The Conard justification – Income inequality

Conard’s upcoming book justifies uninterrupted income grab by the people who caused the mess.

Edward Conard’s soon-to-be-released book is  Unintended Consequences, Why Everything You’ve Been Told About The Economy Is Wrong .  The New York Times devoted many pages to Conard and his book with a  featured report by Adam Davidson in its Sunday Magazine (2012-May06) and devoted many pages.

I though the NYT coverage was pretty sympathetic, Conard considered it a hit piece.

Disclosure:

I have not yet read the book because it will  not be available until June 7.  But important points were made in the NYT and on Conard’s website.

Anecdotal Analysis:

An anecdote is a snapshot analogy taken from our current situation and selected for a reason.  Although sometimes used for humor, they are most important when people make political points with them, as when Pres Reagan made them the foundation of his reasoning.  Although Unintended Consequences is apparently chock-full of these things, we will only discuss Job Creators, Food Supply, and Investment Policy.  At the end, Conard’s advocacy of current investment practice will be discussed based on the point that the current social situation arose from the American Income Pump that has operated for 3 decades.

Snapshot of Job Creators:    Conard asserts that society benefits when investors compete successfully.  This is pretty uncontroversial.  Examples are not so clear:   Sergey Brin founded Google and we all benefited; Jobs and Wozniak succeeded with Apple, Gates with Microsoft, Bezos with Amazon.  All these are poster-child examples, true success stories in which we all shared, at least initially.

Job Creators close businesses

Competition generates great progress while it happens. But, when one participant gets more income than the others the play morphs into the game of Monopoly®; the player with the most cash acquires or terminates the others.  Our poster-child companies have bought or suppressed their foes.  All these companies seem moving toward increased exploitation of their customers, the ways traditional monopolies manage the prices of their controlled commodities.

Romney bragged that he was a job generator with Bain Capital, right along with Ed Conard. The blog PowerLine made a basic point:

“Ultimately, of course, Bain was not in the business of creating or destroying job; it was in the business of maximizing financial return to investors.“

Happy investors make more profit for management.  Takeovers or restructuring that move jobs from US to China (as in Apple’s factory moves), are frequently listed on the (+) side. Jobs eliminated when a company is closed and assets sold, or jobs actually retained due to a benign takeover – these are not of concern to investment companies.

Techniques to efficiently manufacture vegetables

Snapshot of food supply:   Conard uses farming as a 65 year demonstration in making life easy for all because food prices have steadily fallen.

Agri businesses certainly have become more efficient.  Over the past 30 years, family farms have been systematically replaced by corporate farms working hard to optimize efficiency.  Efficiency means mono-culture planting (hectares of the same variety of crop). Efficiency means GM crops that can exude their own pesticides, or it may mean application of high levels of external pesticides, or both.

Techniques to efficiently manufacture meat

For meat production, efficiency means penning the animals in spaces where motion is difficult to impossible, letting them stand in filth. Of course efficience means keeping them loaded with massive antibiotics.

Efficient food manufacture has been very successful at reducing prices to historical lows; Conard is pleased by it.

All these efficient practices are generating “super” pests – the immune descendents of survivors of our eradication efforts.  Interesting to note here that the Green Revolution of the 1970s is starting to fail.  There will be trouble if it does.

Manufacturing centers that prepare our foods for family and restaurants efficiently deliver low doses of pesticides and antibiotics to consumers in the food stream.  They are good vectors for contaminants or future “super” infections into human populations.

A second-level path to cheaper food bypasses U.S. food production regulations.  Just import from countries with zero regulations.  Import regulations might have limited success until some elite administration stops enforcing them.

Snapshot of investment policy:   Conard speaks a lot about investment practices. He proclaims opposition to the excesses identified with our crash, but it all has a hollow ring when he comments that problems only come up when people want their money back. “Traditional” banks should not be stopped from speculating every single dollar placed in  their care by the public.

