I asked a longtime friend who is a USG China-watcher for a no-kidding assessment of current energy usage in PRC. Energy usage is a vital sign for the economy:
China imports are down 20% with about a year and a half strategic stockpile in tanks inland and ships in port (China has a strange habit of keeping oil at sea). In fact, their oil use is down so severely that Saudi Arabia and Russia are coordinating their reduction in oil production (which is totally ridiculous because they are both one commodity economies and are directly confronting one another for customers to balance their national budgets).
This is from Chevron yesterday:
Working to lift markets this morning is the talk of supply cuts coming from OPEC+. Signs point to OPEC+ being willing to deepen cuts amidst the decreased demand caused by the coronavirus. OPEC+ is gathering for an urgent assessment of how Asiaâ€™s coronavirus may hurt oil demand; technical experts from the OPEC+ coalition will meet at the cartelâ€™s Vienna headquarters to evaluate the diseaseâ€™s impact.Russian President Vladimir Putin and Saudi King Salman bin Abdulaziz spoke by phone and discussed the grim situation of the global hydrocarbon market, the Kremlin said in an emailed statement; both leaders confirmed their readiness to continue cooperation to keep the global oil market stable.
Crude is recovering most of yesterdayâ€™s losses this morning, but markets are still reeling from last weekâ€™s declines.
Concern continues over the effects of the coronavirus on oil demand in China and Asia, but traders seem to have priced most of those concerns into the market already. The major remaining variable is how long will the crisis continue.
Crude prices are up this morning. Crude is currently trading at $51.07, a gain of 96 cents.Fuel prices are up. Diesel is trading at $1.6049, a gain of 2.7 cents.
Gasoline is trading at $1.4892, a gain of 1.6 cents.
Basically, China was already using less energy from the tariff war and now the virus has literally shut down the Yangtze River from Wuhan eastward to Shanghai (basically Saint Louis towards New Orleans– that’s how serious it is).
Keep in mind, the impact of China’s decline in energy use is driving oil prices down to the point many important national budgets cannot meet their obligations, which will put people in the streets protesting already compromised governments (Russia is the most vulnerable, then places like Venezuela are put in even more trouble, and the whole Belt/Road thing will fall apart).
Ukraine lacks a modern mechanized and air-supported military capable of taking on Russia but, as Dr. Waller notes, Ukraine does not necessarily have to do that. Russia’s economy and influence over Europe depends on energy sales to European countries. That energy is delivered by Russian pipelines crossing Ukraine.
Hereâ€™s what Ukraine should do:
1. Send loyalist forces and pipeline engineers to occupy all Gazprom pipeline compressor stations, valve stations, and regulator stations.
2. Close the valves of one or more major pipelines, to demonstrate capability.
3. Issue orders to shut down entire pipelines by closing the valves and disabling them if necessary.
4. Plant demolition charges along the pipelines in remote areas, to detonate in the event it is necessary to destroy them.
The results will be catastrophic for both Europe and Russia.
For Russia, it would show that Ukraine effectively controls the single largest source of Russiaâ€™s hard currency inflows.
When Putin sent forces into Ukraine, he caused Gazpromâ€™s market value to tank $15 billion in just one day.
Think, then, of how powerful the mere suggestion of a Ukrainian cutoff of gas would be on Gazprom, the Russian state, and the oligarchs who own the most shares of the company.
The results would also cause Europe to pay Ukraine some of the respect that was lost when Kyiv surrendered its nuclear weapons back to Moscow more than two decades ago. Ukraine could finally show that it isnâ€™t just Moscow that controls Europeâ€™s natural gas supply.
Ukraine can safeguard whatâ€™s left of its natural integrity â€“ and even force Putin to remove Russian forces from the country completely â€“ by building the easy capability to destroy the pipelines completely, should Putin remain the aggressor. Meanwhile, Ukraine can show its restraint as a responsible actor in the midst of a severe national crisis, earning more serious attention to the increasingly finlandized Europe. (Keep in mind that senior political figures, such as former German socialist chancellor Gerhard SchrÃ¶der, is on the Gazprom payroll.)
By showing that it can â€“ and will â€“ shut down or wreck Gazpromâ€™s gas lines crisscrossing its territory, Ukraine will be defeating the enemy without fighting him at all.
The central conflict of the Obama Presidency has been between the jobs and growth crisis he inherited and the President’s hell-for-leather pursuit of his larger social-policy ambitions. The tragedy is that the economic recovery has been so lackluster because the second impulse keeps winning.
