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

[Brad Haslett]

Bill,

Here is a pseudo fact.  One Tuesday every leap year I actually like
you and value your opinion.  Please don't let that be known on
da'list.

Brad

On 7/7/06, TN Rhodey <tnrhodey at hotmail.com> wrote:
> Brad,
>
> For the most part I have stayed out of the energy thread. Short term I am
> sure Middle East oil producers could cut us off. The one thing we can all
> agree on is we need to find an alternative to oil.
>
> Wally
>
>
> >From: "Brad Haslett" <flybrad at gmail.com>
> >Reply-To: The Rhodes 22 mail list <rhodes22-list at rhodes22.org>
> >To: "The Rhodes 22 mail list" <rhodes22-list at rhodes22.org>
> >Subject: [Rhodes22-list] Energy, Farming, High School Geopolitics
> >Date: Fri, 7 Jul 2006 10:33:11 -0500
> >
> >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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>
>
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