This week, JPMorgan Chase admitted to massive new losses from destructive investment practices. The irony lost on no one is that CEO, Jamie Dimon, (one of the American ultras), has been fighting investment regulatory controls meant to protect investors from the same class of losses.  Per Dimon and Conard, banks that are “too big to fail” deserve the right to engage in any slick action they want,  and when they fail, the public should be obligated to use tax revenue to to bail them out.  The leaders, of course, need huge and monstrous bonuses more than ever when that happens because things are tough during failures, and they (top management) get awfully stressed, really tensed up.  Canard says it is a shame these boys can be so bad, but we must ignore that behavior and bravely move on, down that same banking path.

Nathaniel Popper published a May 6 report in the New York Times; his secondary topic was that the investment environment is predatory. The volume of trading trasactions in the stock market is half that seen in 2008. Normal traders are making fewer transactions and high speed trades (from rapid-response investors using computers) have also dropped. The problem – rapid traders only work against normal humans, not other rapid guys. If two rapids were to fight, the winner would be the one with the better network connection. No fun there.  Usually, mundanes have no chance against rapids.

Name calling: Conard invented a new put-down for the non-rich. He calls them “art history majors” because, is there a more useless a segment in a useless liberal arts education? Ayn Rand called most people moochers. In science fiction genre literature, we call them mundanes (the dead heads, as opposed to elite psi talented folks). Conard uses art history major as I use MBA graduate.

In college, Conard should have learned analytical thinking instead of the basic mechanical tasking (as seems to be all he got from his engineering degree). But he did follow up with an MBA.

Anecdotes are not good evidentiary data:    Put a group of ideologues in a room and they will spin snapshot examples against each other for hours.  Conard twists the illumination on current issues to highlight the success of our aristocracy.  He can discount vulnerabilities that could generate problems as easily as experts discounted nuclear disaster scenarios in Japan –  clearly ridiculous, until a Fukushima event happens.

The American Income Pump invalidates the examples

A mysterious process (LastTechAge calls it the American income pump) was turned on about 1981.  The income pump is the process that has sucked household income from the lower earning parts of the total U.S. pool and poured it into the hands of the wealthiest households.  Clicking on the link to find more or the button in the ribbon bar (banner picture). The income pump has been responsible for many things.

This next anecdote can easily show that our the monopoly driven ultra rich are needed to make things happen.

Conard might argue— since we have decided to not go into space, only Elon Musk’s SpaceX or Jeff Bezos’ Blue Origin, or Robert Bigelow’s Bigelow Aerospace will maintain an American presence.  Or Boeing, or ATK or any of the other competing private efforts.

And, in fact, we really should wish our American aristos success  This is because for the past 3 decades, the Income Pump sucked away NASA funding from its own outstanding programs by stripping the US Government of its cash resources for innovative things.  So the effort that shifted excess money to the uppers generated the reason for cheering them on.  The cash has been pumped out of the tax base (the lower 4/5ths of the population) and into the topmost 0.01% of all households reporting income. The Privatized Space issue is complicated, as they say nowadays. We will cover it in future posts.

Space is just an example.  In light of the income pump, Conard’s case implies this premise:  The current manipulated situation justifies its own continuation.  Or …  yes, we have stripped you guys of your ready resources; if you want anything now, you must continue to support our grab for even more wealth.

Conard treats Americans as moochers, mundanes, art history majors.  We, the citizens of the country, will maintain descent down this path if we continue to listen to arguments such as these.

We are perilously close to the true trickle-down scenario of Mozart’s day (for example) when world-class, even history-making talent had to rely on bored patrons in order to produce.  Question for today: How many potentially outstanding contributors to the human race are unknown because they never found a patron?

I have understood The American Dream to be about a country where all people can realize their own potential.  Because of the active income pump, if we follow men like Conard, we may never be allowed to personally dream again.

……………………………….

Charles J. Armentrout, Ann Arbor
2012 May 16
This is listed under Economics  and Politics
Find related posts on the INDEX page, or click [Categories], right.

