Archive for category Oil

Like a James Bond Plot

The plot of Air Force One - where Hijackers take over the President's flight and Harrison Ford (the President) gets back control, is only slightly less unrealistic than what seems now to be happening!

The plot of Air Force One – where Hijackers take over the President’s flight and Harrison Ford (the President) gets back control, is only slightly less unrealistic than what seems now to be happening!

When I first heard about the Malaysian airlines “missing plane” with 239 on board, I didn’t pay much attention.   Air crashes are actually rare, but when they happen everyone notices.   There are far more automobile deaths (if you fly, the most dangerous part of the trip is the ride to the airport) and almost nobody notices.

Then things went from dull to really bizarre.  The plane’s engines sent out signals that proved the plane was flying at least five hours after it disappeared from radar.  The signals didn’t give much data, only proof the plane was still in the air, somewhere.   Beyond that, the communication systems with the ground had been manually disengaged, something very difficult to do.

Then the reports said that the plane briefly rose to 45,000 feet, high enough to render the crew and passengers (anyone not prepared) unconscious.  That way the hijackers could easily confiscate cell phones from passengers and restrain them – or maybe even kill them.   They flew where there was little or no radar, and may have used “terrain masking” and other techniques to avoid detection.

To what end?

This is a Banacek style mystery!

This is a Banacek style mystery!

Two reactions.  The first is politically incorrect – WOW, I’m impressed!   The skill to implement such a plan, avoid detection and pull it off is really amazing.  This is something from a James Bond film – where the super villain manages some bizarre act of sabotage, like stealing nuclear missiles.   I can’t deny a little admiration for someone with the guts and cunning to pull off such a feat.  Friedrich Nietzsche would approve.

But of course I am deep down a humanist who does not want terrorists to use this in some nefarious plot, so my second reaction is to hope that, like in James Bond films, there is some 007 like team rooting out the villains, ultimately saving the day.

Theories range from the pilot doing this as an act of protest against the Malaysian government to the first step of some al qaeda like attack, perhaps focused on shutting down Saudi oil ports like Ras Tanura.

Hitting any of these oil ports, especially Ros Tanura, could be devastating to the world economy

Hitting any of these oil ports, especially Ras Tanura, could be devastating to the world economy

We just don’t know.   It’s creating a media drama unlike anything else recently.  A mystery!  Danger!  Lives at stake!  Conspiracy theories!  My favorite – some anti-terror expert in the UK thinks its possible someone with a mobile phone could have taken control of the plane.  Think what that would mean for airline safety!   Right now it’s a fascinating story to watch unfold.   Hopefully it’ll conclude with the passengers freed and little damage done.

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Welcome 2013!

2013

The world did not end on December 21, 2012 and the country averted the so-called fiscal cliff.   But perhaps the end of the Mayan cycle does symbolize change:  the world has been on an unsustainable path and the direction is shifting.

Politically, the US is becoming more progressive.   Ronald Reagan and Barack Obama are both larger than life Presidents, disliked by their opponents but pragmatic.  Each compromised – Republicans forget the types of compromises Reagan made during his term – but focused on shifting the country’s direction.   Reagan succeeded – for thirty years taxes have been going down and the debt has been going up.   The growth in social welfare projects was halted, while social conservatism grew.

Those days are over.  With states rapidly approving gay marriage, drug laws shifting (remember the vindictive nineties when Newt Gingrich was advocating the death penalty for even selling pot?), and the internet creating a more open and tolerant public, the culture wars are over.   The social conservatives lost.  A new generation is emerging less repressed, less convinced by social conventions, more willing to experiment and be open.

Republican infighting grows as the nation shifts from center-right to center-left

Republican infighting grows as the nation shifts from center-right to center-left

With the fiscal cliff deal people accept that tax reform is necessary to bring more revenue and stop living beyond our means.   The only reason the debt’s gone up under Obama is the recession — something he didn’t create.   Recessions radically increase the cost of government programs, decrease tax revenues and require spending to stimulate the economy.   But Obama has signaled structural reform that will turn around the budget mess, even if the results won’t be clear until the economy is growing.

Until recently concern about global warming was losing support in public polls.   That’s turned around.   Things like Sandy, droughts, and historically high temperatures are convincing the public this is an issue.   A generation of children are coming of age who learned environmentalism and science in the schools.  Environmental activism is becoming cool again.

Beyond that the fossil fuel era is ending.   Despite promising finds of natural gas and tar sands, global consumption has been rising fast and new finds will not be enough — though they make the transition easier if we are proactive.   Saudi Arabia is past its peak and likely to become an oil importer by 2030.    Right now the recession has kept oil prices low, but even with the world in the economic doldrums oil is near $100 a barrel.  If growth returns, oil prices will rise dramatically.

Even with oil sands and fracking for natural gas, the fossil fuel era is ending

Even with oil sands and fracking for natural gas, the fossil fuel era is ending

Luckily, led by the EU, the rise of green technology is dramatic.   Still, higher energy costs will force a shift in life styles.  I doubt it will be the collapse predicted by some, but the days of cheap energy are ending.

The biggest shift is in technology.   Social media and the internet started a revolution in the Arab world that will take years to play itself out.   Those who think this is bad – or could have been prevented – are sorely mistaken.   The regimes relying on fear and bureaucratic control are going to find that people are becoming informed and empowered, able to rise up.    This started back in 1989 with the fall of Communism in Europe, but will grow and spread.

Even in Africa, where a genocide in 1994 and numerous wars involving some of the worst atrocities of recent history went unnoticed, a new activism is emerging.   Though Kony 2012 faded, the connections people are making across borders make it likely that over the next few decades the African continent will have a rebirth.  They own many of the scarce resources that the rest of the world needs; corrupt dictators are starting to fall.

