A Second Hand Conjecture

I was sitting in an airport lounge yesterday and got to chatting with a member of the self-described “oilfield trash” who was bound for Lagos, and then for an FPSO in the Gulf of Guinea. These are rough and ready guys who lead the sort of perilous commercial-adventurer lifestyle that one has the mistaken tendency to think went extinct with the age of empires. Thus it’s always an interesting conversation when you run into them…and invariably, an intoxicated one. To form, I was soon quite drunk.

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Light and infrared targeting devices for games. (Photo by Rob Stradling | website)

Al Qaeda technicians have apparently pioneered the use of electronics in old SEGA game cartridges for bomb detonators. A smaller precedent than the use of the airliner as suicide missile, but no less remarkable as a demonstration of the the transnational terrorist group’s acumen and artistry at the reuse of civilian technology for military purposes.

The West, having derived its military advantages from the possession of advanced technology for centuries, has been preoccupied with the security risks of technology transfer perhaps since the classical Greeks. But the emergence of massive civilian technology transfers from modern to relatively underdeveloped cultures, and the accelerating pace of Western technological advance, presents a new challenge that promises only to expand in risk and complexity.

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IBD
Perhaps we are making progress.

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After forcefully savaging the Russian invasion of Georgia, controversial Swedish economist Anders Aslund lays out ten reasons he expects an impending economic collapse in Russia. Each point is sound, although some are more problematic than others.

Particularly cogent are the following Aslund points IMO:

4. Renationalization is continuing and leading to a decline in economic efficiency. When Putin publicly attacked Mechel, investors presumed that he had decided to nationalize the company. Thus, they rushed to dump their stock in Mechel, having seen what happened to Yukos, Russneft, United Heavy Machineries and VSMP-Avisma, to name a few. In a note to investors, UBS explains diplomatically that an old paradigm of higher political risk has returned to Russia, so it has reduced its price targets by an average of 20 percent, or a market value of $300 billion. Unpredictable economic crime is bad for growth.

5. The most successful transition countries have investment ratios exceeding 30 percent of GDP, as is also the case in East Asia. But in Russia, it is only 20 percent of GDP, and it is likely to fall in the current business environment. That means that bottlenecks will grow worse.

6. An immediate consequence of Russia’s transformation into a rogue state is that membership in the World Trade Organization is out of reach. World Bank and Economic Development Ministry assessments have put the value of WTO membership at an additional growth of 0.5 to 1 percentage points a year for the next five years. Now, a similar deterioration is likely because of increased protectionism, especially in agriculture and finance.

[...]

8. Oil and commodity prices can only go down, and energy production is stagnant, which means that Russia’s external accounts are bound to deteriorate quickly.

9. Because Russia’s banking system is dominated by five state banks, it is inefficient and unreliable, and the national cost of a poor banking system rises over time.
(Moscow Times via Robert Amsterdam)

As for all this leading to a Russian economic apocalypse, it should be noted that the accuracy of Aslund’s predictive powers leaves more than a little to be desired. I note that we’re still waiting for his prediction of a military coup against Medvedev to come true.

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I cited Victor Davis Hanson’s NRO post earlier in an easy defense of Palin, but there’s another point therein worth mention: Palin as agent of change for McCain, personally.

On energy, [Sarah Palin] will either blunt McCain’s unreasonable opposition to ANWR, or, in fact — as an Alaskan pro-driller — give him the opening necessary to “evolve” on the issue into a support for drilling there.
(NRO)

An entirely welcome possibility, as ANWR is increasingly looking peculiar within the context of McCain’s dramatically “evolved” (outright changed) positions on domestic drilling and energy independence as general policy principles.

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IBD
I have long thought this was the most cogent argument for energy independence. We must stop the transfer of our wealth to those folks who want to do us harm..

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Notice what drilling is doing to the wildlife.

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I’m doing this for my own benefit, as I’ve not followed the goings on in the Republic of Georgia, except to note when it’s in the news, not our Georgia.

