Wednesday, August 27, 2008

Oil and Energy 2012

Our dear friends in OPEC have had the world and the US in particular in stranglehold since the 1970’s but they may have finally overplayed their hand. Actually, it isn’t just their greed that may bring them down but the greed of Wall Street Speculators who drove the price of a barrel of oil to an unprecedented $147 / barrel. The price of oil has fallen from that ridiculous high and in all likelihood will continue to fall and some forecasters are predicting $65 / barrel by 2010.

How is this possible? Several things seem to be driving the price of oil down and the slide seems to have begun on a rumor that the US Government was launching an investigation into oil speculation. Note that this was just a rumor but that was enough to drive the speculators into a selling frenzy which drove the price down. If the demand for oil worldwide was rising then the speculators would not have had such an impact when they sold, but the reality seems to be that the oil supply was meeting – if not exceeding – world demand. In effect the speculators were driving the price of oil up to artificial highs. This created a worldwide scare and reaction as the usual left wing politicians got on their demagogic bandwagon and began calling for punishing the Oil Companies for their obscene profits, when in actual fact the oil companies had lower profits than almost any other large company. But the critical point here is that the speculators created a scare and OPEC could not correct it because they were already producing more oil than the demand and that scare may have far reaching consequences.

Although the price of oil may fluctuate in the near term the long range trend will most likely be down as the dollar strengthens against the Euro and other world currencies. This fluctuation according to some analysts will center on the $100 / bbl mark but once that barrier is breached the slide will be steep and within six months the price of a barrel will be $65 or less. But all of this could be attributed to the usual swings in every commodities market, except this time it seems that maybe the realization that oil is a finite resource and an alternative must be found has gotten some traction with consumers. In fact it seems this scare may have actually shocked consumers to the point where they may actually take energy conservation seriously. Auto companies are sharply focused on hybrids and electric cars but more importantly consumers seem to have rediscovered public transportation and the logic in turning off lights when not needed. The day of the SUV seems to be ending as consumers are looking for ways to reduce the cost they pay for gasoline and as this trend grows it drives down demand which in turn drives down price, so the return of low priced (relatively) gasoline may be in the near future and certainly by 2012.

If this trend to develop alternative energy sources and reduce our alliance on oil and oil based products is sustained it will have far reaching consequences. Perhaps the greatest impact will be on the oil producing countries in the Middle East, especially Saudi Arabia, Kuwait, and the other Arab countries. These countries have failed to establish any sort of economic base other than oil and they have squandered the billions in revenue they have received on palaces and luxuries. The result is that if their oil revenues decline they really have no way of offsetting the decline. Worse they cannot rely on tourism due to their religious fanaticism and draconian laws. Furthermore they have become highly dependent on foreign workers and if these imported workers leave the over indulged citizens will be unable or unwilling to take up the slack.

Naturally the attitude among many as they see OPEC choking on an oil glut and declining revenues, will be that it is well deserved. Well deserved it may be but if this happens it could have far reaching consequences. Saudi Arabia and the oil producing Islamic countries are all highly unstable and any dramatic decline in revenues that impacts their social programs could trigger massive political change. Certainly the House of Saud could fall and would be replaced by an Islamic government similar to Iran’s, but other governments currently friendly to the west could also fall. This would create chaos in the oil markets but it would also provide massive amounts of cash to various terrorist organizations.

But not all oil producing countries are Islamic and countries like Canada, UK, Russia, etc, would not be greatly affected but some of the poorer countries like those in Africa might weather the storm politically but socially the impact could be devastating. These countries do not have the infrastructures or solid economic base that would allow them to compensate for reduced revenues. In these countries the impact could be reflected in even greater unemployment and reduce the standard of living from its already low level.

So while the price of oil and gas may decline as alternative fuel sources come on the market, the impact may not be all positive.