Old political notions of sovereignty, national self-interest, and fear based policies are slowly giving way to interdependence, shared interests and hope.   The world is waking up, change is coming.   It will not be easy, there may be decades of instability and uncertainty before we see a better reality.    But a new world is coming.

The biggest barrier to peaceful change are those who cling to old ways of thinking – fear, anger, greed, self-interest at the expense of others, and a ‘them vs. us’ mentality.    The old mentality will not work in the world that’s emerging, and following the path of fear will yield crisis and conflict.    But change is coming, yesterday has past, now let’s all start living for the one that’s going to last.

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The Folly of Striking Iran

Iran's Grand Ayatollah Ali Khamenei

Right now President Obama’s chances of re-election look good.    The Republicans are in disarray, he has no primary challenger and most importantly the economy appears on an upswing.   Taken together, the stars are aligning for the President better than any time since early in his Administration.   In politics, timing is everything.   However, lurking under the radar screen of most Americans is the possibility of an Israeli or (less likely) American strike on suspected Iranian nuclear facilities.

Already President Obama is being criticized for not giving Israel high tech bunker busting weaponry that could increase the chances (but not guarantee) that an Israeli strike would work.    The CIA has consistently said that they do not think Iran is close to possessing a nuclear weapon and many doubt they actually want to go through with producing one.   There are also serious doubts about Iran’s delivery systems.

The reason both Presidents Bush and Obama have tried to hold Israel back is that such a strike is not at all in the US national interest.   A nuclear Iran (like the nuclear North Korea) would be an irritant, but not a major threat.

If Israel or the US struck Iran, however, the results could be devastating.  Oil prices would certainly skyrocket putting the economy back into recession just in time for the election.    President Obama would likely lose, especially if his base was infuriated by him starting another offensive war.   The Euro crisis would deepen as well, and the world economy would be back where it was in 2008 – or worse.   And that’s a best case scenario!

Israeli Prime Minister Netanyahu and Defense Minister Ehud Barak: What are they thinking?

In a worst case scenario the bombing unleashes a series of attacks on US interests in the region.   The Shi’ites in Iraq radicalize and ally with Iran, the Taliban uses this to incite the youth in Afghanistan, Hezbollah and Hamas launch terror strikes against Israel, and the region drifts towards the worst regional war since 1973.

Hezbollah remains a threat - one that Israel underestimated in 2006

Oil prices could rise to astronomical heights, the straits of Hormuz could be closed, Saudi oil facilities attacked, and unrest against even stable regimes like that of Saudi Arabia could grow.

From the US perspective there is little upside to an attack on Iran.   The only interest the Iranians can directly threaten is the oil supply, but the risk is small.   Especially since prices are unlikely to drop precipitously, the US and Iran share an interest in keeping Persian Gulf oil flowing.   And the Carter doctrine still applies – nobody thinks that Iranian nukes would deter a US response to Iranian aggression threatening the flow of oil.  Iran would be loathe to escalate such a crisis to the nuclear level since that would mean the end of the Islamic Republic.

The Persian Gulf

Iran’s power would grow in a region includes the Arab states, Israel, Russia, China, Pakistan and Afghanistan.   All other things being equal the US would prefer Iran be a weaker rather than a stronger regional power, but there are many options to balance Iranian power and contain any effort to extend it.   There would be concerns of further proliferation, but there would be many ways to prevent that.

Another indirect threat would be that Iran would give nuclear technology to terror organizations.   That sounds scary, but a country that works hard to gain a nuclear weapon does not give up control of them to people they can’t control.    Even now Iran limits what it gives groups like Hezbollah – and the Iranians certainly don’t want Hezbollah hotheads provoking a nuclear strike on Iran!

Remembering how wrong the US was about the Iraq war it would be a mistake to assume an attack on Iran would be low risk.   The war in Iraq was supposed to be easy, cheap, and yield a stable, safe pro-American ally offering us permanent regional bases.   None of that turned out to be the case.

The main dangers in striking Iran:  1)  There might be no benefit at all as Iran may have successfully decoyed its program; 2) This could severely undercut the reform movement in Iran, whose success would do more than anything to support US regional interests; 3)  After years of decreased influence and appeal, al qaeda and other radical groups could benefit from the US launching another war of aggression and the terrorist threat could spike dramatically, undermining our counter-terrorism efforts; 4) An oil price spike could not only bring us back into recession, but if the crisis were to drag on global depression is quite possible; 5) Iran could respond to an attack by escalating the war to create regional instability.

In the case of number 5, the US would see no alternative but to try to create “regime change” in Tehran.   This would cause unrest in the US.   Strong, angry domestic opposition to such a war would be far more intense than the opposition to the war in Iraq – national stability would be jeopardized, especially if an unpopular war were to be accompanied by deep recession or depression.    In short, this could lead to a crisis far more severe than any yet faced by the US or perhaps the industrialized West in the modern era.

Protests against the Iraq war were relatively mild; a war with Iran could unleash far more division

To be sure, it is possible that a strike could succeed and Iran would refrain from responding.  That’s the best case scenario.    The best case scenario is probably more likely than the worst case scenario, though most likely is something in between.

I cannot imagine people at the Pentagon and in the Department of Defense seeing any persuasive rationale for a strike against Iran.   I can imagine they will pull all the stops to assure that Israel refrain from its own strike, perhaps even suggesting that US support for the Jewish state cannot be assured if they start the war.

