15 million acres of Monsanto-produced dicamba-resistant soybeans for which the company hopes to sell seed in 2017. And, that acreage number doesn't include the dicamba-resistent cotton seeds the company hopes to market as well from which we can expect more drifting herbicide.

If there is enough damage, the whole dicamba project may have to be withdrawn as the courts sort out who is responsible for all the damage and how much they must pay. That might put the damper for some time on the idea that farmers can trust the judgment of GMO seed companies.

Kurt Cobb is an author, speaker, and columnist focusing on energy and the environment. He is a regular contributor to the Energy Voices section of The Christian Science Monitor and author of the peak-oil-themed novel Prelude. In addition, he has written columns for the Paris-based science news site Scitizen, and his work has been featured on Energy Bulletin (now Resilience.org), The Oil Drum, OilPrice.com, Econ Matters, Peak Oil Review, 321energy, Common Dreams, Le Monde Diplomatique and many other sites. He maintains a blog called Resource Insights and can be contacted at kurtcobb2001@yahoo.com.

Sunday, August 21, 2016

Limitless imagination and physical limits

Humans can imagine lots of things. They can imagine angels and demons. They can imagine whole worlds unlike ours with beings unlike us. They can convey these products of imagination in art, in literature and in film.

They can imagine flying machines, armored cars, diving suits, machine guns and human-like robots. Leonardo da Vinci imagined all of them hundreds of years before they became everyday reality. Hero of Alexandria, a Roman citizen and engineer, described a steam engine 1700 years before Thomas Savery obtained the first patent for one.

It didn't occur to the ancient Romans to refine the idea of the steam engine for transport or industrial work. They lacked the imagination for such a move and perhaps the necessity. After all, they had built a thriving empire without the steam engine, and the Mediterranean already offered quick, wind-powered transport to practically any part of the empire.

How do we distinguish those ideas that are forever going to remain in the realm of fiction and those that can become concrete reality? Of those that are possible how do we determine which won't destroy us? Both questions are very difficult ones indeed.

We are "moderns". We believe we have thrown off the burden of superstition and can now see in the clear light of day all the rational possibilities in the world that were previously hidden from our understanding. In this era of enlightenment the rush of invention and the power it has given us have resulted in the conceit that there is no limit to the power we can ultimately have.

That has given rise to an entire genre of fiction we call science fiction. Much of it concerns itself with space travel, particularly encounters with faraway alien civilizations. And, there is some reason to believe, just based on the immense size of the universe, that such civilizations exist even though we have never heard from them.

The science fiction genre and the enormous technological flowering of our age has encouraged the notion that anything we can imagine, we can achieve or invent. With regard to invention, the trouble with imagination as prediction is that if our imagination were vivid enough to detail the workings of a futuristic invention, those details would be tantamount to having created the invention itself.

All too often, we have objects with mere capabilities, but with no specifications. We have energy-matter transporters, but no specifications and no reason to believe based on the laws of physics that there could be any. We have ships that travel faster than the speed of light. There are theories about how to achieve such speeds. But, the amount of energy required is so enormous--by one calculation the energy contained in all the matter of the planet Jupiter to propel a 1,000 cubic meter ship--that it is hard to imagine how such an energy burst, if achieved, would not destroy the object it was trying to propel.

And, here we get to the crux of the matter. The above illustration is probably the most extreme one we could conjure of what actually constitutes technical prowess. Technology requires energy to run. What we've essentially been doing so far is substituting fossil fuel energy for human labor to run the technology that makes us feel so powerful. This has allowed productivity per person to skyrocket in the industrial age, but at a cost. That cost is the rapid depletion of fossil fuels and the climate effects of burning them.

Technology has given us the illusion of increasing "efficiency" in labor, when, in fact, this "efficiency" has been achieved through the wildly inefficient use of energy from the burning of fossil fuels. That inefficiency is the reason we are burning through so much fossil fuel so fast and creating climate change and depletion problems. (I am indebted to Nate Hagens for this insight.)

So, here I would like to propose a check on every "miracle" technology we are expecting in the future to do everything from making work optional (robots) to solving the climate problem (scrubbing the air of carbon dioxide). If the proponent of any yet-to-be-invented or yet-to-be-widely-deployed technology cannot explain where he or she will get all the energy needed to run it at scale in ways that 1) won't destroy the climate and 2) are in accordance with the known laws of physics, you should be very skeptical that it will ever be widely used.

A society that is ruined by climate change will cease to be technologically adept. So far, the best information we have about how to avoid a climate catastrophe is summed up in two principles: 1) Stop emitting greenhouse gases and 2) stop destroying things such as forests which absorb them.

Many of the technofixes which I've seen such as scrubbing the atmosphere of excess carbon involve enormous energy use. I know that the fantasists will protest that we will do all the things we want to do with "clean" energy. They must believe we have a lot longer for such an energy transition than we actually do. And, they likely don't understand the vast differences in energy density between fossil fuels and renewable energy. So far, "clean" renewable energy is only adding to our capacity rather than replacing our existing fossil fuel infrastructure.

The human imagination is an amazing thing. Its expression in literature, music and art can delight us and also be a mirror for our deepest selves. But it can lead us as well to mistake all our internal yearnings--for love, power and excitement--for external possibilities that have technological solutions which may not be possible or which may have serious downsides.

I am not trying to stop innovation. I am only trying to distinguish helpful innovation that betters our chances of survival and increases our overall quality of life from that which only sends us further down the road of climate instability and resource depletion and thus puts our very survival as a species at stake.