The American Income Pump matters to us

The Income Pump that started in 1981 has had huge impact on American Society, and not good.

Our Page, The American Income Pump, summarizes a strange process that started about 1980 or 1981 and has continued through today. Consider all the income made by American families as forming a great pool (like a swimming pool). After WW-II and before this pump started up, the income depth (fraction of the total pool) at the low earning end was pretty constant and the depth at the highest earning end was also pretty constant, no group grabbed a larger fraction of the income “water” than what they had been enjoying.

Now think of a pump which efficiently takes income from the shallow end of the pool and pumps it to the deepest end, thereby making that end even deeper.   This is what has happened in our “total income pool.”  The pump effectively pulls income from the lower earning families and transfers it to the wealthiest families of our society.  Because there are so many fewer ultra rich families, the effects up there really stand out.

The interval when the pool was pretty calm is called the baseline period and extended from 1945 to about 1980.

We look at some of the effects on society after the pump started up.  The conclusion is that yes, the shift in income to the ultra rich did, in fact, have a huge impact on just about everyone.

Were there effects after the baseline time?
Those baseline years, 1945–1980, were not any kind of golden age (sorry Newt). There were plenty of failed expectations, lost or damaged hopes, frustrated ambitions, and huge social and financial inequalities. But they were exciting times of change, in both social growth and towering technical achievement. We had reasonable expectations for our future. As one of the cohort who lived during this time, I assert that current times are qualitatively and quantitatively different.

Here are a few observations

• Then, US government was corruptible but was under continuous scrutiny at all levels. Every community had independent newspapers that people read to discover what their officials were doing.
  Now, few community papers survive to shine information spotlights into dark corners and illuminate creepy local corruption.

• The income of a worker with median or less earnings (≤ $50,000/yr) has dropped dramatically while our few ultras have net worth of small countries.

• Then, one person (the standard male) could earn enough to support a family.
  Now, the median household needs two full time earners to make ends meet.

• Then, most people did not think about attending college, they did not need a degree for a reasonable job.
  Now, student loan debt top $50k-100k, and higher for the better universities. Our uncaring political leadership says that a high school graduate must get a college degree to stay alive. How can someone from a family at median or below …
  [A] qualify for a loan, [B] pay back this kind of cruel debt?
  Does the income pump cause people lose control over their lives due to massive debt?

• Then, we invented and commercialized the transistor, started up Palomar observatory, and made huge strides in astronomic understanding. We systematized aircraft development with x-series of test craft, tested and built rockets that took humans to the moon, and commercialized satellites to the point that we could not do with out the communication and GPS platforms that are up there (GPS development started in the late 1960s). We developed atomic power, and commercialized it (even though we followed the wrong path). About when the Income Pump that changed our reality started, we developed fusion power concepts to the point that we were ready to build true prototype power plant.
  All the technical things we did and were proud of would cover many pages.
  Now we watch the programs started before 1980 die from loss of economic oxygen. The Hubble may be deorbited in less than 5 years, our new-technology telescopes are closing down revolutionary capabilities. The last of our fusion development people are continuously threatened with closure, as are our high energy research labs are threatened.  Easy to justify, now, no money! New spacecraft seem like dreams. Actually, American space presence depends the willingness of foreign nations;  or on the participation by several of our ultras, each one with economic power of small nations, to direct and fund the ventures. Instead of a national program with nationally built rockets and spacecraft, we are now hoping that the privately developed ICBMs, carrier vehicles, and orbiting platforms will be successful and take Americans back to space. (Interesting to note: the Atlas-V started life as an H-bomb delivery system, the Falcon-9 and Heavy would make ‘great’ delivery systems)

So, yes, the pump that is pushing our classes ever farther apart does matter, even at this late date.  We could stop it yet, but with huge effort.

……………………………….

Charles J. Armentrout, Ann Arbor
2012 May 14
This is listed under Economics
Find related posts on the INDEX page, or click [Categories], right.

