Monday, July 8, 2013

Crude Awakening

By Keith, WOC's "Suck. On. This." Correspondent.
(Reuters) - At least five people died and 40 were missing on Sunday after a runaway train carrying crude oil exploded and destroyed the center of a small Canadian town</a> in a disaster that raises fresh questions about shipping oil by rail. 
The train had been hauling crude from North Dakota to eastern Canada, and was parked, without a driver, outside town when it began rolling downhill, gathering speed and derailing on a curve at 1 a.m. on Saturday. 
Each tanker carried 30,000 gallons (113,000 liters) of crude oil. Four cars caught fire and exploded in a huge orange and black fireball that mushroomed hundreds of feet into the air and flattened dozens of buildings, including a popular bar.

Readers, if you think the purpose of this post is to argue for or against the continued construction of  that pipeline, think again.

Our feature today is America's greatest intellectual wanking 'tard. Ladies and gentlemen, may we present Mr. Thomas Friedman? Hip-hip, chin-chin?
("Oh?" you say. "Mr. Friedman needs no introduction." Bob Hope said something similar to Jack Benny way back when. My bad.)
A Good Question 
An e-mail came in the other day with a subject line that I couldn't ignore. It was from the oil economist Phil Verleger, and it read: "Should the United States join OPEC?" That I had to open.
Well, it was an email, Tommy, and surely didn't contain ricen.
Verleger’s basic message was that the knee-jerk debate we’re again having over who is responsible for higher oil prices fundamentally misses huge changes that have taken place in America’s energy output, making us again a major oil and gas producer — and potential exporter — with an interest in reasonably high but stable oil prices.
We love your forecast. "Reasonably high but stable." Please continue ...
From one direction, he says, we’re seeing the impact of the ethanol mandate put in place by President George W. Bush, which established fixed quantities of biofuels to be used in gasoline.
Tom, that ethanol makes my Lamborghini Aventador LP 700-4 backfire on the long driveway from my palatial Catskills estate. But I get good highway mileage. A wash, perhaps?
When this is combined with improved vehicle fuel economy — in July, the auto industry agreed to achieve fleet averages of more than 50 miles per gallon by 2025 — it will inevitably drive down demand for gasoline and create more surplus crude to export.
Then again, demand may rise because of higher fuel efficiency standards. Drivers might be encouraged to get the most of out their tank-full.
Add to that, says Verleger, “the increase in oil production from offshore fields and unconventional sources in America,” and that exportable U.S. surplus could grow even bigger. 
Then, add the recent discoveries of natural gas deposits all over America, which will allow us to substitute gas for coal at power plants and become a natural gas exporter as well. Put it all together, says Verleger, and you can see why America “will want to consider joining with other energy-exporting countries, like those in OPEC, to sustain high oil prices.
Tom, it's Sunday afternoon and I'm already smoking herb just to get through this thicket of wonk-speak, where there are already disturbing signs of "Tar-Baby" status awaiting your readers. And yet already you're asking me to do three "add" operations plus a sum. Why do you always make us push the stack this way?
Indeed, Bloomberg News reported last week that “the U.S. is the closest it has been in almost 20 years to achieving energy self-sufficiency. ... Domestic oil output is the highest in eight years. The U.S. is producing so much natural gas that, where the government warned four years ago of a critical need to boost imports, it now may approve an export terminal.” As a result, “the U.S. has reversed a two-decade-long decline in energy independence, increasing the proportion of demand met from domestic sources over the last six years to an estimated 81 percent through the first 10 months of 2011.” This transformation could make the U.S. the world’s top energy producer by 2020, raise more tax revenue, free us from worrying about the Middle East, and, if we’re smart, build a bridge to a much cleaner energy future.
Update: Tom's just registered a Kickstarter drive to build the Supertrain to Siberia.

All of this is good news, but it will come true at scale only if these oil and gas resources can be extracted in an environmentally sustainable manner. This can be done right, but we need a deal between environmentalists and the oil and gas industry to lock it in — now.
The Oracle of Friedman has spoken thus: no need to consider erring on the side of caution. Lube up the drill and stick it in baby! Let's go full-throttle.
No one likes higher oil prices. But — perversely — the high price benefits America as we rapidly become a bigger oil producer and it ensures that investments will continue to flow into energy efficient cars and trucks. If we were smart, we would establish today a floor price for any barrel of crude oil or gallon of gasoline sold or imported into America — and tax anything below it. A stable, sufficiently high floor price serves the environment, our technology investments and our energy productivity. As our producers succeed, we would become increasingly energy self-sufficient, keep a lot more dollars at home for our Treasury, stimulate innovation on renewables and drive down the global oil price that is the sole source sustaining Iran and other petro-dictators.
Who would have imagined? Price controls from a free-marketeer. Tom, you said that the first volume of "Das Kapital" from Viking was on your bookshelf because you wanted to learn about commodity trades ... in my opinion you are veering off the highway here. The last POTUS to get away with this type of market interference in such a spectacular fashion was Richard M. Nixon.

The weird thing is, this whole article is about gas prices, and it's the one time when Friedman's inside dope didn't come from a Random But Convenient Cab Driver.  Anyway, I don't recommend getting out of the boat, but Tommy's got more for Big Thoughts if you're in a mood to abandon ship.  Or All Hope, Ye Who Enter Here.

[The Grey Lady is under a lame-ass paywall. If you are using the Firefox, Chrome or Opera browsers, there is a feature called "incognito browsing" and if it works properly on your device this will display the article. Right click, choose "open in new incognito window" or similar instructions.]

Thanks for reading. Peace.

6 comments:

Carl said...

Wait. The driver forgot to put on the parking brake???

ifthethunderdontgetya™³²®© said...

If we were smart, people like Friedman wouldn't get paid big bucks for writing drivel.
~

Weird Dave said...

If there was any justice in this world J. B. S. (Doghouse) Riley would have a column in the New York Times and Tom Friedman would have an obscure blog.

Li'l Innocent said...

Carl, last I heard (which was around mid-day) the Canadians were saying the brakes "may have been released". Exactly what they mean by that, I'm not sure. Canadian news sources do not, unlike others I could mention, generally hold with jumping onto garish Speculation Bandwagons that are blasting "Well, Did You Ever" on giant steam calliopes. Even though they, too, have a 24-hour news cycle. Go fig.

Carl said...

I was interpreting that in the kindest way possilbe, Innocent. I mean, it comes down to either incompetence or sabotage.

Weird Dave said...

There is no justice.