The completeness of it all

28 07 2014

mikestasse:

Pedal Bin at well over a thousand degrees....

Pedal Bin at well over a thousand degrees….

Born of the Earth, Fired with the Sun

Born of the Earth, Fired with the Sun

I just had to share this latest post of Steve’s…… especially seeing as we just did a firing of our own; Glenda has again entered the Flying Arts competition, which she didn’t win last year, but some of her work was accepted for the travelling exhibitions. Let’s hope this year’s “Born of the Earth, Fired with the Sun” gets accepted…… or even better, wins! We could use the cash for when we move to Tassie.

Originally posted on Tonight my Fingers Smell of Garlic:

I love the completeness of it all.

We have had all our firing partners back again for the unpacking of last weeks woodfiring. A lot of nice pots come from the kiln and everyone makes a line of human-chain to pass them all the way to the top of the kiln shed. It’s a slow process, as each and every pot is examined and discussed all along the way. 

These potters have helped pack the kiln with all of their own work. They have stacked the wood and stoked the fire. Shared meals together and stayed up all of the night in shifts to see the firing successfully reach the bright white heat of stoneware temperature, then fired down to a safe state, where the kiln could be left to cool un-attended.
Now we are all back together again to experience the un-bricking of the door. Cleaning and carefully stacking all our home-made, hand-made…

View original 745 more words





Money rules….

28 07 2014

Over the past 15 or 20 years, society switched from being a society to being an economy.  Today, everything has a price, and nobody does anything anymore unless there’s “money in it”.  Take Universities; fifty years ago, one could go to University, for free, and just learn….  that’s what Universities were always for.  To learn.  Today Universities are all about money, and learning how to make money.  I clearly remember our son, who at the time was doing his first science degree, coming home from University one night, scathing of the number of people studying ‘business studies’ or economics or any number of other money making pursuits on offer at these institutions.

Alex now has two science degrees and a Master….. and can’t get work.  It was, admittedly, bad timing on his part, Australia has elected an anti-science government that only believes in making money and measuring everything society, oops I mean the economy, does in dollar terms.  An economy does not need scientists, it needs bean counters….  so funding for Australia’s premiere scientific organisation, CSIRO, is being defunded, and is now starting to sack scientists.  Just when we need them most.

Putting a price on everything was brought home succinctly the other day by George Monbiot who wrote:

So just at this moment, this perfect moment of the total moral and ideological collapse of the neoliberal capitalist system, some environmentalists stumble across it and say, “This is the answer to saving the natural world.” And they devise a series of ideas and theories and mechanisms which are supposed to do what we’ve been unable to do by other means: to protect the world from the despoilation and degradation which have done it so much harm.

I’m talking about the development of what could be called the Natural Capital Agenda: the pricing, valuation, monetisation, financialisation of nature in the name of saving it.

Sorry, did I say nature? We don’t call it that any more. It is now called natural capital. Ecological processes are called ecosystem services because, of course, they exist only to serve us. Hills, forests, rivers: these are terribly out-dated terms. They are now called green infrastructure. Biodiversity and habitats? Not at all à la mode my dear. We now call them asset classes in an ecosystems market. I am not making any of this up. These are the names we now give to the natural world.

How much longer this sad state of affairs can continue, no one knows, except that it can’t possibly last much longer.  Here is the latest shock from Bloomberg….:

For the past two decades, growth in the global economy spelled higher revenues for the Organization of Petroleum Exporting Countries. Not any more.

The CHART OF THE DAY shows how last year was the first since 1993 that the value of OPEC’s total crude exports didn’t track the direction of global gross domestic product. The bottom panel shows how the group supplying about 40 percent of the world’s oil fetched lower average prices and also shipped fewer barrels year on year.

So there you have it……  the beginning of the end of the ‘bumpy plateau’ that shapes Peak Oil is about to end, and the beginning of the inexorable backside of Hubbert’s Curve is at hand.  This is as good as it gets, and all the things we value in dollars will soon be worthless.

Also of interest, and pertinent to the collapse of the plutocracy, I recently discovered this article….

Written by Nick Hanauer (a Seattle-based entrepreneur – never heard of him before now…), this telling article is a wake up call for his 0.1%er mates of his… He starts off by displaying his credentials as a filthy rich plutocrat – “You probably don’t know me, but like you I am one of those .01%ers, a proud and unapologetic capitalist. I have founded, co-founded and funded more than 30 companies across a range of industries—from itsy-bitsy ones like the night club I started in my 20s to giant ones like Amazon.com, for which I was the first nonfamily investor”, writes in the middle “I see pitchforks”, but ends with “If we don’t do something to fix the glaring inequities in this economy, the pitchforks are going to come for us. No society can sustain this kind of rising inequality. In fact, there is no example in human history where wealth accumulated like this and the pitchforks didn’t eventually come out. You show me a highly unequal society, and I will show you a police state. Or an uprising. There are no counterexamples. None. It’s not if, it’s when.”

Wow……..  are they actually waking up to themselves?  Notice how he claims to be a 0.1%er, not a 1%er..?!

Gulfstream V – in case you didn’t know!

Here’s what I say to you: You’re living in a dream world. What everyone wants to believe is that when things reach a tipping point and go from being merely crappy for the masses to dangerous and socially destabilizing, that we’re somehow going to know about that shift ahead of time. Any student of history knows that’s not the way it happens. Revolutions, like bankruptcies, come gradually, and then suddenly. One day, somebody sets himself on fire, then thousands of people are in the streets, and before you know it, the country is burning. And then there’s no time for us to get to the airport and jump on our Gulfstream Vs and fly to New Zealand. That’s the way it always happens. If inequality keeps rising as it has been, eventually it will happen. We will not be able to predict when, and it will be terrible—for everybody. But especially for us.