Privatized Space – SpaceX

SpaceX delays launch to ISS again.  Looks like they actually want to be successful.

The hard-tech news these days is that SpaceX plans to launch a resupply mission to the International Space Station to test their man-rated Dragon capsule.

SpaceX Falcon-9 with Dragon capsule, 2012. NASA photo

This has been scheduled and rescheduled for months; recently it was to be April 30, then May 7.  Elon Musk, CEO, and principal dreamer at SpaceX commented that the remote communication and control system was too sensitive during the 2010 orbit test, with responses too rapid and too strong for the commands.  A mis-tuned feedback system is good reason to delay things, even at this late a date.

The May 2  announcement was that there is to be yet another delay.  SpaceX apparently wants to be successful by actually sending that capsule to the ISS and bringing it back again.

Merlin engine firing during previous Falcon-1 launch

This followed the April 30 test of the 9 Merlin engines on the Falcon 9.  The engines fired for the allocated time and the test was reported to be successful.  But there was an unexpected hold during the final minute.

Rocket Development Stress

These are intensely  complex pieces of mechanical/chemical/electronic technology.  Many countries build and launch with minimum pretesting and failure mode analyses. They fail.

Vanguard TV-2BU 1957 launch

Americans discovered early-on how difficult it was when we built the Vanguard launcher for the International Geophysical Year (1957).  This was a wholly new system design for engines, fuel systems, and automatic control systems.  It was under development when launched out of political pressure to answer Sputnik.  The first several  ended with spectacular fire balls, though, ultimately, they did launch a Vanguard satellite (still in orbit).

In the 1950s, we had few test and analysis protocols and it seemed the best thing was: don’t  check it out, test it, blow it, fix it; try again.  In those years, we ran our space programs as we did our X-plane program (either the test is successful or the craft is lost and the pilot dies).

The Soviets, unfortunately, did the same with their moon rocket program, the N1, which was the competitor to the American Saturn 5, and was about its size.  The N1 was developed under intense internal politics between engineering factions.

Soviet N1 moon rocket was pushed to launch too quickly, canceled after 4 tests

The first 4 N1 tests ended in horrible explosions. The Party Central Committee viewed them as expensive failures and  canceled the project before the 5th test.  Development stress and political pressure killed their program.  If the first four Saturn 5 launches had exploded on the pad, would the new president (Nixon) have persevered to the moon?

SpaceX Falcon-9 with Dragon capsule, orbit test launch 2010 Dec.

SpaceX launch to ISS

The point is, if we want to see success in this bold privatized launch venture, we must hope that Elon Musk and SpaceX has the patience and courage to authorized repeated checks and tests until their experienced engineers are confident that all is ready.

Failure comes when political or commercial demands overcome engineering sense.  The U.S. has lots of examples of this.

The next launch window is May 10 and additional delay could force a delay until next month to avoid traffic congestion with the scheduled Russian resupply capsule.

SpaceX may be the best American hope for continued presence in space technology.  I personally wish them engineering patience and technical success.

……………………………….

Charles J. Armentrout, Ann Arbor
2012 May 04
This is listed under Technology–Space
Find related posts on the INDEX page, or click [Categories], right.

Fusion Wins Reprieve

House ignores Obama, grants required fusion research budget, but it will not be over until after the elections.

Last week, we saw an astounding finish to the congressional budget assignments.  Rather than finding its coffin lid nailed closed, at this point, home-based fusion energy research seems to come out ahead in the annual sweepstakes.

David Malakoff posted in last Wednesday’s Science Insider (2012-Apr25) that, in its decisions on the 2013 budget that afternoon, the House Appropriations Committee awarded U.S. fusion energy research enough funding to continue as it has functioned to date.  This action explicitly dismissed Obama’s recommendation to kill most fusion research work.

