Why Can't Saudi Crude Replace Libyan?

Libyan Oil Grinding to a Halt

Here's the latest:

At least 300kbd-400kbd of oil production are shut-in already, and likely more, but the situation is still confusing.

As much as a quarter of Libyan oil output has been shut down, Reuters calculations showed on Wednesday, as unrest prompted oil companies to warn of production cuts in Africa's third-largest producer.

Austria's OMV said on Wednesday it might be heading for a full production shutdown in Libya. Total, Repsol, Eni and BASF have also said they are either slowing or stopping output.

The latest comments point to a growing impact on oil output from Libya, which produces 1.6 million barrels per day (bpd) of high-quality oil, or almost 2 percent of world output. About 1.3 million bpd is exported, mainly to Europe.

According to Time Magazine's Robert Baer, anonymous sources close to Gaddafi say he is now giving orders to sabotage Libya's oil industry:

There's been virtually no reliable information coming out of Tripoli, but a source close to the Gaddafi regime I did manage to get hold of told me the already terrible situation in Libya will get much worse. Among other things, Gaddafi has ordered security services to start sabotaging oil facilities. They will start by blowing up several oil pipelines, cutting off flow to Mediterranean ports. The sabotage, according to the insider, is meant to serve as a message to Libya's rebellious tribes: It's either me or chaos.

Libyan ports are shutting down:

Libyan cargo port operations have shut down due to increasing violence sweeping the country, Reuters has reported.

Operations at Tripoli, Benggazi and Misurata Mediterranean ports, which handle general cargo and container shipping, have closed.

In particular, oil exports appear to be halting completely:

Operations at Libyan oil ports were disrupted by a lack of communications, trade sources said, and flows from marine oil terminals in Libya were halted on Tuesday, an Italian government source said.

"The situation is worrying. This morning the oil terminals were blocked in Libya," the government source said.

It was not possible to get through by phone to Libyan oil ports or shipping agents on Tuesday.

"Everything is out," said a source with a major oil company. "We can't get through to anyone. Our operations people say contact is impossible with the shipping agents, port officials, anyone. The lines are all down."

The country appears to be descending into civil war:

Col. Muammar el-Qaddafi of Libya kept his grip on the capital on Wednesday, but large areas of the east of the country remained out of his control amid indications that the fighting had reached the northwest of the country around Tripoli.

Libyans fleeing across the country’s western border to Tunisia reported fighting over the past two nights in the town of Sabratha, home of an important Roman archeological site 50 miles west of Tripoli. Reuters reported that thousands of Libyan forces loyal to Col. Qaddafi had deployed there.

“The revolutionary committees are trying to kill everyone who is against Qaddafi,” said a doctor from Sabratha who had just left the country, but who declined to give his name because he wanted to return.

Of course, as for the oil production losses, the Saudi's say they stand ready to make up the difference:

“OPEC is ready to meet any shortage in supply when it happens,” the Saudi oil minister, Ali al-Naimi, said at a news conference after a meeting of ministers of oil producing and consuming nations in Riyadh, Saudi Arabia. “There is concern and fear, but there is no shortage.”

The next few months' oil statistics are going to be interesting, to say the least. It now seems increasingly likely that Libya's oil production (about 1.6mbd) is largely going to halt, or at least not get exported.  So we will see if Saudi Arabia's production really will rise to compensate. The problem, of course, is that Mr al-Naimi's idea of what constitutes a "shortage" may not be the same as the rest of us.

OPEC Stability Watch

Libyan Oil Production

Brent-WTI spread

Chinese Railway Chief Fired

Some very interesting reporting in the NYT this morning:

In his seven years as chief of the Chinese Railways Ministry, Liu Zhijun built a commercial and political colossus that spanned continents and elevated the lowly train to a national symbol of pride and technological prowess.

His abrupt sacking by the Communist Party is casting that empire in a decidedly different light, raising doubts not only about Mr. Liu’s stewardship and the corruption that dogs China’s vast public-works projects, but also, perhaps, the safety, financial soundness and long-term viability of a rail system that has captured the world’s attention.

