Day: 02/24/2013

America’s oil choice: Pay up, or get off.

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twisted-tanker-cn-6201The oil industry has an important message for you, America: You’re not paying enough for fuel. And if you want to realize the fantasy of “North American energy independence,” you will have to pay more for it — a lot more.

Getting drivers to go along with this notion will not be easy, so the industry has couched this message in much more careful language.

Its new media campaign began with a Feb. 5 editorial in the New York Times by Christof Rühl, group chief economist of BP. After claiming victory for optimists over peak oil pundits like me and trumpeting “North America’s oil and gas renaissance” — new “tight oil” production from shale formations like the Bakken in North Dakota and the Eagle Ford in Texas — Rühl explained how the “expected surge of new oil will lead to increased supply overall and continued market volatility.”

He wrote: “If history is any guide, OPEC will cut production and forego market share in favor of price stability.” (Emphasis mine.)

The United States and Canada have an important policy choice to make, Rühl asserted. “Nations with abundant resources must decide whether to follow the path of open markets, including foreign access and competitive pricing,” or “opt for restrictive investment regimes that risk becoming less rewarding.” (Emphasis mine.)

In other words, North American oil prices need to be higher. And the way to do that is to export crude to the rest of the world.

An editorial in the Financial Times the day after the Times piece, written by the head of the International Energy Agency (IEA), Maria van der Hoeven, echoed this message.

Under the subtitle “Conditions expose misalignment between resources and regulations,” she explained how “logistical and policy hurdles above ground” are “depressing domestic oil prices and curtailing investment.” The glut of oil at U.S.’s primary delivery point in Cushing, Oklahoma, caused by new tight oil production have driven the price of some varieties of mid-continent crude as low at $50 to $60 a barrel, well below the primary West Texas Intermediate (WTI) benchmark price of $96. The main European benchmark grade, Brent, currently trades at more than $117.

The industry has a choice to make, van der Hoeven wrote: “Either U.S. crude is shipped abroad, or it stays in the ground.”

That’s right: The United States needs to become an oil exporter to “avoid [the] shale boom turning to bust.”

Elected officials in Alberta, Canada, have complained similarly in recent weeks about the glut, the “bitumen bubble.”

Tar sands oil is fetching just $50 to $60 a barrel due to a lack of export capacity, which is why the industry has been pushing for the approval of the Keystone XL pipeline. The discount from global prices will cost the Canadian province an estimated $6 billion in lost royalties this year, and the provincial government is anxious to find export routes for its crude.

A Feb. 17 article in the New York Times put a finer point on the dilemma: “If the Keystone pipeline is not completed, energy experts say, weak prices will make the economics of future oil sands projects questionable.”

As indeed they are. Two weeks ago, tar sands giant Suncor Energy wrote down a $1.5 billion investment in an $11.6 billion upgrade project that was to be built north of Fort McMurray, the heart of the tar sands development. Without Keystone XL, “the province seems fated to face continuing steep price discounts, as a captive in an oil-glutted North American market,” opined the Globe and Mail, and the upgrade project could be cancelled altogether.

In the red

Canada’s glut owes to a physical lack of export capacity, but in the United States it is more of a policy issue. At their discretion, U.S. presidents have banned crude exports overseas under the Export Administration Act of 1979. Only crude oil exports by pipeline, to Canada and Mexico, have been permitted. Overseas exports of refined products such as gasoline and diesel have not been so restricted.

It may seem strange to suggest that the United States should become a crude exporter, when it remains the world’s top oil importer. In 2012, the country imported an average of 7.7 million barrels per day, or about 41 percent of its oil demand, according to EIA data. The second-largest importer is China, which currently imports 5.6 million barrels per day, according to Platts.

It seems even stranger to suggest that oil prices aren’t high enough, when California drivers already pay more than $4 a gallon for gasoline. National gasoline prices have risen for 32 straight days, according to AAA, and consumers are not happy about that trend. Prices are usually low this time of year. And weren’t we just promised that gasoline prices would go down thanks to the tight oil boom?

Oil and gas producers, along with their government cohorts, are stumping for crude exports for the same reason they have been fighting for natural gas exports: because domestic prices are too low to sustain the boom in production. Fracking shale for gas and tight oil is expensive. A single tight oil well, which might produce an average of 100 barrels a day for the first few years, costs upward of $10 million.