Kurt Cobb is an author, speaker, and columnist focusing on energy and the environment. He is a regular contributor to the Energy Voices section of The Christian Science Monitor and author of the peak-oil-themed novel Prelude. In addition, he has written columns for the Paris-based science news site Scitizen, and his work has been featured on Energy Bulletin (now Resilience.org), The Oil Drum, OilPrice.com, Econ Matters, Peak Oil Review, 321energy, Common Dreams, Le Monde Diplomatique and many other sites. He maintains a blog called Resource Insights and can be contacted at kurtcobb2001@yahoo.com.

Sunday, August 14, 2016

Cheniere's first LNG export cargoes: A contrarian indicator for U.S. natural gas prices?

Cheniere Energy has long been my favorite contrarian indicator in the U.S. natural gas market. For those unfamiliar with the term, a contrarian indicator is an event which suggests that a broadly and firmly held view--in this case, the view that U.S. natural gas supplies will grow and remain cheap for decades--is about to begin a reversal.

As the company shipped its first cargo of U.S. liquefied natural gas (LNG) for export earlier this year, the glut of cheap U.S. natural gas seemed to vindicate Cheniere's plans. I, on the other hand, imagined that the shipment was not confirmation of Cheniere's assumptions, but a contrarian signal that natural gas production was about to dip and that prices were finally going to turn higher in a sustained way.

I say this based on the timing of Cheniere's last scheme, a U.S. natural gas import terminal that now sits unused next to its newly built LNG export terminal in Louisiana. The import terminal received its first LNG shipment in April 2008 just two months before U.S. natural gas prices peaked around $13 per thousand cubic feet, collapsing to a low of $2.06 by September 2009. For comparison, last week U.S. natural gas futures for September delivery closed at $2.59.

Cheniere's stock price went from above $40 in 2007 to around $3 by September 2009, having gone below $1 at one point. When Cheniere planned and built the import terminal, most everyone believed that U.S. natural gas production would soon go into decline. But, only months after the terminal was operational, there was no longer any reason to bring LNG into the United States. It was just too expensive to compete with cheap domestic production which continued to grow.

So, Cheniere got the idea that it would reinvent itself as an LNG exporter. After all, because of the so-called shale revolution U.S. natural gas production was supposed rise for decades keeping U.S. domestic gas cheap. The rest of the world, Europe and Asia especially, would be hungry for LNG supplies and would pay dearly for them.

That was then. Now, of course, LNG prices have collapsed because of worldwide overexpansion of LNG capacity and flat demand in a world struggling to grow. Prices which had been above $11 in Europe and between $15 and $18 in Japan in 2012--while Cheniere was building its export terminal--have now swooned to $4.51 in Europe and $6 in Japan. Even back in 2012 Cheniere's foray into LNG exports seemed like a risky proposition to me.

What's worse for Cheniere is that the first signs of a U.S. natural gas production decline have appeared. Shale gas, the main driver of U.S. production growth, is expected to decline. That means that at some point supplies will shrink enough that U.S. prices will rise and likely make the margin between the U.S. price and European and Asian prices even smaller. And, as it turns out, the peak in U.S. natural gas production may arrive by 2020 if it hasn't already.

I have not scrutinized Cheniere's financial statements. I do not know the structure of its debt. Nor have I studied the arcana of the company's existing contracts for delivery of LNG cargoes. Cheniere reports that 87 percent of its capacity is under long-term contracts where all the price risk is taken by the buyer. If Cheniere makes money, it will make money based on service fees.

With LNG prices as low as they are and a glut of new LNG facilities still planned, will other buyers from other new facilities take all the price risk which seems only to the upside? Will they insist on a more equitable sharing of that risk? Will the low spot price of LNG lead to more short-term arrangements for the time being? These are all good questions for those contemplating an investment in LNG facilities.

An earnings report from Cheniere released last week missed estimates and may or may not indicate a problem. Famed short seller Jim Chanos--who has no doubt done all the analysis I've failed to do--thinks the company has many problems.

In December of last year I suggested that one possible surprise in the year ahead was that several approved U.S. LNG projects might be delayed or canceled, something that seemed unlikely at the time. In late July Royal Dutch Shell announced that it was delaying a decision on whether to build an LNG export facility in Louisiana. Earlier in the month, the company announced a delay for a similar project in British Columbia.

Just last week Sempra Energy announced a delay in further work on an expansion of its Louisiana-based LNG export operation.

Outside North America a cancellation in Australia and a delay in Cameroon show that the problem is worldwide.

Possibly making matters worse in the long run are planned natural gas deliveries by pipeline from Russia to China starting in 2019 that might sell for around $10 to $11. If that becomes the ceiling price in China, LNG from the United States will almost surely be unable to compete for the large Chinese market.

Because Cheniere is taking no price risk on almost all of its exports, the company may make out just fine no matter what happens to U.S. natural gas or world LNG prices. (I leave it to the financial analysts to figure out, for instance, whether Cheniere's arrangement with Britain's BG Group to supply gas at 115 percent of the Henry Hub price plus a $2.25 per million BTUs liquefaction fee will provide adequate cash flow.)

But, I'm guessing that Cheniere's first exports of LNG will in hindsight likely mark a bottom for U.S. natural gas prices--just as its first imports of LNG nearly coincided with the top of the gas market in 2008. U.S. natural gas production is likely to shrink in the coming years, and Cheniere is proposing to take more and more of that shrinking supply and export it. And, so are several other companies (though I doubt that many of them will complete their projects).