History of Democracy Question

Jamais Cascio seems to have suddenly returned to the blogosphere, and has a post worrying about various possible signs and indicators of decay in American democracy.  I've also been thinking a lot about democracy in light of events in the Middle East.  In particular, I have the impression that once democracy is well entrenched in a culture, it's actually very difficult to dislodge, and that US democracy will prove much more robust than Jamais worries.

Clearly, some autocratic countries become democratic briefly, and then lapse back into some form of autocracy.  The Weimar republic lasted from 1919 to 1933, for example, before Hitler effectively abrogated the constitution.  However, I can't think of any case, in the modern era, of a multi-generational democracy that has ever reverted back.  For example, Britain managed to lose an entire empire without ever any serious threat to its status as a democratic country.  Britain and the US made it through two world wars and a great depression without losing their democratic status.  Indeed the US managed to fight a civil war with itself, without either side actually giving up on the democratic form of governance.

So my question is this: what is the longest period that a country has been a democracy, and then reverted to some non-democratic form of government?  Let's confine it to the post-industrial revolution era.

Right now, the longest case I've found is Chile - if I'm understanding the history correctly, Chile was a democracy from 1932 to 1973 - 41 years - before the government was overthrown in a military coup.  Are there any cases more pronounced than that?

Do Mediterranean Crop Yields Show Climate Stress?

Climate Change Wrecks Agricultural Yields! (Not)

Deleveraging Accelerates Slightly in Q4

What We Use Crop Land For

OPEC Production

Energy and Wealth Aren't *That* Proportional

New Highs of Liquid Fuel Production in January

What did we Learn From the Saudi Cables?

All The Guardian Saudi Oil Cables

At present, I have found five Wikileaks cables that the Guardian has published which concern Saudi Arabian oil production and reserves. Here are links to each one, in chronological order, and a short excerpt to give the flavor:

Wikileaks confirms Saudi Reserve Overstatement

The Guardian has a very interesting piece for us keen Saudi watchers:

The US fears that Saudi Arabia, the world's largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show.

The cables, released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom's crude oil reserves may have been overstated by as much as 300bn barrels – nearly 40%.

Emphasis mine.  Also...

Chicago in Context

Latest Saudi Arabian Oil Production Statistics

January Employment Data

Long Term Trends in Economic Output

Food Prices Up Again in January

The FAO reported this morning on their latest global food commodity price index for January, and it rose 3.4% from Dec 2010 to Jan 2011 (which was already higher than during the 2008 food price shock).

Why Oil Matters More Than Rubber

I was thinking about Paul Krugman's Cross of Rubber column, and in particular the associated blog post Commodities: This Time is Different.  My take on Krugman is that he's an extremely brilliant guy who's been thinking about economics for a good long time.  His enormous knowledge and insight are invaluable, and I pay close attention to his writing.  However, I also think he's gotten into some pretty deeply scripted habits of thinking based on past events and isn't paying close enough attention to the ways in which the present and the future are likely to be different than the past.  In particular, his frame of reference for the events of the last few years has been past deflationary episodes such as the Great Depression in the 1930s and Japan in the 1990s.

Contango, Oil Stocks, and OPEC Economic Thought

Oil Shock Potential of OPEC Nations

Self Immolations in Saudi Arabia

In both Tunisia and Egypt, the main demonstrations were preceded by desperate individuals publicly setting themselves on fire as a protest against the hopelessness of their lives, or their treatment by their respective regimes.

In Tunisia, the first person to do this was on December 17th, but it took until January 4th for him to die.  Protests built over several weeks, until President Ben-Ali was obliged to flee the country on January 14th.

In Egypt, the first self immolations were on January 19th, and now, 12 days later, although the outcome is uncertain, the regime hangs by a thread.

So far, there have been two self-immolations in Saudi Arabia: a 60 year old man on January 22nd, and a 42 year old on January 25th.  So far, demonstrations have been limited to a few hundred people (video here) in Jeddah, mostly protesting that the government had failed to prevent devastating floods there.  Demonstrations are not allowed in Saudi Arabia, and the authorities arrested tens of the protesters.  I am not presently able to find any evidence of the self-immolations leading to further protest (feel free to provide any further links in comments).