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Geothermal Update

The heat exchange unit, which sends warm or cold air to the attic where a fan then sends it through the house

Last June I blogged about our installation of a geothermal heating and cooling system in our house.  (The link is to one of the final blogs, go earlier in the week to see the process).   Now seven months later it’s time for an update.

It is winter.   You can’t tell by looking out the window because we are barren of snow.  That is exceedingly rare for December 30th and has destroyed my plans to spend the week skiing with the boys here in town.    We did get a two inch snowfall on December 23rd that melted on December 26th.   Maine without a white Christmas would have been an abomination!

So far the geothermal system gets a mixed review.  It does a quick, reasonably silent and comfortable job heating and cooling.   It’s nice that air doesn’t blast out of the ducts; it’s even hard to tell when the system is running.    As expected, there isn’t a lot of heat being pushed to the basement, so while we keep the upstairs at a comfortable 68 when we’re around, the basement is usually a good five or six degrees cooler.   We do have a space heater we use sparingly (and we could turn on the oil heat if we really wanted the basement toasty).

We don’t seem to be saving as much money as we hoped to.   We haven’t seen any help from our desuperheater, designed to provide hot water.    I expected better from something called a ‘desuperheater.’   It is supposed to augment our boiler, which now is used only for hot water and back up heat.   The goal was to burn 15% of the oil we used to, but it’s more like 30% –  which is pretty much what hot water costs anyway!   The boiler acts as if the desuperheater isn’t there.

To install it we not only had to deepen our well from 360 feet to 840, but dig up the front lawn to connect a second pipe for returning the water. The well provides both domestic water and geothermal.

I plan to increase the temperature of the water sent from the geothermal unit to the hot water supply.   I originally set it to 125 instead of 150 out of fear that water too hot would burn the kids.   I think the water sent would mix with cooler water so I’ll experiment with that.  If the kids start suffering 2nd degree burns I’ll turn the temperature back down.

The other issue is electricity.   Unfortunately our electric bills haven’t been consistent.   Despite the new use of ‘smart meters,’ a device which sends information on usage to the company so CMP can lay off meter readers, we seem to be getting a lot of estimated bills or wild fluctuations from month to month.

The total cost of the system was nearly $40,000, though we do get a third of it back in tax credits (thanks, Uncle Sam!), making the final cost about $28,000.   To pay it back in 10 years we’d need a savings of $2800 a year (I didn’t even need a calculator for that one!).    Last year we paid $4500 for heating oil.   This year we’re likely going to pay about $1200.    That puts us at a savings of $3300 before the electric bill.   The electric bill used to be about $120 a month.   For people outside Maine that sounds like a lot, but we have expensive electricity in Maine — even the Governor complains about that!

In summer the cooling didn’t increase the cost much, but last month’s bill spiked.   If that continues (one month is hard to go by with electric bills, you have to average them out), we could be looking at $500 more for the three  coldest months, and  probably about $700 more for the rest of the year.   Even that is suspect because we had two dehumidifiers pumping water out of the year non-stop this summer since my wife got concerned that there is too much mold in the basement air.   I thought it added character to the atmosphere but her sinuses disagreed.

If those figures are accurate that would mean the additional electricity would cost about $1200, or $100 a month on average.   That would make our savings $2100 for the year.   If we can’t improve on that it will take the system as much as 15 years to pay for itself.

So far the system has only malfunctioned once, and Jeff Gagnon Heating and Plumbing was there early the next day to fix what was a minor problem (free of charge, of course, as it is under warranty).   I gotta love Maine — we weren’t able to be home when they could stop by, so we just left the house unlocked.   That’s typical here.   During that time it was nice to have oil heat back up.   We also had a 13 hour power outage in mid-autumn which also required us to use oil.   We have a generator, but it’s not powerful enough to start the geothermal system.   The electrician who worked on the installation just laughed heartily when I pointed to my generator and asked if it would be enough to keep the geothermal going.

Despite that, I still do not regret installing the system.   My wife – a CPA much more in tune with money issues than a dreamy academic like me – isn’t so sure.    But if oil prices sky rocket, the payback time could decrease quickly.  Looking at headlines from Iran, Syria, and the Mideast I find it a bit comforting not to be relying completely on oil.

We have heat going down to the basement through three upstairs closets; so far it's providing minimal but valuable help

I also really like having air conditioning in the summer.   You don’t need it in Maine, but if you’re going to entertain guests, cook indoors, or be comfortable on those hot weeks (and we seem to be getting more of them), it is very pleasant.   We couldn’t have had central air without duct work being done anyway, and that was a chunk of the cost.    We would never have gotten central air for that reason and a few window units would have been a pain.   There is real value to having a cooling system!

Finally, I’m not yet convinced about the cost.   I need more data about the cost of electricity over a full year, and I hope to get the desuperheater to provide more relief heating water.

So the unit works well, we get good heat, and I’m happy with it.   We don’t seem to be saving as much as we hoped for, and the basement stays chillier than the upstairs.   Nonetheless seven months in I’m still glad we did this!   My wife tells me that even if I get a major midlife crisis I’d better be happy with my Ford Fusion for at least another decade — this was my expensive toy of choice.   I can live with that!

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Energy, Finance, and Geopolitics

As the EU leaders work with the IMF, various central banks around the world and China to figure out a way to prevent a Euro collapse and treat the causes rather than just the symptoms of the crisis, it’s clear that four years into this economic crisis — which would be akin to another Great Depression if not for the capacity of government to intervene more effectively in the economy — the core problems remain unresolved.

The core issues revolve around a triad of energy, finance/debt and geopolitics.   The solution summed up in one sentence:  We must restructure our energy usage so as not to be dependent on oil, restructure debt and the global financial regime so as to return to sustainability, and restructure the world system to give new prominence to rising powers such as China, India, Russia and Brazil, while the US and the EU take important but diminished roles.

