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    Iran’s RQ-4N Shoot Down, Pres. Trump and the Expiration of the Carter Doctrine

    Posted by Trent Telenko on 24th June 2019 (All posts by )

    It’s become something of a regular occurrence for the American mainstream media to blow a foreign policy story because of their Trump Derangement Syndrome. Yet they seem to have greatly sunk to new lows in missing the real importance of events leading to the 19 June 2019 Iranian shoot down of an American drone.

    RQ-4N BAMS-D (Broad Area Maritime Surveillance-Demonstrator)

    President Trump has ended the 1980 Carter Doctrine!

    The free flow of oil from the Persian Gulf is no longer a “Vital Interest,” thanks to frac’ing, for a near energy independent USA.

    BACKGROUND

    CENTCOM confirmed Last Wednesday night of 19 June 2019, in international air space over the Strait of Hormuz, an Iranian surface to air missile (SAM) battery shot down a US Navy RQ-4N BAMS-D (Broad Area Maritime Surveillance-Demonstrator) Global Hawk. The ~$120 million drone in question was a navalised version of the USAF Global Hawk, used as proof of concept for the production MQ-4C Triton. It was essentially an unarmed, jet powered, sail plane with the wing span of a 737 jet liner and several tons of sensors. The drone fills the mission of the U-2, at similar altitudes, without the risks of a human pilot in the event of a shoot down.

    RQ-4N Shoot Down Map

    Pentagon RQ-4N Shoot Down Map with Drone and SAM launch battery location.

    Iran has claimed it used it’s ‘Third of Khordad’ domestically built SAM system, operated by the IRGC, to shoot down the drone. This SAM system is described as a copy or derivative of the Russian Buk M3 / SA-17 GRIZZLY that incorporates the Bavar 373 missile that, in turn, appears to be a derivative/copy of the Soviet 5V55/SA-10B with additional controls. If you think of it as a late model Raytheon MIM-23 Hawk medium-range surface-to-air missile battery firing an early version of the MIM-104 Patriot PAC 1 missile, you would not be far wrong.

    Press TV Tweet of Iranian SAM

    Press TV Tweet of Iranian SAM

    It was this lack of a human pilot, either as a death or a prisoner of war, that saw President Trump jump off Iran’s scripted “escalation ladder.” Instead of destroying a SAM battery and converting 150 odd IRGC missile operators into another “Martyr blood sacrifice” for the Mullah regime to celebrate. Pres. Trump responded with cyber-attacks on Iranian missile control systems to remind the Mullah’s of the West’s technological “Black Magic” and additional economic sanctions that will cause further payroll cuts to both the IRGC and it’s over seas terror networks. (Truth be told, the new economic sanctions threaten the Mullah’s power far more than any set of tit for tat military strikes.)

    And in a move treated as an afterthought, if the MSM mentioned it at all, President Trump ended an era in American Middle Eastern Foreign Policy.

    END OF AN ERA
    It has been almost 39 & 1/2 years — 10 years before the Cold War ended — that President Carter pronounced access to Mid-East oil a “Vital Interest” that the United States would go to war to protect.

    Our two wars in Iraq both have that date, and that policy, as their starting point.

    Now that era is over.

    Last week Pres. Trump forged a completely new Middle East Foreign policy for America. Specifically, Pres. Trump took the opportunity Iran’s military escalations leading to the shooting down of the RQ-4N to end the January 23, 1980 “Carter Doctrine” expressed as follows —

    “…An attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force.”

    This is how Vandana Hari at the Nikkei Asian Review put it:

    Asia has most to lose if Middle East turmoil hits oil supplies
    As US-Iran tensions, can crude importers defend their interests?
    JUNE 21, 2019 14:21 JST
    https://asia.nikkei.com/Opinion/Asia-has-most-to-lose-if-Middle-East-turmoil-hits-oil-supplies

    “U.S. President Donald Trump says he might take military action against Iran to prevent it from acquiring a nuclear weapon. But he has indicated he won’t necessarily jump in to protect international oil supplies from the Middle East if they are under threat from the Islamic Republic.

    .

    The position, articulated by Trump in an interview with Time magazine on June 17, should not come as a surprise, even if it appears to be at odds with the Pentagon beefing up aircraft carriers and troops in the Middle East in recent weeks, citing a threat from Iran.

    .

    As Trump spelt out in the interview, the U.S. is no longer as dependent on oil from the Middle East as it was, thanks to burgeoning domestic production.

    .

    Air Force General Paul Selva, vice chairman of the U.S. Joint Chiefs of Staff, emphasized the message a day later, pointing out that China, Indonesia, Japan and South Korea were heavily dependent on supplies moving through the Strait of Hormuz, and needed to protect their interests. U.S. Secretary of State Mike Pompeo has made similar comments.”

    The pronouncement above was the full “Bell, Book and Candle” exorcism of American foreign policy — President, Joint Chiefs of Staff and Secretary of State.  And please carefully note that it happened two days before the RQ-4N was destroyed.

    .

    While “freedom of navigation” on the high seas over all and the Persian Gulf in particular remains a “major interest” of the United State of America.  It is no longer one which America will automatically go to war over.

    .

    In ending the Carter Doctrine, President Trump has fulfilled his 2016 campaign promise of “No More Iraq’s.”

    .

    By changing the cost benefit calculations of Middle-Eastern oil — no more free riding on American protection of Persian Gulf Sea lanes — the only way a nation can “win” internationally now is by “getting close” to the American hyperpower.

    .

    If you are functionally anti-American.  You get nothing but higher insurance rates included in your price of oil to cover the political risk premium of lacking American protection.  China is now paying  -defacto- and additional American oil tariff via much higher insurance rate on the VLCC tankers moving Mid-East crude oil to the Far East.
    .
    Japan and South Korea could get lower insurance rates if they send naval forces to the Gulf to work with the US Navy.  Or they can replace Mid-Eastern oil with exported US oil.
    .
    China, not so much.
    .
    As a correspondent put it in an e-mail to me when I mentioned the above to the list he and I are in —

    HA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA-HA!

    .

    That’s a good one!

    .

    “You all need to defend YOUR oil shipments through those NASTY Straits of Hormuz.  The U.S. don’t need that filthy Middle East blood-oil no more.  In fact, if you don’t want to spend the money and lives pounding sand in Iraq, Kuwait and Iran, we have some FINE Texas frackin’ goodness to sell at a SPECIAL price, just for YOU, our friends and allies for SO many years!”

    .

    Snicker, choke, GASP….”

    The American Left has finally gotten what it always wanted…no more “Blood for Oil in the Middle East.

    Somehow, I don’t think President Trump delivering that reality to them will make them very happy.

    -End-

    Posted in Culture, Current Events, Economics & Finance, Energy & Power Generation, Environment, Europe, History, Iran, Iraq, Japan, Korea, Leftism, Middle East, Military Affairs, Miscellaneous, National Security, Politics, Texas, USA, War and Peace | 24 Comments »

    Our ‘Xanatos Gambit’ President’s Energy Export Strategy Tree

    Posted by Trent Telenko on 5th May 2019 (All posts by )

    In my last post — President Trump’s ‘Xanatos Gambit’ Trade Policy — I spoke to how President Trump has set up his political strategy on trade policy to make any outcome on the USMCA Trade agreement that he negotiated to replace the NAFTA agreement would be to his advantage over House Democrats and the “purchased by the multi-national corporation China Lobby” GOP Senators.  In this post I am going to lay out President Trump’s “Global  Energy Dominance” export policy’s “Xanatos Gambit” strategy tree vis-à-vis the 2020 presidential elections.

    To start with, I’m going to refer you back to this passage from my last post on how the Trump Administration is “gaming” economic growth measurements:

    This is where Pres. Trump’s ‘Xanatos Gambit’ strategy tree kicks in via a macroeconomic and trade policy manipulation of the very simple economic equation of gross domestic product:

    GDP = US ECONOMIC ACTIVITY + EXPORTS + FOREIGN INVESTMENT – IMPORTS – EXTERNAL INVESTMENT

    The American economy just grew 3.2% in the 1st quarter of 2019.  It would have grown another 0.3% but for the 30-odd day federal government shut down.  The “markets” were expecting 2.5% GDP growth.  The huge half-percent GDP “miss” boiled down to:

    1. The USA exported more.

    2. The USA imported less and

    3. There was more external foreign investment than expected.

    All three were the result of a combination of Trump administration policies on oil/LNG fracking, tax & regulatory cuts and trade/tariffs.