I estimated last year that the global minimum price for crude producers was $85 a barrel. If tar sands and tight oil operators are only able to command $60 a barrel, they’re in trouble. Likewise, the low-cost gas producers need at least $5 per thousand cubic feet to turn a profit, but gas has been priced below that threshold for three years now. In the words of ExxonMobil CEO Rex Tillerson last June, gas producers “are losing our shirts…It’s all in the red.”

Short of crude exports, the only way for U.S. tight oil producers and Canadian tar sands operators to command higher prices is for domestic demand to pick up. But American oil demand is in a long-term structural decline, mostly due to the nation’s ongoing economic contraction, and to a lesser extent due to increasing vehicle efficiency.

Refined tastes

If oil prices are so low, then why aren’t North American consumers seeing lower prices for gasoline and diesel? Indeed, we’re seeing higher prices for pretty much everything, as higher fuel prices continue to work their way through the broader economy.

The simple answer is that it’s because of our open market policy toward exports of refined products. We participate in a global market for those fuels — the “foreign access and competitive pricing” that Rühl advocates — and they are sold to the highest bidder. Since 2005, that bidder has been China and the world’s other developing economies. In what has become essentially a zero-sum game in world oil demand, their gain necessitates our loss. We will never catch up with them in vehicle efficiency, and they will always be able to pay more for fuel.

Discounted oil does give us slightly cheaper gasoline than we would have if WTI prices were closer to Brent prices, but most of the crude price differential simply goes into refiners’ pockets in the form of higher profit margins.

Contrary to political promises, our booming production hasn’t reduced American oil imports from the Persian Gulf much, as Javier Blas noted in the Financial Times this week. Instead, it has primarily displaced similar grades of crude from Nigeria and Angola, since refiners don’t need more of those particular grades.

If the United States and Canada were to ban exports of refined products as well as crude, that would reduce gasoline prices for a little while, but eventually this policy would drive refiners out of business and prices would rise even higher due to the overall reduction of world supply. It would also come with an unpalatable array of geopolitical problems, and almost certainly spark a trade war. That’s not an option.

A strategic choice

So I agree with Rühl, van der Hoeven and the experts cited by the Times: Crude prices would have to rise for the boom in unconventional oil and gas to continue. Their production growth has already slowed as prices have faltered.

But I disagree that the answer is to open up U.S. ports to crude oil exports. This isn’t really a principled argument about misalignment between resources and regulations, or open trade policy. It’s a strategic choice about whether or not the United States wants to remain committed to oil.

Instead of asking ourselves if we want more oil from increasingly dirty and environmentally damaging sources, we should be asking what kind of an economy we want.

From the standpoint of national security and the economy, it makes little sense to export crude oil and natural gas when the United States is still a net importer of both. (That’s right: Despite the ballyhooed boom in shale gas, the country still imports a net 6 percent of its gas.)

Higher prices may bring more supply, but it will also hasten the nation’s economic contraction, and merely keep it dependent on fuels that will eventually go into global production decline. Peak oil is here, costumed as oil prices that are too high for comfort, yet still not high enough. To repeat, I expect the global decline of oil production to commence by 2015.

The right policy choice is to switch to renewables and more efficient modes of transportation as quickly as possible.

We can eliminate a great deal of our oil demand permanently by moving car and truck traffic to rail, and relying more on bicycles and renewably powered electric vehicles. It will be expensive, but as I calculated in October 2011, the cost of maintaining our current transportation regime is about $1.6 trillion a year; at that rate, the transition could pay for itself in 30 years.

It will take decades to transition to renewables and alternate modes of transportation, but there’s no time like the present to get started.

C. Gil Mull, a 78-year-old career petroleum geologist who worked for Atlantic Richfield (now ARCO), Exxon, the U.S. Geological Survey, and Alaska Geological Survey and Division of Oil and Gas, shared his perspective with me recently. Mull was fortunate enough to be working at the discovery well when the Prudhoe Bay field was found on the North Slope of Alaska in 1968.