The question for investors is whether U.S. LNG operators will make money or simply destroy capital as Cheniere did in the past with its LNG import operations. The question for policymakers is whether shipping U.S. natural gas abroad is a good idea even as the country continues to import natural gas to meet its needs.*

_______________________________

*It is a supreme irony the some U.S. imports continue to arrive in the form of LNG, almost certainly under long-term contracts. Some of those imports arrived through Sabine Pass, Louisiana just last year, the site of Cheniere's new LNG export facility. The lion's share of U.S. imports, however, come via pipeline from Canada.

Disclosure: I have no investments related to Cheniere Energy.

Kurt Cobb is an author, speaker, and columnist focusing on energy and the environment. He is a regular contributor to the Energy Voices section of The Christian Science Monitor and author of the peak-oil-themed novel Prelude. In addition, he has written columns for the Paris-based science news site Scitizen, and his work has been featured on Energy Bulletin (now Resilience.org), The Oil Drum, OilPrice.com, Econ Matters, Peak Oil Review, 321energy, Common Dreams, Le Monde Diplomatique and many other sites. He maintains a blog called Resource Insights and can be contacted at kurtcobb2001@yahoo.com.

Sunday, August 07, 2016

Climate change begins now (even if we are unprepared)

As record floods swept away whole villages in China and India in the month just past, I was reminded that climate change activist Bill McKibben likes to say, there is Earth and then there is Eaarth.

The first planet is the one most of us grew up on. It had a stable climate, generally friendly to bumper harvests; it was usually safe because of reasonable precautions against floods and droughts; and it was conducive to persistent economic growth that was supposed to lead to material prosperity for all.

Then there is Eaarth, a forbidding planet with a climate in chaos, one shifting constantly in ways that threaten life and property with too much rain or not enough--with drought that makes Western forests mere tinder and rainfall that makes Chinese and Indian farms and cities into lakes.

Climate change used to be about the future. Its bad effects were going to be visited upon those who come after us. But we have consistently underestimated the pace and impact of human-caused climate change from the day in 1896 when Swedish chemist Svante Arrhenius first theorized about the effects of carbon dioxide emissions.

Now, climate change has arrived. Some like to call it climate chaos because it changes the climate in different places in different ways and at different rates. One thing we do know. The climate we grew up with is no longer.

That implies that our entire infrastructure of roads, rails, cities, farms, dams, in fact, nearly everything may be inadequate to the challenges posed by climate change. Our first priority ought to be securing the food we will need. That will mean developing better drought and flood resistant crops. In fact, it will mean rethinking all of agriculture which is now based on an industrial model implemented during a period of exceptional climate stability from the end of World War II through the end the last century.

This one task is daunting all by itself. And yet, we must also now think anew about rivers and levees; seawalls and relocation of cities; the viability of water sources including the sea itself (through desalinization).

We imagine wrongly that this rethinking is a mere engineering problem. We believe we will simply find technology that overcomes the problems created by climate change. But even if we do--and that is by no means certain since those problems aren't presenting themselves in an orderly and timely fashion--technology is not free. We will find it very, very expensive simply to protect our current ways of doing things rather than change them to accommodate climate change.

Let's look at some examples:

Las Vegas gets 90 percent of its water from one source, Lake Mead, the lake formed by Hoover Dam on the Colorado River at the Nevada-Arizona border. Because of an ongoing drought in the southwestern United States, one that began 15 years ago, the Southern Nevada Water Authority came to fear that Lake Mead would fall below the authority's current two intakes leaving Las Vegas largely without water.

The cost of a now-completed third intake tunnel was $817 million. A companion pumping station scheduled for completion in 2020 will cost an additional $650 million. That's $1.47 billion for one additional intake for one city.

Despite this, water may be rationed starting next year if lake levels don't stabilize.

Oh, but wait, there's more. The U.S. Bureau of Reclamation, the operators of Hoover Dam, are replacing turbines that generate much of Las Vegas's electricity because the current ones might not work as the lake level continues to decline. No cost estimate was provided.

When it comes to taking the train, you may decide not to if a climate change enhanced heat wave is in progress and likely to cause "sun kinks" in the tracks. These are deformations or bucklings resulting from exceptionally high heat. Derailments from this cause are already on the rise. What would it cost to make existing railroad tracks kinkproof? We don't know, but it's bound to be a lot. (By the way, taking the car won't be a solution as similar suddenly appearing buckling in roads can send cars flying. Not all kinks are as benign as the one I've linked to.)

Of course, sea level rise will be an enormously costly problem for the more than 2 billion people who live within 60 miles of a coastline. The Dutch have been holding the sea at back for centuries and have the most advanced and nuanced plan for addressing ongoing sea level rise. It isn't one that just holds the water back, but rather, in part, works with nature to provide for the natural ebb and flow of water.

The Dutch are good at engineering, too. They invested $3 billion in the so-called Europoort (sic) barrier that protects Rotterdam. That was 20 years ago, and so costs would be much higher today.

All these costs are in addition to mere maintenance of existing infrastructure for which the United States, for example, has already gotten a D+ grade from the American Society of Civil Engineers (ASCE). The ASCE estimated that just restoring the existing U.S. infrastructure to acceptable working order would cost $3.6 trillion by 2020. Many other countries have done a better job. But it's hard to see how the world's poor countries could both keep up with necessary maintenance AND build additional or enhanced infrastructure to meet the rigors of climate change.

