Thursday, August 25, 2011

Kim's Excellent Siberian Adventure

Though largely overshadowed by events elsewhere in the world, North Korea's reclusive leader, Kim Jong-il has spent the past few days meeting with Russian President Dmitry Medvedev and touring sites in Russia's Far East and Siberia regions. The trip marks the first time in almost a decade that the Dear Leader has paid a visit to his former Cold War ally.

The reason for the trip, of course, is business and to boost ties between the two nations. Russia got the ball rolling by pledging a gift of 50,000 tons of wheat to perpetually-hungry North Korea. Russia's real goal though is to get North Korea to give permission for the construction of a natural gas pipeline across their territory so that Russia can ship its gas directly to South Korea. Traditionally, most of Russia's natural gas has gone west, though pipelines, to markets in Europe. But Russia in recent years has been trying to diversify their gas clientele; they are actively working on liquid natural gas (or LNG) export facilities on the Pacific coast and north central Russia that would allow them to ship gas via LNG tanker to any part of the globe. A pipeline to South Korea would also give Russia another lucrative outlet for their gas, with the pipeline likely ensuring a long-term agreement between the two countries. Of course, this will also subject the Russia-South Korea gas relationship to the whims of the always mercurial Mr. Kim, a situation that seems all too similar, from a Russian perspective that is, to their relationship with Ukraine, which is currently the major transit point for their European gas shipments. Friction between Russia and Ukraine over payments for that gas has resulted in several shutdowns of the pipeline network in the past few years, causing fuel shortages across Europe.

But Russia seems willing to risk it with North Korea. One reason for the Russian position could be the unfolding events in Libya. Russian companies, like the quasi-national energy conglomerate Gazprom, currently have large contracts with the Gadhafi regime to develop Libya's oil and gas reserves. With Gadhafi seemingly on his way out, there is fear in Russia that a new rebel-backed government will be pro-NATO and by extension, anti-Russian, meaning Gazprom and other Russian firms could find themselves frozen out of the new Libya (early word from the would-be rebel government though is that they will honor all existing oil and gas contracts). From the other side, there are signs that Kim Jong-il may be looking to once again play nice with the international community. During his visit, word was leaked that North Korea may be willing to declare a moratorium in their pursuit of nuclear weapons, a key precondition set by the international community for any talks with North Korea.

Its also been interesting to see the Dear Leader in the flesh in Russia. For the past couple of years, rumors have circulated about Kim Jong-il's health, with most centering on the belief that he suffered a major stroke. Getting news about Kim out of North Korea is always a tricky matter since the state-controlled media has a penchant for running old footage of Kim as current events coverage. In the few verifiable current pictures of him, Kim looked thin and pretty bad shape. Kim's Siberia trip seems to be agreeing with him though. While he does look markedly older (Kim is somewhere near 70 years old), he looks more like his pudgy, strangely-content self than he has in other recent images.

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Tuesday, August 23, 2011

Parochial Pipeline Protest

Even though its most famous resident is currently not at home, dozens of people are camped outside the White House, many with the express purpose of getting arrested, all to protest the construction of the proposed Keystone XL oil pipeline. The US State Department is expected to issue their official recommendation on the Keystone XL pipeline, which, if approved, would bring up to 700,000 barrels of oil from the Tar Sands region in northern Alberta, Canada, to waiting refineries along the US Gulf Coast, every day. The White House protests are being organized by an umbrella group called Tar Sands Action, which claims to have 1,500 people signed up to get arrested outside of the White House. The group also has the support of a number of celebrities, while some well-known politicians, including California Representative Henry Waxman, have also voiced their opposition to Keystone XL to both the White House and State Department.

Environmentalists on both sides of the border are up in arms over Keystone XL, since they say it will lead to a massive expansion of operations in Alberta's Tar Sands region. While the Tar (or Oil) Sands contain vast amounts of bitumen, getting it out of the ground and transformed into usable petroleum products is a labor-intensive, and polluting, process. Traditionally, oil sands deposits near the surface were strip mined and the bitumen was “cooked” out of the dirt; today producers more often are employing a method called Steam-Assisted Gravity Drainage (or SAGD), which injects high-pressure steam deep below the surface to liquify the bitumen so that it can be recovered like a traditional crude oil deposit. While SAGD has far less impact on the surface of the Alberta prairies, it uses vast amounts of water, much of which returns to the surface contaminated and in need of treatment. The bitumen pumped to the surface also either needs to be mixed with other petroleum products to make it liquid enough to ship through pipelines or processed by “upgrader” units on-site to turn it into synthetic crude oil (SCO), which looks and acts like traditional crude. The whole process has turned swaths of the rural prairie into industrial sites, with some of the indiginous First Nations tribes in the region reporting spikes in cancer rates and other illnesses, which they blame on the Tar Sands industry.