Despite all the hoopla around “drill, baby, drill” and oil finds everywhere from North Dakota to off the western shore of Mexico, nothing yet denies the fact that if we are not now at the peak of production, we still will be.   This isn’t as dangerous as some would have you believe.   The traditionalist peak oil school looks at production like a regular normal curve:

This alarmist example posits a quick drop in oil production, leading to crises ever more serious and devastating

The alarmist approach could be a bit early — the peak may still be ten or fifteen years off.  But right now the data does show flat production, even when prices spiked in 2007-08, so there is evidence to support a claim we are now at peak.   The late Matthew Simmons’ book Twilight in the Desert makes a persuasive yet indefinitive case that Saudi Arabia is already peaking and hiding the fact their real reserves are not as plentiful as claimed.   Still, the normal curve shown above is based on how US reserves were depleted — the US peaked in 1973 and production declined dramatically.   The global peak will probably not play itself out in the same way.

The US peaked in an era of cheap oil; with oil expensive and the global economy as dependent as ever on it, the search for new reserves and thorough extraction from existing wells can stretch out the peak potentially quite a while.  The graph could stay around the peak for ten or twenty years and then decline at a much slower pace.  Still, switching from an oil based economy to one that runs on a diverse set of sources ranging from coal to solar, nuclear, geothermal, wind power and others will be difficult.   Waiting for the market to force change will likely assure a period of twenty years of imbalances where real crises and shortages cause political unrest and could yield dangerous movements akin to fascism of the 1930s.    Proactive efforts to actively promote alternative energies alongside efficient exploitation of remaining reserves could help make a safe transition possible; unfortunately it’s hard to find political will to do that when there is still denial that we’re in crisis.

The second issue is global debt.  Thanks in part to cheap energy and seemingly relentless growth, banks grew comfortable making large loans to governments, corporations and individuals without worrying too much about the ability to pay back the money.   The technology revolution helped rationalize this exuberance, technology means you can get more bang for the buck — more growth with fewer resources.  Governments and the private sector got addicted to a debt that could only be maintained so long as growth was rapid, requiring both cheap energy and technological advances.

All of this debt did two things; first it spurred on investment bubbles as lack of regulation (meaning the insiders could rig the game to their benefit) alongside easy credit led to investment for the sake of making “easy money” rather than investing in companies likely to grow the economy.   This created short term jobs in the bubble sectors, but those were unsustainable.  I’ve called this the ‘something for nothing‘ mentality.

What is alarming about this graph is that except for early in the Great Depression when total debt (government and private debt) hit 300%, the average has been about 150% or lower.   Through 2009 it was reaching 380% an amazing debt burden.   Since the debt to GDP ratio of the US government is about 100%, most of it is private or corporate debt.   Much of this run up was during a boom, a sign of an unsustainable economic run up.    The US is doing worse than most in this regard, but Japan, another of the largest economies, is also burdened with high debt.   One can quibble with the statistics used (at least in interpretation) and argue that the graph exaggerates the burden.   Even then the number comes out at near 300% of GDP instead of 380%, still Great Depression levels.   Clearly there is a debt problem, and it’s not limited to governments.

So here’s the deal: how do you pay down the debt without causing a deeper recession?   The only way to do that is through growth.  Spending can be cut, but realistically the best bet is to slow down spending growth.   Moreover, cutting spending during a recession can be disastrous — it does far more harm than raising taxes.  Then if high energy costs return as demand rises economic recoveries can be stopped in their tracks.

The most dangerous issue is the third, however: geopolitics.  It’s also the most promising.   The emerging markets have a lot of under used resources and human talent, and the expansion of Asian and potentially other developing world economies could lead to a global boom.   That could provide the capital to help the developed world restructure its debt.  The problem is that the first world also have to acknowledge relative decline — the balance of power would shift towards countries like Brazil, Russia, India, China and South Africa, the so-called BRICS.

The trouble is that rising powers tend to get over confident and take risks while declining powers choose to fight to try to hold on to what is slipping away.   The so called “power transition theory” may be less viable now when economics dominates and nuclear war is all but unthinkable, but the careless talk in recent Republican debates about policy towards China suggests that many in the US may not get just how vulnerable we are, and how much damage has been done to the economy over the past decades.   The good news is that the BRICS don’t want the West to collapse, economic interdependence is real.  They want to shift towards investment and a greater say in the world economy and, in exchange for helping bail out western states in various ways, influence on our domestic economies.  China is already gaining that through heavy investment in both the EU and the US.   It’s often not noticed, but it results in a real shift of power.

These aren’t the only issues of course — global climate change is still potentially a game changer, and the Mideast could explode and create an oil crisis unrelated to so-called ‘peak oil.’   High energy costs could still undermine the BRICS and thus the world economy.    Still they keys towards the future remain transitioning to new energy sources in a timely manner, turning around the build up in public and private debt in the West likely by a mix of ‘haircuts’ (simply eliminating debt) and capital support from BRICS and other emerging markets.  In exchange control of global financial institutions shift away from western dominance (though maintaining western influence).   Managed right, there is no need for on going crisis, fear of war, or concern that civilization will collapse.   But can we trust the politicians to handle this with any wisdom?

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A Better Kind of Regime Change?

When President Obama called on President Assad of Syria to leave office last week it was a sign that Gaddafi was the verge of losing Libya.  Obama made clear that the West would continue the strategy of aiding popular uprisings through diplomatic pressure, economic sanctions and low levels of military support.   His message to the Syrian people was clear: Don’t give up.   President Obama, like President Bush before him, has a strategy designed to promote regime change.   It’s less risky than the one embraced by Bush, but can it succeed?