    The Trump Administration upon coming into office in January 2017 had a huge windfall of energy projects that the Obama Administration had held up approval of in the Federal Energy Regulatory Commission.   This windfall neither began nor ended with the  Keystone XL oil pipeline There was a whole cornucopia of oil and natural gas energy infrastructure projects that Democratic Party interests, only some of them environmental, that the Obama Administration was using the FERC to sit on for a whole lot of reasons that I refer to as “The Economic Cold Civil War.

    While the media was spending a great deal of time talking about things like the Congressional votes to open the Arctic Wildlife Refuge in the early days of the Trump Administration’s energy policy implementation.  President Trump spent a great deal of his early political capital on getting his earliest political appointments through the Senate to the FERC to get those projects turned loose as a part of President Trump’s “Global  Energy Dominance” export policy.  The first fruit of this export infrastructure energy policy focus started paying off with the  Louisiana Offshore Oil Port (LOOP) coming on-line in 2018.  See this Apr 16, 2019 article by Julianne Geiger at Oilprice.com:

    U.S. Doubles Oil Exports In 2018

    The United States nearly doubled its oil exports in 2018, the Energy Information Administration reporting on Monday, from 1.2 million barrels per day in 2017.

    The 2.0 million barrels of oil per day exported in 2018 was in line with increased oil production, which averaged 10.9 million barrels per day last year, and was made possible by changes to the Louisiana Offshore Oil Port (LOOP) which allowed it to load VLCCs (Trent Note: Very Large Crude Carriers) .

    The changes to LOOP and to the sheer volume of exports were not the only changes for the US crude oil industry. The destination of this oil shifted in 2018 as well, and even shifted within the year as the trade row between China and the United States took hold.

    Overall, Canada remained the largest buyer of US oil in 2018, at 19% of all oil exports, according to EIA data. During the first half of 2018, the largest buyer of US crude oil was China, averaging 376,000 barrels per day. Due to the trade row, however, US oil exports to China fell to an average of just 83,000 barrels per day in the second half, after seeing zero exports to China in the months of August, September, and October.**

    [**Please note above the nice thing about energy exports is how futile a energy user embargo is against it.  China’s economic embargo of US crude products only hurt itself.]

    The impact of the Trump Administration’s energy export policies from those early days of his administration in terms of liquefied natural gas (LNG) export facilities are now impacting the American economy. A large part of the extra 0.7% GDP growth achieved over the 2.5% Wall Street forecasts in the first quarter of 2019 came from the Corpus Christ 1 and Sabine 5 LNG export facilities coming on-line in late 2018 and making their first full export capacity quarter in Jan – Mar 2019.  The Cameroon 1 and Elba Island 1-6 LNG export facilities were also scheduled to come on-line in Late Feb-Early March 2019, and were very likely large contributors to LNG export surge.

    This is how CNBC described 2019’s 1st quarter:

    Robust demand for Texas oil and gas in the first two months of 2019 pushed the state’s export activity into high gear, strongly outpacing the national rate and contrasting with a slight decline by California.

    Texas represented nearly 20% of all U.S. exports in the January-February period while California accounted for roughly an 11% share.

    California has seen its share of total U.S. exports fall in recent years while Texas has been growing its share due mainly to the new oil boom.

    And this is only the beginning for the US economy in 2019. See the following text and LNG export facility graphic from a Dec 10, 2018 report by the US Federal government’s Energy Information Administration:

    U.S. liquefied natural gas export capacity to more than double by the end of 2019

    U.S. LNG exports continue to increase with the growing export capacity. EIA’s latest Short-Term Energy Outlook forecasts U.S. LNG exports to average 2.9 Bcf/d in 2018 and 5.2 Bcf/d in 2019 as the new liquefaction trains are gradually commissioned and ramp up LNG production to operate at full capacity. The latest information on the status of U.S. liquefaction facilities, including expected online dates and capacities, is available in EIA’s database of U.S. LNG export facilities.

    EIA projection of Liquefied Natural Gas Export Capacity from 2016 - 2021. Date of projection Dec 2018

    EIA projection of U.S. Liquefied Natural Gas Export Capacity from 2016 – 2021. Date of projection, Dec 2018.

    Given the above information, barring a war or serious election year intervention to kill the economy by the Federal Reserve, the cascade of LNG export infrastructure coming on-line in the 2nd and 4th quarters of 2019  will mean something on the order of a full percentage increase in GDP growth (in a range of 4.0% to 4.5%) in Jan – Mar 2020 over Jan – Mar 2019.  That is what going from 3.6 billion cubic feet per day (Bcf/d) of natural gas export capacity to to 8.9  Bcf/d in Dec 2019 does for you.

    This extra 1% GDP will be happening just in time for the Iowa caucuses and New Hampshire primary.

    Read the rest of this entry »

    Posted in America 3.0, Big Government, Business, Capitalism, Culture, Current Events, Economics & Finance, Energy & Power Generation, Immigration, Markets and Trading, Miscellaneous, Politics, Predictions, Taxes | 34 Comments »

    President Trump’s ‘Xanatos Gambit’ Trade Policy

    Posted by Trent Telenko on 27th April 2019 (All posts by )

    I’ve written previously in my column “President Trump’s ‘Xanatos Gambit’ Government Shutdown” of President Trump’s tendency for building political strategy trees were every possible outcome is to his advantage. (See the “Xanatos Gambit” strategy tree example in the figure below)

     

    https://static.tvtropes.org/pmwiki/pub/images/XanatosGambitDiagram_7509.jpg

    This is a decision diagram example of a “Xanatos Gambit. Source: https://tvtropes.org/pmwiki/pmwiki.php/Main/XanatosGambit

    It very much looks like President Trump has done the same thing with the Democrats and “China lobby” GOP Senators with the post-NAFTA US-Canada-Mexico (USMCA AKA “You Smack-A”) trade agreement and the US economy.

    THE US ECONOMY, NAFTA & USMACA

    The key thing you need to understand regards NAFTA and American manufacturing is that NAFTA was geared to allow the “China lobby” of multinational corporations to use Canada and Mexico as an “international arbitrage opportunity” for Chinese slave labor wage manufactured goods to be assembled at Canadian and Mexican production facilities and avoid American tariffs.

    Multinational corporations exploiting this “international arbitrage opportunity” was “The Great Sucking Sound” that Ross Perot talked about which killed the US domestic refined metals industry and hollowed out middle class manufacturing jobs in the American economy.

    President Trump’s USMCA removes that “international arbitrage opportunity” via original 75% North American manufacturing content requirements for metals and intermediate manufacturing goods as well as a Mexican minimum wage rules on the order of $15 an hour for automotive parts assembly.

    In response the “China lobby” has been paying large campaign contributions to both House Democrats and “free trade” GOP Senators to try and keep NAFTA, as well running info-war spots everywhere in the corporate media and “movement conservative” publications/media outlets about the benefits of “free trade.”  This has resulted in public statements by Speaker Pelosi that the House does not intend to vote for USMCA.

    This is where Pres. Trump’s ‘Xanatos Gambit’ strategy tree kicks in via a macroeconomic and trade policy manipulation of the very simple economic equation of gross domestic product:

    GDP = US ECONOMIC ACTIVITY + EXPORTS + FOREIGN INVESTMENT – IMPORTS – EXTERNAL INVESTMENT

    The American economy just grew 3.2% in the 1st quarter of 2019.  It would have grown another 0.3% but for the 30-odd day federal government shut down.  The “markets” were expecting 2.5% GDP growth.  The huge half-percent GDP “miss” boiled down to:

    1. The USA exported more.

    2. The USA imported less and

    3. There was more external foreign investment than expected.

    All three were the result of a combination of Trump administration policies on oil/LNG fracking, tax & regulatory cuts and trade/tariffs.

    First point, the USA will be a net energy exporter — of oil, natural gas & coal combined — in 2020 if it isn’t one already.