Opponents of Keystone XL and the Tar Sands in general have a point - operations in the Tar Sands reserves have an obvious impact on the environment – though some claims made by their opponents, such as calling the Tar Sands the largest source of greenhouse gas emissions on the planet, are wildly overstated (the Tar Sands produce a fraction of the GHG emissions of the US coal industry). But exploitation of the Tar Sands has been a boon to Alberta's economy and has helped not only to position Canada as a major energy exporter, but also to bring the Canadian dollar to parity with the currency of their southern neighbors. And that's where the parochialism kicks in. Implicit within the American protests against Keystone XL is the idea that if TransCanada is not allowed to build a new pipeline to reach refineries in the American south then the brakes will be put on expansion of Tar Sands operations. This is ridiculous. With global demand for oil growing and traditional super-large fields in places like Saudi Arabia and Kuwait maturing, more attention is falling on non-conventional deposits like the Tar Sands. So as long as oil prices remain above the $50-60 range (roughly the breakeven point for Tar Sands production) the folks in Alberta will keep the Tar Sands reserves in production. The only question will be where that oil goes. Proposals already exist to build or expand pipelines westward from Alberta to Canada's Pacific coast where Tar Sands bitumen or SCO can then be loaded on tankers headed anywhere, but most likely to China. In fact some in Canada are arguing that even if Keystone XL is approved by the State Dept. that a Pacific Coast outlet is a wise business move so that Alberta will not be subject to the whims of the American market.

So in short, protests by groups like Tar Sands Action aren't going to actually stop oil production in the Tar Sands, but they may succeed in preventing America from getting access to a needed source of crude oil from a close and stable ally.

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Monday, August 22, 2011

A Libyan Von Steuben?

The speed of the Libyan rebels charge into Tripoli on Sunday seemed to take even them by surprise. On Saturday rebel spokesmen announced that with the capital surrounded on three sides and with their forces less than 20 miles from the city center, a final assault would begin within days. Less than a day later, rebel forces were in Green Square, the plaza at the center of Tripoli that Moammar Gadhafi had used for so many photo-ops. Two of Gadhafi's sons had been captured by rebel forces, though The Man himself was still at-large as of Monday morning. It's difficult to imagine a Libya without Gadhafi, the strange Colonel has been the leader of Libya my entire life, and then some. But it is impossible to imagine him clinging to power now – rumors are circulating that he has already fled the country, perhaps to neighboring Algeria or Chad.

It has been quite a reversal for Gadhafi and for the Libyan rebels as well, who until recently, quite frankly, were a fairly inept fighting force, often winning ground one day and losing it the next. That's not meant to be an insult to the rebel fighters, but more a nod to the fact that they were not professional soldiers, but rather students, office workers and tradesmen who found themselves thrown into a war. It reminded me of another collection of citizen-soldiers, the American Colonial Army. Like the Libyans, they were a collection of average men who found themselves thrown into combat, and like the Libyans, they were initially awful at it. That is until a man named Friedrich von Steuben showed up at the American encampment at Valley Forge. While largely forgotten to history, and overshadowed by Revolution-era icons like George Washington, Von Steuben deserves at least some of the credit for winning the American Revolution.

Von Steuben presented himself to the Colonial leadership as a Prussian nobleman. He almost certainly oversold his own credentials, but Von Steuben had been trained by the Prussian military, one of the finest fighting forces in Europe. Von Steuben set about teaching the ragtag collection of farmers and merchants gathered at Valley Forge the basics of soldiering, drilling basic military concepts into them during the course of the winter. A proper Colonial Army would emerge from Valley Forge, one capable of finally standing up in battle against the British, thanks to the efforts of Von Steuben.

