by Alex Evans | Feb 27, 2008 | Climate and resource scarcity, Global system
Ed Crooks, writing on the FT’s energy blog, flags up some new work from Cambridge Energy Research Associates on how we got to $100 oil – and how much higher prices can go.
On the former, CERA list four key drivers: the “growing shadow of fear over supply reliability”, demand continuing to rise despite high prices, inventory levels continuing to fall, and ongoing human resource and equipment constraints. Financial markets have also intensified the process, they say, through demand for derivatives such as crude oil futures which “did not unilaterally create the momentum toward $100, but … did react to growing perceptions about potential supply inadequacy and exacerbate the underlying oil price trend”.
So where will it all end? According to Ed Crooks, CERA “raises the question of how much higher prices can go, but does not answer it”. That said…
The piece appears to suggest that the “break point” for oil prices, as illustrated in figure 6 with some cute little blue figures, is about $120. At that point, factors such as the rise of energy efficiency, alternative fuels and other policy changes, as well as the economic impact, really begin to take their toll on demand.
But as one observer notes in the comments on Ed’s post, maybe CERA don’t pin themselves down to an exact figure because “every other time they’ve answered it they’ve been spectacularly wrong”:
CERA Prediction Record
2002: predicted $20, actual $26.16
2003: predicted $20, actual $31.07
2005: predicted $20 to low $30, actual $65
2007: predicted low $60 range, actual $72 as they state above.
An awful lot depends on how resilient the major emerging economies (and especially China) prove to the downturn in the US. Watch this space…
by Jules Evans | Feb 26, 2008 | Global system, UK
‘Clueless’. That’s how the financial press is summing up our politicians’ understanding of financial markets.
The ignorance of most politicians about the basics of financial markets was cruelly exposed, say both IFR and Euroweek (two of the City’s leading organs), by the furore in the Houses of Parliament over the fact that Northern Rock had securitized around 40% of its mortgages in an off-balance sheet special purpose vehicle called Granite.
David Cameron has confronted Gordon Brown with the existence of Granite, as if it was some dark and terrible secret which has only just come to light. He said: “We found out at 10 minutes to midnight that half of the mortgages, the best half, are owned by somebody else [Granite]. Why are you covering it up?” The media have been equally sensationalist. The Guardian claimed to have ‘exposed’ the existence of Granite in a front-page ‘investigation’. Patrick Wintour et al informed us that: “The existence of Granite was first brought to public attention by the Guardian last November.”
These ‘revelations’ come as a big surprise to the financial press, who have been writing about the existence of Granite for several years. It is one of the best known issuers in the securitization market, and its existence is openly acknowledged in Northern Rock’s accounts, and is registered with the SEC.
(more…)
by David Steven | Feb 26, 2008 | Conflict and security, South Asia
The world is beginning to resemble a low-budget television comedy:
A Pakistan ISP that was ordered to censor YouTube accidentally managed to take down the video site around the world for several hours Sunday.
The Pakistani government ordered ISPs to censor YouTube to prevent Pakistanis from seeing a trailer to an anti-Islamic film by Dutch politician Geert Wilders. YouTube has since removed the clip for violating its terms of service, but a screenshot of the film, available via Google, shows a crude drawing of a pig defecating with the word Allah underneath it.
Pakistan Telecom complied by changing the BGP entry for YouTube — essentially updating its local internet address book for where YouTube’s section of the internet is. The idea was to direct its internet users to a page that said YouTube was blocked.
Unfortunately, the ISP announced the new route to upstream providers. The upstream providers didn’t verify the new route but accepted it and then passed it along, cascading the bad address around the net, until most everyone using the net on Sunday would have been directed to the Pakistani’s network block. The blunder not only took down YouTube, but also choked the Pakistani ISP, which was quickly deluged with millions of requests for talking cat videos.
by Alex Evans | Feb 26, 2008 | Conflict and security, Influence and networks, North America
[youtube:http://www.youtube.com/watch?v=UoZeZprXnDg]
A propos of David’s recent posts on lax security surrounding Barack Obama, American voters can at least take heart from new research from Harvard University, which finds that the effect of assassination attempts in democracies – either successful or not – is negligible. In autocracies, on the other hand, they can have a decisive effect. Michael Moynihan in The American has the details:
In “Hit or Miss? The Effect of Assassinations on Institutions and War,” Olken and Jones looked at the effects of political assassination, using a strict empirical methodology that takes into account economic conditions at the time of the killing and what Olken calls a “novel data set” of assassination attempts, successful and unsuccessful, between 1875 and 2004.
Olken and Jones discovered that a country was “more likely to see democratization following the assassination of an autocratic leader,” but found no substantial “effect following assassinations—or assassination attempts—on democratic leaders.” They concluded that “on average, successful assassinations of autocrats produce sustained moves toward democracy.” The researchers also found that assassinations have no effect on the inauguration of wars, a result that “suggests that World War I might have begun regardless of whether or not the attempt on the life of Archduke Franz Ferdinand in 1914 had succeeded or failed.”
by Charlie Edwards | Feb 25, 2008 | Climate and resource scarcity, Conflict and security
The Svalbard Global Seed Vault is situated more than one hundred metres deep inside the mountain permafrost on the Norwegian island of Spitsbergen, some 620 miles south of the North Pole deep inside the Arctic circle.
It’s pretty barren.
No trees grow on the archipelago, which is home to some 2,300 people. It was selected because of its inhospitable climate and remoteness. The average winter temperature on Svalbard is around minus 14C. The vault is protected by high walls of fortified concrete, doors armoured with steel plate and a home guard of free-roaming polar bears.
As the world’s first global seed bank, it has the capacity to hold up to 4.5 million batches of seeds from all the known varieties of the planet’s main food crops and has been designed as a latter-day Noah’s Ark, or insurance policy, for the planet in the event of a catastrophe such as devastating climate change induced by global warming.
The vault aims to make it possible to re-establish crops and plants should they disappear from their natural environment or be wiped out by major disasters. Cary Fowler, of the Global Crop Diversity Trust which set up the project together with Norway’s Nordic Gene Bank yesterday described the vault as the “perfect place” for seed storage.
The vault is made up of three large, airtight, refrigerated cold-storage chambers which are housed in a long trident-shaped tunnel bored through a layer of permafrost in to a mountain of sandstone and limestone on the archipelago.
Scientists involved in the project point out that some of the world’s biodiversity had already been lost as a result of war or natural disaster with gene vaults disappearing in Iraq and Afghanistan following the conflicts there and while seed banks in the Philippines and Honduras have been wiped out from natural disasters. The vault is the world’s last line of defence against extinction.
‘Every nation has been invited by the Norwegian government to place its seeds in this vault. It’s the last line of defence against extinction for all the crops we have, and the most long-lasting, most futuristic and most positive contribution to humanity being made by the international community today.’
Each country’s seeds will be stored inside heat-sealed, four-ply aluminium envelopes originally designed for use by the military, placed inside sealed boxes, stored on metal shelving and secured inside an air-locked chamber. Each packet will hold one representative crop sample, and about 500 seeds depending on their size. They will remain the property of the country that donated them. This last part is very important as according to researchers at the World Vegetable Centre (I kid you not) in Taiwan, up to 27 “orphan” crops with a value of US$100 billion are grown on 250 million hectares (618 million acres) in developing countries. Orphan crops like cowpea and groundnut are not minor or insignificant crops but are crucial to regional food security.
