Connect with us

Culture

Shale ‘Miracle’ Is a Retirement Party For the Oil Industry

Published

on

The author is a prominent American social critic, blogger, and podcaster, and we carry his articles regularly on RI. His writing on Russia-gate has been highly entertaining.

He is one of the better-known thinkers The New Yorker has dubbed ‘The Dystopians’ in an excellent 2009 profile, along with the brilliant Dmitry Orlov, another regular contributor to RI (archive). These theorists believe that modern society is headed for a jarring and painful crack-up.

You can find his popular fiction and novels on this subject, here. To get a sense of how entertaining he is, watch this 2004 TED talk about the cruel misery of American urban design – it is one of the most-viewed on TED.

If you like his work, please consider supporting him on Patreon.


Editor’s note: Kunstler is an expert on the shale question, which is central to his theory that the gradual drying up of hydrocarbon energy around the world is going to lead to inexorable economic and social upheaval.

It is great to have someone writing about this in a way that not only doesn’t make ones eyes glaze over, but is actually fun and entertaining.

Shale is also central to Russia’s fortunes. The Russians invented fracking in the 70s and never implemented the technology because it is not profitable. They have been very dismissive of it in recent years, arguing that it is a short term phenomenon made possible with ultra-low interest rates and is ultimately economically unsustainable, which coincides with Kunstler’s view.

Should the US shale industry get ship-wrecked on the rocks of rising interest rates, global oil prices will rocket to economy-busting highs again, albeit giving a temporary windfall to low-cost producers like Russia, Iran, and Saudi Arabia.


As of this week, the shale oil miracle launched US oil production above the 1970 previous-all-time record at just over ten million barrels a day. Techno-rapturists are celebrating what seems to be a blindingly bright new golden age of energy greatness. Independent oil analyst Art Berman, who made the podcast rounds the last two weeks, put it in more reality-accessible terms: “Shale is a retirement party for the oil industry.”

It was an impressive stunt and it had everything to do with the reality-optional world of bizarro finance that emerged from the wreckage of the 2008 Great Financial Crisis. In fact, a look the chart below shows how exactly the rise of shale oil production took off after that milestone year of the long emergency. Around that time, US oil production had sunk below five million barrels a day, and since we were burning through around twenty million barrels a day, the rest had to be imported.

In June of 2008, US crude hit $144-a-barrel, a figure so harsh that it crippled economic activity — since just about everything we do depends on oil for making, enabling, and transporting stuff. The price and supply of oil became so problematic after the year 2000 that the US had to desperately engineer a work-around to keep this hyper-complex society operating. The “solution” was debt. If you can’t afford to run your society, then try borrowing from the future to keep your mojo working.

The shale oil industry was a prime beneficiary of this new hyper-debt regime. The orgy of borrowing was primed by Federal Reserve “creation” of trillions of dollars of “capital” out of thin air (QE: Quantitative Easing), along with supernaturally low interest rates on the borrowed money (ZIRP: Zero Interest Rate Policy). The oil companies were desperate in 2008. They were, after all, in the business of producing… oil! (Duh….) — even if a giant company like BP pretended for a while that its initials stood for “Beyond Petroleum.”

The discovery of new oil had been heading down remorselessly for decades, to the point that the world was fatally short of replacing the oil it used every year with new supply. The last significant big fields — Alaska, the North Sea, and Siberia — had been discovered in the 1960s and we knew for sure that the first two were well past their peaks in the early 2000s.

By 2005, most of the theoretically producible new oil was in places that were difficult and ultra-expensive to drill in: deep water, for instance, where you need a giant platform costing hundreds of millions of dollars, not to mention armies of highly skilled (highly paid) technicians, plus helicopters to service the rigs. The financial risk (for instance, of drilling a “dry hole”) was matched by the environmental risk of a blowout, which is exactly what happened to BP’s 2010 Deepwater Horizon platform in the Gulf of Mexico, with costs estimated at $61 billion.

Technology — that El Dorado of the Mind — rode to the rescue with horizontal drilling and fracturing of ”tight” oil-bearing shale rock. It was tight because of low permeability, meaning the oil didn’t flow through it the way it flowed through normal oil-bearing rocks like sandstone. You had to sink a pipe down, angle it horizontally into a strata of shale only a few meters thick, and then blast it apart with water under pressure and particles of sand or ceramic called propants, the job of which was to hold open those fractures so the oil could be sucked out. Well, it worked. The only problem was you couldn’t make any money doing it.