The sudden recent success of the Libyan rebels makes me think that they had their own Von Steuben somewhere; perhaps it was thanks to the efforts of NATO advisers, or officers who defected from Gadhafi's military, perhaps we'll never know. But somehow the Libyan rebels were able to turn themselves from a collection of amateur into an effective fighting force, and now the reign of one of the world's longest-ruling dictators appears to be at an end.

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Sunday, August 21, 2011

The Coming Alien Invasion

Apparently in their spare time NASA scientists and university astrophysics professors like to speculate on alien invasions (while also rehashing sci-fi plotlines). That's the one conclusion to draw after seeing this story about a new report: "Would Contact with Extraterrestrials Benefit or Harm Humanity? A Scenario Analysis", published by NASA's Shawn Domagal-Goldman and researchers from Penn State University, though Domagal-Goldman was quick to point out that he was doing this in his spare time and that the report was not an official NASA study.

The authors say that global warming might serve as a sort of interplanetary “welcome” mat – that any extraterrestrial intelligence (or ETI for short) monitoring the Earth would be able to detect the concentration of greenhouse gasses in the atmosphere, infer that it was the result of industrial processes and further infer that this indicated that we Earthlings were reaching a critical level of development that would suddenly warrant the ETI's attention. What that attention would be is the subject of the 33-page report, which at times reads like a compendium of sci-fi plots. One option is that the ETIs could take a beneficial tack, offering to use their superior technology to help us solve Earth-wide problems, like famine, which is in part the plot of the excellent Twilight Zone episode, “To Serve Man” (which if you have never seen, you should do so immediately). On the other hand, the authors warn, that ETIs may see us as a potential threat to galactic order and may decide to try to destroy us now before humankind achieves the technology to travel beyond Earth in any meaningful way, which is roughly the plot of Plan 9 From Outer Space, Star Trek: First Contact, and a host of other movies.

The authors go on to make the rhetorical leap that the potential for an alien invasion should be reason enough for us to get a handle on greenhouse gas emissions, stating that: “these scenarios give us reason to limit our growth and reduce our impact on global ecosystems. It would be particularly important for us to limit our emissions of greenhouse gases, since atmospheric composition can be observed from other planets,” since, according to the authors, the Earth would not be able to resist a large-scale alien invasion.

Apparently they never watched Independence Day.
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Tuesday, August 16, 2011

Green Energy Perspectives

I recently spent a few days up in the Lake Ontario/1,000 Islands Region of New York State (and if you ever have the opportunity to visit this beautiful area, you really should), while I was up there for a vacation, I managed to have several very interesting talks with local residents about energy issues, specifically green/renewable energy projects in the area.

The one topic that seemed to come up in every conversation was wind power. Several major projects are being proposed for the area. On one hand, installation of the wind turbines is being touted as a job-producer for a region that has seen its manufacturing base ebb away. But most of the people I spoke to were opposed to the turbines. Some of the opposition were the expected complaints that wind turbines are big and ugly and that scattering them about the area would have a significant aesthetic impact on a region that now relies heavily on tourism as an economic driver; one man, and avid bird-watcher, also worried about how the turbines would affect the local and migrating bird populations. But a lot of the critique went beyond simple NIMBY-ism; another common complaint raised was the fact that wind turbines just aren't terribly efficient: while wind turbines obviously can't produce electricity when the wind is not blowing, they also can't produce it if the wind is blowing too strongly – in this situation, the turbine will go into a “safe” mode to avoid rotating too fast and literally tearing itself apart; as a result, a wind turbine will typically only generate 35-40% of its rated electrical output, not a terribly efficient form of generation. I had one discussion about other wind generation technologies that are not being as actively pursued as turbine development, such as using kites to generate power, which has shown promise in experiments.

In fact, rather than just saying no to wind, the people from the region that I spoke with had a number of suggestions for other methods of generating power. Hydroelectric was obviously one alternative discussed. Rather than constructing dams, run-of-river plants are one alternative, another discussed were subsurface turbines. At its outlet from Lake Ontario, I was told, the St. Lawrence River has a current flow of about four knots, and unlike wind in the area, this flow is constant. Turbines placed along the river's shipping channel, which is more than 100-200 feet deep, could provide a constant source of power, while going unnoticed by tourists to the region. A demonstration turbine project along New York City's East River, utilizing the river's (which is actually an estuary) daily tidal flow has show promising results. A local politician also told me of her suggestion that biofuel crops be grown in the region. Biofuels typically have been problematic – while they are a truly renewable fuel source since more fuel can be grown each year, in practice biofuels have taken arable land out of food production and anecdotal evidence indicates that biofuels have caused a rise in food commodity prices. But the 1,000 Islands region has numerous farms that have been abandoned; the land has already shown it is arable, so if these abandoned farms were reclaimed for biofuel production, they could grow biofuel crops without negatively impacting the region's food supply.

