Too Much Information
Too much going on in my head…must…get…it…all…out.
It started with the latest StrategEcon report from CIBC World Markets. Jeff Rubin revised some critical numbers from his January 18, 2008 issue. In the previous report Mr. Rubin predicted that by 2012 gasoline would be selling for US $4.50/gallon. His latest numbers are revised upward to US $7/gallon by 2012 - in spite of a predicted drop in crude consumption of 2 million barrels per day. Imagine that, gas doubling in price again in less than four years. He sees the cost of crude rising to US $150/barrel in 2010 and US $200/barrel in 2012.
How high could oil go this year? Well, on BloombergTV Jonathon Kornafel of the Hudson Energy Group/Singapore sees oil going as high as US $130/barrel this year. In his interview he predicted that oil would pass US $120/barrel going to just below US $125/barrel and then falling back very quickly to US $110/barrel or so in a matter of days. However, he said that summer driving season in the US and the upcoming Olympics will cause demand to rise, squeezing supplies once again and bringing the price up to new record highs.
The message from both of these gentlemen is that the oil producers cannot increase the supply and demand continues to rise in the BRIC (Brazil, Russia, India and China) countries and only “demand destruction” in other markets can satisfy them.
Of course Clement Gignac at National Bank Financial is skeptical about all this and he expects oil to fall back to US $75/barrel.
Now, I don’t want to just dismiss Monsieur Gignac’s outlook, I’m quite certain that he is an expert in his field. However, he doesn’t seem to acknowledge the fact that oil production has been flat for the past two to three years despite rising prices. He is of the opinion that the “laws” of supply and demand are still in play. I believe that the evidence is mounting, the price of oil is going to go higher and there is little chance that anyone is going to increase production enough to bring prices back down to anywhere near US $75/barrel.
Oil is getting more expensive, gasoline gets more expensive, food is getting more expensive. What can we do to reduce our cost-of-living?
Move. Move from the suburbs into the city. Move closer to work. Move to a neighbourhood that allows you to choose whether you walk, ride or drive to shop. A report published last July estimates the personal savings realized by residents of Portland, Oregon because of the city they live in. The report says that Portlanders save more than $1 billion each year because they drive on average 4 miles per day less than the average American driver. One billion dollars saved in a city of two and a half million works out to $400 extra in the pocket of each person. The compact nature of the city of Portland also means drives are shorter, that means less time spent behind the wheel of a car. Portlanders collectively drive 100 million fewer hours each year. If time is money and time is worth $15/hour then Portland saved itself another $1.5 billion by not having to drive as much. Finally, think people only want to live in sprawling cities and spend all their time driving? During the 1990’s the number of college-educated 25 to 34 year olds went up 50% in the Portland metro area. All those bright young “knowledge economy” people that we’re supposed to attract to be successful in our Brave New World want to live in cities like Portland. Cities that don’t just talk “green” they build and live it.
The group CEO’s for Cities is a national (US) network of mayors, corporate CEOs, university president, foundation officials and business and civic leaders working to help cities make the most of their assets by building leadership partnerships around urban innovations. (Paraphrased from their webpage)
This group funds studies like: Driven to the Brink: How the Gas Price Spike Popped the Housing Bubble and Devalued the Suburbs, Written by Joe Cortright. This is an interesting investigation into the cause of collapse of the housing industry in the United States. The premise is that cheap gas allowed home buyers to venture further and further out from cities. The report correlates the beginning of home devaluation to the recent run-up in gas prices. Interestingly, the greatest loss of home values occurred in suburban regions of major US cities. The report uses Information Mapping to demonstrate zip code by zip code the price changes in home values. But, the most important bit is that home values in and around the cores of vibrant cities actually have gone up. There you go. Inner ring and downtown homes have gone up in value while the sprawl homes are losing value daily.
There now, my head’s a little clearer.
The implications of all this for Windsor and our surrounding communities is, well, kinda bad. Gas prices will continue to rise squeezing our wallets a little more each time we need to fill up. We are going to have to start choosing where and when we drive and that’s going to shift how we spend our money. Less money spent at local restaurants and stores will hurt our smallest businesses first. It will also hurt those individuals and families that can least afford it first.
