Category: Energy

Australia Intends to Institute a Carbon Tax

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Well, this is a good policy, at least until 2015, when they turn the whole idea over to the Vampire Squid* and its ilk:

The Australian government has unveiled plans to impose a tax on carbon emissions for the worst polluters.

Prime Minister Julia Gillard said carbon dioxide emissions would be taxed at A$23 ($25; £15) per tonne from 2012.

The country’s biggest economic reform in a generation will cover some 500 companies. In 2015, a market-based trading scheme will be introduced.

(emphasis mine)

Once the market based trading scheme is implemented, we can expect to see the investment banks come up with all sorts of opaque trading schemes (Carbon Default Swaps anyone?) that will serve primarily as a means to extract fees and other rents from the process, and then we will see another orgy of fraud and speculation bring the market down.

Of course, this won’t happen immediately, particularly since there would be floor and ceiling prices for the first few years, but it will happen, and money that is extracted from the public will go to private speculators rather than the public good.

*Alas, I cannot claim credit for the bon mot describing Goldman Sachs as a, “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” This was coined by the great Matt Taibbi, in his article on the massive criminal conspiracy investment firm, The Great American Bubble Machine.

And It Will End With “Settled Without Any Admission of Wrongdoing”

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Because, notwithstanding the recent move by the CFTC to sue oil speculators for market manipulation, I do not believe that there will be a vigorous investigation of criminal wrongdoing by any arm of the Obama administration.

Still, when I read this:

After oil prices surged past $100 a barrel in 2008, suspicions that traders had manipulated the market led to Congressional hearings and regulatory investigations. But they produced no solid cases in the record run-up in gasoline prices.

But on Tuesday, federal commodities regulators filed a civil lawsuit against two obscure traders in Australia and California and three American and international firms.

The suit says that in early 2008 they tried to hoard nearly two-thirds of the available supply of a crucial American market for crude oil, then abruptly dumped it and improperly pocketed $50 million.

The regulators from the Commodity Futures Trading Commission would not say whether the agency was conducting any other investigations into oil speculation. With oil prices climbing again this year, President Obama has asked Attorney General Eric H. Holder Jr. to set up a working group to look into fraud in oil and gas markets and “safeguard against unlawful consumer harm.”

In the case filed Tuesday, the defendants — James T. Dyer of Australia, Nicholas J. Wildgoose of Rancho Santa Fe, Calif., and three related companies, Parnon Energy of California, Arcadia Petroleum of Britain and Arcadia Energy, a Swiss company — have told regulators they deny they manipulated the market.

If the United States proves the claims, the defendants may give up $50 million in profits that were believed to be made as a result of the manipulation and also pay a penalty of up to $150 million.

The commodities agency says the case involves a complex scheme that relied on the close relationship between physical oil prices and the prices of financial futures, which move in parallel.

In a matter of a few weeks in January 2008, the defendants built up large positions in the oil futures market on exchanges in New York and London, according to the suit, filed in the Federal Court in the Southern District of New York.

At the same time, they bought millions of barrels of physical crude oil at Cushing, Okla., one of the main delivery sites for West Texas Intermediate, the benchmark for American oil, the suit says. They bought the oil even though they had no commercial need for it, giving the market the impression of a shortage, the complaint says. 

It made me smile.

Economics Update

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The Fed’s Beige Book is out, and it is the same old, same old, a slow recovery that will take years before we are back to what should be normal:

The Federal Reserve said the labor market improved throughout the country early this year, driven by rising retail sales and “solid growth” in manufacturing.

“Labor market conditions continued to strengthen modestly, with all Districts reporting some degree of improvement,” the Fed said today in its Beige Book report, an anecdotal account of the economy released two weeks before meetings of the Federal Open Market Committee. Its last survey, released Jan. 12, said the job market was “firming somewhat.”

Overall, the economy “continued to expand at a modest to moderate pace,” the central bank said in Washington. Eleven of the Fed’s 12 regional banks, including San Francisco and Philadelphia, described their regions as expanding, improving or experiencing moderate growth. Only Chicago reported growth “at a pace not quite as strong” as before.

This translates to, “Well, stocks are up, but this is not really a recovery.”

I am uncertain just how much this fragile and slow recovery might be harmed by the recent spike in oil prices.

We also have conflicting job news, with Challenger, Gray, and Christmas saying that large planned layoffs are up, largely on the loss of jobs at state and local government level, but ADP is forecasting fairly strong private sector job growth.

Not Enough Bullets

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So, BP is whining because it thinks that Ken Feinberg’s slow walking of meager settlements is too generous:

In the eight months since Kenneth R. Feinberg took over the $20 billion fund to compensate victims of the Gulf of Mexico oil spill, he has been attacked by many of those filing claims and by coastal state politicians who argue that the process is opaque, arbitrary and slow. Many of them have also argued that Mr. Feinberg’s recently published estimates of future damage to those in the gulf are too optimistic, and thus his offer of compensation in a final settlement is too low.

Now he is getting complaints from another quarter: BP.