George Monbiot seems to believe in the pitchforks…..  he ends his piece with “Well, ladies and gentlemen, it is no mystery… what do we do instead?  It is the same answer that it has always been. The same answer that it always will be. The one thing we just cannot be bothered to get off our bottoms to do, which is the only thing that works. Mobilisation.”

Never mind the pitchforks…….  bring back the guillotine!





The ‘pre-Holocene’ climate is returning – and it won’t be fun

25 07 2014

Republished from the Conversation.

A string of events earlier this year provided a sobering snapshot of a global climate system out of whack. Europe suffered devastating floods, Britain’s coastline was mauled, and the polar vortex cast…

The polar vortex played havoc with Niagara Falls (and much of the rest of North America too). EPA/Rick Warne

A string of events earlier this year provided a sobering snapshot of a global climate system out of whack. Europe suffered devastating floods, Britain’s coastline was mauled, and the polar vortex cast a US$5 billion economic chill over America. Meanwhile, an abnormally mild winter in Scandinavia disrupted bears’ hibernation; while Australia was ravaged by fires and record-breaking heat.

These happenings give us an idea of what life must have been like in the lead-up to the Holocene Epoch, living on the brink of seismic change, amid a series of abrupt climate shifts.

As the archaeologist Steven Mithen wrote in his book After the Ice:

People were thin on the ground and struggling with a deteriorating climate … massive ice sheets had expanded across much of North America, Northern Europe and Asia. The planet was inundated by drought, sea level had fallen to expose vast and often barren coastal plains. Human communities survived the harshest conditions by retreating to refugia where firewood and foodstuffs could still be found.

Since then, we have been lulled into a false sense of security by the ensuing 10,000-odd years of peaceful, stable climate during the Holocene itself. This has allowed us to tame crops and livestock, and to come together to form communities, villages and, ultimately, cities.

But the calm and tranquil Holocene has now been replaced by the Anthropocene – heralding a return to a volatile and destructive climate. Truly, we have woken an angry beast from its slumber.

From ice age to rapid warming

When the last ice age began to teeter 14,700 years ago, meltwater began to pour into the oceans, raising levels by up to half a metre per decade. The sea moved inland like a slow tsunami.

But after a hesitant couple of millennia of warmer conditions, the cold was back with a vengeance, turning western Asia and Europe into ice empires. This event, dubbed the Younger Dryas, derived from the collapse of the ice walls on Lake Agassiz in North America, sending freshwater flooding into the Atlantic and Arctic Oceans. As a result it cut back the Gulf Stream, returning the planet to cool and dry conditions in a matter of decades, with the average Northern Hemisphere temperature plummeting by 7C.

These cold conditions lasted for about 1400 years. Then, just as rapidly, the warm and wet conditions returned, marking the beginning of the Holocene about 11,700 years ago.

Extent of the glacial Lake Agassiz roughly 7900 years ago. Several millennia earlier it dumped freshwater into the oceans, causing widespread cooling. Chris Light/Wikimedia Commons (derived from USGS data), CC BY-SA

Click to enlarge

Stable era

Since then, the world’s climate has remained remarkably stable – boring, even. The relatively static shorelines have made farming, fishing, towns and cities possible.

Humans have got used to thinking that this is a natural state of affairs. But, as James Hansen has declared, “it’s our relatively static experience of climate that is actually exceptional”.

Of course, there have been divergences from the norm, although these have thankfully been few and far between. One was 5000 years ago, when the Sahara went from a land of hippos and giraffes to desert in a mere 100-200 years.

In geological terms, the Sahara became a desert overnight. GaetanP123/Wikimedia Commons, CC BY-SA

Click to enlarge

That event was caused by gradual changes to the Earth’s orientation towards the Sun. It shows us that even when the forces are gradual, the climate may not always respond gradually but instead can move in juddering, unpredictable shifts.

At about the same time, seismic change was happening in our own midst, with the eruption of Mount Gambier sending an ash plume up to 10 km high – an event that would have partially obscured the Sun.

Eruptions like this were the main cause of climate variability in the Holocene, causing cooler, drier episodes such as the “Mediaeval little ice age“.

Things are different now

Now, however, carbon dioxide has reached levels not seen for at least 3 million years, and fossil fuel emissions have become the dominant driver of the changes to our climate. In a world potentially several degrees warmer than the one that spawned our civilization, we had better ready ourselves for some surprises.

This isn’t alarmism; it’s just sensible risk management. Retired US Navy Rear Admiral David Titley, now head of Penn State’s Center for Solutions to Weather and Climate Risk, pointed out that governments still spend money on defence, despite the declining number of people killed worldwide in war. He told the US Congress that “we rightly invest in our security and defence as one component of hedging against unknown or unlikely security risks”. Inaction on climate change violates that same fundamental risk-management principle.

What’s nature ever done for us?

Of course, nature will carry on regardless, albeit savaged. As the MIT physicist and humanities professor Alan Lightman has noted, “tornadoes, hurricanes, floods, earthquakes and volcanic eruptions happen without the slightest consideration for human inhabitants”.

Yet if we turn our backs on nature, while at the same time climbing the population hill to nine billion, we will create a horrid future for humanity’s survivors, with ongoing wild species extinctions and a world polluted by human-invented chemicals.