LastTechAge earlier reported that the Obama administration was intent on eliminating the high field Alcator C-Mod program at MIT, one of our lead fusion science laboratories and one of our key locations for professional fusion physics education.

Obama’s budget would have damaged (maybe ultimately terminated) our efforts at the Princeton Plasma Physics Laboratory, reduced to a laughable level the operating time on the DIII-D user facility at General Atomics, and would not have supplied sufficient funds to meet anticipated increases of our international obligations with the international tokamak program (ITER). This would have closed this path to an energy future; for American scientists, it would probably terminate, forever.

The House committee extended and even raised current funding to allow fusion experiments and graduate student training to continue. It explicitly saved the Alcator program, raised funding to maintain our professional research labs at Princeton and General Atomics, and mandated the necessary funds to pay our dues in support of ITER.

Our earlier post warned of the danger we face if the original attack succeeded. It attracted unusual (for this site) interest, including comments with links to the real heroes of this story, the young men and women who set up fusionfuture.org, and advocated public pressure on the politicians.  The authors of this site are mostly (maybe entirely?) graduate students who truly want to keep our society from dying an energy death and regressing deeper into medieval lifestyle.

It is interesting to see the public response to this action. When we last looked, there were 3 comments from anonymous no-nothings whose comments sound like talk-radio rants.  For those who care,  magnetic fusion energy (MFE) research has been at the brink of success for about 25 years, being held back by a strange lack of interest in national leadership.  LastTechAge commented on this before.  Before anyone suggests (again) that we go to cool laser fusion, please read LastTechAge comments on NIF and inertial confinement fusion (ICF).  We are not really pursuing that, either. There is a lot of mouth-noise in support of fusion, but this is really support of the dreamy sci-fiction books that used to paint lovely pictures of it.  Reality is that MFE, at least in its House budget incarnation, is being funded at less than 1/3 its 1981 budget when compared in inflation adjusted values.

Final note:  It’s not over yet.  The House Committee decisions are not the rule of the land.  We almost certainly will not see the end until after the November elections, even though the budget starts in October.  AND:  This budget is being played as a zero sum game.  By mandating more money here, the Department of Energy must reduce its support elsewhere.   I feel bad about that, but if every program currently  being supported were actually covertly slated to be discarded just as it reaches success, the truth must be that the U.S. has no energy research program.

Update: Read Jeffrey Mervis’  ScienceInsider report  on the Administration’s budget posture (2012-0427).

……………………………….

Charles J. Armentrout, Ann Arbor
2012 May 02
This is listed under Technology – Fusion
Find related posts on the INDEX page, or click [Categories], right.

Petroleum exports skyrocket while oil prices rise

On 2012 Mar 07, The U.S. Energy Information Administration released a report on the history of U.S. liquid petroleum products (crude oil, gasoline, kerosene, …) highlighting the positive fact that exports are leading imports for the first time in 6 decades.  However, our analysis of EIA data uncovers a disconcerting trend.  Exports show a huge jump about 1980 (during the Oil Embargo),  ratcheted another jump in the late 1980′s ( lead-up to Desert Storm), and have blasted upwards during the past 7 years to reach its current unprecedented 5O⁺% of our crude oil production.  This is about 27% of our total liquid petroleum production.

Added after initial publish date :  The point of this post is not that we are exporting our petroleum, but that exports are growing way out of line compared to our usage, or even to our imports!  The data (below) show that similar export jumps happened 3 times in our history, when our politicians seemed to promote resource exploitation for someone’s personal gain.

This post is an update to US Petroleum Exports are Huge.  LastTechAge is presenting it because this startling chart has been taken off-line at least once in the past week, and because internet data is politically fragile.  Here is the original EIA link, also shown in Huge. Here is the PDF of the originalEIA report.

These jumps in exports happened when we as a country were under high stresses and could blame rising prices on other factors.  Although there are no names attached to the data, it is the U.S. oil companies that control our petroleum inventory. My opinion is that the export jumps represent profiteering actions on the part of those responsible.