April 18, 2008

Georgia sought the backing of NATO and the European Union on Friday after Russia stepped up pressure by announcing intensified ties with two separatist Georgian regions.

Georgia’s Vice Prime Minister Giorgi Baramidze called Russia’s action “very, very, very dangerous.”

“It is a decisive moment,” said Georgia’s Vice Prime Minister Giorgi Baramidze. “Russia has crossed the red line and Europe and the Euro-Atlantic community must react.”

April 22, 2008

Georgia has asked the U.N. Security Council to discuss Russia’s “military aggression” after saying a Russian jet shot down one of its unmanned spy planes.

“We call upon the United Nations to address this direct military aggression against Georgia and to fully exploit its own means and capabilities in order to keep the situation from further escalation,” Georgia’s U.N. Ambassador Irakli Alasania told reporters Monday.

To bolster its case, the Georgian air force released a video that it says shows a twin-tailed Russian MiG-29 shooting down a Georgian unmanned aerial vehicle, or UAV, over the separatist region of Abkhazia on Sunday.

April 23, 2008

Tensions have been escalating between Georgia’s pro-Western government and Russia, which is providing assistance to Abkhazia and another breakaway region, South Ossetia.

Georgian forces fought separatists in Abkhazia before the ceasefire was negotiated more than a decade ago.

Last week, Moscow formalized relations with the territories and withdrew trade sanctions while expanding “trade, economic, social, scientific and technical, information, cultural, and educational” contacts with them, Russia’s Itar-Tass news agency reported.

April 29, 2008

Russia is increasing the number of its troops near the region of Abkhazia amid simmering tensions between Russia and Georgia, the Defense Ministry announced Tuesday.

Georgians protest outside the Russian Embassy in Tbilisi on April 25, 2008.

A statement posted on the ministry’s Web site said the increase of what it called peacekeepers was in response to a Georgian troop buildup.

“Georgia is increasing its group of forces in close vicinity to the conflict zones,” and there have been “threats to use military force and provocations on behalf of Georgian authorities,” the statement said, according to a CNN translation.

July 4, 2008

Georgia and its breakaway region of South Ossetia offered differing accounts Friday of a shooting that highlights continued tension between them amid Georgia’s NATO ambitions.
South Ossetians stand in the street during a night of shelling in Tskhinvali.

South Ossetians stand in the street during a night of shelling in Tskhinvali.

South Ossetia said shootings Thursday night in the regional capital of Tskhinvali and surrounding areas killed two people and wounded 11 in what a South Ossetian government spokeswoman called a Georgian “military provocation,” according to a report on Russia’s state Interfax news agency.

A Georgian defense official, however, denied that Georgian troops even fired a shot, though they were fired upon, and said the incident is part of ongoing provocation by South Ossetian separatists.

August 2, 2008

Six people were killed and 13 wounded in the shelling of South Ossetia by Georgian forces, South Ossetian officials said Saturday, according to Russia’s Interfax news agency.

Officials of the breakaway Georgian region said the shelling was part of a Georgian military operation, Interfax reported.

Georgia initially suggested Russian peacekeepers were to blame, drawing heated denials from the Russian Defense Ministry, which called the allegation “dirty informational provocation.”

Later, however, Mamuka Kurashvili, the commander of Georgian peacekeeping operations, told reporters that four people were wounded when several Georgian villages were fired upon from South Ossetia, and Georgia “had to return fire.”

August 7, 2008

Georgia’s president on Thursday ordered his country’s forces to cease fire in South Ossetia, the separatist region where days of sporadic clashes have raised fears of full-scale war.

President Mikhail Saakashvili announced the order in a television broadcast in which he also urged South Ossetian separatist leaders to enter talks on resolving the conflict.

He proposed that Russia could become a guarantor of wide-ranging autonomy for South Ossetia, if the region remains under Georgian control.

Russia has close ties with the separatist leadership, and Georgian officials have alleged that Moscow is provoking the recent clashes.