The oil giant is arguing that if anything, Mr. Feinberg’s proposed settlements are too generous. The planned payments far exceed the extent of likely future damages because they overstate the potential for future losses, the company insists in a strongly worded 24-page document that was posted on the fund’s Web site Thursday morning.

And after that, BP murdered its parents, and asked for mercy because it was an orphan.

Missing the Point Completely

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This article notes that Israel appears to have made significant discoveries in offshore natural gas, but that access to foreign markets will be difficult:

Israel can look forward to long-term energy security after the discovery of a huge off-shore natural gas field but obstacles lie ahead in exporting its output, experts said Thursday.

Israel will find it hard to secure foreign buyers as European gas consumption is weakening while competition is stiff in the expanding Asian market, they said.

Texas-based Noble Energy and its Israeli exploration partners described Wednesday the Leviathan prospect — 130 km (80 miles) off the Mediterranean port of Haifa — as the world’s biggest gas find in the past decade

This misses the reality of the situation.

When one looks at oil exporting nations, with the exception of Norway, the truth is that it does not bring prosperity to the masses, nor does it make for a better society.

Simply put, Israel should not plan to export the gas in any significant quantity.

First, from a defense perspective, the natural gas serves as a way to achieve energy independence in the relatively short term, and exporting the gas diminishes this.

Secondly, natural gas is the raw material for much of the petrochemical industry, and this could be used to establish such an industry in Israel. A focus on exports would serve to subvert the development of this industry and the additional profits, and jobs, that they would create.

Economics Update

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The final numbers for US GDP in the 3rd quarter came in, and they were slightly lower than estimates, with a 2.6%, as opposed to the 2.7% forecast, growth rate, while core inflation was at a 50 year low.

So I don’t think that either inflation or a robust recovery are around the corner, particularly with oil rising above $90/bbl, a 2 year high, which has in turn driven gasoline prices near to $3.00/gallon.

Unfortunately, the dollar has continued to fatten up versus the Euro, because people see more pain and woe from Ireland, Greece, Portugal, Spain, and Italy.

Your Corruption Update

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Pedro Espade, who switched parties in the New York State Senate and switched control of the body back to the Republican before being tossed out in the primary, has now been charged with embezzling over $½ million from the charity that he ran.

And in the “if you are going to be corrupt, be sure that you are too big to prosecute” category, the winner is Dick Cheney and Halliburton, who are bribing Nigeria to get out from under charges of bribery.

The Wheels of Justice Turn Slowly

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In Nigeria, where they intend to charge Dick Cheney for bribery for his activities as head of Halliburton:

Nigeria will file charges against former U.S. Vice President Dick Cheney and officials from five foreign companies including Halliburton Co. over a $180 million bribery scandal, a prosecutor at the anti-graft agency said.

Indictments will be lodged in a Nigerian court “in the next three days,” Godwin Obla, prosecuting counsel at the Economic and Financial Crimes Commission, said in an interview today at his office in Abuja, the capital. An arrest warrant for Cheney “will be issued and transmitted through Interpol,” the world’s biggest international police organization, he said.

And the Wikileaks tapes reveal that the Obama administration went hammers and tongs against Spanish judicial investigations of torture by Bush administration officials.

So it appears that the rich and powerful evil-doers are more likely to be prosecuted in Nigeria, and more likely to be protected in the United States.

H/t emptywheel.

Not Feeling Hopey Changey

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The Obama administration has lifted the moratorium on deep water drilling in the Gulf.

Well, at least this means that Mary Landrieu has dropped her hold on Obama’s OMB chair, right?

Wrong.

It appears that she wants to be sure that the EPA and the Department of the Interior are sufficiently compliant:

“I am not going to release my hold on Jack Lew. Instead, I will take this time to look closely at how [Interior] is handling the issuing of permits and whether or not drilling activity in both shallow and deep water is resuming. When Congress reconvenes for the lame duck session next month, I will have had several weeks to evaluate if today’s lifting of the moratorium is actually putting people back to work,” Landrieu said in a prepared statement Tuesday after the Interior Department announced the lifting of the deepwater ban ahead of schedule.

You just got called a c*cks*ck*r by Mary F%$#ing Landrieu, and you are supposed to be the umpire, to mangle a Bull Durham moment.

What are you going to do now?

This is what happens when people know you have no guts.

Politics Trumping Science In the Obama Administration

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Yet another Bush policy that Obama has doubled down on.

In this case, we now have a report showing that the Obama administration actively suppressed science based reports from the NOAA during the BP oil spill:

The White House blocked government scientists from warning the American public of the potential environmental disaster caused by BP’s broken well in the Gulf of Mexico, a report released by the national commission investigating the oil spill said yesterday.

The report, produced by a panel appointed by Barack Obama to investigate the spill, said that about two weeks after the BP rig exploded scientists from the National Oceanic and Atmospheric Administration (NOAA) asked the White House for permission to release their models showing their worst case scenarios for the spill.

The White House office of management and budget, which is a traditional clearing house for decisions, turned down the request, the report said, quoting interviews with administration officials.

The report, one of four released today by the commission, provides the most compelling evidence to date of direct attempts by the White House to spin the BP oil spill disaster.

