Natural gas: why global markets increase U.S. domestic prices

Natural gas consumers in the U.S. can expect sharp price increases over the next year. This will affect home and commercial space heating, domestic water heating, cooking, electricity generation, agricultural chemicals, fertilizers, and a wide variety of industrial activities. The demands of space heating still cause us to burn most of a year’s supply of natural gas in the winter months. For that reason, producers extract natural gas from wells all year, inject surplus gas into underground storage caverns or tanks, and dispense the gas for delivery to customers upon demand.

The Department of Energy’s Energy Information Agency (EIA-DOE) reported (4/24/08) a lower than average quantity of natural gas in underground storage – 1.9% less than the 5-year average for mid-April. The history makes this shortage unusual. Despite very active domestic drilling, encouraged by high prices, production continues to fall. Wholesale natural gas prices have already climbed between 40-65% this year to a NYMEX price of $10.78/million Btu (approx. $11/mcf [1,000 cubic feet]). New York Mercantile Exchange (NYMEX) establishes a major price standard in the U.S.

It seems unlikely that U.S. natural gas producers can accumulate adequate storage supplies during this year’s injection season (the warmer months) to reach a level equal to that of November 2007 – the beginning of the most recent heating season. The rising popularity of natural gas as a “clean” fuel (compared to coal) to generate electricity has recently increased demand for it during air conditioning season. Recent data indicate that, on average U.S. vendors add 68 billion cubic feet per week of natural gas to storage between April and October. In order to accumulate by November 2008 the 3.5 trillion cubic feet held in storage in November 2007, producers would need to add 77 billion cubic feet per week (for 30 weeks) – 8 billion cubic feet per week more than the recent average. Increasing summertime natural gas consumption makes this goal more difficult.

Since 2000, the U.S. became a net importer of natural gas. We now import more than we export. This situation places us in competition with the world market for natural gas supplies. As an example, Qatar now sells its liquefied natural gas (LNG) to China instead of the U.S. because China pays more. A variety of import problems, including price, have reduced U.S. LNG imports during the past two months to less than a third of the quantities reported a year ago.

Market squabbles among Russia, Iran, Turkmenistan, and Europe have ratcheted up the price of natural gas from the Central Asian republics to between $42 and $64/mcf. This represents a 4-6 fold difference from the North American prevailing market price. Since the U.S. entered the international auction for natural gas, it seems inevitable that we will find ourselves bidding with Europeans, Chinese, and everyone else who consumes more natural gas than they produce. This comes at a bad time, while the dollar has lost value against the euro and other world currencies. We must learn to conserve energy better.

Sources: EIA-DOE Natural Gas Weekly Update (4/24/08); Whipple, Tom in Energy Bulletin (.net); Bloomberg (.com); Eurasianet (.org)

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What do I tell the students and the politicians about Peak Oil and Public Policy?

Read about Peak Oil and global warming for yourself! Don’t take my word for it. The web site energybulletin.net and the oil awareness meet-up group, Crude Awakening of Austin, provide some good places to start reading, but don’t stop there. Read books. Look up the “Oil Drum” and the Association for the Study of Peak Oil (ASPO). Plenty of evidence of the crisis exists in the data tables of the US Department of Energy’s web site – notice the projections only in so far as to recognize that they contradict the histories of oil and gas production and prices. Read Lester Brown’s “Plan B 3.0;” Post Carbon Cities: Planning for Energy and Climate Uncertainty; Ross Gelbspan’s “Boiling Point;” and Elizabeth Kolbert’s “Field Notes from a Catastrophe.” Read enough to know the difference between truth and obfuscation. If you didn’t live through the energy crises of the 1970’s, read about those to recognize the dysfunctional nature of our current administration’s behavior in this crisis.

After you read enough to get overwhelmed, depressed, or angry, place your passion in the middle of your consciousness and talk to lots of people about it. After you annoy, frighten, or infuriate everyone you know, then take what you have learned and strike up a conversation with your elected officials. Let them know how seriously you consider Peak Oil and climate change. Don’t let them off the hook. Insist that they tell you what they can do and intend to do to prepare our society to weather this crisis and come out the other side as a sustainable, ecologically responsible city, state, or nation.