I don’t mean to put a damper on anyone’s day, really, I just needed to get this stuff out there but, the reality is we need to change the way we do things soon or we’re just gonna be f****d.
Tags: budget repercussions, commuting, statistics, transportation costs, urban sprawl
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There’s a lot of finger pointing now.
1. some are blaming environmentalists for promoting bio fuel. As if ethanol plants sprang up at the bequest of environmentalists. Like, the lure of raising corn prices to eventually reduce gov’t subsidies was not the real culprit.
I am happy that my long held views on the scam of ethanol have been vindicated. but lets not blame some environmentalists as if they had the say in ethanol plants being built
2. Peak oil will replace global warming. The relationship between Food and Oil will now finally be told. The fact that 20% of U.S. oil is used to produce and transport food will hopefully bring about change in consumer habits.
3. Kyoto will finally die,
Why would we need to impose carbon taxes above the oil price increases is beyond me and will soon be beyond anyone. I was at a liberal leadership convention 5 years ago with a speach against Kyoto but was not allowed to say it because it would require 5% of delegates to oppose kyoto and I was probably the only one there that did.
Instead of creating an artificial tax that would be transferred to Russia and other countries that have horrific human rights record. We will actually be forced to deal with the problem
4. Will the left wing political parties embrace high gas prices? Apparantly only if the high prices are caused by taxes. I think a lot of left wing hypocracy will be exposed here. This is not partisan as I believe the right wing hypocracy is exposed every time the oil company profits are released.
5. How long can people be slapped in the face with high gas prices before they stop believing the peak oil deniers and the claims of unlimited oil (without understanding all new oil discoveries are extremely expensive to obtain oil).
Can people understand that peak oil is not about running out of oil but simply having its supply reduced? (probably more due to the countries supplying oil needing it themselves). why no media coverage about Saudi’s building of the worlds largest and oil intensive aluminum smelter which will single handedly reduce the amount they can export?
Necessity will be the mother of invention. This is one area where I disagree with Kunstler, he preaches a lot of doom and gloom and that technology will not solve this problem.
While technology won’t replace fossil fuels with a cheaper form of energy, we will have energy and new technology will bring about other changes that will affect use
The biggest requirement is that the public begin a shift from their long held beliefs that bigger is always better. That quality of life depends of quantity.
We need some leadership from those who make policy to show that they accept this shift in our lifestyle.
Our main roadblock to recovery is not technological, but societal. All this technology depends on cheap energy (whether that energy is derived from oil, hydrogen, or cow farts) and the age of cheap energy is quickly diminishing. Look at how cheap nuclear turned out to be? If the “market” was such a truthful barometer of the situation, wouldn’t we be unveiling all these new technologies right now when oil is $120 a barrel? Supply and demand? No - these life saving technologies exist only in comic books and the dreams of the navel-gazers.
A societal shift must take place that we don’t need power everything (leaf blowers?!?) and can lead a quality lifestyle without such “conveniences”. However, we can’t even persuade our elected “leaders” to even acknowledge the need for change so, inevitably, a big chunk of the population will continue rallying around the status quo and when the time comes when we’re forced to change they will be the hardest hit. That wouldn’t bother me so much except they’ll drag everyone down with them.
Mark and I don’t see eye-to-eye on this point; that people clinging to the notion that “technology will save us” is only perpetuating the “head in the sand” response that is complicating our reversal of fortunes. Why do anything when “something” will save us? That’s part of the reason that I have problems with some dogmatic religions as well - waiting for our savior while ignoring the fact that it is within humanities powers to fix the situation.
I to concur with Chris on societal change rather than technology as our salvation. From our flint knapping ancestors to today, technology has always been with us, and we have constantly exploited it for our use, benefit and destruction. Advances in technology have always been a two edge sword, there is no benign technology! Just the decision by society on how to use it.