President George W. Bush went into Iraq with a bold and risky foreign policy.   He wanted regime change led by the US, so the US could shape the new regional order.   The Bush Administration understood that the dictators of the Mideast were anachronistic — out of place in the globalizing 21st Century.  Surveying the region directly after 9-11-01, while the fear of Islamic extremism was still intense, they reckoned that the benefactors of the coming instability would be Islamic extremists.   This would create more terror threats and perhaps lead to an existential threat against Israel.

Emboldened by the end of the Cold War and the belief that the American economy was unstoppable, they gambled.  What if the US went into Iraq, ousted Saddam, and then used Iraq as a take off point for further regime change throughout the region?

The formula was clear: invade, use America’s massive military to overthrow a regime, and then pour in resources to rebuild the country and make friends.    The Bush Administration thoroughly under-estimated the task at hand and over-estimated the US capacity to control events.     Their effort to reshape the Mideast failed.   By 2006 Iraq was mired in civil war, and President Bush was forced to change strategy.   Bush’s new realism was designed to simply create conditions of stability enough to allow the US to get out of Iraq with minimal damage to its prestige and national interests.   President Obama has continued that policy.

However, when governments in Tunisia and Egypt fell in early 2011, and rebellions spread around the region creating the so called “Arab Spring,” it became clear that the dynamics the Bush Administration noticed a decade earlier were still in play.   These dictatorships are not going to last.   Some may hold on for years with state terror against their own citizens; others will buy time by making genuine reforms.   But the old order in the Mideast is starting to crumble, and no one is sure what is next.

President Obama choose a new strategy in 2010, much maligned by both the right and left.   Instead of standing back and letting Gaddafi simply use his military power to crush the rebellion, Obama supported NATO using its air power to grant support for the rebels.    That, combined with diplomatic efforts to isolate Gaddafi and his supporters, financial moves to block Libyan access to its foreign holdings, and assistance in the forms of arms and intelligence to the rebels, assured that Gaddafi could not hold on.

Gaddafi’s fall creates the possibility that NATO assets could be used against Syria in a similar effort.   Moreover, it shows that the argument that those who use force will survive while those who try to appease the protesters will fall is wrong.   Survival is not assured by using force, the world community does not ‘forgive and forget’ like it did in the past.

The strategy is subtle.  Like President Bush, Obama’s goal is a recasting of the entire region; unlike his predecessor, Obama’s chosen a lower risk,  patient, longer-term strategy.    If Bush was the Texas gambler, Obama is the Chicago chess master.   But will it work?    Is this really a better form of regime change?

President Bush’s policy was one with the US in control, calling the shots, and providing most of the resources.   President Obama’s approach is to share the burden, but give up US control over how the policy operates.   It is a true shift from unilateralism to multi-lateralism.   While many on the left are against any use of the military, President Obama shares the Bush era view that doing nothing will harm US interests.   The longer the dictatorships use repression, the more likely that Islamic extremism will grow.   The more friendly the US is to dictatorial repression, the more likely it is that future regimes will be hostile.

So the US now backs a multi-faceted multi-national strategy whereby constant pressure to used to convince insiders within Syria (and other Mideast countries) that supporting the dictator is a long term losing proposition.   Dictators cannot run the country on their own.   Even a cadre of leaders rely on loyalty from top military officials, police, and economic actors.   In most cases, their best bet is to support the dictator.   This gives them inside perks, and can be sustained for generations.  However, if the regime falls, these supporters lose everything.

The message President Obama and NATO are sending to the Syrians and others in the region is that they can’t assume that once stability is restored it will be business as usual.   The pressure on the regime, the sanctions, the freezing of assets, and various kinds of support for the protesters will continue.   As more insiders decide to bet against the regime a tipping point is reached whereby change becomes likely.

For this to work a number of things must happen.   First, a stable government must emerge in Libya.  It needs to be broad based, including (but co-opting) Islamic fundamentalists.   The West has to foster good relations with the new government, building on how important western support was in toppling the Libyan regime.  Second, the pressure on Syria cannot let up.   There has to be the will to keep this up for as long as it takes.    Third, the possibility of NATO air support has to be real — the idea is that if it appears that Syria might launch a devastating blow against the revolt, NATO will do what is necessary to bring it back to life.   Finally, the costs and risks of the operation must be kept low so the dictators cannot expect to wait out the West.

If this works, there could be a slow modernization and ultimately democratization of the Arab world, perhaps even spreading into Persian Iran.  If it fails the costs won’t be as monumental as the failure of the US in Iraq, but it will be a sign that Mideast instability in the future is unavoidable, and we have to be ready for dangerous instability.  Has President Obama found a better style of regime change?   Time will tell — and it may take years to know for sure.

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Deepening the Well

The rig to deepen our well until it reaches the proper flow - probably 800 feet

Today our geothermal project officially got underway.   Goodwin Well and Water came and started drilling our existing well to a much deeper level.    Not having seen the process before, it’s fun to see how something as common as a well gets drilled.  44% of Maine residents get their water by private well, the largest percentage in the country.

The well is currently hundreds of feet deep, though this water isn't the well but run off

80% of Mainers use fuel oil to heat their homes.   That has been our source of heat too, meaning we are prone to wild fluctuations based on the price of oil.  Since I consider it possible that oil could rise significantly in the future, part of the rationale for this is to protect ourselves from that expense.   Geothermal runs on electricity, but uses far less energy.   Moreover, natural gas is the source to power electric plants, which is cheaper and more plentiful.   So far only about 1% of Mainers use geothermal in private residences, and retrofitting homes to move to geothermal can be tricky.   Ours has a baseboard heating system that geothermal will not accommodate, so a big expense is setting up duct work for a forced air system.

