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Clean up on Line 3

Because Line 3 is a crude oil pipeline, and pipelines leak because that’s what they do. McKibben, via LGM:

It’s easy to forget now how unlikely the Keystone fight really was. Indigenous activists and Midwest ranchers along the pipeline route kicked off the opposition. When it went national, 10 years ago this summer, with mass arrests outside the White House, pundits scoffed. More than 90 percent of Capitol Hill “insiders” polled by The National Journal said the company would get its permit.

But the more than 1,200 people who were arrested in that protest helped galvanize a nationwide — even worldwide — movement that placed President Barack Obama under unrelenting pressure. Within a few months he’d paused the approval process, and in 2015 he killed the pipeline, deciding that it didn’t meet his climate test.

“America’s now a global leader when it comes to taking serious action to fight climate change,” Mr. Obama said. “And frankly, approving this project would have undercut that global leadership. And that’s the biggest risk we face — not acting.”

And that’s what puts the Biden administration in an impossible place now. Enbridge wants to replace Line 3, which runs from Canada’s tar sands deposits in Alberta across Minnesota to Superior, Wis., with a pipeline that follows a new route and would carry twice as much crude. It would carry almost as much of the same heavy crude oil as planned for the Keystone XL pipeline — crude that is among the most carbon-heavy petroleum on the planet.

An environmental cause that is really an economic question. The slim chance of recouping the cost of building the pipeline before crude oil usage decline makes it no longer viable builds a strong case against pipeline, maybe even stronger than it leaking – which it WILL do, because…
Not easy, but becoming more clear as the science gets tangled with economics, in a good way!

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When at all costs

Quite likely, that the news of Oil’s decline will arrive long after it has actually begun to happen. That’s mostly the way most things work – just ask all the Hillbillies people Elegying worried that the demographics of the U.S. are changing!

Even so, BNP Paribas has startlingly concluded that the economics of oil “are now in relentless and irreversible decline”:

The report is good news for humanity because it means peak oil demand may be less than a decade away, which in turn means ambitious climate goals will be more affordable than previously thought.

But the bank’s analysis, “Wells, Wires and Wheels,” is devastating for Big Oil. It concludes that “the oil industry has never before in its history faced the kind of threat that renewable electricity in tandem with EVs poses to its business model.”

…

But one of the most startling findings is that because the cost of running EVs on solar or wind power is dropping so rapidly, the only way gasoline cars can compete with these renewable energy-powered EVs in the 2020s is if the price of oil were to drop to $11 to $12 per barrel. The current price of oil is over $50.

Even worse for oil, this economic analysis doesn’t even factor in many of the other benefits of running cars on renewable power rather than oil. These include the vast public health benefits of not breathing air pollution from burning oil, along with the benefits of not having huge oil spills and of not destroying a livable climate.

Couldn’t happen to a nicer, more thoughtful and civic-minded group. It would honestly have been much better had we just thanked them around 1967 and made the direct move to the obvious as it had already by then been long-imagined. But no. There were markets to dominate and profits to lose and wars to fund, thus the long drawn out halftime show that just embarrasses everybody with the need for enormous flags, jet flyovers and pale people in native costumes. Can’t enjoy this show and take no pleasure in their decades-late demise.

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Perfect Cases in Point

We wish they were more rare. But just as rising wages are bad news for business(?) and solar most horribly spells doom for coal, word in the oil game is that consistent catastrophes are needed for oil to remain strong:

The weakness comes at a time when speculators have started rebuilding bullish positions after a sell-off last month, betting the market will tighten in the second quarter. Yet, Brent physical oil traders say the opposite is happening so far, according to interviews with executives at several trading houses, who asked not to be identified discussing internal views.

“We need to see the market going really into deficit for oil prices to rise,” Giovanni Staunovo, commodity analyst at UBS Group AG in Zurich, said. “If this is temporary, it could be weathered, but it needs to be monitored.”

The weakness is particularly visible in so-called time-spreads — the price difference between contracts for delivery at different periods. Reflecting a growing surplus that could force traders to seek tankers as temporary floating storage facilities, the Brent June-July spread this week fell to an unusually weak minus 55 cents per barrel, down from parity just two months earlier. The negative structure is known in the industry as contango.

There’s a new word for you. And yes, many of the other words they use are the ones you know, with commonly agreed-upon definitions. I know one needs a lot of sophisticated financial knowledge to really get the subtleties of these economics, but is the overall message really lost? Of no consequence whatsoever? Yes, we can play terrible music on beautiful instruments, just as we can vote against our interests and condemn ourselves with our own words ( though it really isn’t necessary to do all three at once). Thanks to Bloomberg for delivering the straight dope in the top story today. It’s important, you know? Just like it will be to move past the market riff, as I hope to soon.
And also, the term ‘oil futures.’ FY, irony.

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Graphic Inequality

Height

So… after stumbling upon a rather devastating piece by Hitchens on JFK and the Camelot business, I’ve been mining some other back issues of the Atlantic that I found around the house – must’ve had a subscription in 2006. I am no fan of that magazine – the trove seems to run out in 2007 – but this piece on inequality by Clive Crook is worth mentioning for a few reasons, not the least of which is the above graphic and his use of the 1% coinage from this, several years back. Surely things have gotten better, right?

In 1971, Jan Pen, a Dutch economist, published a celebrated treatise with a less-than-gripping title: Income Distribution. The book summoned a memorable image. This is how to think of the pattern of incomes in an economy, Pen said (he was writing about Britain, but bear with me). Suppose that every person in the economy walks by, as if in a parade. Imagine that the parade takes exactly an hour to pass, and that the marchers are arranged in order of income, with the lowest incomes at the front and the highest at the back. Also imagine that the heights of the people in the parade are proportional to what they make: those earning the average income will be of average height, those earning twice the average income will be twice the average height, and so on. We spectators, let us imagine, are also of average height.

Pen then described what the observers would see. Not a series of people of steadily increasing height—that’s far too bland a picture. The observers would see something much stranger. They would see, mostly, a parade of dwarves, and then some unbelievable giants at the very end.

As the parade begins, Pen explained, the marchers cannot be seen at all. They are walking upside down, with their heads underground—owners of loss-making businesses, most likely. Very soon, upright marchers begin to pass by, but they are tiny. For five minutes or so, the observers are peering down at people just inches high—old people and youngsters, mainly; people without regular work, who make a little from odd jobs. Ten minutes in, the full-time labor force has arrived: to begin with, mainly unskilled manual and clerical workers, burger flippers, shop assistants, and the like, standing about waist-high to the observers. And at this point things start to get dull, because there are so very many of these very small people. The minutes pass, and pass, and they keep on coming.

By about halfway through the parade, Pen wrote, the observers might expect to be looking people in the eye—people of average height ought to be in the middle. But no, the marchers are still quite small, these experienced tradespeople, skilled industrial workers, trained office staff, and so on—not yet five feet tall, many of them. On and on they come.