More on oil production in the United States – blessing or systemic threat?

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By the end of the decade the US could have outstripped even Saudi Arabia and Russia in oil production. The development of new shale resources in North America and the opening up of the Alaska fields could see the country pumping 14.2m barrels per day (bpd) of oil and petroleum liquids by 2020, up from 7.5m bpd in 2013. Sounds good? Read on.

A dangerous debt bubble in a notoriously volatile segment of corporate credit markets, could cause yet another stock market crash. By encouraging ever more drilling in pursuit of lower oil prices, the US Department of Energy has unleashed a potential economic monster and pitched these heavily debt-laden shale oil drilling companies into an impossible battle for market share against the low-cost producers of OPEC, e.g Saudi Arabia.

Much of the oil exploration was predicated on a price of $100 or more a barrel. A year ago the price of oil was $107, but fell briefly t0 $45. According to Deutsche Bank stress tests of subprime borrowers in the energy sector in the US, a US crude price $60 per barrel, for any length of time, could result in up to a 30pc default rate among B and CCC rated high-yield US borrowers in the shale oil industry. West Texas Intermediate crude is expected to hover around the low figure of $69 per barrel for the next year, the price very volatile and subject to OPEC manipulation. 2008 all over again? This time it will be courtesy of Saudi Arabia, hell-bent on protecting its position as the world’s biggest oil producer, and the greed of the oilmen, who have succesfully lobbied the effete US Department of Energy.

Epicurus would have commented that this is all self-induced, high-wire stress with an outcome that doesn’t bear thinking about. What is the point? What was Obama thinking? Trying to please the Repubicans with “energy independence”? Actually, there are other serious implications – we have offended the Saudis at a time that we want their cooperation in Yemen and elsewhere. And we are subjected our citizens to constant earthquakes into the bargain. You have to wonder about our masters.

Energy milestones

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The good news:
Costa Rica has set a new world record by becoming the first country to rely solely on renewable energy for 75 consecutive days. Costa Rica derives four-fifths of its energy from hydroelectric sources – but has been able to dispense with fossil fuels entirely this year, owing to the heavy rain that has been keeping its hydroelectric plants going strong. It also relies on geothermal plants, wind and solar power, and has relatively low energy requirements because of its small population (4.9 million) and an economy mainly based on agriculture and tourism. It aims to be carbon neutral by 2021. (The Week, March 2015)

The not-so-good news:
In Oklahoma the incidence of earthquakes of a magnitude of 3.0 or more has risen from practically none to two a day. About ten barrels of water are pumped up for every barrel of oil; the resulting water is pumped down disposal wells, although the oil men have no idea where that water is going, except a lot of it is pumped into basement rock, or near fault lines, causing earthquakes of increasing severity. These man-made quakes have been felt in Ohio, Arkansas, Colorado, Kansas and Texas, as well as Oklahoma. Thus we foul our environment trying to find fossil fuels.

Oklahoma is effectively owned by the oil barons. The governor (and all state employees) not only deny that fracking is causing the earthquakes, but blame drought and deny climate change. There are no rules about drilling into basement rock, and oil companies can just come onto your land and drill; there is nothing you can do about it. Meanwhile, the oil industry funds “studies” to “prove” that climate change is natural. Do they really imagine that the tons of gunk we have been pouring into the Earth’s atmosphere since (approx) the 1780’s has had no effect? Where do they think it goes? To the moon? No one answers the question – it is too embarrassing.

Epicurus never told us not to foul our own nest, but then it probably never occurred to him that we were going to, or would be so stupid.

Is the writing on the wall for the Saudis?

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A blogger has been publicly flogged for encouraging free speech in Saudi Arabia. Raif Badawi, 30, who set up the Free Saudi Liberals website, was arrested in 2012, and charged with offences including insulting Islam. On his conviction last May, Badawi was fined 1m riyals (£175,000, $280,000) and sentenced to ten years in jail and 50 lashes every week for 20 weeks in a public square in Jeddah.

One of the only good things about fracking (no, this is not a non-sequitur) is that it promises to make the US a bigger source of oil than Saudi Arabia*. If that happy eventuality arises, we can hopefully stop pandering to those cruel barbarians in Saudi Arabia, halt the armament sales, and let the nasty regime fall. And good riddance. Enough of supporting these antiquated regimes, their beliefs as arid as the desert around them.

* That is, if a majority of frackers (who are apparently over-borrowed and expected oil prices to be close to $100 a barrel, not $50-60) survive.

If you hadn’t read it, you wouldn’t believe it

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Women seeking to join the Indonesian military are required to strip naked and have their genitalia manually examined by a doctor, purportedly to ensure that they are virgins.

Following protests by Human Rights Watch, Indonesia’s top military commander, General Moeldoko, defended the “virginity test”. He conceded that there was no direct link between a woman being a virgin and her abilities as a member of the armed forces, but insisted that virginity was a “gauge of a woman’s morality” – one of the three key traits he said a woman must have to serve in the Indonesian Armed Forces, along with high academic aptitude and physical strength. “There is no other way to determine a person’s morality”, Moeldoko said. (Report from NPR, May 18, 2015)

Scientists are perfecting a new procedure that establishes whether men have had sexual intercourse during the previous five years, using protoluminosity technology. The tests indicate partner numbers. Initial tests, conducted on behalf of the Indonesian military authorities, indicated that 87.4% of all male applicants to join the armed forces were, as a result, deemed to be morally unsuitable. The military has now declared the test procedure “unreliable”. Men all over the world also want the tests scrapped.

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