Finally, there's nuclear. The region is already home to the Nine Mile Point Nuclear Generating Station, the cooling towers of the plant can be seen looming above the shore of Lake Ontario. Grudgingly, most of the people I talked to said that expansion of nuclear power may be the best alternative; nuclear clearly provides the best EROI (energy return on investment) of all the options presented. The plant has operated in the region for years without incident. And despite the the recent events in Fukushima, Japan looming over the nuclear industry, everyone I spoke to said that the chances of a tsunami in Lake Ontario were pretty remote. There remained a certain wariness about nuclear power, but also a realization that, when properly designed and maintained, nuclear power plants can operate safely and efficiently.

There were a couple of takeaways from the energy discussions I had during my trip. The first is, as a friend put it, that there is no “silver bullet” in the energy picture, no one single solution to meeting our growing demands for power, so advocates of wind, nuclear, or even an old standby like drilling more oil wells, cannot present their pet project as THE solution. Second, the average citizen knows far more about sources of energy and has a much clearer view of the energy picture in this country than they are generally given credit for having by the so-called experts, and they also can have some pretty innovative suggestions for meeting our energy needs.
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Sunday, August 14, 2011

Chinese Carrier Kerfuffle

China made headlines this week with the launch of their first aircraft carrier. The move also made waves on op-ed pages as a host of columnists pointed to the launch as yet another sign of China's growing international clout, military might and territorial ambitions. Launching an aircraft carrier is being seen as a direct challenge to American control of the seas, since the United States has dominated the aircraft carrier field since the end of World War II; the US State Department added a little fuel to this fire on Wednesday by sending a formal request to China to explain why they feel the need for “this type of equipment”.

The ship in question is “Chinese” inasmuch as China currently owns it, but the ship began life back in the old Soviet Union as the Varyag. After the fall of the Soviet Union, the Varyag spent years rusting away in a Ukrainian shipyard until being sold and towed to China (the Ukrainians sold the Varyag less its engines) where it sat rusting in another shipyard, possibly to become a floating casino in Macau, before the Chinese decided to refurbish it and put it into service as their very first aircraft carrier. Given that lineage, the Chinese aircraft carrier starts to sound a lot less intimidating. Add to that account two other stories from earlier in the year: an account from the Washington Post in January about how the Chinese air force remains dependent on Russian-built jet engines since the domestically-made versions just don't perform as well, and reports that the crews of the ships the People's Liberation Army Navy sent to participate in anti-piracy operations off of Somalia reported severe morale and supply problems due to the length and distance of their mission; the Chinese navy sounds even less formitable still.

The Varyag, or whatever the Chinese eventually decide to call her, isn't itself a game-changer in terms of naval power around the globe, but it plays nicely into an existing narrative of a China growing in economic/industrial power and a China that is becoming more aggressive with its neighbors. According to reports, the Chinese plan to field three carrier battlegroups by 2050. Of course 2050 is a long way off, forty years from now the aircraft carrier as a ship design may very well be obsolete. It also supposes that China will continue on an unbroken path as an emerging superpower, which is a pretty big assumption. It is easy to look at China, which recently became the world's second-largest economy, and presume that this is what will happen. But it ignores potentially serious problems within China that could derail their ascendancy: climbing rates of inflation, a potential economic housing bubble, a growing disparity between rich and poor and simmering ethnic tensions. In his new book, The Next Decade, George Friedman of the geopolitical risk group Stratfor makes a compelling case for the idea that China may now be near its peak of power, with internal problems dragging the country backward by the end of the decade.

It is a viewpoint to consider while reading tales about China's second-hand carrier.