Think about how people lived before the fossil fuel era and how we will function with modern technology and ecological constraints after fossil fuels become unavailable. Petroleum in particular and fossil fuels in general have become central to our economy and culture in only a couple of centuries – the blink of an eye in historical terms. Now, we depend on fossil fuels for practically every aspect of modern life: transportation, food production, industry, entertainment, construction, and the military. Natural gas and coal power both our food production system and electricity generation. Synthetic materials of all kinds (plastic, rubber, fabrics) all use petroleum.

“Hubbard’s Peak” illustrates the concept that the peak of petroleum production occurs a predictable period of time after the peak of petroleum discoveries. Today’s oil price, near $119/barrel, represents a 500% increase in price over the past decade. If gasoline prices continue rising at the rate of the past 6 years, it will cost over $10 per gallon by 2012 – if not sooner. Everyone sets their own threshold for declaring something unaffordable. We must find alternatives that do not wreck our economy or our ecology. The former cannot exist without the latter. Biofuels to replace petroleum already threaten starvation for hundreds of millions who cannot eat the corn we turn into ethanol or the palm oil we turn into biodiesel. Clearly, we must find alternatives to driving so many cars and trucks. Wind and solar power recently became very competitive with fossil fuels. Wind and solar can power electric trains, but we must build a new transportation system to take advantage of those renewable resources.

Having become sensitized to the phenomenon of peak oil, one can see daily evidence of it in the news, even though the stories make no mention of “peak oil.” Hungry people in Egypt, Haiti, Afghanistan, and elsewhere riot in the streets because staple foods like wheat, corn, rice, and soybeans have become unaffordable. Investors feverishly build ethanol refineries. General Motors makes its big SUVs available with the capability to burn ethanol. Canadian “tar sands,” previously considered impractical for petroleum production, now seem practical – in business terms that ignore ecological consequences. Cities must delay street repairs because asphalt prices have exceeded their budgets. Mexico debates allowing foreign companies to invest in their oil fields because their most productive reserve, Cantarell, has gone into steep decline. The connections go on.

The Chinese and Europeans may soon routinely outbid Americans in the market for imported natural gas and petroleum. The falling dollar may not continue to compete well with the yuan or the euro. This recession shows strong indications of turning out far more menacing than anything since the 1930s. We must focus on dealing with expensive energy and food before it becomes unaffordable. We must get our best and brightest minds working on solutions immediately!

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Peak Oil and global food prices: wake up and smell the biofuel

Peak oil colors the news in a subterranean way, but the mainstream media dare not speak its name except to deride those who seriously discuss it. The Austin American Statesman (4/12/08) reported, “UN: End to high food costs unlikely.” Food riots in Haiti reportedly close markets. UN Food and Agriculture Organization (FAO) warns us to expect high food prices to persist, including for bread, rice, milk, and cooking oil. Wheat and rice prices doubled in a year while corn (maize) prices increased by 30%. Lester Brown, of Earth Policy Institute, reports in “Plan B 3.0” that, “in seven of the last eight yeas, world grain production has fallen short of consumption, dropping world carryover stocks of grain to their lowest level in 34 years.” Returning to FAO reports, rapidly rising demand exceeds supply and shortages provoke food export restrictions. Affected countries include: China, India, Egypt (and most of Africa), Italy, Mexico, Pakistan, and Thailand. Meanwhile, US ethanol subsidies devour corn crops and neglect all other grains.

Peak oil influences the Iraq debate, in which we bicker over a trillion dollar price tag, how much money Halliburton, Blackwater, et al will reap, and higher oil prices – despite our best efforts. Oil revenues from the liberated Iraq theoretically should have paid for the incursion but never actually to make it to the bank. At this point, it matters little that Mesopotamia might possess more remaining oil and gas reserves than Saudi Arabia. Irreconcilable differences among warring factions will almost certainly render those resources unprofitable if exploitable at all.