August 8, 2008

Intense fighting reportedly raged for a second night in the Georgian separatist region of South Ossetia on Saturday and Georgia’s interior ministry reported air attacks on three military bases and key facilities for shipping oil to the West.

Interior Ministry spokesman Shota Utiashvili said the Vaziani military base on the outskirts of the Georgian capital was bombed by warplanes during the night and that bombs fell in the area of the Baku-Tbilisi-Ceyhan oil pipeline.

He also said two other Georgian military bases were hit and that warplanes bombed the Black Sea port city of Poti, which has a sizable oil shipment facility.

Utiashvili said there apparently were significant casualties and damage in the attacks, but that further details would not be known until the morning.

Russia dispatched an armored column into South Ossetia on Friday after Georgia, a staunch U.S. ally, launched a surprise offensive to crush separatists. Witnesses said hundreds of civilians were killed.

August 9, 2008

Russian forces launched an airstrike against a military airfield near the Tbilisi International Airport early Sunday, despite international calls for Russia to stand down from the escalating conflict, Georgian officials told CNN.

The attack near the Georgian capital city came after a day of intense fighting in the former Soviet republic, with dozens of Russian warplanes bombing civilian and military targets in Georgia on Saturday.

As many as 2,000 people had been killed in the capital of separatist Georgian province South Ossetia, according to a Russian ambassador.

“The city of Tskhinvali no longer exists. There is nothing left. It was wiped out by the Georgian military,” the Russian news agency Interfax said, quoting the Russian ambassador to Georgia, Vyacheslav Kovalenko.

August 11, 2008

As fighting continued Sunday between Russia and Georgia over the separatist province of South Ossetia, U.N. officials expressed concern about violence in another Russian-backed breakaway territory in Georgia.

Forces of Abkhazia launched air and artillery strikes on Georgian troops Sunday, intending to drive them out of a small part of Abkhazia that the Georgians controlled, The Associated Press reported.

U.N. Assistant Secretary-General Edmond Mulet said Russian personnel and weapons were part of a military buildup in Abkhazia’s capital, Sukhumi. The Georgian government said 4,000 Russian troops have landed in Abkhazia, according to the AP.

Also Sunday, bombing was reported in the Georgian city of Zugdidi, south of the Abkhaz border, “causing panic among the civilian population,” Mulet said. Information on casualties and who was responsible for the bombing wasn’t available.

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Cernig at Larisa Alexandrovna’s site had me persuaded for two whole paragraphs.

Now, having little taste for the fine art of distractions-from-distractions, I tend to roll my eyes at the transparently partisan diversionary tactics one sees all over the web from Democrats in defense of John Edwards (eg “who cares about a politician’s adultery when there’s potholes in the streets!”). However, Cernig’s complaint that the national media was focusing on that rather tawdry and meaningless scandal to the exclusion of the crisis in Georgia, had some legitimacy. Reading it I paused for a moment, reflected on the non-Olympic television news coverage I’d watched over the past 24 hours, and decided Cernig had a legitimate point.

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The Club for Growth has a clip of Mitch McConnell’s struggles to find a price for gasoline which is high enough to persuade congressional Democrats to authorize expanded oil drilling. A bit of a theatrical exercise of course, but there is a certain discomfort in seeing Ken Salazar casually reject $10 a gallon as insufficient.

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Pelosi says, “I’m trying to save the planet; I’m trying to save the planet.”

Charles Krauthammer points out the incoherence of this:

Does Pelosi imagine that with so much of America declared off-limits, the planet is less injured as drilling shifts to Kazakhstan and Venezuela and Equatorial Guinea? That Russia will be more environmentally scrupulous than we in drilling in its Arctic?

The net environmental effect of Pelosi’s no-drilling willfulness is negative. Outsourcing U.S. oil production does nothing to lessen worldwide environmental despoliation. It simply exports it to more corrupt, less efficient, more unstable parts of the world — thereby increasing net planetary damage.

