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Wednesday, March 10, 2010 6:07 AM EST
Looking for oil demand in all the wrong places
It’s Wednesday, and the week’s U.S. oil inventories numbers will soon be out. I have no clue what they will say, nor much interest, either. But others do.
Exactly why oil traders and speculators think the data has anything to do with the state of world oil demand is beyond me. I suppose, like Pavlov’s dog, they’re only doing what they’re trained to do. But their training comes from a world that no longer exists.
Link to this postWednesday, March 3, 2010 12:19 PM EST
We’re all PIGS now
Wall Street is worrying about financing the PIGS (Portugal, Italy, Greece and Spain), and little wonder. Proposals to halt exploding public sector budget deficits in those countries already have the workers out in the streets in Athens and Madrid.
But we needn’t look across the Atlantic to see a debt crisis in the making. The U.S. economy is sporting a record one-and-a-half trillion dollar budget deficit, and even Canada, after running a decade of budget surpluses, is posting its own largest deficit ever.
Monday, March 1, 2010 12:23 PM EST
Hugo Chavez for premier of Alberta
Is there heartache in the heartland? As Albertans shoulder the weight of a new $4.5-billion budget deficit (not to mention the burden of equalization payments to the rest of Canada), despite the fact that they own the world’s largest oil reserve open to private investment, some might suggest that something is seriously amiss in the heartland.
But instead of imposing painful health care spending cuts or equally unappealing personal tax hikes, maybe there is another, better way to go.
Wednesday, February 17, 2010 6:07 AM EST
When do smart prices get dumb?
My local utility just mailed me a notice informing me that they’ve installed a new smart meter at my home that will start monitoring and charging me for my electricity depending upon time of use.
The first thing I noticed about smart (i.e. off-peak) prices was how expensive dumb (i.e. peak) prices were. At 9.3 cents per kilowatt hour, power ain’t cheap anymore on the grid Sir Adam Beck built from Niagara Falls.
Wednesday, February 10, 2010 7:23 PM EST
Why Obama has fallen from grace
There are many factors associated with Barack Obama’s plunging popularity. Botched health care reform certainly hasn’t helped. Neither has a near-double-digit national jobless rate, nor a $1.6-trillion budget deficit. But what outrages American voters most is the billions of dollars given to Wall Street investment bankers, who continue to live la dolce vita and flaunt their arrogance in taxpayers’ faces.
As I’ve argued before in this blog and in chapter 7 of my book, it wasn’t too-big-to-fail financial institutions but the interest rate shock from soaring oil prices that deep-sixed the economies of both the US and the rest of the oil-guzzling world. Interest rates didn’t just rise from around one per cent to almost six per cent because no one was minding the store at the Federal Reserve Board. It was soaring oil prices that did all that heavy lifting.
Thursday, February 4, 2010 4:46 PM EST
Why can't we build coal plants, too?
Don’t confuse North American voter skepticism about the recent farce in Copenhagen with indifference to environmental issues.
Photo ops for local schmoes trying to make it big on a world stage don’t abate a single ton of carbon going out into the atmosphere, and neither does anything else coming out of that environmental summit.
Nor could it, really, when over half the participants, including the most egregious carbon emitter of them all—China—didn’t even want to be there. With energy consumption per capita at a tenth of ours, the only thing that interests countries like China is emitting a whole lot more. That country may lead the world in clean wind power, but it also has more coal plants spewing emissions than the U.S., UK and Japan combined.
Monday, February 1, 2010 10:36 AM EST
The electric car: Turn out the lights
Will technology leapfrog depletion and save drivers from the cost of triple-digit oil? Every auto producer in the world has an electric car in the works; General Motors, of course, will start producing its Volt later this year. But in actuality, the car of the future is really a throwback to the past.
In 1899, an electric car was clocked going over 60 miles an hour. And a little over a decade later, a Detroit Electric managed to travel 211 miles on a single charge (by comparison, General Motors’ Volt will go just 40 miles on a single charge before its back-up gasoline engine kicks in.)
In an ironic twist of fate, it was the invention of the electric starter that all but killed the electric car, since you no longer needed the physique of a weightlifter to crank-start your internal combustion engine.
Tuesday, February 2, 2010 10:43 AM EST
Why the U.S. needs all the tar sands oil it can get
Governor Arnold Schwarzenegger and his Midwestern colleagues had better think twice before banning carbon-dirty fuels such as the oil made from Canadian tar sands. If they don’t like the fuel Canada has to offer, their only other choice is to get off the road entirely.
Like it or not, synthetic oil from Alberta’s tar sands is going to figure ever larger at American fuel pumps in the future (provided that it isn’t siphoned off to China by a pipeline to the west coast first).
American oil demand may be diminishing as more and more drivers take the exit lane, but available supply is shrinking even faster. Domestic production, formerly 10 million barrels per day, is already down by half. The longer the U.S. economy has run on oil, the more dependent it has become on energy imports. Only finding those imports is becoming more challenging all the time.
Tuesday, January 19, 2010 11:05 AM EST
A massive public investment in obsolescence
As North American taxpayers take a look at the gleaming new models on display at Detroit’s auto show this week, they might well ask themselves just why they poured billions of dollars into saving GM and Chrysler when no one else would.
Politicians, local car dealers, parts suppliers and the auto workers’ unions told them it was to protect strategically vital jobs in their economies. But far from being essential to our economic future, those jobs are rapidly becoming obsolete—at least in this part of the world, where they are being funded by taxpayers’ money.
With GM car sales in China up over 60 per cent this year and North American sales still down from last year, I know what I’d be doing if I were running the company. I’d take the bailout money given by the taxpayers of countries with shrinking auto markets, like the U.S. and Canada, and use it to build new car plants in China and other countries where car sales are booming. (GM already sells almost as many cars in China as it does in the US.)
But I’m sure the company promised not to do that.
Tuesday, January 19, 2010 11:05 AM EST
Why energy efficiency means higher consumption
Buddy, my furnace repairman, tells me it’s time to buy a new furnace. And I’d better act quickly if I still want to order the old mid-efficiency model. In the New Year, I have to buy a high-efficiency one, which, of course, costs twice as much.
Welcome to the brave new world of energy scarcity—it’s not only smaller, but also more costly. As energy prices continue to climb, you can expect to pay more, not less, for all the new energy-efficient cars and devices for your home.
But don’t count on actually saving any energy.
Jeff Rubin's Smaller World Contributors
Jeff Rubin
After nearly 20 years as the chief economist of CIBC World Markets, Jeff Rubin left the bank earlier this year to seek a larger audience for the story he wanted to tell.
His predictions of steadily rising oil prices over the last decade, including $100 (U.S.) per barrel oil by 2007, had flown in the face of conventional economic wisdom. As he said, soaring oil prices demonstrated that the traditional laws of supply and demand were no longer working for one of the global economy's most basic and essential commodities.
The consequences would be severe. He argued that it wasn't sub-prime mortgages, but record oil prices that drove the world economy into its deepest post-war recession. And unless the economy starts to wean itself off an ever depleting supply of affordable oil, he believes there will be other recessions to follow as economic recoveries quickly push oil prices right back into triple digit range. But weaning our economy off oil means some fundamental changes in the way we live.
That's not the kind of message chief economists' at investment banks are supposed to deliver so he resigned from CIBC World Markets to write about it in his new book Why Your World Is About To Get A Whole Lot Smaller. See his website at jeffrubinssmallerworld.com.