Atrios on Peak Oil and Supply disruption

Atrios on Peak Oil and Disruption: "I think some people assume that an inevitable result of lower oil supply/rising oil demand is disruptive supply shortages. Widespread persistent supply disruptions would indeed be a big deal, but they just aren't an inevitable result of peak oil concerns. Arguably political instability caused by the economic pain of higher oil prices could lead to such disruptions, but there's no simple cause and effect there."

Atrios, aka Duncan Black, recovering economist, isn't often wrong on economics issues, but this comment was not particularly enlightening.

Here's the thing about the oil economy: for a fairly simple commodity, it is a long supply-and-value chain.

At one end of the chain, are the people, who are extracting petroleum as mineral wealth from the ground, and at the other end, are people, who invest in transportation and industrial infrastructure, which consume petroleum energy -- the people in James Kuntsler's suburbs and SUV's -- and, in between, a large infrastructure for processing (refining) and distribution.

Here's the thing about the refiners and distributors in between: If the world is at a Peak, that means that the world will never again be producing/consuming more oil than right now. So, there will never be more oil products to process or distribute, than right now. So, if you are a distributor, you have no incentive to add to your capacity, because the one thing you know abut the future is that your future capacity utilization will be lower than it is now.

So, yes, Atrios, supply disruption is built into the situation, at least right now, in the short run, because distribution and refining capacity is so highly utilized and so little investment is being made in expansion or, even, in the repair of marginal capacity, which might be near obsolescence and retirement.

The great danger of supply disruption is in that part of the supply chain. A hurricane in the Gulf of Mexico is a bigger deal, consequently, than war in the Persian Gulf. But, this is a temporary circumstance, which will change radically, as oil production declines quantitatively, and the refining and distribution infrastructure develops huge redundancies.

As production sags in the years ahead, the profit will go out of distribution. Declining quality of oil will push up the costs of refining, particularly the energy costs of refining. Refining oil products will become a much less profitable business as well, at least in consuming nations. The economics of refining will drive oil refining to the countries producing an exportable oil surplus, and the exporters will export product rather than crude.

The declining profitability of refining and distribution is not something I have seen discussed much, although I am sure people in the industry anticipate it in detail. The U.S. oil giants will probably migrate abroad, as Halliburton has already done. Those, which remain will decline precipitously as an industry. The Energy industry will be very powerful, as always, but the oil industry will be a sad, fading memory.

And, big surplus or high-idle capacity in distribution and refining will tend to dampen the effects of disruption. While inventory is inadequate, now, to buffer disruption, in the future, a distribution net with a high-degree of idleness will be able to cheaply hold and manage larger (relative to rates of consumption) inventories of crude and product. So, the threat of disruption will fade away.

The scenario favored by James Howard Kunstler and fans, of a huge escalation in oil price to an astronomical price, leading to total economic meltdown is just not a realistic prospect.

The global warming problem, however, may be exacerbated. Like a cigarette producer going down-market in search of addicts, oil producers will go to the relatively un-developed world with refined oil product, at an assured price, which does not require large investments. Oil will be the energy source of choice for the under-developed world -- which is most of the world, after all -- for the same reason that they favor cell-phones: if your society cannot afford or maintain a complicated infrastructure, the technology with the simplest infrastructure wins out.

The Washington Monthly

Kevin Drum, the Political Animal: "Democrats have gone from 30% of all health industry donations in 2000 to 44% in 2004 to 57% this year. This is, obviously, good news and bad news. The good news is that lobbyist money follows winners, and the healthcare lobby seems pretty confident that a Democrat will become president next year. The bad news is that they might just get what they paid for."

I increasingly fear that this may be the case. What ought to be an election year of revolutionary change appears to be heading toward a coronation for Hillary Clinton, and no change at all -- just a confirmation that all the horrendous changes, wrought by Bush and the Republican Thugs for Plutocracy, have become the new foundation stones of American Life.

The underlying dynamic, which is driving the greatest political storm in half a century into blowing itself out in irrelevance, is clear enough. Politicians recognize that Media blessing is more important to achieving office than the welfare of ordinary People, who remain sheepishly willing to respond predictably to the Media message machine.