Some have predicted that, within just two or three centuries, we could be alone except for pets, chickens, livestock, and an unknown suite of microbes and freeloaders such as mice and cockroaches.

For a sneak preview of this “biosimplification”, look no further than the swathes of European countryside where there has been a crash in bird populations – no songs, no glimpses of plumage, just an eerie silence – as a result of the wholesale ripping up of hedgerows, draining of wetlands and ploughing over of meadows robbing farmland birds of their homes and sustenance in order to boost farming production.

That would leave us living in a drab, crummy landscape where surviving native plants cower in small niches away from the weeds; zoos exhibit a lost fauna; and biophilia is reduced to watching carp.

It’s surely a trajectory that’s worth getting off.





Peak Footwear

18 07 2014

I was reminded to write about this subject some weeks ago when a Tassie friend of mine started listing essential things needed post crash.  On that list was footwear.  Shoes and boots, to anyone thinking like me of moving to a colder climate, are high on the list of essential things.  You can get away with walking around bare feet in Queensland for most of the year, but I suspect in Tasmania it would be out of the question, especially during the wet Winter season…….

So why write about footwear you ask…..  can’t I afford to buy sturdy boots to walk around the property?

Look around today at what people wear on their feet, and you will see shoes entirely made of plastic – read OIL.  Joggers and even loads of cheaper footwear these days are no longer made of leather.  I expect that with oil still being relatively cheap, plastic is still not as dear as leather.  Personally, I can’t wear plastic shoes, they make my feet smell for starters, and I know it’s not a personal problem, because I can wear leather shoes with woollen socks for days on end without even washing the socks with zero foot odour.  It’s definitely the plastic, and I include synthetic socks here.

So what will happen come the day oil becomes too precious for food production?  Will Nike stop making plastic shoes?

Years ago, as I was still contemplating building our house, I decided it was time I bought myself some steel capped boots; safety on a building site is always in my mind, and wearing such boots has saved my toes many times from dropping concrete blocks and heavy pieces of timber on them.  Today I wear such boots as a matter of fact, the additional steel toe never really costs much more, as I will show further down this article…..

At about that time, we were planning a trip to the snow in the old Lada Niva; so I thought now was a good time to buy some boots, I could wear them in the snow, and wear them in at the same time.  Being scroungers, we started shopping for ski gear at op shops – we did after all have to buy stuff for four of us.  One of the op shops we visited had ‘never worn’ steel capped boots going real cheap.  They looked brand new, in their original boxes…  I tried them on, and I was rapt……  great looking boots for half the price of really new ones.

However, within just two days, the soles started completely falling apart……  now I don’t normally return things at op shops, but these were supposed to be ‘brand new’, and there were more in the shop, so I took them back and the op shop gladly replaced them.  The very next day we left for our epic trip.  When you drive a couple of thousand kilometres, you don’t tend to do a lot of walking, but soon enough, the soles on these boots started falling to pieces too, just sitting there behind the wheel of my car!  I was not impressed…..  buying shoes at Thredbo is not how one gets a bargain, let me tell you!!

To cut to the chase, I eventually bought a pair of Blundstones in Brisbane, and they lasted me many many years while building, climbing up ladders, dropping aforementioned concrete blocks on them, etc etc…..

Never worn, gathering dust

Never worn, gathering dust

heel peeling off

heel peeling off

But then, another boot buying event sparked my attention on the looming footwear problem.  At a nearby hardware store, they were selling shedloads of Makita tradies’ boots.  Normally costing $160 a pair (and we are talking maybe 2005), these quadruple stitched steel capped suede boots looked like they were worth $160, and they were going for $69!  So I stupidly bought three pairs, thinking I’d now be set for life, bootwise.  I even bought Glenda a pair.  My mate Dean down the road in Cooran did the same thing I recently discovered as were were discussing these self destructing boots…..

My Blunnies were starting to seriously wear out by now (but not falling apart…) and I switched to the Makitas.  Within six months, to my horror, they too started falling apart.  So I took them back.  The store exchanged them for new ones (I discovered they had bought Makita’s entire stock as Makita was getting out of all work apparel), but within a fairly short time, they too were falling apart.  I checked the as yet never worn spare sets….. and they were cracking too.  What on Earth was going on?

Old faithfuls..

Old faithfuls..

..falling apart with still plenty of tread

..falling apart with still plenty of tread

I decided that as my last set of Blunnies had served me so well, I’d buy another pair from the local farm produce store that stocked them.  To my amazement, the boots started falling to bits.  Some energetic googling found that shoes are now pretty well exclusively soled with Polyurethane, which has a shelf life of approximately five years, regardless of wear and tear.  Talk about planned obsolescence….  So, I reluctantly returned those boots too.  What I had also learned from google is that most boots have a stamp on the sole that tells you when the boot was made, usually consisting of a ring of numbers from 1 to 12, and the year in the middle with an arrow pointing to the month of the year the item was made.  So if your boot has a stamp saying 12 with an arrow pointing to 3, your shoe was made in March 2012.  Armed with this information, I rummaged through the shop’s entire stock of Blunnies my size, found the newest ones possible and went home.  Almost on queue, they fell apart five years after the manufacturing date.  I can’t tell you now exactly how long I wore them for, but it couldn’t have been more than a couple of years.  So I bought another pair somewhere else, this time Blundstone’s top of the range waterproof steel capped boots for the princely sum of $129.  So you see, it’s not like I was skimping….  I really did go for quality.  Unfortunately, three years on, these are now too badly cracked to wear, and they are definitely no longer waterproof.  More googling determined that Blundstone warn consumers about ‘Hydrolysis’…

What is hydrolysis damage?