Understandably, it's hard to plan when you have a wall of water coming at you as villagers in China and India experienced in recent floods. Both countries are faced with huge bills for an emergency response to what are turning out to be historic floods.

Right now humanity is like a patient without medical insurance or a doctor, one who visits the emergency room every time something serious goes wrong. That's a costly practice as is merely reacting to the inevitable catastrophes that climate change is now inflicting and will inflict upon us in the future. That said, it may be just as costly, though wiser, to prepare for climate change.

Kurt Cobb is an author, speaker, and columnist focusing on energy and the environment. He is a regular contributor to the Energy Voices section of The Christian Science Monitor and author of the peak-oil-themed novel Prelude. In addition, he has written columns for the Paris-based science news site Scitizen, and his work has been featured on Energy Bulletin (now Resilience.org), The Oil Drum, OilPrice.com, Econ Matters, Peak Oil Review, 321energy, Common Dreams, Le Monde Diplomatique and many other sites. He maintains a blog called Resource Insights and can be contacted at kurtcobb2001@yahoo.com.

Sunday, July 31, 2016

Oil price and economic growth get married

It used to be that when it came to the world economy, oil prices and economic growth were more like distant cousins who disliked each other rather than a happily married couple always seen nuzzling together in public. The received wisdom was that low oil prices are good for the overall economy even if they are bad for the oil industry and for countries that are heavily dependent on oil for their revenues.

That's what many believed when suggesting that even though high oil prices and an attendant oil boom had underpinned economic recovery in the United States after the 2008 financial crash, low oil prices would now somehow on balance deliver even more recovery. And, low prices would also benefit the rest of the world as well.

Nowadays, as the oil price dips into the low $40 range again and economic growth weakens simultaneously, we must re-evaluate. U.S. economic growth declined significantly after oil prices began to fall in 2014. Only last week, U.S. growth for the second quarter of 2016 came in at 1.2 percent (annualized), less than half the forecast of 2.5 percent. First quarter growth was revised down to 0.8 percent from a previous estimate of 1.1 percent. That's down significantly from a peak of 5 percent growth for the third quarter of 2014, the last quarter during which the price of oil was over $100 per barrel.

World economic growth instead of speeding up, slowed down slightly from 2.6 percent in 2014 to 2.5 percent in 2015 according to the World Bank.

There are many reasons for the subpar growth of the world economy since the Great Recession. Record average daily prices for oil four years running from 2011 through 2014 helped sap the world economy of its strength by siphoning funds from the non-energy economy.

Of the other causes, chief of among them is the heavy buildup of private and public debt which may be hindering growth by siphoning funds from consumption and investment into debt service. In the first quarter of this year, U.S. credit growth was $644.9 billion. U.S. gross domestic product growth was $64.7 billion. It took $10 of credit growth for every $1 of GDP growth. There was a time long, long ago when the ratio was 1 to 1.

China's credit growth had been running twice its GDP growth through the end of last year. (I don't have dollar or yuan amounts.)

Debt isn't necessarily a bad thing if one uses it to invest in something that will produce goods or services rather than merely to consume. But much of our debt creation has been exactly for consumption. That isn't particularly bad either if we as individuals, nations or a world society can afford to service that debt. But there is a level we cannot afford and it stunts growth. To get a better understanding of how too much debt is affecting economic growth around the world, listen to economist Steve Keen explain why debt matters and how the rate of credit creation affects growth. You may need to watch it twice before you get the "aha" moment.

But let's look further now into the relationship between debt and energy to find out more about why oil prices seem much more correlated to the health of the overall economy than they used to be.

First, oil remains the central energy source for the world economy, especially critical as transportation fuel. It provides 33 percent of total energy according to the BP Statistical Review of World Energy.

Second, our desperation for additional sources of oil led to a debt-fueled boom in the United States, debt used by drilling companies to reach deep shale deposits and release oil found in them through a new version of hydraulic fracturing called high-volume slickwater hydraulic fracturing.

It turns out that the low oil prices of today make these deposits largely unprofitable and production has been falling. Many of the high-flying drillers during the boom are now in or headed for bankruptcy.

Debt, it must be remembered, is simply a way to bring what would be future consumption into the present. We have brought energy consumption from the future into the present with debt through the fracking boom in the United States and to a certain extent the boom in oil sands in Canada. And, we've shifted consumption of so many other natural resources and finished goods from the future to the present through the vast expansion of private and public debt.

Still, we are faced with slower world economic growth than in the past despite our herculean financial efforts. The simple explanation is that cheap energy was the cornerstone of growth of the industrial economy. As long as that energy was cheap, we could grow at a relatively rapid pace. Once it becomes expensive, growth must decline for most sectors of the economy as more and more resources are sent to the energy sector.

By this logic then today's low prices should be providing substantial stimulus to the global economy. Why are we not feeling it? The short answer would be that the debt we built up procuring expensive energy during a period of high and rising energy prices over the last 15 years is holding back economic growth. We are experiencing the hangover.

The hangover manifests itself as slow growth which is a reflection of the difficulty consumers are having maintaining their growth in spending in a high-debt world. That means everything is less affordable at the margin, and this has led to a creeping slowdown in the world economy.

Now, here's the kicker. If we as a global society can no longer afford high-priced oil--and that's what's left to get out of the ground--then as long as oil remains the central energy component of our economy, we will be trapped in a low- or no-growth economy where oil prices can't rise high enough to make new drilling in high-cost deposits profitable; and, when prices do rise, they simply squeeze the life out of economic growth and send the economy back into a stall or near stall. (Gail Tverberg has explained this phenomenon in detail on her blog, Our Finite World.)