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Wednesday, August 10, 2011

London's Thug Revolution

A quick thought on the riots gripping London, and now a host of other British cities. As the rioting stretches into a fourth day, some are citing recent austerity measures pushed forward by Conservative Prime Minister David Cameron as a rationale. To pull Great Britain out of its economic doldrums, the Cameron government pushed forward a package of budget cuts, many complain the budget ax fell the hardest on the nation's poor. The explanation goes that the riots then are a reaction by poor inner city youth to cuts in education and assistance programs, a lack of jobs and to being trapped in a cycle of poverty.

This explanation is crap.

For one, there already were massive street protests against the austerity budget, staged as Parliament was voting on the bill. But unlike the current rioting, these protests, despite being massive in scale, were peaceful. The catalyst for the current protests was the police shooting of an allegedly unarmed man several days ago. Calls went out for a peaceful protest against police tactics, and the public gathering was in fact peaceful at first, though some within the crowd had different ideas sparking off the ongoing riots.

In coverage of the event though, few of the self-styled “protestors” mention the police shooting as the reason they're in the streets now. A few have uttered vague notions about being angry at a lack of jobs, but more telling are Blackberry messages collected by the BBC blasted out by “organizers” of the rioting. Far from calls for social justice, the messages tout what a great opportunity it is to steal stuff. One urged London street gangs to set aside whatever turf battles they may be having and join in on the orgy of theft; another said it was a great time to steal and spread fear – a message which seems to stray into the area of domestic terrorism.

The notion then that this is some sort of social justice action then is ridiculous, more accurately it is a concerted effort by petty criminals and self-styled anarchists to kick a hole in the fabric of society, as well as High Street shop windows, merely to enrich themselves. This isn't to say that there are not some real issues of social justice and social inequity at play in England (it is wise for people in the United States to take note since many of these same conditions are brewing here as well), or that budget cuts haven't hit the poor and vulnerable disproportionately hard. Nor is this to say that people shouldn't take to the streets in protest and to demand that their rights, their views, be taken into account when those in power make decisions that affect their lives. But to try to link the burning of local businesses and homes or the assaulting and robbing of people in a neighborhood by a gang of neighborhood thugs to these larger social justice issues only serves to make a mockery of them. What's happening in London, and other cities across Britain isn't the striking of a blow for the working class, it is thugs running wild, pure and simple.

Update: This afternoon a YouGov Poll showed that not only did a vast majority of Britons think the government should take a harder line with the rioters, one-third thought the police should be using live ammo on them.

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Tuesday, August 9, 2011

The Maestro?

With the twin economic events of the S&P credit downgrade and Monday's stock market plunge dominating the news, it seems like every financial analyst, economics professor and business journalist able to put together a coherent sentence has appeared on some television channel during these past few days. So it should be no surprise that the former chairman of the Federal Reserve, Alan Greenspan, joined the televised economic chorus. What is surprising though is what he offered by way of commentary. Greenspan contends that the S&P downgrade of America's creditworthiness was not necessary since America would never default on its debt obligations because the country can always “print more money”.

What Greenspan said is technically true, the government can just keep the printing presses at the Mint running 24/7, and this is a great financial strategy – if you want to end up like Zimbabwe. In modern global economics, currency is not back by tangible assets like gold and silver, but rather by perceptions of its worth. A US dollar is worth a dollar because that is what people perceive its buying power to be. If you follow Greenspan's advice and just print more dollars, you're not doing anything to intrinsically increase the dollar's worth, you're just putting more of them out there. And a fundamental law of economics is that when supply increases, the value of a given commodity drops. So if the guy at the corner deli knows you suddenly have more money in your pocket because the government has magically made more currency, that one dollar pack of gum will quickly become a two dollar pack of gum. Your buying power as a consumer has not increased because you have more money in your pocket, it has actually decreased.

This was the situation faced by folks in Zimbabwe. The government of Robert Mugabe reacted to a financial crisis by printing more Zimbabwean dollars. The market reacted by immediately devaluing those dollars, which prompted a response by the government to simply print more dollars, and so on and so on until you wound up with this:

Despite all the zeros, at the height of Zimbabwe's financial crisis, that bill wouldn't even cover your bus fare across Harare. Again, it is simple economics, which is why it was so disturbing to hear the man who once had so much control over the nation's economy that he was dubbed “The Maestro” put forward such a dumb economic idea. Though on second thought, perhaps it helps to explain the mess that we currently find ourselves in...

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