Democrats want no oil from the American OCS or ANWR. But of course they do want more oil. From OPEC. From where Americans don’t vote. From places Democratic legislators can’t see. On May 13 Sen. Chuck Schumer — deeply committed to saving just those pieces of the planet that might have huge reserves of American oil — demanded that the Saudis increase production by a million barrels a day. It doesn’t occur to him that by eschewing the slightest disturbance of the mating habits of the Arctic caribou, he is calling for the further exploitation of the pristine deserts of Arabia. In the name of the planet, mind you.

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From Slate

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From Congress and the unintended consequences of their actions. Bruce over at QandO has a post discussing an excellent piece by Walter Williams.

Most of the great problems we face are caused by politicians creating solutions to problems they created in the first place. Politicians and much of the public lose sight of the unavoidable fact that for every created benefit, there’s also a created cost or, as Nobel Laureate Milton Friedman said, “There’s no free lunch.”

Congress, doing the bidding of environmental extremists, created our energy supply problem. Oil and gas exploration in a tiny portion of the coastal plain of Alaska’s Arctic National Wildlife Refuge would, according to a 2002 U.S. Geological Survey’s estimate, increase our proven domestic oil reserves by about 50 percent.

The Pacific and Atlantic Oceans and eastern Gulf of Mexico offshore areas have enormous reserves of oil and natural gas. Congress has also placed these energy sources of oil off-limits. Because of onerous regulations, it has been 30-plus years since a new refinery has been built. Similar regulations also explain why the U.S. nuclear energy production is a fraction of what it might be.

Congress’ solution to our energy supply problems is not to relax supply restrictions but to enact the Energy Independence and Security Act of 2007 that mandates that oil companies mix more ethanol with their gasoline. Anyone with an ounce of brains would have realized that diverting crops from food to fuel use would raise the prices of a host of corn-related foods, such as corn-fed meat and dairy products.

Wheat and soybeans prices have also risen as a result of fewer acres being planted in favor of corn. A Purdue University study found the ethanol program has cost consumers $15 billion in higher food costs in 2007 and that it will be considerably higher in 2008.

This is in addition to Congress blocking use of our oil shale reserves and blocking importing of oil from Alberta’s tar sands.

So what will be done about these problems congress has created?

On May 1, Sen. Charles Schumer, New York Democrat and chairman of the Joint Economic Committee, convened a hearing on rising food prices saying, “The anxiety felt over higher food prices is going to be just as widespread, and will equal or surpass, the anger and frustrations so many Americans have about higher gas prices.” Congress’ proposed “solutions” to the energy and food mess it created include a windfall profits tax on oil companies, a gasoline tax holiday for the summer, increases in the food stamp program and foreign food aid. These measures will not solve the problem but will create new problems.

Now some people I’ve talked with like the higher gas prices as they spead up alternative energy development and make it more attractive to use right now. That’s a perfectly valid, and logical opinion to have I say. However that’s not the view of the people in congress. They can’t push for alternative energy and then decry high gas prices that they’ve helped to create. They’re either ignorant or pandering, or both. I’m not sure which is worse.

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Hoystory poses a thought-provoking question with potentially dramatic consequences for the concept of “peak oil”:

What if “fossil fuels” weren’t made of fossils at all? What if the earth naturally made petroleum? What if gasoline was a renewable resource?

Imagine the howls from the environmentalist left if there was no such thing as “peak oil.”

In answer of the questions, Hoystory points to the following:

Lost in the big news last week — the race for the Democratic nomination, the reeling U.S. economy, the ongoing life/death saga that is “Dancing with the Stars” — came word that a new deep-water exploration area off the coast of Brazil could contain as much as 33 billion barrels of oil. How much is that? If estimates are accurate, the Brazilian find would amount to the world’s third-largest oil reserve. In comparison, the U.S. has proven oil reserves of 21.8 billion barrels.