Demographics and Wealth in MENA

Weekend Blog: Virtue Can be its Own Reward

Minor note.  I just received the NYSEG bill for a month of heating and powering our Victorian farmhouse in upstate New York, with 100% renewable electricity in the middle of winter: $429.36.  Out of curiosity, I went back and looked at our bills from the same time last year, when we paid to heat and power a similar aged (1880) almost identical sized rental house in Sausalito, California: $462.11.

In Sausalito, the bill was for about half natural gas and half electricity of whatever provenance PG&E chose to provide (ie mostly not renewable).  Here the electricity is supplied by Sterling Planet via Agway Electric, and delivered by NYSEG.

The main difference is that the house here, having been owner occupied, is insulated to a more-or-less average contemporary standard, whereas the rental house in Sausalito was not (presumably because the landlords had had no incentive to do so).  Also, electricity here is somewhat cheaper than in the Bay Area.  These effects are enough to more than overcome the difference between about 3000 degree days and about 8000 degree days, as well as the premium for renewable power.

My smugness knows no bounds following this bill :-)

Oil, Food, and the Wealth of MENA Countries

The Kids are Stressed Out

US Revenues and Outlays

The latest CBO projections for the US government deficit.  Note the break in the y-axis. The report came out today.

Obama on Energy and Climate

Here is the portion of President Obama's State of the Union Address devoted to energy and climate, followed by my reaction:

Chinese Oil Consumption Growth

Creating a Toaster From Scratch

Want to know what civilization does for you?  This video is one man's account of trying to build a toaster from scratch himself starting from raw materials (iron ore, oil for the plastic, etc).  I mean, you already know how that's going to turn out, right?  Still, it's pretty eye opening to follow the details.

Hat tip Ran Prieur.

Growth Was So Faster in the Post War Years

Kevin Drum tries to set Matt Yglesias straight, arguing that this logarithmic graph of real GDP demonstrates that growth has not been any slower in the past thirty years than the previous thirty years:

Expensive Potatoes, Cheap French Fries

Paul Krugman commented the other day on this article in Commodities Now by John Kemp.  The article's main thesis is:

Leading commentators such as Martin Wolf in the Financial Times and Paul Krugman in the New York Times argue the problem facing the global economy is lack of sufficient demand; the remedy is some combination of fiscal and monetary expansion. But sharply rising commodity prices suggest global growth is already hitting supply-side limits. The problem is not aggregate demand but its distribution.

Until firms significantly raise productivity, especially resource efficiency, the painful remedy is likely to involve increased competitiveness and reduced living standards across North America and Western Europe (through a combination of commodity price inflation, weaker exchange rates, higher import prices and falling real wages and incomes).

There is not much Keynesian demand management can do in the face of this sort of structural shift. Central bank policies are simply shuffling costs around (from borrowers and banks to savers and pension funds) while stoking further increases in food and energy prices.

This is the implication of the syndrome I christened misflation the other day (and since I haven't see any other term in general circulation yet, I'm going to stick with mine for now).

Anyway, Krugman responds:

Weekend Blog: Living in the Country makes you Smarter!

Well, roughly.  Via Andrew Sullivan, here's an interesting paper which compared the cognitive performance of undergraduates after taking a walk in a natural environment (a university arboretum) versus taking a walk on busy city streets.

We compare the restorative effects on cognitive functioning of interactions with natural versus urban environments. Attention restoration theory (ART) pro- vides an analysis of the kinds of environments that lead to improvements in directed-attention abilities. Nature, which is filled with intriguing stimuli, modestly grabs attention in a bottom-up fashion, allowing top-down directed-attention abilities a chance to replenish. Unlike natural environments, urban environments are filled with stimulation that captures attention dramatically and ad- ditionally requires directed attention (e.g., to avoid being hit by a car), making them less restorative. We present two experiments that show that walking in nature or viewing pictures of nature can improve directed-attention abilities as measured with a backwards digit-span task and the Attention Network Task, thus validating attention resto- ration theory.