Hydrolysis damage occurs when moisture builds up in the thousands of air bubbles found in the soles of the footwear.  If not worn for a considerable amount of time, or stored correctly, the moisture build-up causes the soles to break down.  If stored for an extended period of time, footwear with a polyurethane sole should be kept in a cool dry spot.

And I’m not the only one who’s discovered this problem…….

It now appears one cannot buy anything not soled with that dreaded Polyurethane crap.  And why would a quality brand use material for its soles that has “thousands of air bubbles“?  So two days ago, I bought a $30 pair of Chinese made steel capped boots from Aldi.  I’m sick of wasting my money on expensive shoes that don’t last the distance.  Even if I only get 12 months wear out of them – at least I know they are brand new this time! – then they will have been better value than anything I’ve bought over the past few years.

This, however, does not solve the problem of what we might be wearing in the future when shoe shops are far away, there’s no fuel to supply them let alone drive there, and we are left to our own devices for footwear.

I find it hilarious that when confronted with collapse, most people put toilet paper at the top of their list of things that will be hard to do without……  I’m much more concerned about footwear.  Some enterprising persons who know about leatherwork are likely to become highly prized members of any community if you ask me.





Reality Check….

13 07 2014

Just found this, written by Tovar Cerulli who is the author of The Mindful Carnivore: A Vegetarian’s Hunt for Sustenance. He lives in Vermont in the northeastern US.  Originally published at http://aeon.co/magazine/nature-and-cosmos/tovar-cerulli-vegetarian-food-production-hunting/

Once upon a time, I believed in the tidy taxonomy of the grocery store.

In the meat coolers, near the back of the store, I could find Animalia: beef steaks, pork chops, chicken legs, and fish fillets. In other coolers, along a side wall, I could find gentler products from that same kingdom: eggs, milk, yogurt, and cheese. In other sections, I could find all things Plantae: vegetables, fruits, legumes, nuts, seeds, and grains.

The realms seemed clear and separate, each kind of food carrying a distinct meaning. When I ate meat, that meant animal death. When I ate dairy products, that meant animal confinement. When, inspired by the compassionate teachings of Buddhist teacher Thich Nhat Hanh, I turned to veganism — that meant harm to nothing but plants. My conscience seemed clear.

Eight years later, this fairy tale began to unravel. In the garden my wife and I tended, for instance, I began to see that squash and green beans were not just the fruit of plants. They were also the fruit of animals.

Like all living things, our garden plants had to eat. As their hungry roots drew sustenance from the ground, nutrients had to be replaced. So each year I drove our pickup truck a few miles down the road and brought home a cubic yard or two of compost: rich, dark, dense material made from the manure of cows and other animals, and from their bodies as well, as farmers sometimes compost carcasses.

Squash and green beans owe their existence to the lives and deaths of animals

I could have insisted on supplementing our own kitchen-scrap compost with fertilisers made from nothing but plants. Such products were certainly available. Most, though, were imported from out of state in bright plastic bags. Depending on them to feed our soil would, I reflected, be like subsisting on grocery-store tofu made from soybeans grown a thousand miles away, instead of eating chicken from a neighbour’s backyard or venison from nearby woods. These choices would keep animal products away from our garden and plates, but they made no ecological sense.

And even if I found a local source of animal-free fertiliser, would it make a difference? Though crops can be grown without manure, such approaches typically require more acreage than do integrated plant-animal systems. Why till more land, and perhaps displace more wildlife habitat, for the sake of excluding domesticated creatures from the agricultural landscape? Though this might help shore up my own conceptual categories, would it serve any other purpose, any greater good?

Plant-animal integration is, I realised, the norm in nature. It is how prairies and savannahs and all manner of ecosystems have been sustained for countless millennia. It is the most natural, ancient, and sustainable of systems — flora and fauna feeding one another in endless cycles. But our participation blurred boundaries I had taken for granted. If the squash and beans we grew were fed by local dairy farms, were we really eating just plants?

In his book Peace Is Every Step, Thich Nhat Hanh reminds us to attend to interconnections, to look deeply into the origins of the materials of everyday life, including food. The more I looked, the more complex things became.

In our own garden, I saw the earthworms we accidentally cut in two with our shovels whenever we turned the soil. I saw the beetles I crushed to protect tender young plants. I saw, too, that the compost we imported linked our garden not only to dairy products but also to meat: to give milk, cows must be impregnated. Pregnant cows give birth to calves. And virtually all male calves end up as veal.

In larger-scale crop production, I saw prairie and forest habitats disrupted across North America. I saw birds, mammals, reptiles, amphibians, and insects maimed and killed by machinery and pesticides. Even in produce from small-scale organic farms, I saw rodent burrows cleared by deadly smoke bombs and deer populations kept in check by hunters and farmers alike.

When I visit the grocery store these days, I realise we have a choice, but it is not simply the choice I once made between the purity of veganism and its alternatives, based on suffering. Walking down the aisles, we can let the orderly bins and shiny packages cultivate our forgetfulness. We can let ourselves believe in all the tidy separations: plants and animals divided into neatly compartmentalised kingdoms, food severed from earth, our shopping disconnected from others’ farming. We can let ourselves be comforted by our own ignorance, by everything we neither see nor want to see.

