Gulf Coast Oil Production

This is a good time to link back to my post on Peak Oil.  I have been listening to all sorts of people saying how we have to keep drilling so that we don't have pay more for oil.   It is a great argument, other than the fact that it is not true.

Every time you hear the argument for drilling somehow linked to the price of oil, remember back a few months ago when I wrote the following: "We produce 7% of the world's oil, while consuming 24%. Simple economics say that we can have a lot more influence on price of oil by managing our demand rather than our production."

(Actually these stats show that we produce 5.8% of the world's oil, and consume 22.8%)

Oil prices are set on a global market, whether we drill in the gulf or not, it isn't going to affect the worldwide price of oil much.    What we consume will tremendously affect the price of oil, and the Saudi's know it.

A better argument is that oil prices are currently too low.   They don't price oil for externalities, such as national security, global climate change, and the risk of environmental disasters like the gulf oil spill.   Including these costs in the price of oil would be a free market approach to reducing oil consumption.

Is Failure An Option?

I once heard former NASA Flight Director Gene Kranz speak about the Apollo 13 mission, in which he repeated his famous quote, "Failure Is Not An Option".    For the last month and a half, our nation has been puzzled as to how BP could have failed so miserably to prevent the tragedy in the gulf that is still unfolding.

The backups designed to prevent this exact problem failed, and it appears that additional backups were deemed too costly.    The best analysis on this subject that I have read comes from Kenneth G. Brill over at Forbes Magazine.

As you read his analysis, keep in mind what Brill is famous for.  According to Brill's page at the University Of Redlands, "Brill is the founder and former executive director of the Uptime Institute and the Site Uptime Network, an organization that provides many opportunities and resources for the data center industry and data center professionals."

Basically, he has devoted his professional life to studying the why machines and organizations fail and how to prevent it.   Brill, who has a degree in electrical engineering from the Redlands College of Arts and Sciences says that very few business even need to have a "never failing" approach to their activities, as the cost of creating such a system are incredibly high.  Unfortunately, companies are designed to accept the possibility of failure, so long as the risk is low enough and the cost of preventing it is high enough so that, on average, the cost of failure is less than the cost of preventive measures. Simply put, from the standpoint of a corporation, failure will always be an option.

Peak Oil?

There are two articles in the New York Times today that mention Peak Oil.

One article, is about supply, and the technical debate as to whether or not the worldwide annual production of oil has peaked, as it has in many individual countries such as the United States.

The other article mentions a different kind of peak oil, peak consumption. This article is about how upset the Saudis are that oil consumption in the United States has peaked. The price shocks of the last few years is the largest contributor, but our election of a president who has made a commitment to reducing consumption over the long term has is terrifying them; "the Saudis know that any attempt to reduce gasoline consumption is a threat to the future of the Saudi economy."

This really isn't all that complicated. We produce 7% of the world's oil, while consuming 24%. Simple economics say that we can have a lot more influence on price of oil by managing our demand rather than our production.

In the election last year, you had a candidate who's party was promoting increasing supply ("drill baby drill!") vs. a candidate focusing on reducing consumption. You would think that all of the business people and free market advocates in the Republican Party understand these basic facts, but they are so co-opted by big oil that they are literally being paid not to.

Since the election, the winner has actually been focusing on long term consumption reduction, and the Saudi's are scared shitless. They are now worried about peak oil consumption more than we are about peak oil production. With 230 mpg hybrids and pure electrics on sale next year, they should be.

One final quote from the second article: "the former Saudi oil minister, Sheik Yamani, once said that the stone age didn’t end because the world ran out of stones, and the oil age will not end because the world runs out of oil. It will end when something replaces it."

Final Note On Jackson

I was in Atlanta last Thursday, and I had the occasion to speak with a writer for CNN. I initially offered my polite criticism of his employer, which he seconded with a far more scathing rebuke. He was embarrassed to be associated with them, and hoped to leave as soon as possible. In fact, he didn't even get CNN at home.

One of my criticisms was that CNN should start an entertainment news network, and cover all of those stories there, leaving the core channel for actual news.

It was only a few minutes later that I was to hear about the death of Michael Jackson. Today, we learned that "Fully 93% of cable coverage studied on the Thursday and Friday following his death was about the King of Pop."

For days, their top story was: "Michael Jackson is still dead."

Jackson death also killed any remaining interest the world had in the Iranian election, let alone hiking trips conducted by southern governors.

Talk Nicely, and Carry a Big Stick

Obama is not a simple person. Depending on who you talk to, he a Communist, a Muslim, a Christian, a foreigner, or perhaps even a centrist Democrat (no way!).

This article seems to nail his political strategy to a T. Obama corners his opponents in public by being conciliatory, and then kills them in private. A great strategy, especially when you agree with his policies.

Some Amazing Photos

From a photo essay in the Boston Globe.

Court Ruling: Obese Given Extra Seat In Canada

A Canadian court has ruled that Canadian airlines must provide obese passengers with an extra seat for free. This has created a lot of controversy, and some pretty strong opinions against this here and here.

Here is my opinion:

This is an outrage. Clearly, people who are overweight are at fault for their condition. The litigant, Ms. McKay-Panos (if that is her real name) "said she was born with Polycystic Ovary Syndrome, a hormonal disorder that causes obesity in about 50 per cent of those afflicted." That means there is a 50% chance it is her fault!

This kind of thing would never happen in America, where the financial health of the airline industry takes precedence over the mere comfort and safety of obese passengers and the people sitting next to them. An airline ticket should only entitle you to one seat, as people should be treated by airlines no different than cargo.

Furthermore, how many so called "disabled" people were crippled due to accidents that they themselves were at least in part to blame for? Why should these freeloaders receive any special treatment? In the era of Roe vs. Wade, we also need to take a more strict look at people who's parents chose to give birth to, despite their genetic conditions, like obesity.

So booo to the Communist Canadians for unfairly interfering with the free market. Never in America would our government become so blatantly involved in the operation of it's corporations, especially when the health, safety, and comfort of it's citizens are involved.