Romanticism is not New

There is an interesting essay by Michael Lind in Salon, America in the age of primitivism. Lind bemoans the irrationality of modern politics on both sides of the right-left divide:

A case can be made that yes, we are indeed in a period of rising irrationalism. This irrationalism permeates our politics, from the right to the center to the left. And it has done so for some time.

and he makes that case at greater length:

Back Problems...

On an administrative note: I hurt my back on Monday and am under physical therapist's orders not to sit up.  That has cramped my blogging style more than a little!  It has started to improve and I hope to return to light blogging tomorrow (albeit from a near horizontal position...).

December Liquid Fuel Production

OPEC: December Global Oil Supply Flat at New Peak

NY Times: US involved in Stuxnet

As far as I can see, the NY Times is burying the lead in this story.  I think the most important news is:

Though American and Israeli officials refuse to talk publicly about what goes on at Dimona, the operations there, as well as related efforts in the United States, are among the newest and strongest clues suggesting that the virus was designed as an American-Israeli project to sabotage the Iranian program.

In recent days, the retiring chief of Israel’s Mossad intelligence agency, Meir Dagan, and Secretary of State Hillary Rodham Clinton separately announced that they believed Iran’s efforts had been set back by several years. Mrs. Clinton cited American-led sanctions, which have hurt Iran’s ability to buy components and do business around the world.

Chevy Volt Availability Gossip

I had to come out to California on business this week.  Last night, I took the opportunity to go into the San Jose Chevy dealership to inquire about the Volt.  They have seen three total.  One came in a couple of weeks ago, and sold in an hour for $10k over list.  Two more came in Wednesday morning, and both sold by Thursday afternoon at $8k over list to a business owner who had come in from out of town and was on his third different city trying to buy Volts.  I got to sit in those two, but not test drive them.

So, based on this one data point, it's not exactly impossible to buy a Volt at present, but it's certainly not easy.  It's not like they are back-ordered for months, but you'd probably have to sit in a major urban area where they are available, make friends with all the dealerships, and then be ready to pay well over list when one showed up.

This particular dealership said they had only 40 allocated to them for all of 2011.  So it could be a while till things settle down.

Misflation

Environmentalism ≠ Socialism

Yesterday's Archdruid report triggers me to write a post I've been meaning to write for a while, which is to make the following point: the project of transforming society to use less resources, have less environmental impact, or emit less carbon, does not necessarily have anything to do with the project of making society more equal.  Environmentalism != Socialism, to reduce it to a bumper sticker.

Employment for Young American Men

Food Price Break-out

New High in Food Commodity Prices

Latest Global Oil Price/Production Plot

Kuwaiti Oil Production

State of the Blog, Q4 2010

Pete Postlethwaite, RIP

I see from the NYT that character actor Pete Postlethwaite has died:

Oscar-nominated actor Pete Postlethwaite, a craggy-faced British character actor described by director Steven Spielberg as "the best actor in the world," has died at age 64 after a long battle with cancer.

Friend and journalist Andrew Richardson said Monday that Postlethwaite died in a hospital Sunday.

The actor was instantly recognizable for his unusually shaped face — with prominent cheekbones that gave him a lean, rugged look — and his intense eyes. He was not conventionally handsome like many film stars but had a powerful presence and authenticity on screen and on stage.

This would normally be of no interest to this blog, but...

The Lithium Revolution

Deutsche Bank: $125 oil spike in 2012

Odds of a 2011 Spike in Gas Prices?

Prospects for Early Progress in Decarbonizing my Household

As regular readers of this blog know, part of the thinking around my move to upstate New York was to put my family in a position to move to a zero-carbon, or carbon-negative, lifestyle.  The goal here is to do this in a way that a) preserves or enhances our quality of life, but b) doesn't cheat.