What makes the Brazil find interesting is really the gold; not as in “black gold,” but as in Thomas Gold:

The Austrian-born astrophysicist, who died in 2004, was a renowned maverick in the science community, a brilliant rogue whose anti-establishment proclamations were often proven right. For instance, in the 1960s, as NASA began its assault on the moon, many scientists debated whether the moon’s surface was comprised of hard rock or might in fact be a layer of dust so thick that, upon touchdown, the Apollo lunar modules would sink out of sight. Gold, studying evidence from microimpacts, moon cratering, electrostatic fields, and more, boldly predicted that the astronauts’ boots would sink into the lunar regolith no more than three centimeters. And, give or take a centimeter or so, he was proven right.

What does Gold have to do with the recent Brazil oil find? In 1999, Gold published “The Deep Hot Biosphere,” a paper that postulated that coal and oil are produced not by the decomposition of organic materials, but in fact are “abiogenic” — the product of tectonic forces; i.e., deeply embedded hydrocarbons being brought up and through the earth’s mantle and transformed into their present states by bacteria living in the earth’s crust.

The majority of the world’s scientists scoff at Gold’s theory, and “fossil fuel” remains the accepted descriptor of oil. Yet in recent years Russia has quietly become the world’s top producer of oil, in part by drilling wells as deep as 40,000 feet — far below the graveyards of T-Rex and his Mesozoic buddies.

Is it possible that Thomas Gold was right again, and that the earth is actually still producing oil? It’s tantalizing to think so.

(emphasis added; more on Thomas Gold here.) If Gold was right and oil is abiogenically produced, then the fears of “peak oil” are premature at best. Of course, that assumes that the world does not consume the oil faster than the earth can produce it or that, alternatively, we don’t learn how to create artificially. But according to Gold’s theory, there is a staggering amount of oil to be discovered beneath the Earth’s crust, much more than we could rapidly consume. The following is from an interview Gold did with Wired Magazine (edited for clarity):

WIRED: How much more oil is there in your view of the world than in the view of traditional petroleum geology?

GOLD: Oh, a few hundred times more.

WIRED: But not all of it is accessible at the moment?

GOLD: It becomes accessible by recharging, and the recharging process I think I completely understand. There’s a stepwise approximation of the pore pressure to the rock pressure – that will always be the case if the stuff is coming up from below. You will not just fill up one reservoir at the top in the shallow levels. It will always be underlaid by another reservoir, and that in turn by another, and so on for a long way down.

WIRED: And by pumping out oil from the highest reservoir you release the pressure on the lower ones, allowing more oil to seep up.

GOLD: Yes, the partial seal between the surface reservoir and the one below in some cases appears to break open violently.

The most obvious evidence that Gold’s theory may be correct is that Russia seems to have reaped huge rewards by adhering to it. Hoystory specifically noted this part of the Brazil story:

Yet in recent years Russia has quietly become the world’s top producer of oil, in part by drilling wells as deep as 40,000 feet — far below the graveyards of T-Rex and his Mesozoic buddies.

In his interview, Gold explained why Russia would have set its compass to the abiogenic star of oil production:

WIRED: Were there precedents for your idea that deep hydrocarbons are a normal fact of planetary geology?

GOLD: In the ’60s, Sir Robert Robinson [a Nobel Prize-winning chemist and president of Britain's Royal Society] said that petroleum looks like a primordial hydrocarbon to which biological products have been added.

WIRED: And what was the response?

GOLD: The response was that I quoted his remark in many of my papers. But the profession of petroleum geology did not pick it up. Mendeleyev [the Russian chemist who developed the periodic table] in the 1870s had said much the same thing, but Robinson had done a more modern analysis of oil and had come to the same conclusion. And, in fact, the Russians have in the last 20 years done an even more precise analysis that completely proves the point. The fact that Mendeleyev was in favor of a primordial origin of petroleum had a great effect – you see, to most Russians, Mendeleyev was the greatest scientist that Russia ever had.