Yesterday came proof positive with the White House’s repudiation of the Keystone XL pipeline, TransCanada’s $7 billion shovel-ready project that would support tens of thousands of jobs if only it could get the requisite U.S. permits. Those jobs, apparently, can wait.
Unless the President objected, December’s payroll tax deal gave TransCanada the go-ahead in February to start building the pipeline, which would travel 1,661 miles from Alberta to interconnections in Oklahoma and then carry Canadian crude to U.S. refiners on the Gulf Coast.
The State Department, which presides over the Keystone XL review because it would cross the 49th parallel, claimed yesterday that the two-month Congressional deadline was too tight “for the President to determine whether the Keystone XL pipeline is in the national interest.” The White House also issued a statement denouncing Congress’s “rushed and arbitrary deadline,” which merely passed with overwhelming bipartisan support.
This is, to put it politely, a crock.
Keystone XL has been planned for years and only became a political issue after the well-to-do environmental lobby decided to make it a station of the green cross. TransCanada filed its application in 2008, and State determined in 2010 and then again last year that the project would have “no significant impacts” on the environment, following exhaustive studies. The Environmental Protection Agency chose to intervene anyway, and the political left began to issue ultimatums and demonstrate in front of the White House, so President Obama decided to defer a final decision until after the election.
Robert J. Samuelson, in the Washington Post, calls the decision to block the pipeline an act of insanity, noting that it is an act of pure symbolism, no utility, not even supposititious enviro-utility is actually thereby served. But reality is never allowed to stand in the way of ideology by this administration.
President Obamaâ€™s rejection of the Keystone XL pipeline from Canada to the Gulf of Mexico is an act of national insanity. It isnâ€™t often that a president makes a decision that has no redeeming virtues and â€” beyond the symbolism â€” wonâ€™t even advance the goals of the groups that demanded it. All it tells us is that Obama is so obsessed with his reelection that, through some sort of political calculus, he believes that placating his environmental supporters will improve his chances.
Aside from the political and public relations victory, environmentalists wonâ€™t get much. Stopping the pipeline wonâ€™t halt the development of tar sands, to which the Canadian government is committed; therefore, there will be little effect on global-warming emissions. Indeed, Obamaâ€™s decision might add to them. If Canada builds a pipeline from Alberta to the Pacific for export to Asia, moving all that oil across the ocean by tanker will create extra emissions. There will also be the risk of added spills.
Now consider how Obamaâ€™s decision hurts the United States. For starters, it insults and antagonizes a strong ally; getting future Canadian cooperation on other issues will be harder. Next, it threatens a large source of relatively secure oil that, combined with new discoveries in the United States, could reduce (though not eliminate) our dependence on insecure foreign oil.
Finally, Obamaâ€™s decision forgoes all the projectâ€™s jobs. Thereâ€™s some dispute over the magnitude. Project sponsor TransCanada claims 20,000, split between construction (13,000) and manufacturing (7,000) of everything from pumps to control equipment. Apparently, this refers to â€œjob years,â€ meaning one job for one year. If so, the actual number of jobs would be about half that spread over two years. Whatever the figure, itâ€™s in the thousands and thus important in a country hungering for work. And Keystone XL is precisely the sort of infrastructure project that Obama claims to favor.
The big winners are the Chinese. They must be celebrating their good fortune and wondering how the crazy Americans could repudiate such a huge supply of nearby energy.
UPI reports that another great European nanny state measure is on the way.
[S]tart-stop systems that turn off a car when it is idling and reignite the engine when the driver releases the brake will be coming to the United States and Canada in the next five years, The Detroit News reported.
The technology is widespread in Europe and will be embraced in North America as a tool to meet increasingly stringent fuel-economy and emissions requirements, auto experts say.
“Engineers kill for one-tenth of a mile per gallon,” Joe Phillippi of AutoTrends Consulting Inc. said. “In city driving, it would make a huge impact.”
Estimates vary, but the consensus is shutting off the engine at a stop can improve fuel economy as much as 15 percent.
Consumer acceptance could be a challenge.
“It is a strange sensation because the engine suddenly turns off,” said analyst Stephanie Brinley of EMC Strategic Communications in Troy, Mich. “It is quick and seamless, but you can tell it happens.”
Half of the new cars in Europe will have start-stop technology in 2012, and North America will reach that figure in 2016, said Frank Frister, product manager with Bosch North America, one of the companies developing stop-start systems.
There you’ll be stopped at the light, and in front of you will be one of those holier-than-thous who has taken care to equip himself with the latest earth-saving technology.