The shale oil companies could get plenty of cash-flow going, but it all went to servicing their bonds or other “innovative” financing schemes, and for many of the companies the cash flow wasn’t even covering those costs. It cost at least six million dollars for each shale well, and it was in the nature of shale oil that the wells depleted so quickly that after Year Three they were pretty much done. But it was something to do, at least, if you were an oil company — an alternative to 1) doing no business at all, or 2) getting into some other line-of-work, like making yoga pants or gluten-free cupcakes.

The two original big shale plays, the Bakken in North Dakota and the Eagle Ford in south Texas, have now apparently peaked and the baton has passed to the Permian Basin in west Texas. If the first two bonanzas were characteristic of shale, we can look forward not very far into the future when the Permian also craps out. There are only so many “sweet spots” in these plays.

The unfortunate part of the story is that the shale oil miracle only made this country more delusional at a moment in history when we really can’t afford to believe in fairy tales. The financial world is just now entering a long overdue crack-up due to the accumulating unreality induced by Federal Reserve interventions and machinations in markets.

As it continues to get unglued — with rising interest rates especially —  we will begin to see the collapse of the bonding and financing arrangements that the fundamentally unprofitable shale “miracle” has been based on. And then you will see the end of the shale “miracle.” It is likely to happen very quickly. It was fun while it lasted. Now comes the hard part: getting through this without the nation completely losing its marbles and doing something stupid and desperate — like starting another merry little war.

Source link

Culture

Irish Times poll lays bare pandemic’s impact on political landscape

Published

on

Sinn Féin is on top again, with its highest-ever rating in an Irish Times/Ipsos MRBI opinion poll of support for the parties. Our latest such poll shows Sinn Féin on 31 per cent (up three points), ahead of Fine Gael, which has slipped three points to 27 per cent.

Fianna Fáil remains some way adrift of Sinn Féin and Fine Gael, although it has closed the gap considerably in this June poll, jumping six points to 20 per cent. The Green Party (on 6 per cent) and Labour (on 3 per cent) are unchanged. Independents and smaller parties combined attract 13 per cent of the vote (down six points). Within this bloc are People Before Profit/Solidarity (on 2 per cent) and Social Democrats (on 2 per cent).

Source link

Continue Reading

Culture

Delta variant: Is Denmark heading for another Covid surge as seen in the UK?

Published

on

Cases involving the highly contagious Delta coronavirus variant are cropping up in Denmark with growing frequency, with at least five pupils testing positive at Grønnevang School in Hillerød near Copenhagen on Monday, and a nearby kindergarten also closed after one of the children’s parents tested positive. 

The Hillerød outbreak comes after a similar school cluster in Risskov near Aarhus, which saw one school class and one kindergarten temporarily sent home after two cases were identified. 

The variant, which was first identified in India, now makes up to 90 percent of cases in the UK, forcing the country to delay the so-called “England’s Freedom Day” on June 21st, keeping restrictions in place for another four weeks? 

So, is there a risk of a UK-style outbreak? 

Tyra Grove Krause, acting academic director at the Statens Serum Institute on Tuesday said it was crucial that Denmark health authorities and local municipalities put as much effort as possible into containing any outbreaks. 

“This is a variant that we are concerned about and that we really want to keep it down for as long as we can,” she said. “This is because, according to English authorities, it is up to 50 percent more contagious and possibly more serious than other variants.” 

In a statement last week, her agency said the delta variant was “worrying”. 

The Danish Patient Safety Authority on Tuesday called for all residents in the areas surrounding the schools and kindergarten in Hillerød to get tested, and said that the authorities were increasing test capacity in the area, and also putting out “test ambassadors” on the streets.  

So how is it going in Denmark right now? 

Pretty well.

Despite the lifting of most restrictions, the number of cases registered daily remains low, even if the 353 reported on Wednesday is above the recent trend of under 200 cases a day, the share of positive tests is also slightly up at 0.37 percent. 

Just 93 people are now being treated in hospital for coronavirus, the lowest since September 23rd last year.

And how’s it going in the UK? 

Not so good, but not terrible either. Overall case numberS remain low, but they are starting to climb again despite the UK’s impressive vaccination rate.

The worry is the Delta variant – first discovered in India – which now makes up 90 percent of new cases in the UK and which experts agree is around 40 percent more transmissible than other variants.

England’s Chief Medical Officer Chris Witty told a press conference on Monday that cases are rising across the country.

It is concerns over this variant that has lead the British government to delay the latest phase of lockdown easing – initially scheduled for June 21st – for another four weeks.

