Month: May 2010

Transocean is distributing a $1 billion profit to shareholders as one of its drill sites leaks millions of gallons of oil into the sea.

The last 30 years of energy leasing policy show that per-acre lease rates have plummeted almost nine-fold from shortly after the time Ronald Reagan assumed the presidency to the tail end of President George W. Bush’s second term.

An average of $2,224 per acre for all federal leases sold between 1954 and 1982 careened to $263 per acre for federal leases sold between 1983 and 2008.

And those eye-opening losses don’t even account for inflation.

Rig owner Transocean relocated to Switzerland two years ago to avoid paying taxes. The company filed a court request last week to cap its Gulf oil spill liability to under $27 million, stark contrast to $500 million spent to date.

Transocean has actually made money from the disaster, collecting over $400 million from insurers, leaving it with a profit of $270 million after the costs of the rig are subtracted.

Oughta hit the news, might not:

Harvard School of Public Health have found that eating processed meat, such as bacon, sausage or processed deli meats, was associated with a 42% higher risk of heart disease and a 19% higher risk of type 2 diabetes.

In contrast, the researchers did not find any higher risk of heart disease or diabetes among individuals eating unprocessed red meat, such as from beef, pork, or lamb.

Unprocessed red and processed meats eaten in the United States contain similar average amounts of saturated fat and cholesterol, but processed meats contained, on average, 4 times more sodium and 50% more nitrate preservatives.

A sample, an option, a choice, a future:

How much power generation in Canada comes from geothermal energy? Zip. Zero. Zilch. Nada.

How much of Canada could be powered by geothermal power? All of it. Many times over.

Exxon did so much wrong in 1989.

The truth is that when large amounts of oil go into the ocean, it’s a huge success to recover as much as 10 percent.

Plans were inadequate, and the equipment described in the inadequate plans wasn’t available. Command was disjointed and disorganized. At first Exxon executives worked from hotel rooms, without proper communications, knowing nothing about the area, embroiled in chaos. Nothing potentially effective was even attempted until oil had already spread many miles over beaches and through channels.

The extent of the failure became clear when I learned that cleanup workers were being sent out on boats so we could see them depart for work on the beaches, but then they never went anywhere. Without equipment or a plan, they drifted aimlessly in the harbor until they could be seen to return after a day’s work.

When reporters blew the cover on that ruse, the recovery crews began voyaging to oiled shores with rags. I spent a day with workers who sat on a beach rubbing pebbles one at a time. They made careful little piles of their cleaned rocks, perhaps so they would have some sense they were accomplishing something amid the 40 million liters of spilled crude that spread over more than 1,500 kilometers of shoreline.

We told these stories. We challenged officials and saw them removed and replaced with higher officials. More equipment and people arrived. Still ineffective, the process repeated. The Coast Guard replaced commanders with admirals, and then higher admirals. Exxon brought in more workers and fleets of vessels, it built floating hotels in the wilderness, and barges that could spray hot water on the shore with fire-hose force.

More than 10,000 workers worked for a summer to wash glue-like oil from cold rocks. After spending more than $2 billion and inflicting untold additional environmental damage through their efforts, the cleanup recovered, at most, 5 to 7 percent of the oil. Some oil still remains in the beaches.

Eventually I realized I had covered the wrong story. The important point wasn’t that Exxon couldn’t clean up its oil spill.

The point was, no one could clean it up.

Energy companies have aggressively lobbied to avoid formally analyzing worst-case scenarios since the Carter administration first required them in instances where there was uncertainty about the risk of disaster.

Deepwater Horizon’s blowout preventer failed. Two switches — one manual and an automatic backup — failed to start it.

When such catastrophic mechanical failures happen, they’re almost always traced to flaws in the broader system: the workers on the platform, the corporate hierarchies they work for, and the government bureaucracies that oversee what they do.

For instance, a study of 600 major equipment failures in offshore drilling structures  found that 80 percent were due to “human and organizational factors,” and 50 percent of those due to flaws in the engineering design of equipment or processes.

China to reduce its energy intensity by 17-18 percent every five years.

May 6, 2010 – Chinese Premier Wen Jiabao

“We can never break our pledge, stagger our resolution, or weaken our efforts, no matter how difficult it is.”

Wen called for stricter control over high-energy-consuming and high-polluting sectors and for more action to reduce the use of outdated capacity as well as in curbing new projects in industries with overcapacity.

“Local officials and executives of enterprises will be taken to task if their specific energy-efficiency targets are not met.”

The statement also said that China would draft regulations to promote ecological compensation, a market-based mechanism to balance economic development with nature conservation.

Under the mechanism, regions and industries that benefit from the exploitation of natural resources should pay for the damage they cause to the environment and ecosystem.

“The regulations are expected to work out a clear set of methodologies for ecological compensation to answer the question of who should pay how much for what.”