We're set up with water to use while the well work is being done

If all goes according to plan we’ll have geothermal AC by the end of next week.    We don’t have AC, and most of the summer don’t need it, but it is nice to have.   So back from Italy and we jump into yet another project!

Back in late 2007 I wrote an e-mail to the staff list asking if anyone knew about geothermal options.   It led to a number of exchanges and as oil surged in price in 2008, Tom Eastler, our internationally known fossil fuel geologist (who is convinced oil may get very expensive in the future) even arranged for a public talk about alternative home heating methods.   The most interesting one was from a professor in Orono talking about having heat exchange pumps positioned in various places around the house — you could control them individually and it would be more efficient.  Alas, that’s a tough kind of retrofit on an existing house and no one actually does that yet.

Solar works well for heating water, and passive solar systems can be efficient.   Wind power can generate electricity, and the main alternative to oil here is wood.   Maine is a forest and wood is plentiful — and at current prices the cost is the oil equivalent of about $1.70 a gallon.    That price probably won’t change unless demand changes — and if oil remains high in cost, wood pellet stoves and ordinary wood stove usage will rise.    My wife grew up having to tend a wood stove, I would rather not have to deal with buying, storing and hauling wood and besides — the tech lover in me thinks geothermal is cool!   (Speaking of cool, as noted, it also gives AC!)

We mulled over the options and then the price of oil fell.   The issue lost its salience, but I suspected that unless we’re in a deep permanent world recession, not only will prices rise again, but the best time to arrange this is when the oil prices are low and there isn’t a high demand for conversion.    We worked it out financially (recognizing that we can cut 30% off the top with federal tax credits), and early last winter — before oil prices starting to really rise — we got our estimates.   Goodwin’s well and water sent over detailed information about the well system, and Jeff Gagnon Heating, recognized as one of the top geothermal installers in Maine, explained the way the system would work and put together his estimate.   It was recommended we wait until after winter to do the well work (it’s easier in so many ways!) and we’d already pre-paid oil so we tentatively agreed.   The fact it would significantly reduce our carbon footprint was also an important issue for me.

The pay off time was looking to be more like 10 to 15 years, which is quite awhile.   Then oil prices started rising, and the possibility of further hikes due to turmoil in the Mideast solidified our decision.  We altered our tax withholdings because of the expected credit, arranged financing, and had both the well and heating people over to examine our property and step by step determine how it would be done.   I didn’t get alternate bids because we decided with a new and relatively rare technology we wanted people with a very good reputation.   So I did some research on who was the best for our region and went with that.

Given the tax credits, I think geothermal is a no-brainer for new construction.   The cost isn’t that much more than setting up heating oil (pay back time is about three or four years), and the cost can be built into the mortgage.

This is the well pump that will bring water for both our domestic use and the heat exchange pumps. We'll never see it again until it breaks down, hopefully not for 20 or so years!

So now the project begins!  It may not be as interesting as my Italy blogs (and I won’t blog about it every day for two weeks, that would be geo-overkill), but it is a look at heating in the future — and regardless of global warming, I suspect home heating will be a major issue in Maine for quite some time!

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Where is the Mideast Revolt leading?

Tunisia and Egypt are looking like success stories early on.   Libya is a mess.   Syria looks like it could be the next to fall.  Pressure in Iran is growing, and the small statelets of Bahrain and Yemen face on going unrest.  Yemen’s President Abdullah Saleh has already said he’s stepping down, but unrest continues.    This will take awhile to play itself out, and before it’s over even Saudi Arabia is likely to experience regime change.

All of this is good news in the sense that the old order was obsolete and doomed to fall.   The Arab people have been victims of governments bolstered by oil hungry powers willing to enable corrupt and ruthless tyrants in exchange for their black gold.   That can’t last forever, and the mix of the information revolution and demography have pushed the region to the tipping point and I suspect there is no going back.   In 1982 Assad could kill tens of thousands to maintain authority, but now images and angry flow across the country and world in a way that undermines the capacity for dictators to engage in the most severe atrocities.

The bad news, of course, is that the region does not have a tradition of stable democracy, and if anything the authoritarian rule of recent years has reinforced the tradition of ruthless power politics inherited from the Ottomans.   And while Turkey had Attaturk, leadership in the Arab world is diffuse.    So where will this unrest lead?

1.  Those who fear too much, and those who hope too much are probably wrong.    One view is that this will be a peoples’ revolt leading to stable modern democracies throughout the region.   Another view is that al qaeda and Islamic extremists will use this to grab power and that this will be a victory for Islamic extremism.    Both views are naive.   The former is naive about the difficulty in having a culture shift from pre-modern practices to a functioning democracy, the latter naively fears a force that does not have the hearts and minds of the people of the region.   Some people are very comfortable fearing Islam and thus enjoy imagining it as an existential threat.

2.  Iran is the most likely to succeed.   Some might think it odd that the one theocracy is most likely to end up with a modern democracy, but Iran is already half way there, with a culture more modern and with less of a tradition of ruthless oppression than the states of the Arab world.   Iran (which is not Arab) was never part of the Ottoman Empire, and had a period of secularization under the Shah.   It was a modernization done too quickly, too ruthlessly and with too little respect for existing traditions, but it has left its mark.   The Shah failed where Attaturk succeeded because he never had Attaturk’s popularity and was seduced by the West to serve as a pawn in the Cold War and energy games.    This made him feel comfortable with personal power, and focused less on his country than his own rule.