    Some rough numbers:  In 2012 US oil production was ~8 million barrels a day, all for domestic consumption, and in 2019 it is 12.6 million with some exports.  Today’s US oil consumption is 20 million barrels a day.  That increase in oil production that has reduced imports of oil by a net of 4.6 million barrels a day has also been accompanied by the displacement of coal and oil in both electrical production and manufacturing by cheaper natural gas, thus freeing both the coal and oil not used to be exported. This combined economic change since 2012 alone is worth a 1% increase in GDP growth a year compared to 2012.

    Second, the Trump administration’s systematic and sustained attack on Obama era federal regulatory growth is reducing business compliance costs particularly in the energy sector for new infrastructure projects.  These are the “anti-green” actions the Democrats accuse the Trump administration of.

    Third, the Trump administration/GOP tax bill, in addition to increasing spending power for the middle class, has had a huge -YUGE- reduction in capital gains taxes and a one-time break in repatriating overseas capital holdings. This has made America a much more attractive place to hold and invest money.  Particularly for energy companies like Exxon, which are dropping this foreign capital inflow into the Permian basin for oil and natural gas fracking and energy export infrastructure from the Permian to the Gulf Coast.

    Finally, in terms of trade and tariffs, President Trump’s tariffs on Chinese steel and aluminum combined with the business implications of USMCA rules have made further investment in Canadian automotive plants a net loss position.  American metal content is now economically competitive for energy sector infrastructure and automobile parts such that US Steel among others are reopening US metal plants.

    Taken together every part of the GDP equation has been directly affected by the Trump administration macroeconomic policies to get that 3.2% GDP number.

    This is where the Xanatos Gambit for USMCA arrives.

    Things will be worse for the China lobby without a vote on USMCA than with one.

    Short form:

    NAFTA is dead regardless of any action or inaction by the House.  All the House and Senate can do is not vote on USMCA.  The legislative branch cannot revive a NAFTA trade agreement the federal executive has withdrawn from.

    This means without a signed USMCA trade deal Pres.Trump can — and will — lay on even more tariffs on the multinational corporations playing price arbitrage in Mexico and Canada between Chinese and American manufacturing.

    While such trade sanctions can reduce the American economy like a tax increase, when we are likely at close to 4% economic growth in late 2019 to early 2020 from the accumulated investment in energy projects bringing defacto energy independence, a 3.5% economic growth rate with tariffs is still pretty good.

    And when the House refuses to vote in USMCA, NAFTA still dies.

    Pres. Trump can and will lay on new massive new anti-Chinese tariffs on Canadian and Mexican front companies for China without USMCA rules.  This will be massively popular in the Midwest in an election year and will hurt the income streams of the multi-nationals supporting the Pelosi Dems and McConnell RINOs.

    From Trump’s point of view, What’s not to like about America’s manufacturing base employing the Midwestern white working class growing while the “international arbitrage opportunity” of China’s slave labor economy contracts?

     

    Posted in America 3.0, Big Government, Business, Capitalism, Civil Society, Economics & Finance, Elections, Energy & Power Generation, Entrepreneurship, Environment | 28 Comments »

    Freezing in the Dark

    Posted by David Foster on 2nd March 2019 (All posts by )

    There has been much concern about possible hacking of the power grid by Russia, China, and others.  Here we have a segment from Rachel Maddow, inspired by a threat analysis from the US Intelligence Community.  From the analysis:

    China has the ability to launch cyber attacks that cause localized, temporary disruptive effects on critical infrastructure–such as disruption of a natural gas pipeline for days to weeks–in the United States. Russia has the ability to execute cyber attacks in the United States that generate localized, temporary disruptive effects on critical infrastructure.

    Maddow:  It’s like negative 50 degrees in the Dakotas right now. What would happen if Russia killed the power today?  What would happen if all the natural gas lines that service Sioux Falls just poof on the coldest day in recent memories?

    What would happen?  Nothing good.  These are serious threats, and I doubt that Russia and China are or will continue to be the only entities able to conduct such cyberattacks.  And there is also plenty of risk for non-cyber attacks…physical-world sabotage…which could have similarly malign impact on energy infrastructure.

    But we don’t need to wait for a foreign adversary or domestic terrorist organization to cripple our energy infrastructure.  We can quite effectively do it to ourselves.

    In late January, it was very cold in Minnesota.  And there wasn’t a lot of wind.  Natural gas, also, was in short supply, as a result of pipeline capacity constraints.  Xcel Energy urged its gas customers to turn down thermostats and water heaters, and to use electric heaters as necessary.  The electricity was coming from primarily coal plants (40 GW) and natural gas plants (about 23 GW)–the gas plants, of course, are also dependent on pipeline capacity.

    Also in Minnesota, here’s a large solar farm covered with snow.  Wonder if it’s melted or been swept off yet?  And here’s a cautionary story from Germany, where long, still, and dim winters do not mix well with wind and solar power generation.

    Solar and wind in most parts of the US are now small enough in proportion to overall grid capacity that shortfalls can be made up by the other sources.  What happens if they come to represent the majority of the grid’s power capacity–not to mention the exclusive source of capacity, as demanded by some?

    It may be feasible to store a few hours of electricity without driving costs out of sight…but what about the situation in which wind and solar are underperforming for several days in a row?  Interconnection of sources and demands over a wide area (geographical diversity) can help, but is by no means a comprehensive solution. So far, the gas, coal, and hydro plants have been there to kick in where necessary.

    Almost every day, there are assertions that new solar is cheaper than its fossil-fuel equivalents.  This may be true in some areas if you ignore the need to match supply and demand on an instantaneous basis.  But if the fossil-fuel plants are there to handle only those periods when wind, solar, and limited battery storage aren’t sufficient to meet demand, then the total energy production against which their capital cost is charged will be much lower, and hence, the cost per unit will go up. (See the California Duck Must Die for a nice visual portrayal of how widespread solar adoption has changed the load curve for the other sources.)  In some states with net metering, a home or business owner can sell excess power to the grid when loads are low and buy it back at the same unit price when loads are at their maximum. This becomes especially problematic when “renewables” become a major part of the mix.  Unless incentives are intelligently crafted–unlikely, given politics–“renewable” sources will effectively be subsidized by conventional sources and potentially make the construction and maintenance of those conventional sources impossible.  See If Solar and Wind Are So Cheap, Why Do They Make Electricity So Expensive?

    Read the rest of this entry »

    Posted in Big Government, Business, Crony Capitalism, Current Events, Energy & Power Generation, Environment, Europe, Germany, Russia, Tech | 41 Comments »

    Industrial Electrification and the Technological Illiteracy of the US Army Air Corps Tactical School 1920-1940

    Posted by Trent Telenko on 1st January 2019 (All posts by )

    This blog post on “Industrial Electrification and the Technological Illiteracy of the U.S. Army Air Tactical School 1920-1940” marks the new year with a departure from past history columns I’ve written for Chicagoboyz in that it is exploring a theme I refer to as “The Bane of Technologically Illiterate Military Leaders.”[1] As such, it will not be fully fleshed out with sources and notes.  Consider it a ‘first draft’ of an article I’ll post later.

    The issue with ‘Technologically Illiterate Military Leaders‘ I’ll be exploring in this and future articles is that such leaders tend to make the same classes of mistakes over and over again.  And when those military leaders reach flag rank on the bones of theories and doctrines that fail the test of combat through their technological illiteracy.  They then bury the real reasons why those doctrines failed behind walls of jargon and classification to avoid accountability for those failures.

    Where you can see this pattern most easily in the historical record is with the US Army Air Corp Tactical School (ACTS) “Industrial Web” theory of strategic bombing  and it’s inability to understand what the changes that industrial electrification caused had meant to this theory.  The “Industrial Web”  theory stated there were “choke points” in an industrial economy which bombing would cause a disproportionate reduction in enemy nation’s weapons production supporting total war.[2]

    Figure 1 — This is an example of early industrial age direct mechanical power transmission that was replaced by small electric motor powered tooling in the 1920 to 1940 time period. The US Army’s Air Corps Tactical School (ACTS) early 1930’s era “Industrial Web” theory of strategic bombing was built upon this technological paradigm. Many of the failures of the World War 2 Combined Bomber Offensive can be laid at the feet of Western military leaders illiteracy of what the move to electric motor power, and away from this technology, meant to the vulnerabilities of industrial economies. Source: Wikipedia

    On the surface, this was a logical sounding intellectual construct.  In practice, it failed miserably at places like the 14 October 1943 second Schweinfurt raid on German ball bearing factories and the  Yawata Strike,  the start of the early B-29 campaign on Japanese Coke ovens.