The light changes, the complex electronic system stutters, and the democrat in the Prius fiddles with his ignition trying to get his engine restarted as seconds tick by and your blood pressure rises.
Jeff Jacoby, in the Boston Globe, debunks the Puritan meme of an addiction to petroleum.
The explosion of BPâ€™s oil rig in the Gulf has been a calamity in so many ways, above all the loss of 11 human lives. With hundreds of thousands of gallons of crude oil gushing daily from the crippled wellhead, the environmental impacts have been excruciating. BP is responsible for a dreadful mess, one that will take years and many millions of dollars to clean up.
Awful as the catastrophe has been, however, life without oil would be far, far worse.
Americans consume oil not because they are â€œaddictedâ€™â€™ to it, but because it enriches their lives, making possible prosperity, comfort, and mobility that would have been all but unimaginable just a few generations ago. Almost by definition, an addiction is something one is healthier without. But oil-based energy improves human health and reduces poverty â€” it makes life longer, safer, and better. Addictions debase life. Oil improves and expands it.
â€œOil may be the single most flexible substance ever discovered,â€™â€™ writes the Manhattan Instituteâ€™s Robert Bryce in â€œPower Hungry,â€™â€™ a new book on the myths of â€œgreenâ€™â€™ energy. â€œMore than any other substance, oil helped to shrink the world. Indeed, thanks to its high energy density, oil is a nearly perfect fuel for use in all types of vehicles, from boats and planes to cars and motorcycles. Whether measured by weight or by volume, refined oil products provide more energy than practically any other commonly available substance, and they provide it in a form thatâ€™s easy to handle, relatively cheap, and relatively clean.â€™â€™ If oil didnâ€™t exist, Bryce quips, weâ€™d have to invent it.
Of course there are problems created by oil, as the Deepwater Horizon calamity so heartbreakingly demonstrates. But most things of great value come with downsides. There are 40,000 traffic fatalities in the United States each year, but no rational person suggests doing away with cars, trucks, and highways. Airplanes sometimes crash and boats sometimes sink, but air and sea travel are not derided as â€œaddictionsâ€™â€™ we need to break. Deaths due to hospital infections, medication errors, or unnecessary surgery number in the scores of thousands annually, but who would recommend an end to medical care?
Someday there may be an energy source that is as abundant, efficient, clean, and economically viable as oil. But nothing today fits that bill â€” certainly not biofuels, wind farms, or solar power. Besides, it isnâ€™t only energy products that we get from petroleum. Crude oil refining also makes possible plastics, synthetic fibers, lubricants, waxes, asphalt. â€œOther products made from petroleum,â€™â€™ notes the US Energy Information Administration, â€œinclude ink, crayons, bubble gum, dishwashing liquids, deodorant, eyeglasses, CDs and DVDs, tires, ammonia, [and] heart valves.â€™â€™
We are not “addicted” to oil. That is a metaphor based on the generally illusory notion of addiction, and it is wrong. We need petroleum or an equivalent source of energy to fuel our vehicles, heat and light our homes, and to operate our machines… to live. We also need food in pretty much the same way. Does it make sense to assert that we are addicted to food? We use petroleum because it is currently the cheapest fuel source. If there were not politicians backed by armed men with guns, at home and abroad, levying whopping extortion fees on any and all petroleum extracted from the ground, it would be really, really cheap.
The cost of the energy we use is not really a problem. We have so little difficulty affording it, that we let our own government attach huge taxes to every gallon we consume and we let primitives in far off lands squat on top of oil supplies and accumulate trillions by charging us for oil we discovered and extract for them. If the cost of petroleum really bothered anybody, we would insist on allowing oil drilling not only in the incredibly remote Arctic howling wilderness, but in everyone’s backyard. If the cost were a genuine problem, we’d have long ago sent the marines into a number of Middle Eastern countries and put all their rulers out of the oil business and back into the sheep herding/caravan ambushing business again.
Peter Zeihan, at Stratfor, discussing the impact of the ongoing collapse of oil prices from to a current $40 a barrel from $147 last July.
Happily, the list of losers is headed by the worst outlaws.
Venezuela and Iran top this list by far. Both are led by politicians who have lavished vast amounts of oil income on their populations to secure their respective political positions. But that public approval has come at its own price in terms of economic dislocation (why diversify the economy if strong oil prices bring in loads of cash?), low employment (the energy sector may be capital-intensive, but it certainly is not labor-intensive), and high inflation (high government spending has led to massive consumption and spurred rampant import of foreign goods to satiate that demand).