But anyone watching the 2009 protests know that the Iranian people want change.  Anyone who has followed the history of post-revolutionary Iran know that modernization has been continuing despite theocratic rule, and that democratic elections do take place, and are hotly contested.  The Guardian Council has been keen to avoid pushing the public too hard, and has shown a capacity in the past to reform.   At some point an internal coup could push less conservative clerics to the top and usher in a transition that could be gradual and popular.   An Islamic democracy may not be like a western democracy, but it can be truly democratic.  Iran may be closer to that point than a lot of people think, and the changes now are more threatening to Iran’s leaders than people realize.

3.  This process will take decades with numerous ups and downs.  Gaddafi could leave Libya tomorrow, Syria’s government could fall, or Gaddafi could hang on for years and the son of Assad could channel his father’s ruthlessness in asserting Baath party control.  Likely there will be dramatic successes like Egypt’s and major disappointments.   Authoritarian regimes will cling to power as long as they think they can win– and most remain in denial of the forces conspiring against them.

This means that it will be a long time before we can truly judge the efficacy of NATO policy, the UN or the US.   It also suggests that oil price increases will continue, forcing us to move more quickly on alternative energy sources, as well as developing domestic oil and natural gas (especially from shale natural gas fields — a potentially very rich source).   It also means that those who espouse hope and those who convey fear will each find a lot of evidence for their beliefs.   You can see that in Egypt where both sides find ample evidence to prove that their hopes/fears are legitimate.

Standing back, though, one has to recognize that the old corrupt authoritarian tyrannies of the Arab world have to go.   No transition will be smooth.  Tunisia and Egypt are doing probably as well as one could hope for, but expect controversy and messy situations in each country for years.   Look at how Nigeria is 12 years into its 3rd Republic and elections are still marked with charges of rigging and some post voting unrest.   These transitions take time.   If the transitions going well take time with numerous ups and downs, places like Libya and Saudi Arabia face the potential that their transitions could take over a generation.   Once the Saudi government starts to lose control, oil crises will be likely.   It will be tempting to think there is something we can do to “fix” things:   Either prop up the old tyrants or intervene to create a new democracy.

The former would be a mistakes because the tyrants are being overthrown by their own people thanks to the force of the information revolution and ideas imported from the West.   It would be wrong to help the dictators stay in power, and ultimately self-defeating.   They will fall, and we don’t want to be seen as being on their side.  The latter simply is beyond our capacity.   We’ve seen that in Iraq and Afghanistan, and Libya is a fresh example.  Libya may be a more realistic way to help — give assistance to indigenous freedom fighters — but it risks sucking us in to a difficult long term quagmire which will likely lack closure.   Even after Gaddafi goes it will be a long time before the transition is complete.

In short, we are watching a major historical event, the start of a transformation of the Arab world away from authoritarian corruption towards modern democracy.   It won’t be the same as the West, but it’s almost certainly not likely to revert to Islamic extremism.   It’s a new era, and we need to have 21st century thinking.   Perhaps the most dangerous thing to do is look at all this through 20th century political perspectives.   A world in motion requires that our thinking be in motion too.

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Going Geothermal

Over the next few months I’ll reserve some blog entries for a project we’re planning to undertake this June – to switch our heating source from fuel oil to geothermal.   When the installation takes place I’ll describe it, and then later blog about the efficacy and savings from the switch.   Today I’ll describe our plans.

The work will be done in early June, and have two stages.  First the well drillers will come and increase the depth of our current well.   If the water flow doesn’t increase then the depth of the well, currently 360 feet, will have to be expanded to 800 feet.  If water flow increases or they figure out a way to bleed the flow (in the coldest temperatures this would be about 10% of the water) the price and depth of the well might be a bit less.   This kind of system works well in Maine, though in most of the country water tables are too deep for a standing column well to make sense (a slightly more expensive to operate loop system is used in those cases).   The water will be pumped in to the heat exchange pump and then returned to the well.   We will continue to receive our domestic water supply from the well.

Once the well drillers get their work done, the heating people come to install the unit.  The heat pump will be in the basement near the current oil tank and well water entry point.    The heat will be transferred up to the attic where all the fans and the ductwork will be located, ready to send heat to the house.   The heat pump will be a five ton unit.   Apparently unlike most forced air systems geothermal heat is low air flow, meaning that the temperature remains constant, but doesn’t rapidly decrease or increase on demand.

The total cost will be near $40,000, though after tax credits that should be just under $30,000.   At today’s fuel prices that could pay for itself in less than ten years.   Even if oil goes back down it will eventually save more than its cost — and I’m sure we haven’t seen the last oil price spike!   Moreover, it will significantly cut down on our green house gas emissions.

The cost would have been less if the house had been designed with geothermal (it was completed in 2006).   Currently it is a baseboard heating system and will require a retrofit to a forced air system.   Our house has about 3400 square feet of heated space.  It’s a ranch with a finished basement.  The basement creates a problem for a retrofit because there isn’t room in the ceiling for duct work.   Instead they’ll creatively work through closests to get a number of ducts sending heat to the basement in winter.  It likely won’t do the whole job so on the coldest days we may burn some oil.   Moreover, while it will help heat water (especially in summer) much of our domestic hot water will also come from our oil burner.  Still, the cost savings should be significant.   Moreover, it will give us air conditioning in the summer — we have no air conditioning system at this time (not even window units), so that’ll be nice.   Maine doesn’t get too hot in summer, but there are always weeks where it gets intense, and it’s often too hot to cook indoors.  It’ll be nice to have AC!