    The unavoidable, in hindsight, issue for USAAF leaders trained in the Air Corps Tactical School in the period between 1920 and 1940 was that it spanned the change in industrial infrastructure from steam engine, line shaft and power belt to electric motor powered mass production.[3]  Thus the ACTS theorists had a fundamentally flawed understanding of industrial economies vulnerability to aerial bombing going into World War 2 (WW2) because they were technologically illiterate regards the radical change industrial electrification caused.

    This flawed understanding was that roof damage in a factory with line shaft and drive belt power transmission — whether steam or electric driven — stops all production until the roof-mounted line shaft is re-seated or replaced.  This was not the case for electric motor delivered power located on the factory floor.  The technological illiteracy here was not seeing the fact that electric motors fundamentally disassociated factory production processes from factory physical structure. [4]

    The basic idea that ACTS theorists had at the time was that their “Industrial Web” was a serial system where every component had to work to produce an effect.  Thus ACTS theorists fundamentally believed in the “weak link” theory of reliability, rather than the need to obliterate all key components that a parallel, or complex serial/parallel system, with redundancy required.   The point failure weakness of line shaft and drive belt industrial infrastructure fit this “serial system with a weak link” belief system of ACTS theorists to a tee. [5]

    So when you read wartime USAAF bomb damage assessment reports from the WW2  Combined Bombing Campaign giving such and such percentages of factory roof’s destroyed being used as a means of determining whether production there was knocked out.  You are seeing a “weak link” short hand based upon line shaft power transmission infrastructure assumptions.

    When you read later post-war bomb damage surveys reading  “…that machines and machine tools were damaged far less severely than factory structures,” you are seeing a USAAF staffer dodging those pre-WW2 “Industrial Web/Weak Link” line shaft infrastructure assumptions by not using the term at all.

    This sort of language shift to hide real world meanings with jargon, thus neatly avoiding accountability for failure in combat, is one of the classic ‘poker tells’ in researching ‘Technologically Illiterate Military Leaders‘.

    Read the rest of this entry »

    Posted in Big Government, Energy & Power Generation, Germany, History, Japan, Military Affairs, Miscellaneous, War and Peace | 75 Comments »

    A Retrotech Adventure

    Posted by David Foster on 2nd December 2018 (All posts by )

    The Essex Steam Train and Riverboat leases 22 miles of railroad track from the state of Connecticut, and owns several steam and diesel locomotives plus various rolling stock. They operate regular passenger excursions plus seasonal specials.  Essex also offers a training and experience program for people who would like to learn a little bit about operating a steam locomotive.  Being interested in steam power, I signed up.

    The program includes some written material to be reviewed at home, a group classroom session of about an hour, and then an individual hour operating a locomotive under the guidance of an experienced engineer.

    On arriving, I was surprised at the scale of the operation.  Although I was there in the off season (early November), judging by the parking lot and the number of railcars the place must be quite busy during prime months.  First was the class, which covers safety rules and basic steam locomotive principles.  It was taught by the railroad’s machinist, who described himself as the “spare parts department.”  Next was a group visit to the locomotive cab to familiarize ourselves with the layout of controls and indicators.

    For our group, the locomotive was #40, a Mikado type built in 1920.  (The name “Mikado” became popular because an early batch of locomotives of this type was sold to the Japanese Railways.)  #40 started its life hauling logs and lumber in the West, then pulled passenger and freight trains in North Carolina until it was retired circa 1950…purchased by the Essex for restoration in 1977.  The locomotive has a rated boiler pressure of 180 psi and can generate a tractive effort of 35,000 pounds.

    On a steam locomotive, the cutoff point of steam admission to the cylinders can be controlled by the engineer.  Early cutoff lets the steam do more of its work expansively, improving fuel economy at the cost of some reduction in power.  The reverser sets the cutoff point as well as controlling the direction of travel–while the reversers on early locomotives were manually-operated and required considerable strength to operate (and sometimes led to broken arms), the reverser on #40 is a fingertip control, using air pressure to do the hard work.

    It was a drizzly and somewhat chilly day, but very comfortable in the locomotive cab. (The boiler backhead is very hot, do not touch!)  Basic controls and indicators include the throttle, the reverser, the boiler pressure gauge, the injectors, the boiler water glass, and the brakes with their associated pressure gauges.

    Read the rest of this entry »

    Posted in Business, Energy & Power Generation, History, Tech, USA | 4 Comments »

    Coupling

    Posted by David Foster on 15th November 2018 (All posts by )

    (No, this post is not about sex…sorry. Nor is it about electrical engineering, though it might at first give that impression.)

    The often-interesting General Electric blog has an article about drones, linked to a cloud-based AI platform, which are used to inspect power lines and detect incipient problems–for example, vegetation which is threatening to encroach on the lines and short them out, or a transformer with a tendency to overheat.  The article mentions a 2003 event in which an encounter between an overgrown tree branch and a sagging power line resulted in a wide-area blackout that affected 50 million people.

    The inspection drone sounds like a very useful and productivity-improving tool: obviously, inspecting thousands of miles of power lines is nontrivial job. But the deeper issue, IMO, is the fact that one problem in one place can propagate over such a wide area and affect such a vast number of people.  Power system designers and the people who operate these systems are certainly aware of the need to minimize fault propagation:  circuit breakers and fuses, network analysis tools,  and the technologies of protective relaying were developed, by GE among others, precisely for reasons of fault localization.  But experience shows that large-scale fault propagation still sometimes does take place.

    This problem is not limited to electrical systems.  The mention of the tree-branch-caused 2003 blackout reminded me of a passage from the historian Hendrik Willem Van Loon:

    Unfortunately in the year 1914 the whole world was one large international workshop. A strike in the Argentine was apt to cause suffering in Berlin. A raise in the price of certain raw materials in London might spell disaster to tens of thousands of long-suffering Chinese coolies who had never even heard of the existence of the big city on the Thames. The invention of some obscure Privat-Dozent in a third-rate German university would often force dozens of Chilean banks to close their doors, while bad management on the part of an old commercial house in Gothenburg might deprive hundreds of little boys and girls in Australia of a chance to go to college.

    This probably overstates the interconnectedness of the global economy as it existed in 1914, but would fit our present-day global economy very well.  (The author was talking about the origins of WWI, which he blamed largely on economic interconnectedness…not correct, IMO, but the war was largely caused, or at least reached the scale that it did, because of another type of interconnectedness…in the shape of alliances.)

    Read the rest of this entry »

    Posted in Big Government, Business, Capitalism, Deep Thoughts, Economics & Finance, Energy & Power Generation, Human Behavior, International Affairs, Trump, War and Peace | 18 Comments »

    Change

    Posted by Jonathan on 7th September 2018 (All posts by )

    A CFTC report explains that open interest in long-dated NYMEX West Texas Intermediate crude oil futures continues a long-term decline.

    Jessica Summers on Bloomberg:

    That’s because oil extraction has become more efficient in tight oil fields compared to conventional wells and producers have more flexibility in turning on and off the taps in response to oil prices.
     
    The increasing amount of crude coming in from tight oil in portfolios of production firms has left them with less crude to sell five or more years forward, reducing their need for long-dated futures contracts, according to the study. U.S. weekly production has skyrocketed to 11 million barrels a day, the highest level on record, according to Energy Information Administration data.

    Posted in Business, Energy & Power Generation, Markets and Trading | 6 Comments »

    Retrotech, Revitalized

    Posted by David Foster on 24th August 2018 (All posts by )

    A triple-expansion steam engine, which was used for water pumping in Phillipsburg NJ, has been restored to operating condition thanks to a small group of dedicated volunteers.  The engine, which pumped 6 millions gallons per day to a reservoir 265 feet above its level, was built in 1913 and was in continuous operation until 1969, when it was put into standby status (the pumping duties having been taken over by electric pumps) and finally removed from service in 1982.  Here’s a video of its final run in 1982, which has turned out to not be so final.