The illustrious finance ministers of the G7 find themselves touched by peak oil. Does the “G” stand for “glorious?” Maybe “gratuitous?” Maybe “gauche?” Whatever… Economic representatives of the G7 recently proposed a plan to address the global financial crisis as economists speculate that the US might have already slid into recession. They really hate to declare these things prematurely. They don’t mention peak oil, but with the supply stagnating at between 85-86 million barrels per day (or about 1,000 barrels per second) and the demand continuing to rise, one can’t help but suspect that energy prices might play a significant part in the developing recession.

People who can’t pay for expensive fuel can’t run their tractors and trucks. Painful food costs weigh unevenly around the globe, don’t they always? A New York Times editorial faults US ethanol subsidies for squeezing food grain prices. The éminence gris cites national statistics to explain American complacency: US households spend less than 16% of their incomes on food, while Nigerians spend 73%, Vietnamese spend 65%, Indonesians – 50% of incomes for food. When our food bills rise 25%, we just economize somewhere else in the budget. When those other countries’ food import bills rise 25%, as they did last year, the World Bank expects social unrest. Robert Zoellick suggests that rich countries finance a “green revolution” to increase crop yields and farm productivity in hungry developing nations. He apparently forgot that the previous green revolution required massive infusions of fossil fuels for mechanized equipment, fertilizers, and pesticides. He also overlooked the fact that the previous green revolution boosted food production with the temporary resource of fossil water. Very deep wells in places like India and China draw from aquifers that do not recharge on time scales helpful to hungry humans. With energy prices headed toward the stratosphere and wells running dry, a new green revolution does not appear in the cards.


Another Statesman article (3/30/08), by Sustainable Food Center’s Heather Davies Bernard, echoed a sentiment expressed by East Austin’s Rhizome Collective, in a 3/25/08 article by Asher Price. Become ecologically self-sufficient and grow your own food locally, she admonishes us. Bernard touches lightly on high oil prices and climate change-induced crop failures. No one wants to depress the readers by sounding too dire. Yes, oil prices jack up the cost of trucking or air freighting food thousands of miles from farm to market. Yes, local growers produce a wide array of crops sold at our farmers’ markets. Yes, community supported agriculture can feed hundreds of people – oops, we need to feed hundreds of thousands, just here in Central Texas! Yes, if we try, we can grow an amazing variety of vegetables and fruits in our back yards and community gardens. I remember reading in history books about “victory gardens” cultivated during World War II; they worked well because the people growing them enjoyed the cultural knowledge possessed by elderly relatives who had recently lost their farms in the Great Depression. A very long time has lapsed since very many Americans grew significant food crops in their back yards. We will need intensive horticultural education programs for the general public to jump that hurdle.

What I find missing from this growing cacophony of reporting has to do with public policy. Doing the right thing still seems like a matter of personal virtue rather than national necessity. We spend billions per week on a nebulously justified war that almost certainly has more to do with oil supplies than with terrorism prevention. However, we exert little or no effort on the home front to reduce demand for oil. Dick Cheney’s disdain for conservation ignores the very real reduction in energy consumption we achieved after the energy crises of the 1970s (Arab Oil Embargo- 1973, Iranian Revolution- 1979). Earnest support from the Federal government for energy conservation and efficiency can garner support at all levels to reduce fossil fuel consumption. Instead of dithering about trivialities and minutiae of climate and food prices, Congress and state legislatures could act to protect farmland, increase local production in close proximity to urban markets, reduce fuel intensity of food production, improve rail links to deliver food to markets, and enhance food security. Maybe a President Obama, Clinton, or McCain will take these matters more seriously than the current resident.

Instead of glorifying and mythologizing the American way of life and driving our economy – and perhaps civil society – beyond the brink, our political leaders can work with our business leaders to create a new American way of life. The new way can become more sustainable than the old way while still providing sustenance, enjoyment, and hope for the future. The existing political system seems destined to provide increasingly less sustenance, enjoyment, and hope for the future.