It is not necessarily the scarcity of oil, fresh water, natural resources or food that is driving today’s global crisis, but how we personally value and use them. It is the growing world wide demand for them, combined with global climate change, or climate disasters that are happening now around the world, a way of life that we have experienced and exported in North America and elsewhere since World War II, that the rest of the world wants. the perceived American way of life. Through television, movies et al, we have exported a way of life to the rest of the world, a sort of standard for what the good life is. Now the rest of the world wants it! And we here don’t really give it a second thought.
Can we or will we run out of oil, fresh water, natural resources or food, possibly, will new technologies save us and still allow a high standard of living beyond our means possibly, while dramatic elevation of conservation in all these items save us, possibly. But something has to give, all reports coming out now, is that we can’t sustain this race for the middle class standard of living are pointing that we can’t sustain this standard for every living individual on this planet.
So what gives! Something has to give! We will still have advances in technology that will be a benefit for us, but that takes time, money and a will to adapt it. Society has to give if we are all to live on this planet with some good standard of living.
Aha!!! I actually do not disagree with you as much as you might think. I don’t think technology will provide a replacement energy source. I think there will be technological advancements to better faciltiate the societal change we will have to make.
Technology will provide alternative solutions to some of the perceived negatives that societal change bring on. solutions to the objections raised by the die hard suburbanites or incentives that will far outweigh the objections
This article from the Globe and Mail today Mark, will warm your heart!
Harper’s biofuels policy sputters out on the Hill
Use of food crops for fuel has some MPs urging caution and others expressing concern about a ‘global food catastrophe’
“The realistic thing to do is put a moratorium on it now so people can actually wrap their heads around the facts. The current biofuel strategy is deepley misguided.” Liberal MP Keith Martin.
http://www.theglobeandmail.com/servlet/story/RTGAM.20080430.wethanol30/BNStory/National/home
And a commentary from the Globbe:
Food Crisis: Stepping up to the plate
“There are many causes of recent food-price inflation, and their relative weight is disputed: rising demand, skyrocketing oil costs, diversion of crops for biofuels, trade restrictions, commodity market speculation. But attention is now turning to what should be done….”
“…Farm subsidies in rich countries have depressed global food prices in most years since the 1980s. These low world food prices have dampened production incentives for developing-country farmers. The result has been a gradual move toward food-import dependence, especially in the world’s poorest countries. According to the UN Food and Agriculture Organization, the least developed countries were net agricultural exporters in the 1960s. Today, as a group, they are net agricultural importers.
In a bid to reinvigorate their farm sectors, developing countries have been pressing rich countries to reduce their farm subsidies through global trade talks. Suddenly, with the food-price spikes of recent months, the era of cheap food has ended, but not as a result of the trade talks.
The problem now is that food prices have changed too quickly. The urban poor are finding it difficult to pay the new prices, while rural farmers cannot respond quickly enough to the new production incentives…”
Full commentary here:
http://www.theglobeandmail.com/servlet/story/RTGAM.20080430.wcofood30/BNStory/specialComment/home
Canadians face higher food prices:
http://www.theglobeandmail.com/servlet/story/RTGAM.20080424.wfood0424/BNStory/National
Facing a food crisis, optimist finds hope in the dismal science
Jeffrey Sachs’s ‘yes we can’ attitude has its fair share of supporters – and detractors
“….“Even though there is a lot of confusion, a lot of inertia, a lot of normal negativity coming from powerful groups, a lot of vested interests – all of this I believe can still be surmounted by good information understood by the public,” Mr. Sachs, now 53, explained during an interview recently at his Manhattan home, near Central Park. “They would like to see solutions to problems.”
This conviction lies at the heart of his latest book, Common Wealth: Economics for a Crowded Planet, a blueprint of sorts for navigating both the perils of a burgeoning population, and the corresponding strain it is placing on our natural resources.
Philosophically, his proposed remedies are more closely aligned with the left-leaning John Maynard Keynes than they are with Milton Friedman, but Mr. Sachs, who is also director of Columbia University’s Earth Institute, has clearly been influenced by both.