    The boilers have not yet been restored; test runs were done using a portable commercial rent-a-boiler as the steam source.  The team intends to restore one of the boilers as well in the future.

    When people think about the vast improvements in health and lifespan over the past century and a half, attention tends to be focused on antibiotics, better medical care, x-ray and scanning equipment, etc.  Public water systems, enabled initially by waterwheels and especially by engines like this one, played an important role as well.

    The restoration team has a Facebook page, here.

    See also my posts 301 Years of Steam Power and 175 Years of Transatlantic Steam.

    Posted in Energy & Power Generation, Health Care, History, Tech | 7 Comments »

    Coming: a Battery Supply Crunch?

    Posted by David Foster on 26th October 2017 (All posts by )

    Several governments have signaled their intent to ban or greatly restrict the internal combustion engine from automotive use, requiring instead pure electrics or in some cases hybrids.  These include China, France, and the United Kingdom, as well as the US state of California.  Volvo says that from 2019 all its new models will be electric or hybrid, and General Motors is planning to introduce 20 electric models over the next six years.

    The core of an electric vehicle is the battery, and these are large, heavy objects:  the battery pack for a Tesla Model S comes in at 1300 pounds. Where are all the batteries for the envisaged exponential growth of electrics going to come from?…this question encompasses the mining and processing of the raw materials and the fabrication of these processed materials into battery cells, as well as the assembly of the cells into finished battery packs.

    Here is an analysis of battery components and their sources:  the key materials, in addition to lithium, are graphite, cobalt, and nickel, as well as the more common and less-expensive metals manganese and aluminum.

    Will severe supply constraints for some of these materials put a practical limit on the growth of electric vehicles, even in the face of government subsidies and draconian edicts?  Here’s a recent article in the Financial Times:

    Volkswagen’s failed attempt to secure at least five years’ supply of cobalt highlights the challenge facing the world’s biggest automakers as they attempt to secure the materials needed for their push into electric vehicles.  Last month’s tender came as other carmakers, such as BMW and Tesla Motors, are also trying to lock-in stocks of the metal.  That could test to the breaking point a niche market that is heavily dependent on a handful of mines in the Democratic Republic of Congo, one of the most impoverished and politically volatile countries in Africa.

    Demand for cobalt in EV batteries is expected to grow fourfold by 2020, and eleven-fold by 2025, according to Wood Mackenzie.

    The graph accompanying the article indicates that the price of high-grade cobalt has risen from $15/pound in January of this year to $30/pound in October.

    Read the rest of this entry »

    Posted in Business, Energy & Power Generation, Environment, Tech | 52 Comments »

    Machine Tools and Glassmaking

    Posted by David Foster on 5th September 2017 (All posts by )

    In early August, I visited the American Precision Museum in Vermont, which is dedicated to the history of the American machine tool industry, and also made a side trip to the Simon Pearce Glass facility, recommended by Mike Kennedy in comments not too long ago.  Images (should expand when clicked) from upper left…

    1–The museum is located in the former Robbins & Lawrence armory.  Power was initially from a waterwheel, later supplemented by steam

    2–Blanchard Copying Lathe.  Mechanically copies a prototype shape…a rifle stock, in the example shown, but also used for table and chair legs, etc

    3–A much later approach to automated cutting of a specified shape:  this is a paper tape reader used to feed data to a numerically-controlled machine tool.

    4–Bendix G-15 computer, from the mid-1950s.  This one was used for gear-cutting calculations, reducing the typical time taken from 2 hours to 2 minutes.  Computers of this type were also used to directly produce the punched paper tapes used to operate machine tools.

    5–Sewing machine from 1859.  The success of these devices created great demand for precision machining.

    6–A very elaborate model of a steam engine, made by a German man who came to the US between the wars. When he visited Germany in the 1950s, he found that the model had survived intact in an attic.

    7–Profile milling machine, for cutting the outside periphery of a flat surface.

    8–Columbia chainless bicycle, from the 1890s. An advantage of this type was that women could ride them without danger of getting their long skirts caught in a chain.  A disadvantage was the price…$125 in 1890 dollars!

    9–Bevel gear cutting machine…made gears of a type required for the chainless bicycle.  Not clear if this machine came before the Columbia bicycle or if it was a later production-cost improvement.

    10–The showroom at Simon Pearce glass.

    11 & 12–Hydroelectric dam and turbine used to generate power at Simon Pearce.  Capacity is about 600KW, and what they don’t use for their own needs (which are pretty significant given the electric glass-heating furnaces) is sold to the grid.

    Lots more pictures of Simon Pearce at this article.

    Posted in Business, Energy & Power Generation, Tech | 12 Comments »

    Access, Access, Access

    Posted by Ginny on 3rd July 2017 (All posts by )

    “Access, Access, Access” Rick Perry repeated to Bret Baier. It seemed a grilled candidate’s non sequitur to Baier’s question: weren’t many Texans uninsured? But I was struck by its truth. Insurance is of little use if no doctors take it, no medicine is available, deductibles and premiums are unmanageable. Positive rights – to food, to medicine, to jobs – are not rights. The theory never stands up to experience.

    Perry’s run was brief; now, his task is encouraging access to energy – of all kinds. Trump seemed an example of excess – still is, I guess. But a nation not just energy independent but energy dominant is one empowered, free. And we can free others: a Europe not beholden to Russian oil is a healthier Europe. Neither Trump nor Perry invented fracking nor could Obama stop its success. But this administration respects it, clears the way for its natural flow.

    Access, access, access – how much does access to energy change our lives each day? How many are alive today because of access to energy forms unknown or at least unused 300 years ago? (Without air conditioning, I would have left my husband years ago. Then, again, he might have come with me.) Consider, though, the other extreme: we would be shocked to hear of elderly couples found frozen in the depth of winter, not uncommon in other times and places. How much more food is generated because of cheap energy? How broadly is food distributed?

    Read the rest of this entry »

    Posted in Americas, Energy & Power Generation, Entrepreneurship, Health Care, Human Behavior | 12 Comments »

    Planning for Failure

    Posted by Carl from Chicago on 23rd May 2017 (All posts by )

    When I worked in the power industry everyone understood that the cost of a power outage was high, but it was impossible to put a precise value on it. There is the reputational damage, the specific costs of payouts to businesses and residences that are impacted (depending on your jurisdiction), the cost of restoring service (typically it is “all hands” in terms of available personnel and equipment), and finally the loss of trust by your all-important regulator when you come back later and ask for an inevitable price increase for your customers.

    The other, more subtle, cost of outages is the fact that businesses and residents must plan for unreliable power sources, and invest in backup generation which includes fuel, testing, etc… I would call this “planning for failure”. Over time, this also causes businesses to consider exiting the grid entirely in one form or another when they are large and capable enough, causing the remaining fixed costs to be borne by the remaining customers.

    Here in Portland right now we are dealing with a major outage, as a fire caused a power outage to over 2000 customers downtown near the Pearl district. This isn’t 2000 customers… most of these meters are large businesses and buildings and not individual houses. In practical terms, the downtown Target is probably closed, Powell’s bookstore (a major tourist attraction) is closed, and many, many other smaller businesses and restaurants. It would be similar to a power outage taking out most of River North in Chicago where I used to live.

    Luckily I live in a building with a backup generator, and they have fuel for 3 days, so we likely will be unaffected. That’s what you get when you pay more for a recently built class A apartment rather than an older vintage walkup. But many, many folks are going to be impacted by this (it was over 90 degrees yesterday) and many restaurants are going to have to throw out their food on top of losing a couple of days’ worth of customers.

    As we re-think electricity and the grid entirely it is important to consider reliability in the equation. I believe that many individuals and businesses just take power for granted until it isn’t there anymore. This challenge will likely be exacerbated by renewables and solar power… in this outage it is a distribution system failure, but intermittent generation of power is another variable in the reliability equation.

    Cross posted at LITGM

    Posted in Energy & Power Generation, Oregonia | 20 Comments »

    Hydrocarbon drilling in national parks

    Posted by TM Lutas on 7th May 2017 (All posts by )

    Here are the basics. There are 59 national parks operated by the National Park Service. 17 are owned both on the surface and subsurface by the Feds with 42 having split ownership with private subsurface ownership of mineral rights. 12 parks currently have oil/natural gas drilling already occurring on them, or more than one fourth of the 42 split rights parks.