Fig 1: EIA data, Exports are top curve

EIA data 
Their lead chart is shown as our Fig 1.  Click to enlarge. Export data is the boundary line of the top (light brown) data. On a quick scan, exports do not look all that shocking compared to imports.   For production, imports and price trends of American crude oil during this  time (1949-2011), refer to Fig 1 in Footprints-2 Oil.

There were 3 distinct jump periods when exports exponentiated from a starting value.  More details on how the analysis is done are given at the end; in summary, data trends rise exponentially when they follow a straight-line path on a semi-log (log-linear) plot.

Fig 2:  Straight lines – exponential growth period

Fig 2 is a semi-log presentation of the EIA data.  The 3 jump periods are clearly visible as straight lines on this chart.

The doubling time (table below) is  the time required for exports to double in size.  For example, 2004 exports were 1 M bdp.  Exports doubled (exceeded 2 M bpd)  about 4½ years later, and should reach 4 M bpd in early 2013 (second doubling).  If trends continue, it should reach 8 M bpd (third doubling) in an additional 4.6 years.

Three jump periods.
The first growth jump started suddenly after 1978. This was while we were under attack by Iranian extremists who imposed a crippling embargo on oil shipments.

While 2 to 4 hour gas lines were the norm, US exports rose like there was no tomorrow.  And we thought monster gasoline prices were caused by the embargo.

This first jump period ended abruptly in 1983, when the country started preparing for presidential elections.  Hard stops of exponential growth indicate sudden application of some kind of external control.

The second jump period began smoothly in 1986. Although these data do not indicate why petroleum exports jumped, they rose 9%/year right through our Desert Storm war, when we actually needed the oil to support our troops.  The rapid rise abruptly stopped a year before presidential elections in 1992.

The third jump period started smoothly in 2004, and is exponentiating with 15% growth in export volumes every year (the jump data form a straight line in Fig 2).  This continued smoothly through the 2008 election, rose without pause as gasoline prices have risen, and is still shooting upwards according to the latest data point (2011).

Fig 3:  There have been 3 periods of exponential growth in the export of US petroleum products

Fig 3 shows the same EIA data but in a normal linear plot, so that we can see with ‘normal eyes’ how well the exponential model works with petroleum export data.  The 3 straight lines found in Fig 2 all curve upwards through the data points.

Guesses about why this has been happening will be the topic of future posts.  But the fact oil has risen to well over $100/b for WTI quotes and more than  $120/b  for European Brent Oil quotes probably gives a hint.

Highly robust export growth of American petroleum products.
In 2011, Obama tried to force oil prices down by releasing precious oil from the Strategic Petroleum Reserve but at each release, there was a fairly quick bounce back to higher prices.  I was puzzled by this in 2011, had no clue as to why the releases did not work.  Current Talking Head broadcasts discuss this problem in light of the Republican push to open the SPR again for additional lucrative sales.  Obama just might do so in a vain attempt to help election year prices.

Identification techniques for exponential growth data:

This  PDF  explains how to identify exponential growth segments in a data set.  If you plot the data on a log-linear (semilog) graph, an exponential curve shows up as a straight line, as in Fig 2.  

The related doubling time, T_DBL, is another way to identify and characterize exponential growth.  If export volume grows exponentially, then it will grow by a factor of 2 when the time T_DBL  passes.  T_DBL = ln(2)/r.  Since  r is the rate in decimals, a 15%/yr growth rate means   T_DBL = ln(2)/0.15 = 4.62 years.

Analyst’s View   When I wear my physics hat, I have high confidence that data are exponential when the data points (a) rise along a  semilog straight line and (b) growth is > a factor of 10.  With my engineer hat (I also worked as technical support in industry), five of the same exceptions in a row trigger the statistical process control (SPC) signal that a significant effect is occurring.

