[Rhodes22-list] Energy, Farming, High School Geopolitics

[Bill Effros]

Brad,

We all hope the first sentence you wrote is true.

The rest is a lot of weasel language backed by dubious "facts" that none 
of the rest of us has the time to parse.  "Oh, when I said this, I meant 
that...more than half...WMD...GWOT..."

This country has dug itself into a deep hole by substituting slogans for 
policy.  We all know you are bright enough to know the difference.  Some 
of the points you are trying to make may well be right, but we'll never 
know if we have to spend all our time sorting through massive quantities 
of distantly remembered pseudo facts.

Fly safely,

Your friend,

Bill Effros

Brad Haslett wrote:
> Here is one last stab at energy, farming, and high school geopolitics.
> I'm very busy the rest of the month so everyone can breathe easy.
> First, let's clear the air about some numbers.
>
>
>
> Bill and Dave don't like my Straight of Hormuz numbers and attack the
> whole argument about what a strategic choke point it is based on their
> numbers.  My number was a quick and dirty number from memory based on
> Gulf oil reserves times the shipping rate past Hormuz.  Bill and
> Dave's number are based on the percentage of total world production,
> 20% plus.  Allow me to be specific.  Roughly 40% of the worlds traded
> oil flows past Hormuz.  That is a lot.  Using the lowest number tossed
> out, 20% of the total production, would cause a worldwide shortage and
> price spike that would make the previous OPEC created shortages seem
> mild in comparison.  If you look down the road, two-thirds of the
> world's oil reserves are in the Gulf region.
>
>
>
> Dave doesn't think based on his Wikopedia research Hormuz can be
> closed.  Yet, the same articles he sites clearly explains that the
> tanker shipping routes are 1 mile wide with a 2 mile buffer.  What
> happens if you sink a tanker, or a US aircraft carrier, in the middle
> of the shipping channel?  The Iranians have Russian submarines and
> Chinese gunboats.  They also have mines. Wally wonders why they would
> do this when they need to ship oil as well.  Good question.  Why does
> their leader openly state that Israel should be wiped off the map and
> the Holocaust never happened?  They're crazy perhaps?  Another
> question, why do they need a nuclear reactor? Is it because they are
> concerned about damaging the environment by burning oil for
> electricity?
>
>
>
> Now Bill thinks the US and Russia produce more oil than all the Gulf
> countries that ship through Hormuz.  Actually, the Gulf production in
> 2004 (DOE data) was 21.76 million barrels per day versus 17.96 for the
> US and Russia.  The US does not export oil, we consume all we produce,
> as does China.  Russia exported 6.67 million barrels a day.  But let's
> look further down the road at reserves.  Russia and the US combined
> have 81.4 billion of reserves (JAN 06 DOE) compared to 711.1 billion
> for the Persian Gulf.  Hardly comforting.  More discomforting, the
> Chinese are cutting deals everywhere.  Everywhere!  Now as to some of
> those other big oil countries, Nigeria, Venezuela, Libya, and Algeria
> are also members of OPEC.  Nigeria and Venezuela are both having their
> internal political problems that have affected oil production.
>
>
>
> Let's talk about tar sands.  If you count Canada's tar sands into
> reserves, Canada has the second largest reserves behind Saudi Arabia.
> Only one small problem, the extraction of oil from tar sands requires
> huge amounts of energy (currently natural gas) and creates enormous
> environmental damage.  If the sands were to be fully developed, Canada
> would be forced to withdraw from Kyoto.  If Al Gore is correct, the
> inconvenient truth is that mining tar sands will accelerate our
> journey to New York City being innundated with the Atlantic Ocean.
> But let's assume Al is full of it and the environmentalists will give
> Canada a bye.  Who is one of the biggest investors in tar sands?
> China!  In fact, the Chinese are exploring building a pipeline to the
> West Coast of Canada for shipment to China. There has been talk of
> building a nuclear reactor in Alberta to replace natural gas as the
> hot water source.  Let's hope so.  If production of tar sands ramps
> up, our largest outside source of natural gas, Canada, will compete
> with the winter heat source for many of us.  Oh yeah, and don't forget
> all those clean burning electric peaking plants encouraged by the
> Clinton administration that burn natural gas.
>
>
>
> Bill is correct when he states that the Saudis are worried about the
> price of oil.  At current prices, biodiesel, Dave's synfuels, and
> Brazilian ethanol start to look attractive.  The Saudis have always