    The National Park Service has been ordered to review the rules as to what is necessary to drill for oil and gas within a park, or in certain circumstances next to a park, if the subterranean horizontal section includes NPS administered park lands.

    There’s a lot of confusion about what exactly has changed. Right now it’s only a rule review.

    Posted in Energy & Power Generation, Environment, Trump | 23 Comments »

    Obama’s “Nuclear Renaissance” Hit Again By Bankruptcy

    Posted by Carl from Chicago on 29th March 2017 (All posts by )

    Since it was first announced almost a decade ago I’ve followed the “nuclear renaissance” that Obama touted and noted that it would likely end in failure due to the poor economics of these projects given our current, failed regulatory climate. The Federal government provided loans to get some of these projects off the ground. Now, with the bankruptcy of Toshiba’s Westinghouse unit, the whole process is collapsing and leaving half-built reactors and rate payers (and investors) in many jurisdictions likely to hold the bag for huge investments that aren’t going to generate power any time soon.

    Toshiba Corp’s U.S. nuclear unit Westinghouse filed for Chapter 11 protection from creditors on Wednesday, just three months after huge cost overruns were flagged, as the Japanese parent seeks to limit losses that threaten its future. Bankruptcy will allow Pittsburgh-based Westinghouse, once central to Toshiba’s diversification push, to renegotiate or even break its construction contracts, though the utilities that own the projects could seek damages. It could even pave the way for a sale of all or part of the business. For Toshiba, the aim is to fence off soaring liabilities and keep the group afloat.

    These partially built reactors in Georgia and South Carolina were commissioned because local laws and regulations allowed for the costs of these investments to be passed on to the rate payer (local folks paying electric bills). In other states with different sorts of regulatory models, these sorts of investments would have been uneconomic, which is the primary reason why everyone else in the USA balked at the nuclear renaissance, even when it was partially underwritten by the Federal government with loans.

    There are now two problems for rate-payers in Georgia and South Carolina:

    1) the companies now have to build these reactors without price guarantee from Toshiba, meaning that the (likely) giant costs of the overruns will be borne by local ratepayers or the companies themselves. If the unit is in bankruptcy and walled off from the funds of the parent corporation (which is the purpose of the bankruptcy, I am assuming), it seems unlikely that anyone else would step up and backstop such a guarantee.

    2) this bankruptcy is likely to cause significant delays in construction, meaning that the long, miserable process of getting certified to start up the reactor is going to be pushed out further into the future. This means that it will be that much longer until the unit starts generating power and “earns back” the investment, and all the costs of the reactors will accrue interest and financing charges for that much longer while construction proceeds (rate payers)

    Note that there is precedent for taking gigantic write downs and abandoning abandoned reactors. Here is a link to the abandoned reactors in Washington and the famous Shoreham debacle in New York.

    None of this seems to be impacting the stock prices of Southern Company (SO) and Scana (SGC) this morning so maybe the market knows something that I don’t. Scana is holding a press conference to describe their next steps in the process today and I didn’t seen anything yet scheduled on Southern Company’s web site.

    Cross posted at LITGM

    Posted in Energy & Power Generation, Obama | 15 Comments »

    Two Very Poor Analyses

    Posted by David Foster on 3rd February 2017 (All posts by )

    Forbes ran an article with the headline “Solar employs more people in US electricity generation than oil, coal, and gas combined” and goes on to say “It’s a welcome statistic for those seeking to refute Donald Trump’s assertion that green energy projects are bad news for the American economy.”

    Unmentioned in this article is the point that energy production is not done for the purpose of energy production; it is done for the purpose of energy use…and production modes which are more expensive tend to cost jobs downstream.  If an excessive emphasis on solar and wind cause electricity prices to rise significantly, the negative impact will fall on those who work in manufacturing and other fields that are energy-intensive.

    To take an extreme case, one could easily create millions and millions of jobs in energy generation by requiring that all electricity be generated by human beings turning cranks connected to generators.  It is silly to look at job-creation as a good thing in isolation, without considering factors other than the number of people hired.  The Forbes article also neglects to mention the point that in most technologies, and certainly in electricity generation, the construction phase of a plant generally requires a lot more labor than does the ongoing operation of that plant.

    An even lower depth of mediocrity is reached in this International Monetary Fund article:  Counting the cost of energy subsidies.  This study considers traffic congestion and vehicle accidents as ‘externalities’ from fossil fuel usage.  In reality, of course, the replacement of all gasoline-and-diesel-powered vehicles with electric vehicles recharged from solar/wind…or even their replacement by unicorn-powered vehicles requiring no other energy source whatsoever…would by itself have no effect whatsoever on traffic congestion and vehicle accidents.  And while the elimination of automobiles and trucks completely would certainly eliminate traffic congestion, it would also lead to delays in travel which would greatly exceed the magnitude of the congestion-caused delays.

    Putting lots of math in a study is not a substitute for common sense.

    Posted in Energy & Power Generation, Environment | 12 Comments »

    Obama’s “Nuclear Renaissance” Receives Its Final Obituary with Toshiba’s Write Down

    Posted by Carl from Chicago on 28th December 2016 (All posts by )

    Back in 2009 at the start of Obama’s first administration he proclaimed that a “nuclear renaissance” was coming. Although I am a fan of nuclear power, I knew right away that this effort was doomed to failure by a lack of structural incentives in the USA and the ability of NIMBYs and lawyers to drag out and kill any project by a thousand cuts. I wrote that it was doomed here and summarized the players here.

    Yet 2 companies plowed along with their nuclear projects – Southern Company (big in Georgia and the south) and SCANA (a South Carolina utility), mainly because their state rate environment was favorable and allowed them to include the cost of assets in their “rate base” rather than being forced to price energy at something close to market prices. Eventually those that pay for electricity in these jurisdictions are going to be soaked with the enormous costs of these plants and / or the finances of Southern Company and SCANA will be seriously impacted. Southern Company has a market cap of around $50B and SCANA has a market cap of around $10B. For context, the Southern Company nuclear project is currently 3 years behind schedule and $3B over budget and likely to cost up to $20B (although costs are borne by many parties, not just Southern Company) and the SCANA project is likely to cost up to $12B (although not all borne by SCANA).

    These nuclear projects, already non-competitive due to price declines in natural gas (caused by fracking), became even MORE non-competitive as their completion dates were extended and costs ballooned due to inevitable and completely predictable delays. The history of nuclear power projects is littered with failed efforts and those that were completed often had huge cost overruns, especially those completed near the “tail” of the initial nuclear building effort which petered out in the ’80s.

    Now Toshiba is being hit with part of the overrun costs. Their stock recently went down 20% (the most that it can fall in a single day trading session) with discussion of potentially billions of dollars in write downs tied to their work on nuclear power projects.

    What is sad about all of this is that the debacles that will hit rate payers in the south (predominantly Georgia and South Carolina) and / or shareholders were completely predictable, although the situation could get even worse if delays stretch on indefinitely and the plants are never even completed (which is always possible in the litigious USA). As the current administration leaves their utterly failed nuclear policy should be something that they accept responsibility for, as well as their ameteur-ish ignorance of history and the predictable consequences of these sorts of mega-projects (in our current legal and regulatory environment). However, I highly doubt that will occur.

    Cross posted at LITGM

    Posted in Energy & Power Generation | 6 Comments »

    Worthwhile Reading & Viewing

    Posted by David Foster on 15th December 2016 (All posts by )

    A USAF jet fighter pilot flies a WWII P-51 Mustang.

    An argument that China will never be as wealthy as America.  (‘Never’ is a long time, though)

    A huge database of artworks, indexed on many dimensions.

    An ethics class that has been taught for 20 years (at the University of Texas-Austin) is no longer offered.  According to the professor who taught it:

    Students clam up as soon as conversation veers close to anything controversial and one side might be viewed as politically incorrect. The open exchange of ideas that used to make courses such as Contemporary Moral Problems exciting doesn’t happen. It’s not possible to teach the course the way I used to teach it.