If you want change, vote Republican!

digby at Hullabaloo notices a new phenomenon:

George W. Bush is being disappeared from the presidential campaign and everyone's running against incumbent Hillary Clinton. Subtly, but relentlessly, the public psyche is being prepared to deny Junior ever existed. And it could work. For many different reasons, most Americans want nothing more than to forget George W. Bush was ever president. So, we see a very odd subliminal narrative taking shape in which the blame for the nation's failures of the last seven years is being shifted to Clinton (and the "do-nothing" Democratic congress) as if the Codpiece hasn't been running things since 2000. (Not that the radical wingnuts haven't always blamed the Clenis for everything, but the disappearing of Bush is a new element.)

I certainly don't blame the Republicans for trying to do it. It makes sense, since their boy is an epic failure and the original Clinton is still very present in people's minds. It will be quite a trick to pull off, but I can see the press already helping them do it. (Naturally.)

It's an interesting phenomenon and one for which I hope the Democratic strategists are prepared. Their underlying theme seems to be, "If you want change, vote Republican!"

Compare what the Economist said about Robert Draper's recent biography of Bush:

"Mr Draper captures the skill of Mr Bush's two presidential campaigns. In 2000 he beat an incumbent vice-president after eight years of peace and prosperity: the wry slogan among his inner circle was: 'Things have never been better. Vote for change.' Four years later, with the economy stalled and Iraq in flames, he won again. This time, the backstage slogan was: 'Things have never been worse. Stay the course.'"

It is said that it is good to be King. It is also good, to own the Media.

Crisis

tristero at Hullabaloo points to what may well become the beginning of the end in Iraq: a Turkish incursion in Kurdish Iraq.

The Democrats have failed to force an end to Bush's adventure in Iraq, but Bush's policy is inherently self-destructive. It is almost as if Bush designed his own policy to provoke the Iraqis and their neighbors to expell the U.S.

Hostages

Talking Points Memo takes note of the political dynamic, which is keeping the Democrats from ending the war in Iraq, and, not incidentally, is escalating the coming political storm. It is a classic case of keeping the cork in the bottle, while heating and shaking the bottle: an explosion is virtually assured.

Josh Marshall explains why: "the issue isn't really aggregate public opinion. It's the percentage of the 51% of the folks who get you elected. If 50% of them (25% of the electorate) say they want you out, you're toast. And that would appear to be what a lot of these folks [antiwar Republican legislators] are facing."

As the Los Angeles Times reports: "While most Americans want U.S. troops out of Iraq, Republicans remain solidly behind the president and the war. A recent CBS News survey found 58% of Republicans approve of the way Bush is handling the war, compared with just 5% of Democrats and 20% of independents. GOP politicians have defied that sentiment at their peril."

So, 25% of the population holds two-thirds hostage, because one Party depends so much on that 25%, and the cooperation of both Parties is necessary for Congressional action, at least until that captive Party is wiped out the polls.


Atrios points out another aspect of the dynamic, which is how all of this will be interpreted by mainstream Media pundits. The two-thirds have no voice in the mainstream Media. And, consequently, it is not apparent how the political issue will play out. The punditocrisy will certainly blame the Democrats, and insist that withdrawing from Iraq -- the only sensible policy -- is not practical or serious.

24 percent

ABC News:

"Bush's job approval rating fell to 24 percent from last month's record low for a Zogby poll of 29 percent. A paltry 11 percent gave Congress a positive grade, tying last month's record low.

"There is a real question among Americans now about how relevant this government is to them," pollster John Zogby said. "They tell us they want action on health care, education, the war and immigration, but they don't believe they are going to get it."

The dismal assessment of the Republican president and the Democratic-controlled Congress follows another month of inconclusive political battles over a future path in Iraq and the recent Bush veto of an expansion of the program providing insurance for poor children.

The bleak mood could present problems for both parties heading into the November 2008 election campaign, Zogby said.