> been the swing producer in the market and for years tried to keep oil
> in the $22 to $28 basket range.  Oil has moved to a new whole range
> and the world economy hasn't tanked.  We'll probably never see oil
> less than $30 again, ever.  The Saudis would love to keep oil at just
> under the level where alternatives look attractive.  I assume Dave's
> synfuel includes coal to oil.  Only one small problem there as well,
> coal demand is at an all time high.  We produce over 50% of our
> electricity (you can look up the exact number) and no new nuclear
> reactors have been built in over 30 years.  Let's say nukes are bad
> and coal is good.  We can sacrifice West Virginia and some other
> places and press on with our happy selves.
>
>
>
> Now what the hell does any of this have to do with farming?  Well, for
> one thing, farming takes a lot of fuel, not only for tractors and
> combines but for fertilizer as well.  If biofuels becomes a
> significant part of the mix, those crops will compete with food crops.
> We couldn't replace our current crude consumption if we planted every
> square inch of farm ground in the US.  But, we could make a dent.  The
> problem is, the USDA has focussed on a handful of cerial grains and
> cotton to the exclusion of other crops.  Small family farmers have
> been forced to suck on whatever teat the USDA was offering in any
> given year rather than choose what the next best crop in rotation
> would be.  Not good for the land and not in the long term best
> interest of the farmer.  The program is set up to reward the biggest
> and most aggressive. What do we do with all this excess grain?  We
> export it at prices that harm small farmers in third world countries.
> Farmland prices are inflated according to what subsidy is available.
> This prevents new farmers from entering the market and existing small
> farmers from expanding.  The rich get richer.  What started as a
> safety net for family farms has become a perverse redistribution of
> wealth.  This is bad social policy and bad economic policy.  Where it
> really gets perverse is when you combine agricultural policy with
> energy policy.  Brazil makes ethanol from sugar beets rather than
> corn, a much more efficient process.  We consumers pay well above
> world market prices for sugar to protect US growers of sugar crops and
> there is an import restriction on Brazil ethanol imports.  We like
> corn; we subsidize it, export it, and convert it into fuel even though
> the net energy gain is only about 1.1 to 1.  If we put less emphasis
> on corn and grew rapeseed, we could get about 3.3 to 1 energy
> efficiency out of biodiesel.  We currently make biodiesel out of
> soybeans, another subsidized crop.  If you are a farmer choosing what
> to grow next year, what will you choose?  Subsidized corn, soybeans,
> cotton, or an energy crop?
>
> It is impossible to discuss energy independence from bio fuels without
> discussing farm policy.
>
>
>
> So where are we now?  Let's just assume that alternatives are
> available that are competitive at current prices.  We make ourselves
> energy independent and let China have the rest of the world's oil.
> Oil prices would drop, we would have to compete with China in the
> world market with say, $75 a barrel equivilent cost to whatever new
> lower crude price per barrel.  Not a very sunny prospect.  So here is
> my high school geopolitical analysis.  Two thirds of the world's oil
> is located in a region that hates us no matter how nice we play.  That
> oil has to flow through choke points.  China doesn't give a hoot about
> policing the world as long as oil flows to China.  Countries like Iran
> have influence well beyond what they would otherwise because they
> convert their oil into weapons.  I don't have the solution, and
> Congress is more than happy to pander to their constituents and tell
> them what they think they want to hear rather than look for viable
> solutions.  You figure it out.
>
>
>
> As John Lennon said, Imagine!  Imagine if instead of one sane and
> rational democracy in the Middle East, Israel, we had two, Israel and
> Iraq.  What if the other countries in the area envied their standard
> of living and freedoms and called for revolution?  Someone got a
> better idea?  Anyone?  If not, we'd better get busy farming and
> mining, building nuclear reactors, drilling ANWAR and the coastlines.
> Based on my knowledge of China, they don't give a shit about
> environmental problems or who shoots at whom, as long as the oil keeps
> flowing.
>
>
>
> BTW, I haven't tried Wally's baloney sandwich yet but I have eaten a
> great deal of crow in my lifetime.  If you prepare it just right it
> tastes just like chicken.
>
>
>
> Brad
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