Our nation cannot afford to convert its amber waves of grain and purple mountains’ majesties into pavement and suburban subdivisions from sea to shining sea. When traditionalists dismiss the concept of replacing cars and trucks on highways and streets with electric trains and trolleys they argue that we lack the population densities that make electric trains practical in Europe. To overcome that impediment, a future-oriented thinker could argue that 300 million plus Americans clustered in pedestrian-friendly cities, towns, and urban villages could easily support an electric train network while leaving more of the countryside to grow food and provide ecosystem services – such as water purification, storm buffering, soil conservation, carbon sequestration, and everything else that wildlife does for us. If we continue to ignore the problems staring us in the face, they will not go away but rather worsen.

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Slippery truth in oil advertising

Gullible me! to ever believe the cutesy, mock earnest propaganda from an oil company. Nevertheless, I wanted to believe that Chevron genuinely wanted to solicit public opinion about establishing a responsible sense of direction through the transition from a fossil fuel-based economy to a sustainable, renewable energy-based economy. A tiger cannot change its stripes either.

Some intrepid members of Congress once again interrogated some high and mighty oil company officials, April 1, 2008 – presumably under oath this time, no word about whether anyone kept their fingers crossed. Among the five biggest oil companies – Exxon Mobil, Royal Dutch Shell, BP, ConocoPhilips and Chevron – Democracy Now reported the accrual of $18 billion in tax breaks, $123 billion in profits, and less than 1% of those profits devoted to renewable energy research and development. The oil executives facing the members of Congress looked approximately like imperial robber barons hearing criticism from either a hotel bell hop or their child’s elementary school librarian. Of course, their critics possess as much moral authority as anyone else, but the robber barons can safely disregard them with impunity.

The attitude and comments of Exxon Senior Vice President, Stephen Simon stunned me, but maybe they should not have. The literature on climate change and peak oil, tell me that the cheap oil ran out, the more expensive oil will release even more greenhouse gases, today’s greenhouse gas concentrations have already radically accelerated the melting of glaciers around the world, and procrastination by the rich and powerful – in this country and elsewhere – promise to increase carbon dioxide emissions. Mr. Simon confidently proclaims that fossil fuels will continue to constitute 80% of world energy supplies into the foreseeable future. Based on the literature I know about, this man appears either delusional or a pathological liar. Not only has oil production stagnated in the past 2-3 years, but human capacity to feed itself on this finite planet appears frighteningly close to topping out as well (see Lester Brown’s “Plan B 3.0”). Conversations regarding the Austin Energy Depletion Risk Task Force suggest that Mr. Simon holds no monopoly on this popular delusion. The people who sell us food and maintain our transportation systems seem equally oblivious to the impending energy disaster.

Disappointingly, Amy Goodman’s follow-up interview, on Democracy Now, with Steve Kretzmann, of Oil Change International, mentioned neither peak oil nor the kinds of social and economic changes that we will all make when oil becomes too expensive and too scarce for the common people to afford. Kretzmann did mention the ecological havoc unfolding in Canada as the oil companies mine, process, and export synthetic crude from the Alberta Tar Sands. I believe he described it something to the effect of: the worst ecological disaster the world has ever known.

As a long-time reader of The Atlantic magazine, I have seen many advertisements from multi-national corporations striving to paint themselves as patriotic, or environmentally responsible, “green,” or simply steadfast. Take for example the ad from the Altria Group, formerly known as Philip Morris… Their hype says, “Businesses face change every day. At Altria Group, we have encountered our share in recent years [hence, the new name]. It’s how you respond to change and what you learn from it that often determine [sic] (even MS Word didn’t like this turn of phrase) how successful your journey will be.” Some internet wags produced some decidedly less charitable words for the alias-challenged corporation (The Curiously Strong Carcinogen).