The current (2011)  jump has lasted for seven successive years.  The 1980 jump was only 4 anomalous data points, but they had the fastest rate, the greatest change, and visually follow a straight path.  The 1990 jump lasted for the SPC  5 years.  The points scatter about a semilog straight line, and all have been tagged as free exponential expansion, impeded by only their own internal natures.  Even if the 1990 jump were curved,  it represents a significant change in exports.

This update is meant to complement our previous post by showing the graphical reasons behind the observations, and to generate comment. It is also meant to preserve the public domain information from any possible removal.

Update: 2011 May03 Update to this post:  2012-May03 see comment, 2nd paragraph.

……………………………….

Charles J. Armentrout, Ann Arbor
2012 Mar 20
This is listed under Natural Resources – Peak Oil
Find related posts on the INDEX page, or click [Categories], right.

US Petroleum Exports are Huge

On March 7, last week, the U.S. Energy Information Administration (EIA) released a short report that showed that in 2011, U.S. petroleum exports exceeded imports for the first time since 1949. That was their headline.  The data in this report are that, last year – 2011,  the U.S. had 51% of its total petroleum production for the year sold abroad.  This includes both crude oil and petroleum distillates such as gasoline and kerosene.

In this post we look at the implications shining through the time sequenced export data. Looking at these data may not sound like usual fun, but this report is not fun at all though  not for the usual data-wonk reasons

This graph shows the main data set ( directly from the EIA report). The units are Millions of barrels per day (M bpd).   U.S. demand has always been greater than production since at least the early 1930′s (ref: Footprints2) and the U.S. had to import oil to make up the difference.  It is interesting that we exported a bit throughout this time but never more than 6% of production.

Here is my summary table of the export graph.  I used the tabulated Production from the EIA and my own digitization of the export data from the graph.

Looks strange, no?  Before peak oil (1970) when we had plenty, we exported a small fraction.  Around the peak, exports dropped back to the post-War values.  Starting in 1999 through 2011, the percent of our total petroleum production skyrocketed from a large 14% of production to an unbelievable 51% of domestic production of petroleum.

What these data say is that the ultra‘s who control the oil industry are not conserving our precious oil for our energy security but are selling it off for personal, family enrichment.  We are being lied to, by politicians both left and right, and by popular sluts like Rush Limbaugh who lead the deception effort.

I have no idea what has pushed exports into their biggest boost phase (starting in 2005).  But last year, the U.S.  started draining its Strategic Petroleum Reserve.  LastTechAge posted several posts on this.  It turns out that the only method to legally release this stuff is through international agreements where multiple nations also do releases.  BUT, during last year’s release, only the U.S. put fluid on the export market.  All other signatories substituted ‘in-kind’ efforts for actual petroleum. I apologize for the anger, but I get huffy about such things.

Bad as the SPR runaround was, it was too small an effect to account for very much of the nearly 2.9 M bpd exports (U.S. production was about 5.6 M bpd).  These data indicate an all out-grab for huge wealth at the expense of the country, much more than the political attempts meant to reduce home petroleum prices.  In fact, the two processes have opposite effects on home gasoline prices.  Putting SPR oil on the market will reduce Brent Market pricing; removing oil from our own use forces more imports and raise prices.  But in both situations, those who own the oil industry benefit.

This puts the final lid on the can holding the Keystone XL arguments, too.  The pipeline company, TransCanada Ltd, has started a campaign saying that of course they do not want to sell their tar-sands crude abroad.  They want to ship to the Gulf coast for the nice refineries there, not for the oil tankers that accidentally dock very close by.  This issue is enough of a resource destroyer that LastTechAge posted 4 separate discussions on it.  Here is the latest.   There are American ultras involved in TransCanada, too, though.

The data are not enough to determine who and why recent rocket assent in attacks on our petroleum reserves.  Our Footnotes series are meant to show only how and when things went wrong.  This note is a follow-up on Footnotes2, which can only summarize the status of US oil.