    At the GE blog:  Direct mind-to-airplane communication…and, maybe someday, direct mind-to-mind communication as well.  Although regarding the second possibility, SF writer Connie Willis raises some concerns.

    Also at the GE blog:  The California Duck Must Die – a very good explanation of the load-matching problems created when ‘renewable’ sources become a major element of the electrical grid. Media discussion of all the wind and solar capacity installed has tended to gloss over these issues.

    The Battle of the Bulge, December 1944 – January 1945.

    Posted in Academia, Aviation, China, Deep Thoughts, Economics & Finance, Education, Energy & Power Generation, History, War and Peace | 3 Comments »

    Cyber Warfare

    Posted by Michael Hiteshew on 5th June 2016 (All posts by )

    Col. Michael Brown, USMC, Retired:

    The Russians and Chinese are the most active in offensive attacks. I worry a lot about the vulnerability of our electrical grid and even our water supply network.

    SCADA Systems

    Supervisory control and data acquisition – SCADA refers to ICS (industrial control systems) used to control infrastructure processes (water treatment, wastewater treatment, gas pipelines, wind farms, etc), facility-based processes (airports, space stations, ships, etc,) or industrial processes (production, manufacturing, refining, power generation, etc).

    Posted in China, Energy & Power Generation, Military Affairs, Russia, War and Peace | 8 Comments »

    Powering Down

    Posted by David Foster on 4th June 2016 (All posts by )

    Everyone is aware of Obama’s suppression of the Keystone XL pipeline project.  But the legal, regulatory, and PR assault against critical infrastructure construction goes far beyond this. WSJ reports that:

    Many major fossil-fuel projects across the U.S., from pipelines to export terminals, have been shelved or significantly delayed because of a confluence of new regulations, grass-roots opposition and a drop in energy prices.  Overall, more than a dozen projects, worth about $33 billion, have been either rejected by regulators or withdrawn by developers since 2012, with billions more tied up in projects still in regulatory limbo.

    Among the projects that the WSJ article identified as ‘cancelled’ were the $875MM ‘Constitution’ gas pipelines for the Northeastern US and the $3 billion “Northeast Direct” for the same region.

    Natural gas is, of course, a major source for generating electricity, and the only practical way of getting the gas to the power plants is via pipeline.

    (The CEO of New England’s power grid operator), said pipeline) projects are badly needed. Residential consumers in New York and New England paid between 5% and 41% more than the national average for natural gas in March, the latest month for which data were available. They also paid more for electricity, which itself is increasingly made with natural gas. 

    Read the rest of this entry »

    Posted in Energy & Power Generation, Obama, Politics, USA | 9 Comments »

    Frack-Log…ACTIVATED!

    Posted by Trent Telenko on 3rd June 2016 (All posts by )

    In my two previous blog posts here and here I talked of a new extended flow oil fracking technique coming on-line that resulted in a lot of drilled uncompleted wells (DUC) and the population of such wells (~5,000). In the comment section of one of those columns I speculated that we have a top end on oil prices where “turn on a dime fracking” will cut in at a price point of $50 a barrel

    We now have a “flaming datum” for that speculation, oil having just bumped -HARD- into the $50 a barrel roof for world oil prices. The 5,000 DUC Frack-log is being activated with — I strongly suspect — the new extended play oil fracking technique.

    It is being reported in various places that the US rig count jumped from NINE RIGS in mid-May to 325 last week and there was no change from 325 rigs this week. That is a 36 fold increase in rig count in a week!!

    Based on figures I’ve gotten from those in the industry, the range of production you can expect from those wells, depending on the geology, length of the laterals (6,000 to 8,000 feet) and the number of fracking stages (200′, 300′ or 400′) will result in initial barrel per day production of between 400 and 800 barrels a day per fracked well (with a very, very rare 1,300 barrel a day play from time to time). So we are looking at between 130,000 to 260,000 barrels a day of American oil fracking production arriving in the next few months.

    Compared to Saudi production, 130,000 to 260,000 barrels of oil a day represents between 1.3% and 2.5% of the Saudis’ daily oil flow. The number of DUCs activated to provide that production amount to 6.5% of the frack-log. And all that for what amounts to Zero “CAPEX” (capital expenditure), plus the operating expenses of worker wages, the rental price for existing, out of service, oil fracking rigs, and oil tanker trucks to move product to rail heads or oil pipelines.

    Now you know why the Saudis didn’t agree with OPEC oil production cutbacks this week. The Saudis maxing out their oil production is no longer about stopping American oil frackers. The Saudis’ long term regime survival strategy amounts to being the Last Petro-State Standing.”

    The Saudis — like everyone else inside the Big Oil economic paradigm — simply cannot compete with that sort of rapid to market, low cost & low risk oil. The Saudis’ highest priority now is to keep their customers as long as they can, because if they lose them they may never get them back.

    Posted in America 3.0, Current Events, Economics & Finance, Energy & Power Generation, Entrepreneurship, Middle East, National Security | 8 Comments »

    When Texas DUCs Go Quack, Quack, Frack

    Posted by Trent Telenko on 26th May 2016 (All posts by )

    The “DUC” in this case being _D_rilled but _U_n_C_ompleted shale oil & gas wells

    I ran into this article by Seeking Alpha energy analyst Gary Bourgeault over on Real Clear Energy which gave a figure for how many drilled but ‘unfracked’ wells are available for the new extended oil flow fracking technique I mentioned in May 15th 2016 post Texas Fracking and the Death of Big Oil.

    The key passage from “U.S. Shale Oil Boom Over Says CSMonitor – Hahahahaha” below —

    DUC wells waiting in the wings
     
    Another major reason the shale boom isn’t over is the large number of drilled but uncompleted wells waiting to be brought into production. There is an estimated 5,000 in the U.S. which can be quickly brought to market when the price of oil is high enough to reward it. Some companies have been completing them for some time, and more are being completed in 2016.

    There are a lot of implications in that number. Starting with the fact that new oil & gas rig counts are going to be minimal for some time. And the hard economic fact that major politically event driven oil price spikes are going to be extremely short and will drop below 50 dollars a barrel within weeks to three months, given how fast these North American “DUC” wells can be fracked to bring product to market.

    This new age of “banked” cheap oil plays, and the resultant oil price stability, will see off both the “Big Oil” economic model and the political/corporate elites that live by it.

    Update May 27 2016:

    It looks like Zerohedge has come to the same set of conclusions about the “Big Oil” economic model with his post “Peak Petro-State – The Oil World In Chaos”

    Posted in America 3.0, Business, Economics & Finance, Energy & Power Generation, USA | 14 Comments »

    Texas Fracking and the Death of Big Oil

    Posted by Trent Telenko on 15th May 2016 (All posts by )

    It isn’t often you see the death of a major worldwide industry. Last week I saw the death of the “Big Oil” economic model. It just died at the hands of Texas oil frackers who have developed a new “disruptive technology” that has made obsolete all the pillars of technology underpinning large, vertically integrated oil companies. More importantly, the same is true of all the petro-states that nationalized Big Oil’s assets in the 1960s to make all the state oil companies around the world today.

    I found this out doing my day job last week as a Defense Department quality auditor visiting a mid-sized oil service company diversifying into federal contracts. The meeting was about issues with the contract they won and touched on others they have bid on. As a side bar at lunch the following points about their main business came up:

    1. Oil field spending has died. Rig count in the USA is the lowest it has been since 1940.
     
    2. One oil rig controller company these folks worked with saw a year over year drop of 72% in its business.
     
    3. Another company they supplied had their “Cap-X” budget drop from ~$400 million for 2015-2016 to little over $30 million for 2016-2017.
     
    4. One drilling company they supplied went from 120(+) new wells last year to _12_ this year.
     
    5. This supplier sold a lot of copper tubing for “frack-log” drilling. That is the drilling of holes in good oil-bearing rock without fracking rock for oil immediately — and here is the new part — to take advantage of a new long-flow fracking technique.

    While most of the points above are due to the Saudis’ oil price war on Texas frackers. An ex-Big Oil geologist I know put it this way —

    The entire reason for the price drop was because the Saudis wanted to destroy fracking in the United States in order to keep us dependent upon them in order to keep them getting a free defense. The Saudis will have to diversify and start spending money on defense before the price goes back up, or they will be in serious trouble.