At any rate, appearing in the front pages of the Atlantic over the past year or so, Chevron’s ad campaign “will you join us,” looks earnest enough on its face. The “Energyville” game on the Chevron website looks superficially educational – even if very shallow and stilted in favor of choosing more fossil fuels than I wanted to make the city work. Furthermore, Chevron does earn revenues by telling big energy users how to save energy and they do work with the Department of Energy’s National Renewable Energy Laboratory (NREL) on algae-based biofuels research. Parts of their moral standing look good on paper.

I want to believe that some people in positions of power will do the right things for the planet. Alas, I fear that they have proven once again that “Power corrupts and absolute power corrupts absolutely.” It appears that the rich and powerful, given free reign, will drive us and our economy right over the cliff’s edge. The little people who survive the crash will find themselves picking through the wreckage, struggling to survive in not only a wrecked economy but a wrecked ecosystem.

The conscious, the responsible, the compassionate, and the humble must continue to fight the good fight against the tyrants or else they will surely imprison us in a comfortable cell and drag us down to hell.

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Gardening redeems the Earth; plant pleasant trees

The planet needs your help. Plant more trees and flowers, whenever and wherever possible! The U.S. Environmental Protection Agency (USEPA) claims that the wood in trees consists of 50% carbon. The pollinators that make our fruit crops possible need flower nectar all year round. As I understand the way photosynthesis works, plants draw their carbon almost exclusively from the air, rather than the soil. The USEPA web page on Carbon Sequestration mainly discusses the ability of agricultural and forestry lands to grab and hold (sequester) carbon from air. They cite a southern pine plantation as capable of sequestering one ton of carbon per acre per year, over the course of 90 years. I don’t own a pine plantation, so I plant trees in my yard in South Austin. Sometimes, I plant tree seeds in neglected or obscure places where the property owners might not destroy them.

USEPA measures emissions of carbon dioxide, unburned hydrocarbons, nitrogen oxides, and carbon monoxide, from mowers, blowers, edge trimmers, and other gasoline-powered equipment, in units of thousands of tons. Presumably because emissions vary so much from one machine to another, USEPA reports data on the nation as a whole. Several figures appear in the literature about emissions from individual mowers. It seems moot to me, whether a mower, blower, or edger pollutes as much in an hour as a pickup truck driven 140 miles or 90 miles. When one smells petrol fumes at 50-100 paces, one can generally consider the source as a significant polluter.

It seems obvious that we need to stop burning fossil fuels to maintain our landscapes and redesign our landscapes to absorb more carbon dioxide. Even without believing the aforementioned, one can surely appreciate these reasons: beauty, visual screening, wildlife habitat, water savings, energy savings, shade cooling, fruit, herbs, carbon sequestration, attitude soothing, recreation, soil conservation, flood mitigation, aquifer recharge, heat island mitigation, wind buffer, noise buffer.

I take great pride in the trees, shrubs, and flower beds I planted to displace lawn that no longer requires mowing. The remaining patches of lawn around my house which mainly serve as paths, get mowed only a couple of times per month during the growing season. The trees, shrubs, and flowers provide considerably more benefits than a reduction in mowing and sequestration of carbon dioxide. Wildlife, in the forms of birds, squirrels, lizards, and butterflies will show up and linger in a lushly vegetated garden but not in a sterile turf-scape.

Trees I grow include: burr oak (Quercus macrocarpa), Mexican white oak (Quercus polymorpha), pecan (Carya illinoensis), cedar elm (Ulmus crassifolia), flame-leaf sumac (Rhus lanceolata), desert willow (Chilopsis linearis), Mexican buck-eye (Ungnadia speciosa), Texas mountain laurel (Sophora secundiflora), sandpaper anacua (Ehretia anacua), fig (Ficus carica), hackberry (Celtis occidentalis), chaste tree (Vitex agnus-castus), apple (Malus spp.), peach, Mexican plum (Prunus mexicana), crape myrtle (Lagerstroemia indica), cottonwood (Populus deltoides), big tooth maple (Acer grandidentatum), anacacho orchid tree (Bauhinia. congesta), Catclaw acacia (Acacia greggii var. wrightii).