Or we can remind ourselves of just how intertwined everything really is. Uncomfortable though it might be, we can remind ourselves that lettuce is not as innocent as it appears, that squash and green beans owe their existence to the lives and deaths of animals. We can remind ourselves that pastoral landscapes are not just backdrops for recreational hikes or idyllic rides through the countryside. They are not an ‘environment’ that exists around us. They are the places that feed us, the soil in which we are rooted. They are us.

We can remind ourselves, too, of all the people who work the land for a living. Day in and day out, they draw sustenance, theirs and ours, directly from the earth. They know the nature of the places where they live and work — the soils and waters and climates and non-human inhabitants — more intimately than most of us do. They know the nature of living and eating more deeply, too. They know it’s a messy business.

We can remind ourselves that our lives are not separate from theirs. As a teenage omnivore, I never thought seriously about the connections between my living and eating and the gritty realities of agriculture. Nor did I think about those connections as a twentysomething vegan, up on my ethical high horse, wanting nothing to do with the confinement, let alone the deaths, of fellow creatures. I assumed I could remain aloof from all of that. Only later did I begin to see more clearly.

Those connections are, in the literal sense of the word, vital. They keep us alive. The teacher and the student, the artist and the office worker, the doctor and the attorney, are all utterly dependent on the farmer. Whatever romantic notions we might have about ourselves and our ethically or environmentally motivated food choices, the boundaries between vegans, vegetarians and veal eaters are somewhat ambiguous. We are all part of the same food systems.

We can — and should — advocate changes in those systems, promoting both animal welfare and ecological health. Our efforts, however, will be most effective if people of all dietary persuasions can collaborate, remembering that we, like the foods we eat, inhabit an integrated whole, not isolated kingdoms. My wife and I, for instance, don’t buy beef or veal, yet we applaud the local farmers who produce those meats in humane, ecologically sound ways. And we recognise that the yogurt we eat is linked to the lives and deaths of cows, just as our garden is.

It is easy to forget, of course. I know I do. In the bustle of everyday life, the interconnections slip my mind. I eat a bowl of salad and see nothing but greens.

Then the phone rings. It’s a neighbour calling. Woodchucks have begun to obliterate her garden, in spite of the electric fence. I’m one of the few hunters she knows. Would I be willing to lend a hand?

Ah, yes, I think. Hidden costs.

Taking a deep breath, I fetch my .22 rifle.

17 September 2012





The Crash Ratchets Up…..

13 07 2014

It’s often been said among Peakniks that ‘the crash’ is not an event that will occur smoothly or suddenly, but rather in steps… so a sudden downturn like what happened when the GFC first hit would hit a low, followed by perhaps another rise at best, or a plateau.  Then another sharp downturn would shape the next step down to an even lower plateau.  How long these plateaus last of course is anyone’s guess, and they are at the mercy of events.  Who can guess what might happen in the Middle East next?

Just such a downturn may now not be far away.

Bank lending, it seems, has been setting new records since mid-2013, especially in the USA.  If the last credit bubble – when too many dodgy loans were made by overenthusiastic loan officers before it all blew up in 2008 – was spectacular, this one is even more so….. Based on the loose principle that the US economy can only grow if bank lending balloons, it appears that the lowering ERoEI of the oil industry may be at its core.

This is what the auspicious chart of core bank loans outstanding looks like (via OtterWood Capital Management):

http://wolfstreet.com/wp-content/uploads/2014/07/US-Core-bank_loans.png

This time around, economists have been using the borrowing binge as proof that investment was suddenly picking up, that these investments would filter into economic growth, and that after all this time of mirages and sour disappointments, the ever elusive “escape velocity” would finally come……..

It turns out that that jump in investment – powered by bank lending, investment is a code word for debt – that economists have so enthusiastically shown as ‘proof of return to normal’ has been nothing but an illusion. And no, it wasn’t some blogger spouting off pessimistic data, but the Financial Times, quoting such sources as “senior executives” inside major US banks who “are privately warning” that this new lending binge “should not be seen as evidence of an economic recovery.”

Instead, much of the borrowed money was used “to fund payouts to shareholders” via dividends (remember Shell..?) and stock buybacks and to “finance acquisitions,” the source said.  None of these activities are productive, in fact, these acquisitions lead companies to boast about synergies and labour efficiencies – that is, redundencies – at either end, as these businesses get consolidated.

And here’s the sting……  Part of that borrowed money is being ploughed into the American fracking boom where drillers on the terrible treadmill that fracking really is have to contend with terribly sharp depletion rates, forcing them to drill ever more wells just to maintain production.  And they can never get off that treadmill because production would soon collapse if they did, and with each new well they have to borrow more, and then they require more production just to service the ballooning debt.  Revenues have risen 5.6% over the last four years while debt that drillers have piled on has nearly doubled [read... The Fracking Shakeout].

Watch this space, things might get awfully interesting soon…… because as soon as Peak Fracking hits, and that is bound to happen before 2020, all hell will break loose.





Australia headed for energy crisis……

12 07 2014

The news coming in regarding Australia’s energy security are getting more and more worrisome.  Add to that the fact we will soon be totally out of oil, and you have to wonder “what next?”.  We are seemingly led by total morons who have no idea what they are doing, consider money to be far more valuable than energy, and in the process are leading this country to rack and ruin…..  How long we have left before all our chickens come home to roost is anyone’s guess, but the mining industry is already starting to sack people (and we haven’t even hit Peak Mining yet..), [official] unemployment is back up to 6%, and it’s high time the people of Australia got rid of the idiots in charge…..