Far from a sign of good things for the economy as whole, recently declining oil prices now tend to indicate a weakening economy that was already in a weak state. It turns out that the oil price and the economy are now in a very tight relationship, and we are going to be seeing them together a lot for a long time to come. But I don't think their marriage will be the happy one I alluded to at the beginning of this piece.

Kurt Cobb is an author, speaker, and columnist focusing on energy and the environment. He is a regular contributor to the Energy Voices section of The Christian Science Monitor and author of the peak-oil-themed novel Prelude. In addition, he has written columns for the Paris-based science news site Scitizen, and his work has been featured on Energy Bulletin (now Resilience.org), The Oil Drum, OilPrice.com, Econ Matters, Peak Oil Review, 321energy, Common Dreams, Le Monde Diplomatique and many other sites. He maintains a blog called Resource Insights and can be contacted at kurtcobb2001@yahoo.com.

Sunday, July 24, 2016

Are you anti-science if you don't like GMOs?

It's all the rage to call people who oppose the cultivation of genetically engineered crops anti-science. But if science is an open enterprise, then it should welcome discussion and challenges to any prevailing idea.

We should, however, remember that in this case genetic engineering of crops is not merely a scientific enterprise; it's big business. A lot of people have a lot to lose if the public rejects genetically engineered foods, often referred to as genetically modified organisms (GMOs). We are not by any measure in the preliminary phases of this technology. We are not considering it or calmly debating it before its release. We have long since been launched into an uncontrolled mass experiment, the results of which are unknown.

Knowledge is admittedly a double-edged sword. One might argue that any scientific advance brings risks. I would agree. Understanding nuclear fission and then nuclear fusion led to the atomic bomb and then the hydrogen bomb.

More than 30 years ago millions of people across the world flocked to the nuclear freeze movement out of fear that newly elected American president Ronald Reagan would seek a nuclear buildup and a confrontation with the Soviet Union. Were these millions anti-scientific or the voice of reason?

Nuclear discoveries also led to the widespread application of nuclear fission as a source of heat for electricity generating plants, the dangers of which have most recently been on display at the Fukushima Daiichi power plant in Japan. The results of our grand nuclear experiment are ongoing.

Opposition to practical applications of scientific discoveries cannot willy nilly be labeled anti-science. We now know how to clone humans, but so far, human society has chosen to prohibit this use of cloning. One does not have to be anti-science to mount a reasoned case for such a prohibition. The American Association for the Advancement of Science opposes reproductive cloning, while supporting stem cell research and research on therapeutic cloning (the production of replacement tissues for humans).

The vast majority of those who want GMO foods labeled or their cultivation banned do not advocate an end to genetic research. They are not anti-scientific. They have legitimate concerns about the safety of crops derived from a specific application of this research, both for humans and for the broader environment.

Let's see if the arguments used to label those who oppose GMOs as anti-science make sense.

1. Lots of prominent scientists endorse the safety and promise of GMOs.

This argument was most recently trotted out as a petition directed at Greenpeace, asking the organization to cease its opposition to GMOs and more specifically to what is called Golden Rice, a rice that produces its own Vitamin A. (Vitamin A deficiency remains a problem in parts of Asia).

It is understandable that those involved in a political debate over the regulation and even prohibition of GMOs will seek visible shows of support from others who are like-minded. This is part of the persuasion process.

But does this prove that those who oppose GMOs are anti-science? More to the point, are scientists who question the safety of GMOs anti-science even as they continue their scientific research?

We must be careful to distinguish research designed merely to understand the workings of the physical world from an endorsement of specific applications of our knowledge to products and practices. There is a big difference between science and applied science which we often call technology or engineering.

This is where the problem of what a friend of mine calls the Midgley Effect arises. Thomas Midgley Jr. was a renown American chemist in the first half of the 20th century. He was asked to find compounds that could be added to gasoline to reduce "knocking" in engines (which can cause damage). Midgley's solution was tetraethyllead which became the basis for leaded gasoline.

Midgley assured the public that leaded gasoline was safe. In fact, Midgley was given the prestigious William H. Nichols Medal by the American Chemical Society in 1923 for his breakthrough. Despite concerns about the release of lead into the environment and deaths at a pilot plant, the U.S. Surgeon General and the U.S. Public Health Service both concluded that there was no evidence that leaded gasoline would cause human health problems. Thus, yet another uncontrolled mass experiment began with humans as the subjects.

Only unrelated research on the age of the Earth revealed abnormally high levels of lead in the environment which interfered with such age calculations and led to concerns about leaded gasoline--which, of course, was eventually banned.

But Midgley's work on chlorofluorocarbons (CFCs) as refrigerants was probably even more significant. At the time existing refrigerants--fluids that circulate in refrigerators and draw heat away from their interiors--were corrosive or flammable. The industry wanted something that wasn't either. Midgley's solution was a set of inert compounds that would easily vaporize and recondense called chlorofluorocarbons and that eventually went by the trade name Freon.

Nonflammable, noncorrosive, nontoxic to humans and able to circulate in refrigerators for years, even decades without breaking down, his discovery found wide application in refrigeration and eventually air conditioning. So safe were CFCs deemed that they were used in aerosol spray cans and even asthma inhalers.

For his work on CFCs Midgley received another award, the Perkin Medal from the Society of Chemical Industry in 1937.