Shrubs I grow include: yaupon (Ilex vomitoria), possum haw (I. decidua), Carolina buckthorn (Rhamnus caroliniana), beautyberry (Callicarpa americana), coral berry (Symphoricarpos orbiculatus) elbowbush (Forestiera pubescens), various antique roses (sombreuil, Belinda’s dream, Caldwell Pink, et al), winter honeysuckle (Lonicera fragrantissima), Yucca (maybe violacea), red yucca (Hesperaloe parviflora), prickly pear cactus (Opuntia spp.), flame acanthus (Anisacanthus quadrifidus), Mexican poinciana (Caesalpinia mexicana), pride of Barbados (C. pulcherima), Yellow bird of Paradise (C. gilliesii), Gregg salvia (Salvia greggii), spiny aster (Aster spinosa), rosemary, coral bean (Erythrina bidwillii), rock rose (Pavonia lasiopetala [pink and white]), agarita (Mahonia trifoliolata), lime prickly ash (Zanthoxylum fagara), senna bush (Cassia corymbosa), cenizo (Leucophyllum frutescens), lantana (Lantana urticoides, L. texensis, L. montevidensis), Texas kidney wood (Eysenhardtia texana), germander (Teucrium fruticans), pink trumpet vine (Pandorea ricasoliana), esperanza (Tecoma stans).

Some of my herbs double as shrubs: rosemary, Artemisia (A. ‘Powis Castle’, A. ‘silver king’). Most of my herbs don’t shrub: oregano, fennel, Mexican mint marigold (Tagetes lucida), Salvia coccinea, Mexican bush sage (S. leucantha), S. ‘indigo spires’, mealy cup sage (S. farinacea), bee balm (Monarda fistulosa).

Perennial flowers in my garden include: narcissus (tazetta hybrids mostly), amaryllis, spider lilies (Lycoris radiata), “naked ladies” (L. aurea), snow drops (Leucojum aestivum), iris (German bearded and Louisiana), day lilies (Hemerocallis spp.), spider wort (Tradescantia spp.), rain lilies (Cooperia or Zephyranthes), verbena (V. bonariensis, V. rigida, V. bipinatifida, et al), Louisiana phlox (P. paniculata), Maximilian sunflower (Helianthus maximiliani), goldenrod (Solidago spp.), hibiscus (H. coccinea ‘Texas star,’ H. moscheutos hybrids), turk’s cap (Malvaviscus arboreus), gulf coast penstemon, gay feather (Liatris spp.), Byzantine gladiolus, orange trumpet vine (Campsis radicans), passion vine (2 Passiflora spp.), heath aster (A. ericoides), blue autumn asters (not sure about this spp.), fall obedient plant (Physostegia virginiana), lily turf (Liriope muscari), pink evening primrose (Oenothera speciosa), Coreopsis lanceolata, big muhly grass (Muhlenbergia lindheimeri), gulf muhly grass (Muhlenbergia capillaris)… I can go on ad nauseum, with a little coaxing.

The joys of gardening celebrate floral abundance, fragrance, colors, and all the creatures attracted to the beautiful plants. An unabashed plant collector suffers from selective memory – this list could never encompass everything in my garden. Yet, every plant possesses a history – its provenance. Purloined seeds from parks and greenbelts provided some of my plant starts – I don’t dig or uproot without permission. Not only can plant theft lead to arrest, it frequently fails to produce a viable plant. Not uncommonly do I find a mystery plant sprouting in a flower bed and cannot remember whether I planted it or if a bird did me the favor. Sometimes things volunteer from the compost – apples and peaches. I enjoy them for the temporary novelty but they tend not to bear good fruit. Cantaloupes proved the exception to this rule. I highly recommend saving their seeds and planting them out in the spring for summer fruit picked when ripe – unlike what we typically find in the grocery store.

No matter what happens to me in the course of the day, returning home to the garden provides solace. My garden redeems me.

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