“I was proud to be associated with the group that found the largest field in North America, but we’ve squandered it, pouring it into SUVs and all the rest,” Mull told me ruefully. “We’ve squandered it for 40 years without making much progress toward a more sustainable energy future. No doubt that the fractured shales have given us a huge increase, but there’s no way it’s going to make up for the decline of conventional resources. It can buy us more time but I hope we don’t screw this one up!”

I couldn’t agree more. It’s time we did something about our oil addiction, for real. Exporting crude is not the way to do it.

Source: Smart planet

Particle Physics Research Sheds New Light On Possible ‘Fifth Force of Nature’.

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130221192736In a breakthrough for the field of particle physics, Professor of Physics Larry Hunter and colleagues at Amherst College and The University of Texas at Austin have established new limits on what scientists call “long-range spin-spin interactions” between atomic particles. These interactions have been proposed by theoretical physicists but have not yet been seen. Their observation would constitute the discovery of a “fifth force of nature” (in addition to the four known fundamental forces: gravity, weak, strong and electromagnetic) and would suggest the existence of new particles, beyond those presently described by the Standard Model of particle physics.

The new limits were established by considering the interaction between the spins of laboratory fermions (electrons, neutrons and protons) and the spins of the electrons within Earth. To make this study possible, the authors created the first comprehensive map of electron polarization within Earth induced by the planet’s geomagnetic field.

Hunter — along with emeritus Amherst physics professor Joel Gordon; postdoctoral fellow Stephen Peck; student researcher Daniel Ang ’15; and Jung-Fu “Afu” Lin, associate professor of geosciences at UT Austin — co-authored a paper about their work that appears in this week’s issue of the journal Science. The highly interdisciplinary research relies on geophysics, atomic physics, particle physics, mineral physics, solid-state physics and nuclear physics to reach its conclusions.

The paper describes how the team combined a model of Earth’s interior with a precise map of the planet’s geomagnetic field to produce a map of the magnitude and direction of electron spins throughout Earth. Their model was based in part on insights gained from Lin’s studies of spin transitions at the high temperatures and pressures of Earth’s interior.

Every fundamental particle (every electron, neutron and proton, to be specific), explained Hunter, has the intrinsic atomic property of “spin.” Spin can be thought of as a vector — an arrow that points in a particular direction. Like all matter, Earth and its mantle — a thick geological layer sandwiched between the thin outer crust and the central core — are made of atoms. The atoms are themselves made up of electrons, neutrons and protons that have spin. Earth’s magnetic field causes some of the electrons in the mantle’s minerals to become slightly spin-polarized, meaning the directions in which their spins point are no longer completely random, but have some net orientation.

Earlier experiments, including one in Hunter’s laboratory, explored whether their laboratory spins prefer to point in a particular direction. “We know, for example, that a magnetic dipole has a lower energy when it is oriented parallel to the geomagnetic field and it lines up with this particular direction — that is how a compass works,” he explained. “Our experiments removed this magnetic interaction and looked to see if there might be some other interaction that would orient our experimental spins. One interpretation of this ‘other’ interaction is that it could be a long-range interaction between the spins in our apparatus, and the electron spins within the Earth, that have been aligned by the geomagnetic field. This is the long-range spin-spin interaction we are looking for.”

So far, no experiment has been able to detect any such interaction. But in Hunter’s paper, the researchers describe how they were able to infer that such so-called spin-spin forces, if they exist, must be incredibly weak — as much as a million times weaker than the gravitational attraction between the particles. At this level, the experiments can constrain “torsion gravity” — a proposed theoretical extension of Einstein’s Theory of General Relativity. Given the high sensitivity of the technique Hunter and his team used, it may provide a useful path for future experiments that will refine the search for such a fifth force. If a long-range spin-spin force is found, it not only would revolutionize particle physics but might eventually provide geophysicists with a new tool that would allow them to directly study the spin-polarized electrons within Earth.

“If the long-range spin-spin interactions are discovered in future experiments, geoscientists can eventually use such information to reliably understand the geochemistry and geophysics of the planet’s interior,” said Lin.

Possible future discoveries aside, Hunter said that he was pleased that this particular project enabled him to work with Lin. “When I began investigating spin transitions in the mantle, all of the literature led to him,” he explained. “I was thrilled that he was interested in the project and willing to sign on as a collaborator. He has been a good teacher and has had enormous patience with my ignorance about geophysics. It has been a very fruitful collaboration.”