So will Denmark follow the UK’s trend? 

Probably. Christian Wejse, an epidemiologist at Aarhus University, told The Local that he believes it is inevitable that the Delta variant will eventually become dominant in Denmark too. 

“If it’s true that delta variant is 50 percent or 70 percent more contagious than the B117 (Alpha or UK variant), then I think, in the long run, we’ll see that it takes over because that’s what more contagious viruses do.,” he said. “I think that’s also what the health authorities assume it’s going to happen.” 

How much of a problem would that be? 

Not necessarily too much of a problem, according to Wejse.

For a start, he predicts that the end of the school term and the good summer weather should stop the virus spreading too rapidly for the next two months or so, meaning it will take longer to take over than the British variant did. 

B117 came at a time where the epidemic was rolling in Denmark at a very high level, back in December and January. Now the epidemic is growing much, much slower. That means it’s probably going to take more time,” he said. 

And by the time it does take over, in September perhaps, vaccination levels should be high enough to blunt its impact. 

“I seriously think and hope that, that when we get to the next fall, we’ll be in a different situation. There will be small outbreaks, but not really any big time spread, like we had last fall.” 

“At least with the Pfizer-BioNTech vaccine, there’s data indicating the difference in terms of protection [from the delta variant] is quite small. So, there will be very good protective effects of the vaccines, so I’m certainly confident that it will be much less of a problem when we have a high vaccination coverage, which I assume we will have when we get into September.” 



Source link

Continue Reading

Culture

Art restoration in Spain: Spain’s latest ‘Ecce Homo’: how a botched restoration made global headlines | Culture

Published

on

Several days ago, the Spanish painter Antonio Capel was chatting with the owners of Vivaldi, a florist’s shop in the northern city of Palencia, when they remarked that something was amiss with the façade of a historic building that now houses a branch of the Unicaja bank. Capel was surprised so they suggested he take a look at what was once the delicate face of a shepherdess.

The artist went up to his studio and, using his camera’s zoom, saw that the familiar features were now nothing short of an eyesore. The statue’s eyes were in the wrong place and her nose and mouth had been clumsily crafted. As Capel jokes, whoever was responsible for the restoration was no fine artist – an observation backed by the Spanish Association of Conservators and Restorer’s rapid clarification that it was not a professional job. The botched restoration has already drawn comparisons to the infamous Ecce Homo painting which was disfigured beyond recognition by an amateur artist in Borja in 2012.

The notorious ‘Ecce Homo’ restoration.
The notorious ‘Ecce Homo’ restoration.

The florists in Palencia, who preferred to remain anonymous, recall that heavy rains several years back caused a fall of debris from the building, which was inaugurated in 1923. They later realized that the face of the shepherdess was missing. “The strange thing is that no one noticed” how badly it had been restored, they say.

Capal, meanwhile, says it is beyond his comprehension that such slapdash workmanship should be allowed on such a beautiful building, which is located in the heart of the city on Mayor street. In his opinion, the workers simply used a tracing technique to fashion the face out of plaster in the hope that it would be too high up for anyone to notice.

Unicaja denies any responsibility for the sloppy result. Spokespeople from the bank insist that they only own the premises of the branch office and the second floor. Years ago, Caja Duero, which later became part of Unicaja, owned the entire building. However, they sold the upper floors during the takeover to private homeowners. The spokespeople maintain that the building’s administrator informed the homeowners in 2017 that pieces from the façade had fallen off, including the face of the shepherdess. Palencia City Council confirms that they called on the owners to repair the damage that could pose a threat to public safety. They explain the building is under “structural, not integral protection,” meaning that any restoration work must protect the structure of the building, but no special consideration needs to be given to its exterior decorations.

Unicaja’s staff laugh when asked about the ham-handed job. Like other botched restorations in Spain, including the cartoonish facelift of a 16th-century sculpture of Saint George in Navarre, the changes went unnoticed until someone with a keen eye spotted them. Even the journalists at the Cadena Ser radio network, which has its newsroom in the building, admit to being oblivious.

But now Spain’s latest Ecce Homo is making international headlines, with even with the British newspaper, The Guardian, flagging up the statue’s perceived resemblance to the incumbent president of the United States, Donald Trump.

English version by Heather Galloway.

Source link

Continue Reading

Trending

Subscribe To Our Newsletter

Join our mailing list to receive the latest news and updates 
directly on your inbox.

You have Successfully Subscribed!