Update 2012 Mar 20: This post, Exports are Huge has been updated by Exports Skyrocket that has the graphical data behind the Export mess.  In the intervening week, EIA took their report off the air but did replace it; Skyrocket also gives more detail on it.

……………………………….

Charles J. Armentrout, Ann Arbor
2012 Mar 13
This is listed under Natural Resources
Find related posts on the INDEX page, or click [Categories], right.

Keystone XL Is About Exports

Is the Keystone XL push to the Texas coast for American energy or for export?

The U.S. EIA released a new graph that is an attention-getter. In 2011, petroleum exports exceeded imports. This was the first time for this in 6 decades. What is a lede like this doing in a Keystone XL post?  Ans: These data undermine a new attack on protestors to the XL upgrade.

The attack is a response to Pres Obama’s refusal to authorize the XL upgrade.  The argument behind it is that TransCanada Ltd. is America’s friend and truly wants the oil to reach U.S. consumers. Those who do not accept this fact are traitors against America, or maybe mad. The protest argument is that TransCanada wants to quick-ship its tar-sands oil to the Gulf refineries explicitly for access to the oil tankers that deliver the product to off-shore buyers. A lot of people have argued this, including our post here.  Our point: XL will damage the American continent and not serve to help our energy security one bit.

The Keystone line ended at Cushing Oklahoma when it was completed, way back in February 2011.  Cushing seems incapable of handling the stuff when it arrives, oil just glutting about, the stuff puddling all around the landscape.  Good American patriots (the Canadian corporate uppers) want to move the dilbit via a new modern line to where the big refineries are.  Which is at the Texas coast, just accidentally near shipping ports.

Reality – the newly completed Keystone line has been pumping hard for just about a year.  It carries stuff to two Illinois refinery centers (Patokie and Wood River) and those at  Cushing Oklahoma where the West Texas Intermediate (WTI) pricing is controlled. The amount of oil there has lowered the price of WTI vs. Brent by a lot.  So, this pool is good for normal folks’ economy because it is a brake on price increases.  Yes, fuel price is going up, but think about what it would be without that ‘glut’ around Cushing.

Are the owners of the refineries too stupid to think of enlarging capacity to handle the new flow?  Maybe these are the ones stopping all that oil from entering the U.S. market and reducing our gas prices.  Should we indict them all for Treason? Where is HUAC when it is needed against this new commie subversive 5th column of rich refinery owners?  On the other hand, the last paragraph suggest maybe we should give them all Congressional Medals of Honor for doing more to hold down U.S. prices than any other group in all the Americas.

New Export Data:  This figure is from the U.S. Energy Information Administration report, 2012 Mar07. Exports exceed imports in 2011 for the first time since 1949.

This is clear proof that our extracted oil being diverted to off-shore markets rather than used to support home prices.  We vigorously sell abroad, even though we generate only 1/3 of our current demand. These sales are driving up petroleum prices.

Last year Obama opened up the strategic petroleum reserve ‘to fight rising prices.’ Coincedentally, this was when net exports became positive.  TransCanada wants access to the Gulf ports for the same reason the Strategic Petroleum Reserve was drained.  To ship oil abroad so that someone can make lots of money.

TransCanada must think the U.S. public is simple.  They just completed their new pipeline, now they want a massive new duct out of the American heartland. If they just wanted a place to refine their tar-shale oil, why are the trying so hard to open a Pacific port close to the Alberta fields?  Maybe because Japan has no oil and China needs it badly.

Rhetoric aside, the tar-sand output has been flowing for only a year.   Give the marketplace time to respond.  The Ultras who own the markets and direct Cushing, Patokie and Woods River refineries will not let the huge money river flow past them.  That is, unless they suspect the current oil supply will end soon.

Let’s all stop name-calling and allow the existing brand-new pipeline to mature.   THEN we can discuss actual upgrades.

……………………………….

Charles J. Armentrout, Ann Arbor
2012 Mar 11
This is listed under Natural Resources 
Find related posts on the INDEX page, or click [Categories], right.