Of the two states, Venezuela is certainly in the worse position. By some estimates, Venezuela requires oil prices in the vicinity of US$120 a barrel to maintain the social spending to which its population has become accustomed. Iranâ€™s number may be only somewhat lower, but President Mahmoud Ahmadinejad is in the process of at least beginning to bow to economic reality. On Dec. 5, he announced massive cuts in subsidy outlays with the intent of reforging the budget based on a price of only US$30 a barrel.
Ben Smith identifies a hundred eighty degree policy reversal made by Joe Biden in one 72-hour period.
Some great rope line video from Joe Biden’s recent Ohio swing, where he was asked by an anti-pollution campaigner about clean coal — a controversial approach in Democratic circles for which Obama has voiced support, particularly during the Kentucky primary.
Biden’s apparent answer: He supports clean coal for China, but not for the United States.
“No coal plants here in America,” he said. “Build them, if they’re going to build them, over there. Make them clean.”
“Weâ€™re not supporting clean coal,” he said of himself and Obama. They do, on paper, support clean coal.
The answer seems to play into John McCain’s case that Obama has been saying “no” to new sources of energy.
Today, Senator John McCain pounced on Biden’s remarks.
“I am going to put in place the priorities and policies that will create jobs in Ohio. One important way that we are going to create jobs here is with the development of additional nuclear plants and through investments in clean coal technology,” he said. “[Obama’s] running mate here in Ohio recently said that they werenâ€™t supporting clean coal.”
Biden spokesman David Wade responded by calling McCain’s statement “yet another false attack from a dishonorable campaign.”
He continued: “Senator McCain knows that Senator Obama and Senator Biden support clean coal technology. Senator Bidenâ€™s point is that China is building coal plants with outdated technology every day, and the United States needs to lead by developing clean coal technologies.”
But the error here does seem to be Biden’s, and his remarks, and his apparent return to his primary position Tuesday, were striking because just three days ago, he praised the possibilities of coal to a crowd at the United Mine Workers of America annual fish fry in Castlewood, Va.
â€œYou know we have enough coal in the United States of America to meet out needs domestically for the better part of the next hundred to 200 years,â€ Biden said before launching into a critique of McCainâ€™s energy priorities, slamming his support for billions in tax breaks for oil companies as the industry rakes in record profits.
â€œImagine … what Barack and I can do taking that $4 billion â€¦ and investing it in coal gasification, finding out what we can do with carbon sequestration, finding out how we can burn the coal that you dig that can free us from being dependent on foreign oil countries and at the same time not ruin the environment. Thatâ€™s within our capacity to do it, if you give me $4 billion I promise you, I promise you we will find the answer,â€ Biden said.
He linked the ticketâ€™s support for coal with their call to have U.S. automakers produce plug-in electric cars. â€œWhereâ€™s that [electricity] come from? That comes from a utility. What do utilities burn? They burn coal mostly.â€
Southwest Virginia UMWA members are just too dumb to notice what he says in a different state, Biden obviously surmises.
George Will notes how liberals like Obama believe government can simply order new energy sources to come into being.
Obama recently said that he would “require that 10 percent of our energy comes from renewable sources by the end of my first term — more than double what we have now.” Note the verb “require” and the adjective “renewable.” …
What will that involve? For conservatives, seeing is believing; for liberals, believing is seeing. Obama seems to believe that if a particular outcome is desirable, one can see how to require it. But how does that work? Details to follow, sometime after noon Jan. 20, 2009.
Obama has also promised that “we will get 1 million 150-mile-per-gallon plug-in hybrids on our roads within six years.” What a tranquilizing verb “get” is. This senator, who has never run so much as a Dairy Queen, is going to get a huge, complex industry to produce, and is going to get a million consumers to buy, these cars. How? Almost certainly by federal financial incentives for both — billions of dollars of tax subsidies for automakers and billions more to bribe customers to buy cars they otherwise would spurn.
Conservatives are sometimes justly accused of ascribing magic powers to money and markets: Increase the monetary demand for anything, and the supply of it will expand. But it is liberals such as Obama who think that any new technological marvel or other social delight can be summoned into existence by a sufficient appropriation. Once they thought “model cities” could be, too.
Where will the electricity for these million cars come from? Not nuclear power (see above). And not anywhere else, if Obama means this: “I will set a hard cap on all carbon emissions at a level that scientists say is necessary to curb global warming — an 80 percent reduction by 2050.”