Monday, August 18, 2008

Science Under Attack

The daily news continues to document the continuing decline of science from a search for the truth into a faith based system where belief and opinion transcend facts and observation. It is hard to pinpoint precisely when this decline began but it was already well advanced when Rachel Carson’s book “Silent Spring” launched its’ attack on DDT. Even though contemporary scientific observation contradicted Carson’s postulations the media and the usual bevy of environmentalists unburdened by facts demanded in the name of SCIENCE that DDT be banned. The irony of this position was totally lost and DDT was banned even though Carson’s work was later proved to be a fabrication if not a complete hoax. Nevertheless DDT remains banned even though Malaria which was largely controlled by DDT is reaching epidemic proportions. Even more ridiculous is the recent report that ties the shrinking population of Polar Bears to the pollutants “like DDT” that are condensing out of the atmosphere and into the food chain affecting everything from plankton to polar bears. Of course DDT hasn’t been manufactured in over 40 years and the actual total population of polar bears seems to be growing. But science is no longer burdened by facts but is being driven by some sort of weird belief system that rests of the premise that humans are a destructive force and must be controlled if not eradicated and at the least reduced to cave man status.

Following DDT the next great assault on science came with the attack by lawyers aided and abetted by a group of “scientists” with a social agenda, on smoking. The initial cry was that smoking caused lung cancer and the lawyers made millions sucking the blood of deep pocket corporations. It is now considered common knowledge that smoking causes lung cancer even though there has never been any empirical evidence supporting that claim. In fact as the number of smokers declined the incidence of lung cancer remained constant. Clearly this could not true and there must be some other connection – hence the attack on side-smoke. The actual EPA report which was widely unread actually stated that there was no connection and even using their A PRIORI starting point (which allowed them to eliminate any contrary finding) there was never any valid statistical correlation and even worse there has never been any empirical connection to tobacco smoke and lung cancer. Nevertheless and undaunted by facts the media and that same group of social reforming busybodies have managed to successfully curtail individual rights which they disapproved even though there is not one shred of physical proof supporting their position. This is faith based science where a belief in a position is sufficient to take corrective action in the form of legislation.

But this attack on science even by scientists or at least those who claim to be scientists has escalated to the point to where empirical science seems to be disappearing altogether. There has always been a level of discomfort between science and religion. This discomfort began to grow with Darwin’s book “Origin of Species”. At the time Darwin was attacked by the scientific community starting with the simple fact that his book did not discuss or even address the origin of species but merely described how a given species adapted to its environment. With the growth of paleontological knowledge several problems arose beginning with the origin of life itself. Then there was the problem with Cambrian explosion of life. Life in the Precambrian was largely very simple life forms and pond scum followed by highly developed and diverse life forms in the Cambrian. Then there remains the problem of speciation. How species develop is BELIEVED to be through mutation and evolution, but no proof of this exists and transitional fossils either don’t exist at all or are believed to exist based on some conclusions and opinions.

However, Evolution and the problems associated with it really pale when the total picture is examined because today science seems to be nothing more than statistical studies, with very little examination of any facts or empirical evidence. So we see statistical studies that show that cancer is caused by such a variety of things that virtually everything is a carcinogen. Statistics are used to justify taking a variety high priced drugs to lower cholesterol and to control type two diabetes but the reality is that some people with low cholesterol have heart attacks and some people with high cholesterol don’t. Virtually everyone today has type II diabetes because the metric for determining the diabetic threshold was lowered from 199 to 100. This was done arbitrarily and precisely what causes diabetes remains unknown, but science marches on.

Beyond these statistical studies are the new “social” diseases like alcoholism and obesity. Precisely how one catches these diseases is unknown but clearly something must be done by the government or science or someone other than the individual in order to stamp out these diseases. The idea that both of these diseases are the direct result of personal decisions and actions by the individual involved is totally rejected. Instead there are calls by the usual coterie of self-described intellectuals and celebrities to stamp our fast food, to force children to eat only healthy food no matter how unappetizing while launching one excuse after the other so individuals no longer have to suffer the stigma of being called a drunk. Why is obesity being subjected to direct action but not alcohol? Well all of those folks calling for action on trans-fats and fast food are almost universally on a diet and only eat tofu and sushi anyway so it only seems right to force the rest of the population to conform to their dietary standard. But those same people drink wine – only good vintages though and then you have the advertising dollars, besides prohibition didn’t work anyway, so rather than address the disease of alcoholism the solution is excuse it as being something out of the control of the individual.

Where is the science behind all of this? Where is the outcry from the scientific community about this distortion of science? The silence is deafening as science slowly slips away from empiricism and into beliefs, opinions, and excuses.