Lin had his own take: “The most rewarding and surprising thing about this project was realizing that particle physics could actually be used to study the deep Earth.”

Source: Physics.org

Quantum Mapmakers Complete First Voyage Through Spin Liquid.

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110405123245-largeScientists from Oxford University have mapped a state of matter called ‘quantum spin liquid‘, whose existence was proposed in the 1970s but which has only been observed recently.

Until now there has been very limited information describing the physical characteristics of a quantum spin liquid state, but researchers from Oxford University’s Department of Physics working with the Rutherford Appleton Laboratory have demonstrated the effect of temperature and magnetic field on this state of matter. The results are published in a Nature paper.

The scientists mapped quantum spin liquid by implanting muons — sub-atomic particles which come from space but can also be produced in particle accelerators — into the spin liquid in order to measure the microscopic magnetism. The experiments used the muon sources at ISIS in Oxfordshire and the Paul Scherrer Institute in Switzerland.

Professor Stephen Blundell of the Department of Physics explained: ‘Muons are an excellent tool for this kind of study because they are a very sensitive probe of weak magnetism and fluctuating states, just as we have now found in mapping the spin liquid state.’

The quantum spin liquid state is found in 70 milligrams of tiny black crystals of an organic material cooled to just a couple of hundredths of a degree above absolute zero. Inside the material, magnetic atoms are arranged on triangular grids and behave as ‘quantum spins’. The interactions between these spins make them liquid-like, so they never freeze into one configuration. This behaviour is completely different to that of more familiar magnets found in everyday life in which, at some particular temperature, the quantum spins become locked into a particular configuration.

Dr Tom Lancaster of the Department of Physics said: ‘The organic material we have used is a really remarkable compound. This is because its interactions seem perfectly tuned to achieve this spin liquid state.’

Dr Francis Pratt of the Rutherford Appleton Laboratory said: ‘Since the idea was proposed there have been over 800 papers published speculating on the properties of quantum spin liquids, but until now there has been very little experimental evidence to compare these ideas with.’

Source: physics.org

 

Stephen Asma, philosopher, on why we can’t love all humankind.

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asma-head-shot-2012s-heath“You shall love your neighbor as yourself,” so demands the Bible. And certainly, putting religion aside, most of us feel a moral obligation to care about others, even strangers. This may be especially top of mind now, since we have a planet that requires cooperation and the ability to care about the entire human race if we are to avoid its environmental collapse.

But is it possible to truly love and care for all humankind? To love and sacrifice for everyone equally, whether they be your daughter or your bus driver? Even if we forced care and love by our own sheer will, would it be practical?

Stephen Asma, professor of philosophy at Columbia College, would like to believe it’s possible but says that universal love is a myth. As he wrote in a recent New York Times article, “All people are not equally entitled to my time, affection, resources or moral duties.” Asma’s most recent book is Against Fairness, which we reviewed in November 2012.

SmartPlanet caught up with Asma in Chicago and asked him to explain his position.

SmartPlanet: You’ve said there is an ingrained assumption in our culture that we can and ought to extend care to others in ever-widening circles. Where did this assumption come from?

Stephen Asma: I think you find it from a variety of sources. In the West we derive a large part of this assumption from the Christian tradition which takes the idea of brotherly love and expands it.

And you see it in other Eastern saints of the modern period like Gandhi. He held that we should never love a specific person too much because that will interfere with the idea of loving everybody, which is our true ethical calling.

And even in secular culture — here I’m thinking about Marxism and communism — there’s an idea that everybody should have equal share. When these ideas were implemented in places like the Soviet Union and in Mao’s China, it was very much about the idea that no one should have any privilege, and that even family bias was bad and should be broken and subjugated to this universal love.

You say this assumption of universal love has led to a misunderstanding of emotions.

In ethics there are two different traditions. There are philosophers like Immanuel Kant, and utilitarian philosophers like John Stuart Mill, and contemporary rationalists like Peter Singer who think that reason can determine what our obligations are to others.

Another tradition is based more in emotion. This goes back to philosophers like David Hume. They hold that we should have the right sort of feelings for other people.