No, he won’t. Steven Hayward of the American Enterprise Institute notes that in 2050 there will be 420 million Americans — 40 million more households. So Obama’s cap would require reducing per capita carbon emissions to levels probably below even those “in colonial days when the only fuel we burned was wood.”
Liberal statism is a cult, fundamentally based on a narcissistic belief in the omnipotence of the calculative powers of human reason employed by an educated elite, to which class its subscribers by some curious coincidence invariably belong.
I don’t agree with Green with a Gun‘s PC envirnmentalist cant about the people of Great Powers being able “to have more than their fair share of world resources.” Shares of world resources are actually not conventionally exchanged at gun point. Sorry, Marx. We buy them.
Some countries have politically systems providing security of property and the rule of law, and cultural traditions favoring education and hard work. Those countries are consequently more productive, and consequently wealthier, and can afford to buy more of everything than people living in countries where blood feuds and brigandage enjoy greater status than investment banking.
Russia, Lord knows, has more than her fair share of natural resources, but Russia has not been notoriously successful historically in doing anything with them.
Today, Russia would like to use its ability to supply oil and natural gas as a weapon to restore its ability to wield power.
As Green with a Gun aptly puts it:
The Russia energy company Gazprom supplies something like three-quarters of Eastern Europe’s natural gas, and overall about a quarter of the EU’s natural gas. If the EU pisses off Russia, Europeans face a cold winter. Russia has already shown itself ready to turn off the tap, as it did with the Ukraine and Belarus.
You can see, then, that the US and EU are rather keen not to have to rely on Russian goodwill to keep the oil flowing out of Central Asia. If they rely on Russia for oil or for natural gas, then if Russia switches one off it hurts a lot but they can change to the other, but if Russia controls both, they’re stuck. Russia has them not merely by the balls but also the throat. Russia can then dictate not only prices, but to some degree foreign policy. “Yes, dear EU, you can support airstrikes on our friends in Iran, but you will gain a new appreciation of your white Christmas, as you’re walking out in the cold past your unfuelled cars.”
The practical alternative is the BTC Pipeline delivering oil from the Central Asian Republics via Azerbijan and Georgia to Turkey and thence to Europe.
And that’s what Russia’s invasion of Georgia is all about.
There are many ethnic and historical issues behind the Georgia-Russia conflict. The Ossetians feel a kinship with Russia more than with Georgia, Georgia was set for NATO membership next year, putting a NATO country directly on Russia’s border, and Russia has long held sway over the entire Caucasus. And since the West went to war with a Russian ally in Serbia to secure the independence and self-determination of the Kosovar Albanians, they can hardly complain if Russia goes to war with Georgia to secure the same for the Ossetians. But really that is not important: for the world and for Russia it all comes down to energy, to controlling the flow of it. Russia has chosen an effective means of controlling the flow of oil from the Central Asian republics.
Russia has accomplished a strategic coup de main. The aim of most warfare is to present your enemy with a dilemma. For example, achieve air superiority against his land forces, and his forces can either sit still in bunkers and be encircled by your troops, or move and be bombed – either way they’re screwed, it’s a dilemma. Russia has presented the West with a dilemma – do nothing to help Georgia and lose BTC, or go to war against Russia and in the course of the conflict lose BTC.
Candidate Obama, like so many lefties, seems to believe anything bad about the United States, without even submitting it to critical thinking. He said on May 19, 2008, for example, that 3% of the worldâ€™s population (i.e., in his calculation, the United States) accounts for 25% of the greenhouse gases put into the atmosphere. In the 1970s, the lefties used to talk about 6% of the worldâ€™s population using 25% of the worldâ€™s energy. Even before Obama, they were blaming America first.
The leftâ€™s figures depend on what is meant by â€œenergy.â€ Before the founding and development of the United States, â€œenergyâ€ meant the human back, beasts of burden, windmills, waterwheels, burning wood, coke, and coal, and the like. The United States is certainly not using 25% of the energy generated by those means today. I donâ€™t think so, although it might be. The darn country is just so efficient.
But if we mean by â€œenergyâ€ only the modern sources of energy â€“ electricity, the Franklin stove, the steam engine, the piston engine propelled by gasoline (and now by electric and/or hydrogen batteries), the processing of crude oil into gasoline, nuclear energy, the jet engine, the development of ethanol and other fuels derived from plants, and other devices â€“ all of these except one were invented by the people of the United States, as their gift to the world. (The exception was the steam engine, invented by our cousins in Britain, and further developed here as well as there.)
In other words, the United States has invented nearly 100% of what the modern world means by â€œenergy.â€ And it has helped the rest of the world to use 75%.