I’ve been a cynic about Barack Obama since he started embracing gay bashers in late 2007, but his full court press to embrace and protect BP is something that has managed to disappoint me, and my expectations for him are remarkably low.

Economics Update

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There is a lot of news today, mostly in currency and international finance, but the lede, at least for a US focused post, which this is, is the Institute for Supply Management’s non-manufacturing index, well above forecast.

In international finance news, we are seeing central banks all over the world beginning to open the spigots again as they see the recovery sputtering.

We have the Bank of Japan engaging in another round of quantitative easing (printing money) by setting up a ¥5 trillion ($60 billion) fund to buy government and private bonds in order to keep interest rates at 0%, and Australia, one of the first countries whose central banks increased rates, has kept rates at 4.5%, surprising the experts who were expecting another rate hike.

Interestingly enough, currency has gone in the opposite direction expects from these actions, with the Australian Dollar approaching a 2-year high, and the US dollar fell.

Generally, interest rate surprises on the low side for other countries would drive the dollar up, but it appears that there is an expectation that the Fed will go heavily back into QE like the BoJ.

There is another potential blip on the horizon, as crude oil appears to be on an upswing again.

Not Enough Bullets

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BP has given their CEO, Tony Hayward, his waking papers.

Only, he gets to stay on until October, at full pay, and he still has his millions in stock options, and in 2 years, he is eligible for a pension of £600,000 a year.

On the brighter side, he is literally being sent to Siberia, as, BP is, “Planning to nominate him as a non-executive director of its Russian joint venture, TNK-BP.”

If you are one of the hyper-rich, you are safe from the consequences of your actions, which is why these f%$#s act the way they do.

If they win, they make a sh%$ load of money, and if they lose, they are still set for life.

One note here, he will be replaced by Bob Dudley, who is an American, which just goes to show that the BP board does not get the USA.

I think that they think that an American CEO will defuse American anger at them.

They are wrong. Americans are suckers for a British accent, we love being conned by people with British accents, just look at the success that lying charlatans like Niall Ferguson, Christopher Hitchens, and Andrew Sullivan have done selling their crap as gold.

The problem here is that something bad happened, and the more people looked at BP, they saw that it is a corrupt criminal psychopathic organization, even by the standards of the oil industry.

I Cannot See this Not Ending Up in Submarines

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Click for full size

Pix from Hyperion Power Generation‘s web site

Hyperion Power Generation is claiming that it can mass produce a 25 megawatt reactor in the volume of a refrigerator, 1.5m in diameter, and 2.5 m high.

As you can see from the picture, this is just the reactor, and the full installation is a lot larger than a refrigerator, but if you are dumping your heat into an infinite 20°C liquid, the ocean, and you eliminate the super-heating setup, since space is at more of a premium than efficiency, and I can see putting in something north of 15MW in a with a 10 foot stretch.

Hyperion is hawking their technology for military applications as well, albeit for remote bases, not warships.

I would note that their design, which uses convection cooling with a lead-bismuth coolant (the heat carrying capacity of the molten metal explains the small size) sound to me like it would be rather quiet too.

By way of comparison, a stretched Kilo would displace about 4,500 tons submerged, as compared to a Seawolf, which displaces around 9,100 tons and has a s power plant that puts out something north of 45MW, and the Kilo’s Wiki page has it exceeding 20 kts with less than 5MW on batteries.

It would probably keep the aircraft carrier battle group a few hundred miles further off a country’s shoreline during a time of heightened tensions.

That is assuming, of course, that their numbers are not too good to be true.

An Outbreak of Journalism

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When U.S. District Judge Martin Feldman, a Reagan appointee, struck down the Obama administration 6-month moratorium on deep water drilling, I kind of figured that I would hear stories about appeals.

It turns out that the story about his decision is all about the judges investments in a number of energy companies, including Transocean, operator of the ill-fated Deepwater Horizon rig:

U.S. District Judge Martin Feldman, a 1983 appointee of President Ronald Reagan, reported owning less than $15,000 in stock in 2008 in Transocean, the company that owned the sunken Deepwater Horizon drilling rig.

………

Feldman’s 2008 financial disclosure report — the most recent available — also showed investments in Ocean Energy, a Houston-based company, as well as Quicksilver Resources, Prospect Energy, Peabody Energy, Halliburton, Pengrowth Energy Trust, Atlas Energy Resources, Parker Drilling and others. Halliburton was also involved in the doomed Deepwater Horizon project.

I am stunned.

Not by a judge ruling in a case where the appearance of a conflict of interest is clear, after all, the moratorium might expose both Halliburton and Transocean but rather that someone in the mainstream media actually checked out his disclosure forms, and that it actually is now all over the place.

Props to the MSM.

The People of America Have Learned What the People of Texas Already Knew

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That representative Joe Barton (R-TX) is a complete moron.

You see, he publicly apologized to BP for what he called a, “$20 billion shakedown” by the Obama administration in getting the giant oil company to pay into an escrow fund. (He has since recanted)

To my mind, if the Dems don’t run with this like an overpaid wide receiver at the Superbowl, they are morons.