If chemist F. Sherwood Rowland had not asked in the early 1970s where CFCs go once they are released, we might now be living without the better part of the Earth's ozone layer. His work alerted the world that CFCs were indeed quite long-lived as advertised, were making their way continuously to the Earth's ozone layer and were systematically destroying it. Without the ozone layer much greater ultraviolet radiation would hit the Earth and endanger all living things. CFCs were ultimately banned by the Montreal Protocol.

Shall we consider the scientist who discovered the deleterious effect of CFCs on the ozone layer anti-science? Shall we consider the geochemist who discovered the widespread dissemination of lead in the environment that was linked to leaded gasoline anti-science?

Of course not. Pointing out potential and actual dangers of a specific application of scientific research in not anti-science at all.

In these cases we must remember that lots of people who called themselves scientists assured us that leaded gasoline and CFCs were safe. But, they were wrong, grievously wrong. And, we must remember that it took decades to uncover the widespread damage being done by both.

The U.S. Food and Drug Administration (FDA) long ago ruled that GMO foods are "substantially equivalent" to their non-GMO counterparts and therefore do NOT require any testing. Those supporting the widespread dissemination of GMOs could be very wrong as well. There isn't enough information to know what the ultimate results will be for human and animal health.

What is more interesting is that the authors of the petition mentioned above have essentially admitted that we are doing an uncontrolled experiment on humans (because governments required no controlled studies). They write:

But the science telling us GM [genetically modified] crops and foods are safe has been confirmed by vast experience. Humans have eaten hundreds of billions of GM based meals in the past 20 years without a single case of any problems resulting from GM.

The petition writers, of course, do not adduce any evidence that there has not been a single case of a problem with genetically engineered foods. They merely assert it. I would hazard a guess that they did not do an exhaustive survey to find any cases.

This leads us to the second claim that is supposed to prove that somebody is anti-science if he or she opposes GMOs.

2. There is no evidence that GMOs are harmful to humans, animals or the environment.

Anecdotal evidence and even some scientific studies suggest that GMOs may be harmful in one or more these three categories. Even if that evidence is valid, it begs the question, How harmful? Do the supposed benefits of GMOs outweigh any alleged or actual harm?

The problem with engaging assertion number 2 above is that it is an inversion of responsibility. The GMO industry and its supporters assume that it is the responsibility of the public to discover any harm and to document it sufficiently to prove that harm.

But the real responsibility ought to lie with the industry. Typically, the way this is done is that the government requires studies under controlled conditions to establish the safety of a product. Individual consumers and independent researchers don't have the financial and technical resources to do this.

If the industry wants to warrant that GMOs are safe for human consumption, it should have to follow protocols designed for novel products which it wants to introduce into the human body. These protocols are generally reserved for new drugs. But some scientists in the FDA suggested that just such protocols would be necessary to assure that GMOs are safe before their release to the public. (They were overruled.)

The industry assures us that GMOs are not novel. After all, the FDA ruled that GMOs are "substantially equivalent." On that basis all patents for GMOs crops would be invalid since they are not novel. But it is precisely based on the novelty of specific genetic alterations of plants that the GMO companies have successfully obtained patents on their products.

If GMO plants are indeed novel as the companies insist when they go to the patent office, then they ought to be obliged to prove they are safe under established protocols for novel products designed for human consumption.

Don't let the industry get away with this inversion of responsibility. Can the industry really make the claim that those who oppose GMOs because the foods derived form them are not properly tested are anti-science? Isn't the industry really anti-science for opposing the testing of novel foods in the same way the drug companies are obliged to test novel compounds? Isn't the industry being anti-science by claiming that GMOs are not novel? (Maybe that's just straight out lying.)

There is a third claim that is supposed to demonstrate that those who oppose GMOs are both anti-science and ignorant.

3. GMO crops are no more risky than crops created through hybridization or crossbreeding.

This is a clever argument indeed. For it tries to get the listener to accept the equivalence of the two types of genetic alteration. But they are not equivalent. And, the key reason is not the one cited most often by GMO critics, namely transgene splicing, the splicing of genes from completely different categories (from a fish to a tomato to cite a real example). While it's theoretically possible for such gene transfers to take place in nature, they are highly unlikely. (How often is a fish in the wild going to come into contact with a tomato?)

What is more important is that humans have ample experience with crossbreeding. The fact that humans are still here in the numbers that they are testifies to the safety of crossbreeding which has been practiced for a very long time. This does not testify to safety in every instance, but to safety in general. Historically, crossbred plants are tested in small areas to see whether thrive and to see how they interact with other plants. These small experiments keep any mistakes contained.

GMO crops on the other hand are poorly tested* and then introduced practically worldwide within a few years. If there is a hidden adverse interaction with the environment, we will be subject to worldwide effects before we are aware. Those effects might take years to become apparent. And, it might take us years to trace those effects to GMO crops. The adverse environmental effects of GMOs will not be contained. There will be no small mistakes.

Since our experience with GMOs is limited, there has been very little time to discover unintended consequences. The fact that GMO crops to date have not produced catastrophic systemic failures in farm fields or in the surrounding environment does not prove that the next new GMO crop won't produce such a failure or that existing GMO crops under some as yet unencountered situation won't produce such failures.

Now, here's the key point: Because we cannot from experience judge the risks of GMOs to the broader environment (as we can with crossbreeding), and we cannot anticipate all the interactions between GMOs and the environment, THERE IS A NONZERO RISK OF SYSTEMIC CATASTROPHE, namely, worldwide crop failure or systemic ruination of adjacent ecosystems.

