Sunday, February 6, 2011

Should we move to a pure natural gas transport model?

What follows is the text of a rebuttal letter I wrote to Michael Fitzsimmons who is a retired engineer and a proponent of moving all transport to natural gas as a way to free the US from reliance upon imported oil. We had a series of letters on the Seeking Alpha financial web site. This is my final letter to him:

MF: Your idea of a dialog is "Your figures are wrong"? (I offered him a link to the US Energy Information Agency, the definitive  governmental website on all aspects of energy). These are up to date(November 2010) EIA's figures for proven reserves. They are not mine. Did you click on the link? It is apparent you have made up your mind because you don't bother to rebut anyone's arguments in a respectful fashion using credible data. You merely rewind your tape and repeat your arguments.You have chosen to include ALL categories of reserves which you do not mention anywhere that I could find. You argue like Hugo Chavez, the Oil Shale advocates , the Coal proponents and even the Saudis. There is only a certain small portion of the resource that will be economically available at any remotely affordable price. Chavez says there is more oil in Orinoco sands than in the middle east. Probably true. There may be more oil and gas in Western US shale as well. More in Canada than Saudi Arabia. So what, Mike. Even Rigzone, the respected Oil & Gas trade publication, throws cold water on estimates of supply from people such as yourself who have a simplistic agenda and a mission short on details. You are however absolutely correct that the 2/3 reliance on imported oil is an ongoing disaster which is not being addressed as part of a coherent energy policy. Your statement of how much could be saved by a switch to NG takes the lowest price I could find which was about $1.50 for gasoline equivalent. Prices actually seem to range from $1.50-2.50. I don't see a fuel tax on NG in our nearest metro area. Plan on at least 25-50 cents a gallon. The kind of expansion of NG you are proposing would require many new pipelines. You say rail is too expensive and too slow which is incorrect. You  also fail to mention that natural gas on a btu basis is about 1/4 of oil. That is a temporary aberration which would certainly evaporate if vast amounts of gas were to be used as a transport fuel. What will be the price of NG fuel on an oil btu equivalent or even half of an oil equivalent? Do the math. We have a gas pipeline being constructed from here in Wyoming to Oregon, 675 miles. It is the Ruby Pipeline. It will cost at least $3 billion which is $4.4 million per mile. It is going thru open empty land, Indian land, barren land and it is still $4.4 million/mile. Rail in Wyoming laying a new track in flat terrain. for freight(not high speed) is ball park $1 million/mile.(source: a friend in Idaho who works for UP) In Southern Cal adding a second main line is higher for many urban reasons. It is about$2-3 million mile depending again on terrain and location. Urban Rail costs range from numbers like this to absurdly high numbers in the range of $20-60 million a mile in cities.. Rehabbing Freight rail in open country in 1995 estimate(Google) from MO DOT was estimated at $248,000/mile. That is more than double now. Urban rail costs for rail generally include the cost of everything, cars, rail, ties, switches, stations etc. The costs of digging up an urban area and sinking a pipeline of relatively short life is equally expensive. In the US we use rail for freight. In Europe they use Rail for people. It would be stupid to ruin a decent freight rail system in the US by jamming passengers down the throats of UP and CSX. Laying new track alongside an existing ROW@ is relatively cheap as I have pointed out and is very fast, far faster than digging a pipeline. I see no credible estimates of the ultimate buildout costs of your NG plan. There are damn few pipelines in the US and you would need massive expansion of spur pipelines? Your costs? You haven't provided them because it would be almost impossible to estimate the costs. If you stick to say, Interstate corridors I am confident you could generate credible figures. I could generate equally credible figures for rail lines coexistent with interstate road corridors. What is clear to me is that laying rail extra main lines is massively faster than burying pipelines and it is undeniably cheaper . When the rail buildout is completed you will have the ability to transport all conventional forms of transportation energy, people and goods. What would result is a massively improved transportation network which could have trains driven by whatever fuel most feasible at the time, whether electricity, oil, coal, firewood, biofuels, nuclear and yes even gas. What we would have with your not original proposals would be pipes in the ground which would in a few decades would be just that, but they would be empty. Your proposal is unworkable, unaffordable, unnecessary and deeply flawed on multiple systemic levels. You might ask the folks in New Mexico what happened to their gas. With no easy way to store gas at 3000 psi, when the pressure drops in the pipe for whatever reason, the party is over. While there will be some transport by CNG and electric in the future as part of a broad transport model, using CNG as the fuel model to move to is bogus and delusional. It is delusional just as Obama's high speed rail proposals are equally delusional,impractical, and unaffordable. We are long past the time to have a national energy plan. Gas will be part of that plan if it ever happens as will all the fossil and non fossil energy resources. Switching all transport to gas alone is as ludicrous as switching to a pure coal  or pure solar.

