Saturday reading

• From George Will -

  America says to foreign producers: We prefer not to pump our oil, so please pump more of yours, thereby lowering its value, for our benefit. Let it not be said that America has no energy policy.

• Wilkerson on Global Warming
• Joel Splolsky on Architecture Astronauts - worth reading, especially in conjunction with John Robb.
• This is weird
• Inventions by year
  

Quick Friday roundup while uploading

• Cool new wind turbines
• A good article on insanity and Angela Yates
• Oil from Algae!
• 15 year old performs surgery in India
• The art of the doable to do list
• The greatest sidewalk artist ever
  

Fair trade energy

Check out this article on Popular Mechanics about using excess CO2 and algae to create biofuels. It's an elegant solution, using one problem (excess CO2) to solve the other (the need for energy).

If I were Bill Gates, or at least in some position of power in his charity, I would subsidize the creation of these things in the third world. Doing that would create industry in the (mostly) quite hot third world countries where it has never been. Unlike the traditional oil regimes though, this industry would not be easily stolen as capital and expertise could be moved fairly easily.

I'll have more ruminations on the "Curse of oil" and capital flight eventually.

Government temerity

From this CNN article

The bill would bar companies from future lease sales unless they agree to renegotiate flawed leases issued in 1998-99 for deep-water drilling in the Gulf of Mexico.

Because of a government error, the current leases do not contain a trigger for royalties if prices soared, as they have in recent years. As a result, the companies have avoided paying $1 billion in royalties so far and stand to avoid an additional $9 billion over the life of the leases, the Interior Department says.

Isn't that why one signs a lease, to lock in a price? All government contracting is shady, but to pretend that anyone is owed anything is ridiculous. All the more reason to auction off the drilling rights and be done with it.

Aspects of the conventional wisdom

• Oil is the lifeblood of the Global Economy - I remember paying 94 cents a gallon in October of 2001, to $3.05 this summer, to $1.98 today (yes I realize that the price of oil does not track gas exactly, but it's close). Given that the economy of the oil consuming world has growing mildly (Europe), moderately (the US), and highly (China and India), it would seem that this is simply not true, or if true, not meaningful.
• The invasion of Iraq will turn the Muslim world against the US. Given that it's been three and a half years, and all of the opposition is still based in Iraq (with some degree of foreign investment in people and capital) this would seem not to be meaningful.
  

The under reported flashpoint of the moment

It's Russia vs Georgia. One, financially strong due to a high oil price, but weakening everywhere else it seems, and the other a scrappy underdog with some smart leadership. Coming Anarchy has a nice synopsis of the current sort-of crisis. Expect this to become big news over the next few weeks.

Rapid Fire Saturday

• How to tell a good story
• Google unleashes free 3-D software
• A very interesting post on how a war with Iran is likely to function.
• LifeHacker on problem solving.
• LifeHacker on starting your own business.
• A guy in Colorado got caught with an infrared traffic light changer, and was only ticket $50! Totally worth it.
• A very good article on this ridiculous "Peak Oil" meme.
  

The market clears

I went to the bank to make a deposit (Kroger ATM) and then drove around a bit. The lowest I saw gas was $2.89, the highest was $3.41 (at a place that is always the highest) and the average was around $3.15. At least in the Avondale-Decatur area.

All of the places seemed to have gas though, which would indicate that the biggest problem didn't happen. For more on the Atlanta area situation see this post on VodkaPundit.

Fifty cents in one day. I do realize that recent events were the result of a supply disruption, and not a long-term trend, but can we drill in Alaska now? I thought that would arise in the national conversation but it seems like it won't.

A fine post from Steve Levitt

Solid work explaing why the "Peak Oil" notion is wrong, a summary quote.

So why do I compare peak oil to shark attacks? It is because shark attacks mostly stay about constant, but fear of them goes up sharply when the media decides to report on them. The same thing, I bet, will now happen with peak oil. I expect tons of copycat journalism stoking the fears of consumers about oil induced catastrophe, even though nothing fundamental has changed in the oil outlook in the last decade.

Curiously unmentioned is that oil demand usually peaks in the month of August (it's lowest in February). I actually read all of the comments thread, which wasn't terribly illuminating. Few addressed the point in the post. It was surprising how attached people are to particular doomsday scenarios.

Yet more things that annoy me

I was listening the ever earnest radio program Democracy Now on the way from my the guitar lesson and I heard for the third time today the phrase "Oil driven inflation".

Inflation is a general rise in prices, which is the same thing as a decline in the purchasing power of the dollar (or whatever currency). A rise in the price of oil does not cause this. If it did then wages would be increasing due to the oil price increase as well. It is a transfer of wealth from oil-consumer to oil-producer, which is not inflation.

Oil

I came across an interesting article by Alan Reynolds on the Cato site:

We import nearly 58 percent of all petroleum, yet only 45 percent of each barrel is used to produce gasoline, and a significant portion of that gasoline is used in delivery vans and taxis. Commuter and leisure driving accounts for little more than 40 percent of the oil we consume -- far less than the amount we import. The rest of each barrel of crude is used for heating oil and diesel fuel for trucks, busses, farm machinery and ships (23 percent), petrochemicals (17 percent), jet fuel (9 percent), asphalt (4 percent) and propane (4 percent).

...

The U.S. index of industrial production peaked at 116.4 in June 2000 and then fell to 109.1 by December 2001; the price of West Texas crude simultaneously fell from $32 to $19. U.S. Industrial demand for petrochemicals declined, and so did the related need for fuel used to transport industrial supplies and products.

Similar effects were magnified worldwide. Falling industrial production in any region has the same effect on oil prices, so crude fell from $25 to $12 in the wake of the Asian currency crisis of 1997-98.

and

Nobody in Washington shows the slightest awareness of the global nature of the oil market, of the fact that industrial damage from high oil prices has nothing to do with whether a country imports or exports oil, or even the fact that there is a crucial two-way linkage between worldwide industrial production and worldwide oil prices. When it comes to causes and effects of high oil prices, nobody in Washington shows much interest in logic or facts. It might be sad if it wasn't so pathologically pathetic.

RTWT.

Oil Books

Via Instapunit, Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy - which has the theory that the Saudis are running out of oil (not likely IMHO, if they were their behavior would be much different)

Via the too shrill Huffington Post, Secrets of the Kingdom - which has as one of it's major points the contention that the Saudis have rigged the entire country with explosive and radiological material as an incentive for everyone to stay on their good side. Again, not that likely, but interesting. It is written by Gerald Posner who usually does fine work.