The point of preserving our quality of life is so that there's some prospect of influencing others to follow us, and most people being highly motivated by their own comfort and convenience, we will be more influential to the extent we don't sacrifice too much of our own.  So this is not an effort at voluntary poverty, but rather an effort to figure out how to live a pretty comfortable middle class life while not using fossil fuels.

Krugman: Peak Oil has Arrived

His exact words are:

In particular, today, as in 2007-2008, the primary driving force behind rising commodity prices isn’t demand from the United States. It’s demand from China and other emerging economies. As more and more people in formerly poor nations are entering the global middle class, they’re beginning to drive cars and eat meat, placing growing pressure on world oil and food supplies.

And those supplies aren’t keeping pace. Conventional oil production has been flat for four years; in that sense, at least, peak oil has arrived. True, alternative sources, like oil from Canada’s tar sands, have continued to grow. But these alternative sources come at relatively high cost, both monetary and environmental.

Also, over the past year, extreme weather — especially severe heat and drought in some important agricultural regions — played an important role in driving up food prices. And, yes, there’s every reason to believe that climate change is making such weather episodes more common.

So what are the implications of the recent rise in commodity prices? It is, as I said, a sign that we’re living in a finite world, one in which resource constraints are becoming increasingly binding. This won’t bring an end to economic growth, let alone a descent into Mad Max-style collapse. It will require that we gradually change the way we live, adapting our economy and our lifestyles to the reality of more expensive resources.

Emphasis mine.  I would have worded it a bit differently: with a nuance here and a caveat there, but I think the broad thrust of what he's saying is helpful. It's good to see such a widely followed voice acknowledging these issues. I think the degree of political strain is going to be somewhat greater than he's yet acknowledging though.

Happy Holidays!

Merry Xmas, or other seasonal festivity of your choice!

Regular blogging schedule will resume on Monday.  In the meantime, feel free to use this as an open thread for anything in need of discussion or report.

A Few Notes on Winter Cycling in the Northeast

Yesterday's post reminds me that I meant to say a few words about cycling in winter here, mostly for the benefit of any other Californians reverse-migrating to the North East in pursuit of better housing options (or whatever other reason you might have).  I sold my car when I left California in July and since I have been a) wanting to get a house before a car, and b) holding out for a Volt, I have continued to cycle as my main transportation.  Now that I have made it through the solstice, it seems I might have enough of the season under my belt to have some initial clue what it means to cycle here in the winter.  Even after I get a car, I anticipate continuing to cycle for exercise.

The good news here is that it's entirely possible to cycle through the winter in Ithaca in reasonable comfort.  However, it does require some significant investment in clothing and gear, and it takes longer to transition from inside to outside.

Electric Car Market

Iranian Oil Production Stats

Russian Oil Production Stats

Update on Saudi Oil Production

Update on Iraqi Oil Production

Prospects for a New Peak in Crude & Condensate

New High of Liquid Fuel Production

Did the Great Recession Put Men on a Diet?

Some Musings On the Bradley Manning Charges

The things that Bradley Manning is currently charged with are here.  The essence of it is that between Nov 2009 and May 2010, he used his access to the US classified secret network (SIPRnet) to download a number of things, move them to his personal unclassified computer, and then give them to other unauthorized parties (presumably including Wikileaks).  The things he is is accused of thus misusing include:

• a classified video of a military operation in Baghdad
• a classified PowerPoint video
• more than 150,000 state department cables

He is also accused of uploading unauthorized software onto a SIPRnet computer (we don't know what software it was).  He is also a person of interest in the leak of dispatches about the Afghanistan war (and apparently boasted to Adrian Lamo that he did so leak).

For the purposes of this discussion, let's assume that he did these things, or at a minimum, that his position as a military analyst in Iraq, and his resulting access to SIPRnet, made it possible that he could have done these things.  There is also no indication at this time that Manning had any advanced hacking skills - all the coverage I've read indicates that he just downloaded this stuff and burned it onto CDs.  Let's assume that's true also.

Suicide Statistics in the United States

Dismal Employment Stats

Subdued Oil Demand Impact of European Troubles

Some European Unemployment Rates