Matt Mushalik

Matt Mushalik

Energy Super Power Australia’s East Coast running low on affordable domestic gas

In July 2006 then Prime Minister Howard declared Australia an energy super power. 2 years earlier his energy white paper set the framework for unlimited gas exports while neglecting to set aside gas for domestic use. It is a bitter irony that at the 10th anniversary of this energy white paper we read that gas shortages in the Eastern market will result in price increases and that there is not even enough cheap gas for gas fired power plants which are supposed to replace dirty coal fired plants or serve as a back-up for renewable power. Wrong decisions a decade ago (or even earlier) now come to the attention of the public as price rises hit the pockets of consumers.

And what has been completely forgotten is that natural gas is the only alternative transport fuel to replace oil. Conventional oil peaked in 2006 (Yes, Prime Minister, under your watch), US shale oil is likely to peak before 2020 and the Middle East is disintegrating in front of our TV eyes faster than energy and transport planners can change their perpetual-growth mindset. An energy equivalent of 5 LNG trains is needed to replace all oil based fuels in Australia. This gas is locked away in long term export contracts. Well done. Les jeux sont faits.

(1)          Recent events

Electricity providers return to coal-fired power as natural gas export revenue soars

3/7/2014
The rising international price of natural gas is causing electricity providers to return to coal-fired power, with Queensland among the first to make the move.

Fig 1: Tarong power station in Queensland

University of Queensland energy analyst Dr Liam Wagner says the rising price will push other power companies to make similar decisions.

“Gas-fired electricity is becoming more expensive; gas in Australia is going to become more expensive with exports,” he said.

“In the future we’re going to have less gas because it’ll be far more expensive to burn it here and the gas producers will be able to make more money overseas.”
http://www.abc.net.au/news/2014-07-03/electricity-providers-return-to-coal-fired-power-as-natural-gas/5567252

Nation will be paying the bill for poor energy policy

30/6/2014
The government, unlike other governments around the world, allowed unfettered access to global markets. The building of the export gas terminals will push the prices for gas inexorably up towards world prices. Indeed, wholesale gas prices are widely forecast to more than double to match international prices.

Many in the gas industry are calling for the rapid development of environmentally suspect coal seam gas fields in NSW to counter higher prices. This policy simply will not work as prices on the East Coast are now linked to world prices. No amount of domestic production will change this dynamic.
http://www.smh.com.au/comment/electricity-and-gas-prices-why-youre-paying-more-20140629-zspp1.html

As we can see in the following report, AGL is proud to have connected the domestic market to the Asian market to make quick profits, instead of developing a plan which would use gas domestically in the medium and long-term to maximise economic benefits for the local industry. The quarry mentality continues. The expected shortages are presented as an argument for even more coal seam gas.

AGL raises spectre of gas rationing if gas shortages are not tackled, it tells the NSW Government

17/3/2014
Gas shortages will lead to rationing along with job losses, especially in Sydney’s west, energy utility AGL has warned as it intensifies pressure on the NSW government to allow the development of gas projects in the state that tap gas trapped in coal seams.
http://www.smh.com.au/business/agl-raises-spectre-of-gas-rationing-if-gas-shortages-are-not-tackled-it-tells-the-nsw-government-20140316-34vgr.html

This is the report:

AGL Applied Economic and Policy Research

Solving for ‘x’ – the New South Wales Gas Supply Cliff

March  2014

“During this discovery and appraisal phase, it was evidently clear to resource owners that the east coast gas market was not sufficiently large enough to enable the monetisation of reserves in suitable timeframes and at the scale necessary to maximise profit, and so developing an export market for natural gas in the form of LNG was a logical strategic solution. Not only would it result in the rapid expansion of aggregate demand, but would also have the benefit of linking domestic gas prices, historically ca $3 per gigajoule (/GJ), to the north Asian export market price of ca $6-9/GJ equivalent ex-field ‘netback price’ over the medium term(p 2)

“On Australia’s east coast over the period 2013-2016, we forecast that aggregate demand for natural gas will increase three-fold, from 700 PJ to 2,100 PJ per annum, while our forecast of system coincident peak demand increases 2.4 times, from 2,790 TJ to 6,690 TJ per day. This extraordinary growth is being driven by the development of three Liquefied Natural Gas plants at Gladstone, Queensland”.  (p 1)

“Almost simultaneously, a non-trivial quantity of existing domestic gas contracts currently supplying NSW will mature. Much of that gas has been recontracted to LNG producers in Queensland – thus creating a gas supply cliff in NSW. Compounding matters, recent policy developments have placed binding constraints over the development of new gas supplies in NSW”(p 1)

Fig 3: NSW gas supply cliff lead to price increases

http://aglblog.com.au/wp-content/uploads/2014/03/No.40-Solving-for-X-FINAL.pdf

These developments are a bitter irony given that the public has been told many times that Australia’s gas resources are abundant. All LNG export contracts were presented as great achievements.

(2)  Wrong decisions 12 years ago

Although LNG exports to Japan had started in 1989 (20 years contracts with 8 power and utility companies signed in 1985), the 2002 LNG deal with China was Howard’s first main contribution towards a poor energy policy.