The decision to do this isn’t taken lightly.  It is a major up front cost.   Its a no brainer given tax credits to do this on new construction — but a retrofit is much more expensive (not to mention that in buying the houses we paid for the current system, now destined for back up duty).    Moreover, we made this decision last November, when oil prices were low.   My thinking was that oil prices were not going to stay low, and once they rose again when the world economy picked up, changing our system would be more expensive and there would be a longer wait (as it was our wait was simply to avoid having to have the well work done in the winter).

You see, I’ve had this knack of being right about trends.   I argued back around 2000 that the dollar would end up significantly lower in value vis-a-vis the Euro, and wished I could buy a large chunk of Euros as an investment.   I was right — but had no excess money to buy Euros.  I was warning my classes about al qaeda in the 90s, and talking about the coming housing bubble recession by 2005.   During the 1998 dot com boom I told classes “there hasn’t been so much optimism since 1998.”  Yet I did nothing to personally profit from my predictive ability, except to shift my retirement account to safer investments.

Lately I’ve become convinced that large oil price increases are on the horizon.   All that can prevent it is a mix of increased domestic oil drilling, a shift towards oil sands, and a large increase in alternative energy use.  All of this will happen — reality and markets force change whether people like it or not — but it appears likely to be a very difficult transition which could see a sustained period of very expensive oil.   While I doubt the absolute gloom and doom of the peak oil folk is right — I have a bit more faith in our ability to innovate, adapt and react — I also am skeptical of the ‘it’ll be a slow easy transition’ folk.   So rather than risk being right again but having done nothing to prepare myself, I pushed hard for us to make the decision to take the economic plunge.  I’m teaching overload courses to help pay for this, and unless something unexpected comes up, we’re going to do it.

It will feel good too to think I’m doing something about both foreign oil dependence and global warming.   So if all goes according to plan, I’ll blog about this topic again in early June when the work is underway!

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Libyan End in Site?

As rebel forces take town after town originally held by forces loyal to Gaddafi, a strange dilemma faces the international forces aligned against the dictator: if the rebels threaten Sirte, Gaddafi’s strong hold, would it not be the rebels rather than the Libyan army threatening civilians?   To be sure, Gaddafi’s forces have a track record of violence against civilians while the rebels arguably have had public opinion on their side and opposed the military.   There have been no complaints of rebels targeting civilians as they retook Ajdabiya, Brega, Uqayla, and Ras Lanuf.  Still, in Sirte these differences become problematic, and any video of civilian casualties threaten to undermine the international mission.

So far, those videos and pictures have been scarce to non-existent.  Tours arranged for international media in Tripoli to see civilian damage end up either coming back with nothing (“we couldn’t find the address”) or showing a site where any damage is ambiguous — perhaps it was caused by NATO, but perhaps not.  And with Gaddafi snipers and mercenaries in operation, it’s hard to pin any civilian deaths on the coalition at this point.

That means that right now the UN backed mission in Libya still holds the moral high ground, at least in relative terms.   All that could change if the rebels, not under clear control nor guided by one over-arching ideology or aim, start taking revenge on pro-Gaddafi civilians or turning on each other.

This means that it is imperative that the UN and NATO plan and execute an end game as soon as possible, perhaps in time to be announced Monday night when President Obama addresses the nation.    The end game must include: a) a cease fire on all sides; b) a way for Gaddafi to go into exile with a credible chance at avoiding persecution for war crimes; c) a peace keeping mission including and perhaps dominated by the Arab League and African Union; and d) a clear plan for moving to democratic elections.

If the UN can pull this off, the message to other dictators is clear: the international community will no longer allow an abstract  claim of sovereignty to protect their grip on power.   Even if Libya is sovereign, Gaddafi doesn’t necessarily get to claim the right to sovereignty just because he has power.   That notion of sovereignty is at odds with the principle of the UN charter.

The US wars against Iraq and Afghanistan have allowed dictators to breath easy.  The US certainly won’t get involved in another conflict after those have weakened the country and divided the public!  With the American economy still wobbly and still in danger of further decline, the US seems certain to become more isolationist.   Gaddafi certainly was thinking that way when he launched his counter offensive.

President Obama and Defense Secretary Gates were thinking that way early on too — it’s a rational position, one mirrored by the military establishment.   But French President Sarkozy and ultimately Secretary of State Clinton realized that if a truly international coalition — one without the US as the leader and motivator — were to be able to succeed rather easily, that would have the opposite effect: dictators would realize it’s risky to use force to stay in power.  Decisions like Mubarak’s to leave freely would seem more rational than those like Gaddafi’s to fight for power.   That’s why it was so important that Obama remain relatively on the sidelines and not highlight the US role (even if in practical terms US firepower dominated the response).

This also means that should Gaddafi finally be compelled to leave — and the pressure on him is mounting — a new Libya can be constructed on Libyan terms, without it seeming like the US or the West is imposing a government on the country just to control its oil or engage in neo-colonialism.  If that works it could have a chilling effect on other Arab dictatorships, especially in Syria where the government has already unleashed a crackdown.

The calculation is simple: the US wouldn’t be stupid enough to get involved in anything like Iraq again since once the bombing starts, you have to see it through.    The failures of the US in Iraq cause Syria’s Assad to believe he’s invulnerable as long as he can crack down on his population.   But if Libya proves that the international community can mount an effective low cost counter to dictatorial crackdowns, then the calculation changes.  In a best case scenario, dictators decide early on to leave freely in exchange for a relatively comfortable retirement.

Gaddafi, of course, could still fight to the end, meaning that the intervention becomes costlier and this model of countering dictators fails.   And who knows what kind of government might emerge in Libya after the fighting.  But whatever problems may come, it’s important now that NATO and the UN push for an end game so that this does not drag out.   There is reason to believe the end may be in sight.

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