"Voter turnout could still be high next year, but the mood has turned against incumbents and into a 'throw the bums out' mindset," Zogby said.

It is interesting to me that the approved Media narrative, in the mouth of Zogby in this case, is a partisan-neutral "thrown the bums out". After 7 years of the Republican corruption, incompetence and authoritarianism, it is "a pox on both your houses" that leading Media figures want to proclaim.

As I observed in 2004, the failure to oust Bush meant a political chemistry of dissatisfaction with failed policy has proceeded with a cork-firmly-stuck-in-the-bottle, the lid-clamped-on-the-boiling-pot. With the country's constitutional institutions of fixed terms in office, the Senate filibuster, and ideologically gerrymandered House districts, political change is dammed-up, bottled-up.

More from the survey:

"The national telephone survey of 991 likely voters, conducted October 10 through October 14, found barely one-quarter of Americans, or 26 percent, believe the country is headed in the right direction.

The poll found declining confidence in U.S. economic and foreign policy. About 18 percent gave positive marks to foreign policy, down from 24 percent, and 26 percent rated economic policy positively, down from 30 percent.

A majority of Americans still rate their personal financial situation as excellent or good, although the number dipped slightly this month to 54 percent from 56 percent. In August, 59 percent rated their finances as excellent or good."

Two-thirds of the population, week after week, month after month, year after year, live with the idea that the country, under this President, is "headed in the wrong direction". And, most notably, this level of dissatisfaction has been reached without the spur of an actual economic downturn. People are not necessarily doing badly economically. But, they fear the worst. And, for good reason. Still, I doubt that the level of political reasoning has risen. The Media, controlling the national discourse is hopeless: the dissatisfactions of two-thirds (!) are not represented on television news or radio. Consequently, a Zogby not only can, but is expected to, suggest that people's dissatisfaction ought to be bi-partisan in its focus. And, perhaps worse, people do not have to resolve their ambivalence: they can want to do something about Iraq and global warming, but still want cheap gas to drive to Wal-Mart. The intense political dissatisfaction of the country remains intensely and stupidly reactionary; there's no common ideological or partisan beliefs, on which foundation, a revolutionary change in political and economic policy could be founded.

no longer just Bush

digby at Hullabaloo: "Something very disconcerting has been happening in our discourse for some time, . . . . It's no longer just Bush who is blatantly dumb on TV. A lot of public figures these days adopt all the poses and cadence of ordinary conversation, but actually speak in some sort of gibberish language that makes no sense."

It's true and I have no sense of historical perspective on it.

Of course, politicians in every era and place have spoken gibberish, when it suited them, but Americans in the 21st century have adopted a political language almost devoid of analytical thought. It is as if every statement is an emotive 30-second commercial.

Deep Thought of the Day

Atrios calls this, his "deep thought of the day": "If only our elite media would spend as much time 'debunking' the claims of people in political power (Bush, George, etc.) as they spend doing it to Michael Moore and Al Gore."

Every political storm targets some thing, which it aims to wash away. Whether the chaotic collective action, which is a political storm, can properly be said to have an aim, in the sense of intention, is a metaphysical question, with which I do not intend to be distracted. In the hindsight of history, political reaction, in its effects, can be usefully summarized, as if it had had an aim. Watergate aimed at removing Nixon; the American Revolution aimed at Independence; the Civil War aimed at the destruction (or preservation) of slavery, etc.

Viewed from the liberal blogosphere, the current political storm aims not so much at the removal of George W. Bush from power, as at the overthrow of the elite Media and its Punditocrisy. Journalism is a failed profession, in the era of Media celebrity commentary and millionaire pundits, and it has formed a powerful kind of breakwater, separating the Republican Party's leadership from the political storm.

President Bush, according to all the polls, enjoys the kind of popular approval ratings, which resulted in Nixon's resignation. Back in the Watergate day, every major newspaper editorial board in the country called for the President's resignation. Nothing like that is happening now, despite fully 50% of the population reporting strong disapproval of the President and his policies. And, the reason is quite obvious: those journalists, who dominate the nation's political discourse fatuously pretend that the President is not a liar and an idiot, leading an Administration of unfathomable corruption and incompetence.