Both of these traditions have been in play for the last few hundred years. What I’m suggesting is that morality is more motivated by our emotions. But we haven’t really understood emotions properly.

How have we thought about them?

We’ve thought about emotions as being infinitely expansive, and I suggest that emotions of love and affection are like a finite resource.

Right, you’ve talked about providing care as similar to sprint racing. Can you explain that?

The more I’ve studied neuroscience I’ve come to understand that care is more of a biological process. It’s found in all mammals.

The quintessential example of care is between mothers and offspring. It turns out that when infants are being touched — we now understand that there’s a physiochemical process beneath that — there is a huge spike in a neurotransmitter called oxytocin. And not only is oxytocin going through the roof when mothers and babies are touching each other and suckling, so are our natural brain opioids. So the brain is actually bathed in really good chemistry that feels really good to both parties.

I’m simply using that data and applying it to ethics and saying, well, if that’s the case, then caring for somebody is a lot like sprint racing. You have to gear up for it, and when you run, you’re taxing the system. When you’re caring for somebody and loving them, it’s actually also making a demand on your system. And my argument is you can apply that to your family and friends and a small group of loved ones, but you can’t expand that out infinitely to the whole human race.

Do you think there’s a scaled-back version of care or empathy that could be put toward humankind?

I think that would be ideal and it is important for us as a species to recognize that we’re part of this larger biosphere. But I take issue with the idea that what we’re talking about there is empathy.

What would we call it?

Instead, I think we have to have something like an ethical regard. I would argue that what I owe strangers is the kind of respect that I owe all citizens of the world as a cosmopolitan ideal.

The social philosopher Jeremy Rifkin argues that we have to expand empathy to include the entire planet, and I just think this is a misunderstanding of how empathy works, because empathy is a limited resource. I’m saying it’s literally exhausting to care about everyone who needs your care.

This doesn’t mean that I don’t have an obligation to all people. I think we have to have a principled approach to how to save the planet.

Going back to the idea that we can care for close friends and specifically family — can you describe why we have what you call “an ethical pull” toward family members?

Well, consider a burning building. You have the ability to run in and save one of the two people who are inside. Let’s say the building is a hotel and one of the people is a maid and the other is the president. You have time to save one person. So you’ve got the choice to save a very important person or the maid. But here’s the rub: The maid is your mother.

Now, according to the utilitarian calculus, who am I supposed to save? The president and not your mother, because that principle requires you to do so. But I would choose my mother every time. This is an easy decision for me.

Now, why?

In a way it just seems obvious. On the other hand, it has a lot to do with the kind of bond I have with my mother. It’s not just that she’s my mother. Let’s say she didn’t raise me, somebody else raised me. Then I would have all of that oxytocin opioid bonding with that person, not this person who is biologically my mother.

What about the genetically based reasons for why we sacrifice ourselves for our children, or even our cousins? Does it have to do with the fact that the amount of our loyalty can be broken down to a percentage of how much genetic information we share with our different family members?

There is this phenomenon of kin selection, which biologists talk about. It shows that people who are related to each other, or animals that are related to each other, will frequently engage in what looks like altruistic behavior in order to pass down their own genes.

The old joke is you’ll throw yourself on a hand grenade for one brother or eight cousins. When you add up either scenario it means that your gene pool is going to go on to the next generation.

Genetics is one of the great engines of our behavior. On the other hand, there is a level above genetics, which is the one we’re living in every day, in which we’re motivated more by emotions. When I’m throwing myself on a hand grenade to save my family I’m motivated by emotions. So I don’t think that it cancels out this kind of altruism to point out that there are selfish genes.

And do you think that focusing on our close friends and family will ultimately lead to greater happiness and therefore create a better world overall?

In the last ten years there’s been a lot of work done on the major components of human happiness. One of the things that you find over and over again is that strong social bonds are major predictors of human happiness. And even though those strong social bonds between friends and family are highly demanding on us, they seem to be major ingredients in happiness.

If we were to dedicate ourselves to our families and not feel guilty about it, as if it were corruption — because that’s what we call nepotism, which is really just family preference — we could celebrate this and maybe be able to factor this into our recipes for happiness.

Source: Smart planet