If ‘ecological compensation’ catches on worldwide, gee whiz, as Raj Patel points out, the true price of a hamburger could leap to $200.

Endless Aging

1. There won’t be generations anymore.
2. You have at least 30 extra years of life.
3. That’s enough time to solve all your problems.

OK. Don’t.

New jobs ahead?

There is a financial incentive, $200 billion a year to provide care for people, and that’s just in the USA.

Aybrey De Grey, biomedical gerontologist, chief science officer, Sens Foundation, Cambridge, England:

1. There won’t be generations anymore.
2. We have at least 30 extra years of life.
3. You’ll be able to keep up with your granddaughter on the ski slopes

Very simply, the cheap and easy oil is gone.

What’s left is smaller, harder to find, of lesser quality, and in much more challenging places–under a mile of water and another five miles of rock, for example. It’s expensive, risky, and yes, dangerous.

Chris Nelder:

Today’s ‘blowout preventers’ are high-tech marvels, incorporating microprocessors, super high tolerance parts, electric motors, seals and other components in a unit that sits on the seabed under incredible pressure and temperature, waiting to disconnect the wellbore from the production system in seconds without spilling a drop of oil on command from an operator miles away.

What we do not  understand—at all—are the choices we now have to make.

Instead of having a rational discussion about how we’re going to manage our remaining offshore oil resources, we look to technology…as if deepwater drillships and blowout preventers and acoustic shutoff switches were the problem, rather than miraculous solutions only a dedicated junkie could love.

These technologies don’t fall from the sky. Every safety measure ever invented came as the result of a lesson learned the hard way.

After highly visible disasters like the Santa Barbara oil spill of 1969, the Exxon Valdez spill, and now the Horizon spill, the public understands the risk of offshore oil production.

Those calling for an end to offshore oil production in the U.S. apparently don’t understand that it accounts for over 30 percent of our domestic supply.

They don’t understand that making offshore oil off-limits would be a double-whammy to our pocketbooks, both restricting our income and forcing us to import even more oil at ever-higher prices.

If you really want to know why cities and states are so broke, then you must first ask yourself where all the money went.

“Elected officials are simply no match for the investment banker that’s selling the deal.”

In 1963, Ronald McDonald broke every rule in advertising when he turned to the lens and stunned children by speaking to them directly, saying:

“Here I am kids. Hey, isn’t watching TV fun? Especially when you got delicious McDonald’s hamburgers. I know we’re going to be friends too cause I like to do everything boys and girls like to do. Especially when it comes to eating those delicious McDonald’s hamburgers.”

The true price of a hamburger would be $200 if we factor in subsidies and hidden costs.

The role that fraud played in the financial crisis:

The study of financial fraud receives little attention.

Practically no research institutes exist; collaboration between economists and criminologists is rare; in the leading departments there are few specialists and very few students.

Economists have soft- pedaled the role of fraud in every crisis they examined, including the Savings & Loan debacle, the Russian transition, the Asian meltdown and the dot.com bubble. They continue to do so now.

Statement by James K. Galbraith, Lloyd M. Bentsen, jr. Chair in Government/Business Relations, Lyndon B. Johnson School of Public Affairs, The University of Texas at Austin, before the Subcommittee on Crime, Senate Judiciary Committee, May 4, 2010: Chairman Specter, Ranking Member Graham, Members of the Subcommittee, as a former member of the congressional staff it is a pleasure to submit this statement for your record.

I write to you from a disgraced profession.

Economic theory, as widely taught since the 1980s, failed miserably to understand the forces behind the financial crisis.

Concepts including “rational expectations,” “market discipline,” and the “efficient markets hypothesis” led economists to argue that speculation would stabilize prices, that sellers would act to protect their reputations, that caveat emptor could be relied on, and that widespread fraud therefore could not occur.

Not all economists believed this – but most did.

And much more:

Formal analysis tells us that control frauds follow certain patterns. They grow rapidly, reporting high profitability, certified by top accounting firms. They pay exceedingly well.

At the same time, they radically lower standards, building new businesses in markets previously considered too risky for honest business. In the financial sector, this takes the form of relaxed – no, gutted – underwriting, combined with the capacity to pass the bad penny to the greater fool.

Control frauds always fail in the end.

But the failure of the firm does not mean the fraud fails: the perpetrators often walk away rich. At some point, this requires subverting, suborning or defeating the law. This is where crime and politics intersect.

At its heart, therefore, the financial crisis was a breakdown in the rule of law in America.

On Alan Greenspan leading us far into chaos:

He was working for the same person we all work for, himself, at the same task we all work at, i.e., to square his life as lived with the ideals he held. What helped foster the financial crisis was that society has no recognized procedures for dealing with people who are trying to live according to destructive ideals. That’s one of the problems with principles-based vs rules-based regulation. He was working with the wrong principles, and there weren’t the right rules to stop him.