The proponents will say that the risk of such systemic effects is small. But it does not matter how small that risk is if we intend to keep subjecting the environment to novel crop genes. If the risk is nonzero and we metaphorically pull the gene gun trigger enough times, we will eventually create systemic ruin.

We are playing a game of Russian roulette with the many genetic engineering techniques we are now employing. Techniques which have a nonzero risk of creating systemic ruin should be banned. Ruin is too great a price to pay no matter how big the perceived benefits are (and the supposed benefits of GMOs are hotly disputed).

The foregoing discussion is really a reiteration of something I've covered before based on the work of risk expert Nassim Nicholas Taleb. Taleb explains why the precautionary principle should apply to GMOs.

Perhaps risk is not the purview of the pure scientist. But it certainly must be the purview of the applied scientist. To misunderstand risk in the worldwide dissemination of genetically novel crops is to set oneself up to be the next Thomas Midgley and to risk the lives and livelihoods of millions, even billions of people based on a mere feeling that what one is doing is low risk.

___________________________

*The U.S. Department of Agriculture (USDA) requires field testing of GMO plants to determine whether they have the potential to harm other plants. The genetic contamination of non-GMO plants (through the exchange of pollen) which is prevalent worldwide seems of little concern to the USDA which seems not to regard this as a harm to other plants. This is particularly a problem for organic growers who are forbidden to use GMO crops and those conventional growers seeking non-GMO verification of their crops. The FDA regulates as a pesticide any GMO plant which produces its own pesticide (as many of them do) and determines whether ingesting that pesticide in the amounts in the plant poses a hazard to human health--not particularly appetizing. A summary of these regulations can be found on p. 4 of this document.

Kurt Cobb is an author, speaker, and columnist focusing on energy and the environment. He is a regular contributor to the Energy Voices section of The Christian Science Monitor and author of the peak-oil-themed novel Prelude. In addition, he has written columns for the Paris-based science news site Scitizen, and his work has been featured on Energy Bulletin (now Resilience.org), The Oil Drum, OilPrice.com, Econ Matters, Peak Oil Review, 321energy, Common Dreams, Le Monde Diplomatique and many other sites. He maintains a blog called Resource Insights and can be contacted at kurtcobb2001@yahoo.com.

Sunday, July 17, 2016

M. King Hubbert and the future of peak oil

Almost synonymous with the term "peak oil" is M. King Hubbert, perhaps the foremost geophysicist of the 20th century, who first theorized about the eventual decline of oil production in the 1930s. Hubbert and his work have once again come into the public eye as a result of the 2008 oil price spike and the highest ever daily average prices for oil from 2011 through 2014. His life has now been chronicled by science writer Mason Inman in a new biography entitled The Oracle of Oil.

Depending upon whom you speak with, peak oil is either a catastrophe waiting to happen or a far-off concern that has already been solved or will be soon. Frequently, peak oil is referred to as a myth. What you rarely hear is that peak oil is an empirical fact having already occurred in more than two dozen oil-producing countries. Making the list are names that will surprise many including Iran, Venezuela, and Russia, three of the world's top oil exporters.

The term "peak oil" simply means that crude oil production for any field, region or country eventually reaches a peak or plateau from which it inexorably declines. Because the amount of oil in the Earth's crust is finite, it is logical to assume that one day peak oil production will occur worldwide. The concern is that we as a global society are so accustomed to rising oil production that we have built an entire world around that assumption. Will we be ready when oil production begins to decline?

To shed some light on that and other questions author Inman takes us from Hubbert's early days at the University of Chicago to his famous speech in 1956 (in which he predicted a peak in U.S. crude oil production no later than 1970) to his days in Washington, D.C. working for the U.S. Geological Survey and his fights there concerning the timing of a U.S. oil production peak.

In the course of the story Inman puts to rest misconceptions about Hubbert and about peak oil. First and foremost, peak does NOT mean running out. As explained above it means the trend of rising oil production reverses into a decline. When this reversal occurs worldwide, it could pose challenges for a society that has yet to find a cheap, widely available substitute for petroleum to fuel its transportation system. Electric vehicles are still in their infancy and would require huge infrastructure investments. And, petrochemicals made from oil are the basis for a wide variety of clothing, medicines, lubricants, pesticides, and industrial chemicals. Oil is embedded practically everywhere in our lives, and finding substitutes won't be easy in many cases.

Second, forecasting peak oil is NOT tantamount to forecasting disaster. Hubbert himself believed that society could make a successful transition away from petroleum and other fossil fuels to a nuclear- and solar-powered world so long as we started early enough. Far from being a pessimist, Inman tells us, Hubbert was a utopian who believed an efficiently run technocratic society with plenty for all was possible if only we would take the necessary steps.

In fact, Hubbert foresaw some technological advances we now take for granted, for example, that postal mail would be largely replaced by "signals sent by wire" which we, of course, call email. He believed that energy efficiency in the form of thick insulation for homes would become increasingly common. We now see that development in weatherization programs for homeowners and the spread of Passive House technology which reduces heating and cooling needs by 80 to 90 percent.

Third, Hubbert was NOT anti-oil. In fact, he worked for Shell Oil Company for 20 years in production research. Hubbert understood deeply the benefits of oil to human society, and he wanted those benefits to continue. But he believed they would not continue unless new sources of energy were deployed before fossil fuel production began its inevitable decline.