The corruption of political journalism began when Reagan assumed office and lied (aka told fables) in speech after speech, and continued thru the Whitewater fake scandal bought and paid for by Richard Mellon Scaife, gave us the "election" of Bush and the "re" election of Bush.

Today, when Al Gore is awarded the Nobel Peace Prize (in the same year, he won an Oscar!), we are reminded about the role elite journalists played in the "election" of George W. Bush in 2000. The cost to the country of that idiotic choice . . .

Scott Horton (Harper's Magazine) is scathing in his denunciation of the Washington Post's editorial page and commentators as the total hacks they are.

Brad DeLong notes that Andrew Sullivan is ethically challenged and wonders

"why the Atlantic Monthly thinks it is smart to take the reputational hit of employing a guy who says that he prints things he thinks are false. The only reason for anybody to read the Atlantic Monthly is if it warrants that it is publishing things by smart people who are trying as hard as they can to inform--not misinform--their readers. If that warranty is false or is even widely perceived to be false, it is unlikely to survive.

"Why oh why can't we have a better press corps?"

Digby at Hullabaloo notes that the Republican Party seems to be determined to follow the disastrous George W. Bush with a still more catastrophic choice, such as Rudy Guiliani: "Apparently it hasn't occurred to them that nominating the Village idiot might have been their first mistake."

Digby notes that elite journalists see no need to intervene in any way in a political process, which seems to be leading in the direction of making a dangerously fact-challenged fool, the most powerful man in the world:

I don't suppose any of the alleged journalists present could say anything. They are, after all, just there to get in their tedious, pre-fab gotcha questions from 1978, and tell jokes. Correcting the debater on his facts on current relevant issues during the actual debate (or even after it when they are all getting as much TV face time as possible and subjecting themselves to media of all kinds) is obviously not part of their job description. And anyway, if a rival does manage to bring it up, it's presented as "politics" and "he said/she said" unless a snotty operative can successfully turn it into some kind of "gaffe" or the right wing drags out the fainting couch and stages a ritual humiliation kabuki. Fact-checking? How droll.

In any case, the bar has been set very low for GOP presidents. Yet they seem to be able to set it lower each time. If Giuliani wins we will not only have an idiot for president we will have a dangerously unstable idiot for president who is even more arrogant and malevolent than the one we have now. I have a sneaking feeling "competence" is going to be the least of our problems.

Unless, anyone think that this liberal dissastisfaction actually has any mass appeal -- which, of course, it cannot, because genuine liberal opinion is scarcely represented on television, and, as we all know, "the Real World" only exists on television -- we ought to note, once again that Bush's popularity is better predicted by gas prices than any other issue.

And that is really fucking scary.

Tristero at Hullabalooreads Sy Hersh in the New Yorker and muses: "It's a weird experience reading Hersh's article on the plans for war in Iran. They couldn't sell the idea of the nuclear threat. So now they're gonna sell the war with a different reason. The mind boggles."

"Let's go over that again. One excuse doesn't work, so they come up with another. And if that one doesn't fly, you can bet your bippy they'll find a third. The important thing is: sell the war.

"Got it? That means there is no real reason to go to war with Iran. If there was, they wouldn't be switching reasons when they don't poll well. Bush and Cheney just want to do it. That's all. They just want to.

"I can't believe this is happening. And I have no idea how this can be stopped. This is sheer madness, not only on Bush's part. A press that isn't howling loudly about this, a political class that isn't speaking up as one to prevent this, and finally, a public that can't be troubled to protest warmaking on a whim - the country is as insane as it was in the fall of '02."

For me, the Bush Administration plans for war with Iran simply do not have the air of reality about them. So, it is hard to take them seriously. But, of course, the Bush Administration, itself, is not breathing the air of reality, and nor are the sycophants and stenographers in the Media, who enable these propaganda campaigns, and, certainly, the Democratic Eunuch caucus is not grounded in reality, either.