So I guess, in reality, it isn’t Gold’s theory at all, but one posited by a Russian scientist from the late 1800’s, and one that was echoed by the founder of Britain’s national academy of science. Yet somehow the term “fossil fuels” has become fixed, and the concept that oil comes from the decay of death rather than the regeneration of life is treated as gospel. The consensus must have been against them …

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photo: Michael Buck

The sole finalist for the new president of the University of Colorado system, is a Republican oil executive with only a bachelor’s degree. You can imagine where this is going:

Campus observers have fiercely protested the selection, which has yet to be approved by regents. A “Boycott Benson” Web site questions the selection process and criticizes his background as a conservative Republican activist. The student government has voiced complaints, and a campus portrait of Benson was defaced with graffiti that said, “I’ve given CU enough $ for an individual right-wing nut like me to be CU’s president.”
(Newsday)

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Joseph Kennedy II supports blood for oil.

In recent months, my TV has been bombarded with ads from Joe Kennedy promoting his Citizens Energy program, such as the following:

The heating oil distributed by Citizens Energy comes from Venezuela on a subsidized basis (which its been doing since 1979). Since Hugo Chavez took the reins of power in 1998, those donations, and the support of Kennedy’s charity, have had decidedly more political overtones. (more…)

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Via Instapundit, it looks as if Hugo might have to cough up some money for nationalizing oil assets after all. Good.

Exxon Mobil Corp has moved to freeze up to $12 billion in Venezuelan assets around the world as the U.S. company fights for payment in return for the state’s takeover of a huge oil project last year.

[...]

Exxon also won a court order from the U.S. District Court for the Southern District of New York in December freezing more than $300 million belonging to PDVSA, as Exxon argued it would have little chance to recoup its investment from PDVSA should it win its arbitration.

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photo: ccgd

Mick at Uncorrelated picks up a Mark J. Perry story noting that ExxonMobil’s annual average tax bill, nearly equals total taxes paid by the bottom 50% of individual taxpayers in 2004. In the leftist mind this is perhaps deserving punishment for the robber baron. For me, it’s an enormous amount of private capital, that would could be doing much to stimulate legitimate economic growth, were it not being confiscated by the state.

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Gas flaring in the Niger Delta (photo: Ellie)

John Ghazvinian is a journalist and historian of considerable insight into African affairs. He also happens to have written one of the best recent books on the emergent international struggle for African petroleum: Untapped: The Scramble for Africa’s Oil (the paperback edition is due out in April). Whilst being an enormously valuable investigation of a very serious issue, it is also a page-turning and literate adventure into exotic and dangerous places. Indeed, one that’s practically impossible to put down once you’ve picked it up.

As John writes therein, since 1990 the oil industry has invested $20 billion in oil exploration and production in Africa, with $50 billion more planned before 2010. Over the next five years Chevron alone is devoting $20 billion in investment for Africa. Taken collectively, this exercise represents the largest commercial investment in African history. But such a spectacular windfall for some of the world’s most impoverished countries can be a poisoned chalice, where the brutal economic forces of the so-called “resource curse” hollow out states, eviscerate agricultural economies and break traditional cultures.

Populous and promising Nigeria for example, is one of the oldest and most well established oil producing countries in Africa. But with the expansion of Nigeria’s oil extraction industry, she has seen only the systematic erosion of her economic and civil society. As well as witnessing the transformation of her oil bearing region in the Niger Delta (one of the richest in the world), into a vast social wasteland of extreme poverty, rapacious crime and guerrilla warfare. As John notes, “Nigeria” is now a shorthand expression in Africa for what everyone with oil desperately wants to avoid.

John took some time out of his morning yesterday to sit down with me for a telephone interview. We were able to discuss a variety of subjects related to issues raised in his book. Including among other things, US oil supply diversification, the political consequences of offshore exploration in the Gulf of Guinea, the resource curse and rentier states, instability and post-nationalist militancy in the Niger Delta, oil field subculture, the labor problem, Chinese energy strategy in Africa and the difficulty of talking about Africa “without lapsing into sanctimoniousness” (as John puts it in the preface of his book). As I did, I believe you’ll find this to be a rather rewarding and unconventional discussion.

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Assuming he doesn’t double down on the oppression, will come as his oil company collapses.

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