Friday, February 4, 2011

Hosi! Ease up! Disappear Brother.. You’re making the CIA and the US look really bad.

So by now you’ve probably heard about that little brouhaha going on over in Cairo with students and little old ladies protesting against another close  dictator ally of the United States,  and getting stomped by  Hosi thugs wielding swords from stampeding camels and galloping Arabians. I am sure the events are not being lost on Robert Ludlum and Hollywood. Talk about grist for the next Jason Bourne movie. Of course, they might be filming as we speak. Of course who knows what intrigues are going on behind closed doors. We have learned that Hillary, our current Secretary of State and her husband, old whathisname regard Hosni’s Family as family friends.mubarak
That’s Hosni and his adorable wife Susan and the boys. It looks like Hosni is not taking any chances. He is either doing his best Napoleon imitation or hanging on to his Glock. In case you were starting to feel bad for the old dictator, don’t. Hosni has done all right by himself and his boys. They’re all billionaires and I don’t mean just billionaires. I mean mover over Bill Gates and Warren Buffet BILLIONAIRES: From Todays Guardian:

Mubarak family fortune could reach $70bn, say experts

Egyptian president has cash in British and Swiss banks plus UK and US property

clip_image001Gamal and Hosni Mubarak are reported to have built up huge fortunes, including properties in London. Photograph: Cris Bouroncle/AFP/Getty Images
President Hosni Mubarak's family fortune could be as much as $70bn (£43.5bn) according to analysis by Middle East experts, with much of his wealth in British and Swiss banks or tied up in real estate in London, New York, Los Angeles and along expensive tracts of the Red Sea coast.
After 30 years as president and many more as a senior military official, Mubarak has had access to investment deals that have generated hundreds of millions of pounds in profits. Most of those gains have been taken offshore and deposited in secret bank accounts or invested in upmarket homes and hotels.
According to a report last year in the Arabic newspaper Al Khabar, Mubarak has properties in Manhattan and exclusive Beverly Hills addresses on Rodeo Drive.
His sons, Gamal and Alaa, are also billionaires. A protest outside Gamal's ostentatious home at 28 Wilton Place in Belgravia, central London, highlighted the family's appetite for western trophy assets.
Amaney Jamal, a political science professor at Princeton University, said the estimate of $40bn-70bn was comparable with the vast wealth of leaders in other Gulf countries.
"The business ventures from his military and government service accumulated to his personal wealth," she told ABC news. "There was a lot of corruption in this regime and stifling of public resources for personal gain.
"This is the pattern of other Middle Eastern dictators so their wealth will not be taken during a transition. These leaders plan on this."
I’m sure all the boys in Langley are chain smoking and burning the midnight oil wondering where the hell are they going to be able to do their renditions if Hosni and the fam have to make a mad dash for Riyadh or Tel Aviv.  Course, the dark side is that Hosni and his whiz kids might be coming home to the auld sod to roost as they have lots of property here on , namely NYC and Rodeo Drive. Don’t know how long he might last over here with every state moving to  concealed carry laws. That’s the nice thing about Cairo, only his thugs have guns.