    The technique in Point #5 above marks another “fracking revolution” that is of growing importance to the USA. This new fracking energy revolution will upend the world order as we know it. Political winds willing, America may well be a net hydrocarbon exporter in five to eight years.

    Explaining why that is requires some background in Texas oil fracking.

    Read the rest of this entry »

    Posted in America 3.0, Big Government, Business, Capitalism, Economics & Finance, Energy & Power Generation, Miscellaneous, National Security | 42 Comments »

    New Developments between Israel and the Saudis.

    Posted by Michael Kennedy on 14th April 2016 (All posts by )

    Saudi Egypt

    Obama has pretty much abandoned the Sunni Arabs in the Middle East in favor of Iran. This has been noticed, of course, and some new alliances may be forming.

    Egypt’s April 9 announcement of the transfer of two islands, Tiran and Sanafir, to Saudi Arabian sovereignty came as a complete surprise to many in the Middle East. The only country that was not surprised was Israel. A top-level official in Jerusalem told Al-Monitor on April 12 that Israel had been privy to the secret negotiations.

    The islands have a history that is interesting.

    These islands originally belonged to Saudi Arabia, which transferred them to Egypt in 1950 as part of the effort to strangle Israel from the south, and prevent the Israel Defense Forces (IDF) from taking control of them. Israel embarked on two wars (the Sinai War in 1956 and the Six Day War in 1967) for navigation rights in the Red Sea. It took over these islands twice, but then returned them to Egypt both times. Now events have come full circle, and the Egyptians are returning the islands to their original owner, Saudi Arabia.

    And Israel is privy to the negotiations and approves.

    In the past, several proposals were raised regarding regional land swaps, with the goal of resolving the Israeli-Palestinian conflict. The framework is, in principle, simple: Egypt would enlarge Gaza southward and allow the Gaza Strip’s Palestinians more open space and breathing room. In exchange for this territory, Egypt would receive from Israel a narrow strip the length of the borderline between the two countries, the Israeli Negev desert region from Egyptian Sinai. The Palestinians, in contrast, would transfer the West Bank settlement blocs to Israel. Jordan could also join such an initiative; it could contribute territories of its own and receive others in exchange. To date, this approach was categorically disqualified by the Egyptians in the Hosni Mubarak era. Now that it seems that territorial transfer has become a viable possibility under the new conditions of the Middle East, the idea of Israeli-Egyptian territorial swaps are also reopened; in the past, these land swap possibilities fired the imaginations of many in the region. In his day, former head of Israel’s National Security Council Maj. Gen. Giora Eiland led a regional initiative on the subject. But he was stymied by Egypt.

    Moving Gaza away from Israel would solve the rocket problem and the terrorist problem.

    In light of America distancing itself from the region and the cold shoulder that Egypt has received from Washington in recent years, Saudi assistance and Israeli support to Egypt are viewed as critical to Sisi’s continued grip on the regime. And to complicate the situation even more, we can add the reconciliation attempts between Israel and Turkey; these have continued for many long months in marathon negotiations between the sides.

    A highly placed Israeli official told Al-Monitor on condition of anonymity that the Egyptians don’t want to see the Turks in the Gaza Strip, and are strongly opposed to a rapprochement between Jerusalem and Ankara.

    The Turks may have enough trouble with Syria and the Kurds to keep them busy. Meanwhile, a new alliance may be appearing as Obama arms Iran.

    Another factor may be the new Israeli natural gas supplies.

    There are even more interesting possibilities.

    On this background, a revolutionary concept has been floated recently regarding the establishment of artificial islands opposite Israel’s coast; these would host the state’s main infrastructure facilities. The idea was proposed by two close Netanyahu associates. One is Shaul Chorev, who until recently headed Israel’s Atomic Energy Committee and was a former brigadier general in the navy, and the other is Zvi Marom, founder and chief executive of the Israeli technology firm BATM Advanced Communications. Netanyahu worked under Marom after Netanyahu lost the 1999 elections; since then, the two are considered to be close associates.

    The artificial-island proposal contains an additional, even touchier idea: the option for civil nuclear energy in Israel.

    Interesting times in the Middle East now that Obama has abandoned the Sunnis and Israel.

    Posted in Energy & Power Generation, Iran, Israel, Middle East, Obama | 1 Comment »

    Some Hopeful News

    Posted by Michael Hiteshew on 7th April 2016 (All posts by )

    Conservatism Is Winning In The States

    What Alexis de Tocqueville observed over 150 years ago remains true today—states are laboratories of ideas. It’s here on the state level where ideas are created, fought over, tested, implemented, and either succeed or fail. When it comes to conservative ideas in the states, we are winning.
    While presidential candidates were insulting each other’s appendages, West Virginia became the 26th Right to Work state. While the FBI was investigating candidates, North Carolina passed major tax cuts. While pundits cried that both major parties had lost their way, Missouri passed paycheck protection. Conservatism is winning in the states. Don’t let it go unnoticed.
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    There is no state that highlights conservative victories better than Wisconsin. Just five years ago Wisconsin turned a billion-dollar deficit into a multi million-dollar surplus. Act 10 may have grabbed headlines across the country as protestors occupied the capitol for months, but the story did not end there.
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    Over the past year conservatives have passed reforms less controversial than Act 10 but just as important to taxpayers across the state. Last year they passed Right to Work to guarantee workers the freedom to join a union or not. Wisconsin reformed the prevailing wage law, which will save our local communities millions of dollars on the cost of building new schools and roads. Wisconsin reformed the marriage penalty to reduce taxes on working families, froze tuition at the UW for the forth straight year, and passed occupational licensure reform that gives a hand up to some of the hardest working Wisconsinites.

    A newly-released Gallup survey indicates that a solid majority of students at America’s colleges and universities supports free speech on campus. However, a strong contingent of students wants to limit “hate speech” and speech that intentionally offend people based on some aspect of their identities.

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    A full and extensive report about the poll, which Gallup conducted for the John S. and James L. Knight Foundation, shows that 78 percent of U.S. college students believe their campuses should be serious, grownup places where students experience all manner of speech and myriad different viewpoints.

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    Other findings within the study showed that students with Republican and independent political leanings were far more tolerates than their Democratic counterparts. It also found that a majority of students (54 percent) believed their professors and administrators were also stifling free speech on campus.

    Those are hopeful signs. The most important changes begin at the grassroots level. To my mind, the single most tasks facing the American people are reigning in the vast behemoth that is the federal government and reforming public education. That the majority of college students are not yet ready to toss out the Bill of Rights is a positive indicator. But schools are increasingly petri dishes for incubating leftist and far leftist ideologues, and the indoctrination seems to become more radical as time goes by. That needs to stop. Yesterday.

    Meanwhile, in nuclear power development, a long discussed idea of deploying factory built and tested small reactors seems to be capturing imaginations around the world again. The Chinese had plans several years ago to build SMRs from Westinghouse, but I have no idea how that is progressing, if at all. The UK now seems interested as well. I’m interested in seeing how well this technology works out but it seems completely straightforward and doable to me. The US Navy has been using small nuclear reactors safely and effectively for more that 50 years now. And as reactors become less custom one-off designs and more of a standard product, safety and reliability should increase and cost should come down. For reactors to ever be fully accepted by the public, however, the designs must fail-safe. Which is to say that the nature of the process is one where if there is a facility failure, the physics of the reaction process simply stop.

    There will be a competition to identify the best value design of mini reactors – called small modular reactors (SMRs) – and paving the way “towards building one of the world’s first SMRs in the UK in the 2020s”. There is no shortage of contenders, with companies from the US to China and Poland all wooing the UK with their proposals.

    With a crucial UN climate change summit in Paris imminent, the question of how to keep the lights on affordably, while cutting emissions, is pressing.

    SMRs aim to capture the advantages of nuclear power – always-on, low-carbon energy – while avoiding the problems, principally the vast cost and time taken to build huge plants. Current plants, such as the planned French-Chinese Hinkley Point project in Somerset, have to be built on-site, a task likened to “building a cathedral within a cathedral”.

    Posted in Britain, Civil Society, Education, Energy & Power Generation, Politics | 11 Comments »