Fourth, contrary to what his critics say, Hubbert did take technological improvements into account when calculating his forecasts for peak. He was aware of unconventional sources of oil such as tar sands, oil shale, and coal-to-liquids technology. But he realized that these sources would be challenging and expensive to exploit.

It turns out he was right. Operators in the Canadian tar sands today are having a difficult time simply maintaining production in the current low-price environment for oil. As for oil shale, despite more than 30 years of research and development including pilot plants, there is no commercial production of oil from oil shale in the United States (which has by far the largest deposits) and very limited production in Estonia (where oil shale is mostly burned directly to produce electricity). It's not clear that standalone facilities that would produce only oil from oil shale would be economical given the American experience.

Coal-to-liquids technology continues to be too expensive to deploy worldwide though it does have a foothold in South Africa. South Africa built these expensive and environmentally dirty facilities during the apartheid period when the country's leaders feared an embargo might curtail oil shipments to South Africa.

There is, of course, the question of just how oracular the "oracle of oil" was. As it turns out, Hubbert's prediction of a peak in U.S. production (which at that time covered the lower 48 states) was right on the money. U.S. crude oil production fell starting in 1970 and continued to fall (with a short respite when Alaskan oil began to flow) until 2008. Then, the advent of a new kind of hydraulic fracturing or fracking (as it is popularly called) made possible the extraction of previously difficult-to-get oil from deep shale deposits (not to be confused with oil shale mentioned above).

U.S. production last year came close to eclipsing the 1970 number, but has fallen back as low prices have forced deep reductions in drilling. Meanwhile, non-shale production continues to fall. A rise in oil prices would certainly revive drilling in American shale deposits. But it is doubtful that this will happen before shrinking conventional production makes it all but impossible to achieve a new all-time high in U.S. production.

As for world production, he did his original calculations before the high prices and oil crises of the 1970s led to an energy efficiency drive worldwide and resulted in the first ever sustained decline in world oil consumption, something that would clearly delay a peak. After the first of those oil crises, in the mid-1970s Hubbert calculated that a worldwide peak might come as soon as the 1990s or as late as the 2030s (but only if consumption remained level from the 1970s onward).

He views were largely adopted in a U.S. Energy Information Administration forecast in the late 1970s. The agency forecast a probable peak about 2010, but offered a range of 1995 to 2035 depending on energy policies and consumption patterns.

As it turned out, conventional oil, the kind that Hubbert used in his models, the kind that flows as a liquid from the ground--which I call "Beverly Hillbillies oil" after the "bubbling crude" seen in the introduction to the now long-defunct television series--this kind of oil peaked in 2006 according to the International Energy Agency, a consortium of 29 countries which provides ongoing research and information about energy supplies worldwide.

Despite all protestations to the contrary, Hubbert proved prescient once again even if he didn't get the exact timing right. That world oil production continues to eke out small gains is due entirely to production from unconventional sources not included in Hubbert's models. But those sources have shown themselves to be exquisitely sensitive to price.

In the two countries best known for unconventional oil, the United States and Canada, production from U.S. deep shale deposits and Canadian tar sands is now shrinking. Alarmingly, without recent growth in oil production in these two countries, worldwide oil production would have declined from 2005 to today. Now that the twin engines of growth, the United States and Canada, are in decline, we may see a fall in worldwide production soon (though whether this will mark the ultimate peak will not be known until many years thereafter).

But, any peak will inevitably result from a mix of economic and geologic factors. So, the new question about oil is, "Can we afford to extract and refine the oil we have left?" Or, more precisely, "Will the cost of extracting these unconventional sources cause economic growth to slow or stagnate?"

This is just the sort of scenario Hubbert foresaw if we waited too long to address the inevitable transition away from fossil fuels. And, there is reason to believe that low oil prices today reflect an economy slowed by previously high oil prices. These high prices themselves are an indication that we are now facing ever more difficulty and effort in extracting the remaining marginal sources of oil. And, the fact that so many oil companies are now going bankrupt due to low prices tells us that high prices will have to return if we want to extract this difficult-to-get oil in great quantities again.

Hubbert died in 1989, living to see the nuclear accidents at Three Mile Island and Chernobyl. Long concerned about nuclear waste and impatient for a transition, Hubbert decided that global society needed to undertake the rapid deployment of an indisputably clean source of energy, solar power. We would use solar power not only for electricity, but also to make the liquid fuels needed for our transportation system which we could adapt to run on methanol or hydrogen.

Perhaps what irked Hubbert's critics the most was his lifelong skepticism about exponential economic and population growth. So firmly did he believe that population growth needed to be curtailed that he and his wife had no children. There were limits, he believed, and if they were breached, humans would pay dearly.

Hubbert is much maligned and much praised these days. But he is perhaps not well understood. Mason Inman's compelling biography gives us all, critics and supporters alike, a chance finally to understand this scientific giant and the context within which he spawned insights that continue to be central to our lives.

___________________________

UPDATED July 19, 2016

Kurt Cobb is an author, speaker, and columnist focusing on energy and the environment. He is a regular contributor to the Energy Voices section of The Christian Science Monitor and author of the peak-oil-themed novel Prelude. In addition, he has written columns for the Paris-based science news site Scitizen, and his work has been featured on Energy Bulletin (now Resilience.org), The Oil Drum, OilPrice.com, Econ Matters, Peak Oil Review, 321energy, Common Dreams, Le Monde Diplomatique and many other sites. He maintains a blog called Resource Insights and can be contacted at kurtcobb2001@yahoo.com.