Australia Wins China LNG Contract

8/8/2002
John Howard: “I am delighted to announce that today I have been advised by the Chinese Premier Zhu Rongji that Australia’s Northwest Shelf Venture has been chosen by China to be the sole supplier of liquefied natural gas (LNG) to its first LNG project in Guangdong province.”
http://australianpolitics.com/news/2002/08/02-08-08.shtml

5 months earlier, John Akehurst, Woodside’s Managing Director, warned in a report with mixed messages:

Mar 2002

Challenges for Australia

Australia has large gas reserves which have the potential to meet a much larger proportion of Australia’s energy requirements, including liquid petroleum requirements (via CNG, LNG, Gas to Liquids). Gas for oil substitution would deliver significant greenhouse benefits and help Australia meet its Kyoto target. Increased LNG exports would partly offset the cost of rising liquids imports and help address their impact on the balance of payments.  (p 8 )

However, greater use of gas will require substantially more investment in gas production and pipeline infrastructure. Without such investment, south eastern Australian gas markets will, within a few years, face possible gas shortages. Major consumers will find it more difficult to secure long term supply contracts on sufficiently competitive terms (p 9)

Fig 4: Superimposition Akehurst forecast with actual production

LNG export projects and gas-based value adding projects are needed to underpin the cost of bringing new gas supply sources to shore and to justify the initial investment. These types of projects compete on world markets (primarily with projects in Asia) and the provision of an internationally competitive investment environment including fiscal terms is a key driver. (p 10)
www.aspo-australia.org.au/References/Akehurst%20ABARE%202002.pdf

Of course one cannot have it both ways. To replace petrol and diesel in Australia one would need the energy equivalent of 5 LNG trains.

(3)          Howard’s flawed Energy White Paper June 2004

Fig 5: excerpt from Howard’s June 2004 energy white paper

This white paper just rationalises decisions already made earlier by formulating following policy principles  (p 53)

  • Commercial decisions should determine the nature and timing of energy resource developments, with government interventions being transparent and allowing commercial interests to seek least-cost solutions to government objectives (e.g. environment, safety or good resource management objectives).
  • Government objectives should generally be driven by sector-wide policy mechanisms rather than impose inconsistent requirements on individual projects/private investors.

And on page 128:

Australia’s gas reserves are sufficient for more than 100 years at current production levels, or more than 200 years of current domestic consumption. Furthermore, prospects for finding and proving up more gas are good, subject to finding markets. However, the location of Australia’s major gas reserves—to the north and north-west —compared with major demand locations—to the south-east—is sometimes raised as an issue (see Figure 6 and 3 in Chapter 2—Developing Australia’s Energy Resources).”

Note the term “At current production levels” which of course is irrelevant when LNG exports are doubled or tripled.

Fig 6: Map of oil and gas resources in the EWP 2004

Fig 7: Map of gas pipelines in EWP 2004

http://pandora.nla.gov.au/pan/10052/20050221-0000/www.dpmc.gov.au/publications/energy_future/docs/energy.pdf

The Geoscience Report “Oil and Gas Resources in Australia 2004 writes: Natural gas has a current “life” estimated at 65 years, but past estimates have been as low as 39 years (in 1993) and as high as 76 years (in 2001). These estimates include all resources and production in the JPDA with Timor-Leste.”

Fig 8: Geoscience Australia’s reserve to production ratios

http://www.ga.gov.au/image_cache/GA8550.pdf

The EWP 2004 continues to argue:

“Predictions are made that supplies of gas to major urban markets will run short in the next decade, as production in the Cooper Basin and Bass Strait declines. This has resulted in calls for financial support towards the building of major pipelines from either the Northern Territory (to access gas from Sunrise and other Timor Sea fields), Papua New Guinea or north-west Australia (to access gas from either Carnarvon or Browse Basins). While reserves of gas in existing fields close to southeast markets are declining, this does not represent an energy security concern.

Exploration is occurring in the south-east and is resulting in new discoveries and development, such as in the Otway Basin. The development of coal seam methane is also increasing supplies of gas in the region. In addition, holders of the large remotely located gas reserves are actively seeking markets to monetise these reserves. These efforts include actively investigating pipeline projects for bringing supplies of gas from north and north-west sources, as well as seeking LNG export sales in Asian markets. The number and activity of these competing proposals provide a degree of confidence that these supplies will become available once economic, noting that this will in all likelihood occur at higher price levels than those currently enjoyed in some south-eastern markets.

Given the size and placement of gas reserves relative to current and future gas demand, gas supply is not likely to become an issue for the short to medium term. Pre-empting market outcomes in these circumstances is unlikely to add significantly to energy security, but could inflict significant costs by precluding less costly options (such as further development of the Gippsland and Otway basins or coal seam methane).”

http://www.efa.com.au/Library/CthEnergyWhitePaper.pdf

The task of building North/West-East gas pipelines was not pro-actively followed up by State and Federal governments but dropped altogether in favour of exports. No wonder this laissez-faire approach went wrong.

CO2 emissions

The EWP 2004 argues:

“The shape of future international action on climate change is unclear, but the potential costs of future adjustments and long life of energy assets makes it prudent to prepare for the future.” ( p 131)

LNG development could increase Australia’s energy emissions by around 1 per cent of energy sector emissions. However, to the extent that exported Australian gas replaces more greenhouse intensive energy in the importing country, global emissions may decrease as a result of Australian gas production  (p 137)

This is just an argument in favour of LNG exports while none of the LNG contracts included a clause that coal fired power plants equivalent to the energy content of the gas should be decommissioned in the destination country. The above example of Queensland going back to coal shows that not even in Australia the job of using gas to reduce emissions is taken seriously.