The real serious issue is of course yet another revelation of the utter failure and corruption of US Foreign policy in its decades long attempt to set up and prop up dictators friendly to US corporate interests. You can just about name any country . If we have had or have significant corporate interests, the CIA and its thugs have  probably been there, done that. Think Central and South America. There’s a reason that the Latins  have a long tradition of hating us.  In central America the Corporation du jour was the United Fruit Company which had huge plantations  all over the region. The business model was slave labor wages, corrupt politicians and monopoly. Eventually in many of the countries the natives eventually pushed back./ There are a myriad of examples but the CIA special OP PBSUCCESS,  toppled the Guatemalan government when it started talking about peasant rights and expropriating property with or without compensation. This sounded like communism to Langley and in 1954, the  CIA gave those socialists an attitude adjustment. Much the same thing had happened the year before over in Iran. That was the CIA’s ” Operation Ajax” :
This happened on August 19, 1953   overthrowing  the  democratically elected Prime Minister Mohammad Mosaddegh.    Mohammed  with the unanimous support of the Iranian Parliament attempted to nationalize the Anglo-Iranian Oil Company. England had other ideas and called Langley and launched AJAX which toppled Mohammed and installed the Sha  of Iran who lasted until 1979. You know the rest. The problem was, this infuriated the entire coutry of Iran and in Iran, memories die hard. Ajax was a debacle of historic proportions. Iran was a highly civilized wealthy educated country with a proud  cultured history, who today might have become a bulwark of stability and prosperity in the region and we and the Brits destroyed all trust and hope for the future. The United States didn’t even need the Oil as we were the WORLD’S  LARGEST OIL PRODUCER. It is no wonder that  the Iranian people demanded payback. The blunder  continues today. Talk about reaping what you sow. We are long past the time when we could have sat down with the Iranian leaders who were not radicalized and said ”Listen Mohammed. We’re sorry. What can we do to make this right.”  Frankly I still think it is not too late to sit down and try to have a conversation if it were done cleverly and diplomatically starting with an apology to the Iranian People. Instead we continue to sanction and threaten a radicalized regime which doesn’t even represent the Iranian people. These same winning  CIA strategies continued in SE Asia(Think Viet Nam) Chile, Iraq and much of Central America and of course now in Iraq and Afghanistan . No empire has ever taken over Afghanistan for long and the CIA plans on trying to rectify that little quirk of history. It is depressing to think how our extra governmental agencies like the CIA and the Federal Reserve are  so ineffably unaccountable and un answerable to the American People. And now we have their little water boarding torture basement in Egypt  at risk of being shut down.  What will be the next chapter coming out of Langley? God help the world if the dominoes in the middle east continue to topple and we get the CIA involved.The Bozos still rule.

The US needs China to finance its deficits, or does it?


Of course you recognize this building, right? It’s the Bank of China in Bejiing. These are the boys that the US is afraid to annoy with rants of undervalued currency, balance of payment issues, human rights abuses, Tiananmen Square, North Korea, intellectual property abuses, theft of patents  and technology, carbon pollution, you know, the works. The US can’t unsettle China with anything economically threatening. We have been told by  the Economists in the State Department as well as the Globalized Banks( a branch of the State Department) that raising these sorts of issues with the Chinese might tick them off and that would be bad, right? After all, it’s the Chinese who fund our debt. It’s the Chinese who fund our  ability to run big budget deficits. Sure, other folks fund the deficits besides the Chinese like Japan, Asian countries and rich individuals in the US and elsewhere, collectively known as the bond market. So imagine my surprise when I saw this headline in the Financial Times:

Fed passes China in Treasury holdings

By Michael Mackenzie in New York

Published: February 2 2011 00:01 | Last updated: February 2 2011 00:01

The Federal Reserve has surpassed China as the leading holder of US Treasury securities even though it has yet to reach the halfway mark in its latest round of quantitative easing, according to official figures.

Based on weekly data released on Thursday, the New York Fed’s holdings of Treasuries in its System Open Market Account, known as Soma, total $1,108bn, made up of bills, notes, bonds and Treasury Inflation Protected Securities, or Tips.

According to the most recent US Treasury data on foreign holders of US government paper, China holds $896bn and Japan owns $877bn.

“By June [the Fed] will have accumulated some $1,600bn (!!!)of Treasury securities, likely to be in the vicinity of China and Japan’s combined holdings,” said Richard Gilhooly, a strategist at TD Securities. “The New York Fed surpassed China in the past month as the largest holder of US Treasury securities,” he noted.

Whoa horsey!  Talk about cognitive dissonance. !! You may remember before the bernank showed up replacing the last guru of financial psychobabble, Senor Greenspan, the US Government had to raise money to finance it’s budget by issuing debt, but no more. I guess we don’t need China and the bond market any more.  Maybe there is something I don’t understand but is this yet another sign that we are nearing our economic "” End of Days?” Can we now demand:  Mister  Chinaman, Tear down this wall!”