(4) Energy super power declared in 2006

17/7/2006
The Prime Minister has outlined his vision for energy and water, saying the nation has the makings of an energy superpower.
http://www.abc.net.au/news/2006-07-17/howard-outlines-energy-superpower-vision/1803744

(5) Actual gas production

Let’s have a look at gas production statistics

Fig 9: Australia’s gas production 1977-2013

 Data are from APPEA: http://www.appea.com.au/?attachment_id=5192

We see peak gas in the Cooper basin between 1999 and 2002 at around 260 bcf. Right at that peak, Howard failed to pursue building a gas pipeline to connect Western offshore gas with Eastern gas markets.  While LNG exports on the West coast surged, the East coast remained on a bumpy production plateau.  Western Australia has a 15% Domgas policy but also did not introduce gas as a transport fuel. As WA’s LNG gas goes out the window, Queensland and NSW are forced to go for environmentally questionable coal seam gas.

Fig 10: Australia’s LNG exports

The first 3 trains (2.5 mt pa each) mainly supply Japanese utilities, while the Guangdong contract (3.3 mt pa over 25 years) required train 4 (4.4 mt pa)

(6) Conventional gas depletion in NSW, Victoria and South Australia

The Australian Energy Market Operator (AEMO) estimates in its Gas Statement of Opportunities 2013 that current conventional 2P reserves would be depleted by the mid of the next decade.

Fig 10: Depletion of conventional gas reserves (2P) in the South East

“Under the modelled production-cost conditions, consumption of Denison Trough 2P reserves occurs first in 2019. Consumption of Otway Basin 2P reserves begins in 2020, and it is completely consumed by 2023. Bass and Cooper basin conventional 2P reserves are consumed in 2025. Gippsland 2P reserves are consumed in 2026. The 2P CSG reserves in Queensland are sufficient to supply demand until the end of the 20-year outlook period.”

Fig 11: Gas shortfalls in the South East

 “Additional 3P reserves and 2C resources are available in the Otway, Bass, Gippsland, and Cooper basins. The 3P/2C reserves in the Bass, Gippsland, and Cooper basins are sufficient to ensure supply until the end of the 20-year outlook period, provided current transmission and production limitations remain unchanged. The 3P/2C reserves in the Otway Basin are only sufficient to ensure supply until 2028 or 2029, depending on the level of support the southern states receive from production in the north.

Given its role in supplying demand in Adelaide, Melbourne, and Sydney, the Otway Basin reserves consumption is a significant event, with substantial infrastructure investment required to manage changing system flows.”

http://www.aemo.com.au/Gas/Planning/Gas-Statement-of-Opportunities

(7) Domgas Alliance report

Australia Domestic Gas Policy Report (Nov 2012)

History has proven that countries with large resource endowment do not automatically gain an economic competitive advantage over countries that do not have such surplus endowment of resources. Exporting countries have to take the necessary precautions to avoid what are known to economists as the Natural Resource Curse and Dutch Disease. Australia’s large LNG export boom, that is well underway, has the capacity to trigger both of these symptoms and the subsequent regrets.

Gas resource rich countries rely on a comprehensive menu of interventions and gas regulations and policies in order to protect the national interest and the best interest of the general public regarding the use of indigenous gas production. Benchmarking illustrates that Australia does not manage its gas resources adequately to ensure that gas explorers and production companies operate in a manner that is consistent with a vibrant domestic gas market.

Gas resource rich countries, regions and continents generally export gas only after they first develop their own domestic gas market into a vibrant one that has very high gas consumption rates per capita and a high gas penetration in the total primary energy supply. To do otherwise destroys value and effectively de-industrialises the exporting region.

Australia needs to have sufficiently comprehensive policies and regulations in place in order to control and manage the export of raw commodities. Simply relying on market forces without comprehensive guidelines and controls to mitigate inequitable market power is one extreme while nationalising all resources is the other extreme. Neither of these scenarios has proven to serve the public interest very well.

http://www.domgas.com.au/pdf/Media_releases/2012/Australia%20Domestic%20Gas%20Policy%20Final%20Report.pdf

(8) Gas price outlook

The following graph from the Eastern Australian Domestic Gas Market Study by BREE, Department of Industry, shows Energy Quest’s doubling of gas prices by the end of this decade.

Fig 12: Gas prices will double

http://www.industry.gov.au/Energy/EnergyMarkets/Documents/EasternAustralianDomesticGasMarketStudy.pdf

Summary:

Decisions on excessive LNG exports have been made more than 10 years ago and are irreversible. They continued ever since – irrespective of which State or Federal governments were in power –and will lead to yet more LNG exports.  Consumers will have to pay higher gas prices for having elected these governments.  Another regret will come in the next years when it becomes clear that gas is needed as transport fuel.

Fig 13: Glimpse into the future: truckies protest drive around  Canberra’s Capital Hill

Previous articles on this website on gas

9/5/2012    Queensland plans to export more than 10 times the gas NSW needs (part 3)
http://crudeoilpeak.info/queensland-plans-to-export-more-than-10-times-the-gas-nsw-needs-part-3

6/5/2012   Howard’s wrong decisions on offshore gas exports start to hit transport sector now
http://crudeoilpeak.info/howards-wrong-decisions-on-offshore-gas-exports-start-to-hit-transport-sector-now

13/10/2011    NSW gas as transport fuel. Where are the plans?
http://crudeoilpeak.info/nsw-gas-as-transport-fuel-where-are-the-plans

11/10/2011   Australia’s natural gas squandered in LNG exports
http://crudeoilpeak.info/australias-natural-gas-squandered-in-lng-exports








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