Like Mr. Friedman, he believes in market solutions for many economic issues – he just doesn’t think that unfettered markets, left to their own devices, will lift Africans out of abject poverty or stamp out environmental degradation. These crises, he insists, require strong public policies to align private interests with the goals of sustainable development….”
http://www.reportonbusiness.com/servlet/story/RTGAM.20080429.wsachs30/BNStory/Business/home
Now, a feel good technology:
Norway considers floating windmills
WOJCIECH MOSKWA
Reuters
April 29, 2008 at 1:43 PM EDT
UTSIRA, Norway — Giant turbines the size of jumbo jets bobbing on the North Sea may soon become as common off Norway as oil and gas platforms.
http://www.theglobeandmail.com/servlet/story/RTGAM.20080429.wturbines0429/BNStory/GlobeSportsSoccer/
On a happy note, I just got my favourite walking shoes resoled!
And this will warm our hearts to the local and global economy: Cap and capture, either work together
Climate policy frenzy leads nowhere
“…On cap-and-trade, the Torys bulletin says, the provinces are motivated to go their own way because of disagreements with the federal government “over what targets and means should be used to combat climate change” – disagreements, in other words, on everything.
This is serious. If you can’t define your objective, you probably can’t reach it. If you can’t agree on means, you probably can’t agree on ends. Which, precisely, is what? Is it to stop the absolute rise in global mean temperature by the year 2100? Is it merely to impede the rise? If so, by how much? A difference of a single degree Celsius radically alters the selection of strategy – and the investment.
The problem with this continental, do-your-own-thing approach is quite simple: It won’t work. Finance Minister Jim Flaherty, to his credit, has expressed this same judgment – emphatically. The country must work together, he has warned, or incur needless costs. Mr. Flaherty has impeccable academic support on his side.
Yale economist William D. Nordhaus is an authority on the economics of climate change policy. Basing his conclusions on decades of research (beginning in 1978), Prof. Nordhaus advises – as the most important single global principle for combatting climate change – “harmony.”
Prof. Nordhaus says countries must either work together – or forget it. Without global consensus on ends and means, he says, we will be better off doing nothing at all. He calculates the environmental damage caused by doing nothing for the next hundred years at $23-trillion (U.S.) (in future, discounted dollars); he calculates the remedial cost of even a partial fix, as recommended by Al Gore and the celebrated Stern Review, at $22-trillion. (“The Gore and Stern proposals are more costly,” he says, “than [doing] nothing.”)
Prof. Nordhaus would jettison cap-and-trade (which is “conducive to corruption”). He would jettison Kyoto. He would jettison coercive regulation – including fuel efficiency standards for cars. He would start with a very modest but universal tax on all fossil fuels and increase it gradually over coming decades.
You can’t afford financial error in the beginning, Prof. Nordhaus warns, because time multiplies small errors into catastrophic consequences. People, he says, need to understand the dynamic of future dollar discounting: “The funds used to purchase Manhattan Island for $28 in 1626, when invested at a 4-per-cent real interest rate, give you the value of all the land in Manhattan today.” Time turns a few dollars, in other words, into trillions of dollars. And the maximum investment we need to reduce greenhouse gas emissions, he says, is $3-trillion – measured in 2100 future discounted dollars.
For economic efficiency, Prof. Nordhaus would exempt no one from a modest carbon tax – not farmers, not the aged, not industry. “If you exempt half of the economy because of politics,” he says in his illuminating 2007 report, The Challenge of Global Warming, “then the cost of obtaining your objective rises by 250 per cent…..”
http://www.theglobeandmail.com/servlet/story/RTGAM.20080429.wreynolds0430/BNStory/specialComment/
Technology has unforseen consequences sometimes. Can you imagine how the world would rejoice if we devised an automobile that ran on air? There would be dancing in the streets, as this new automobile’s technology was dirt cheap to boot! Oh joy!!!! The world is saved!
Everyone buys one of these cars and drives everywhere - because it’s a “Green Car” and it will help save our domestic manufacturing jobs as well as the polar bears. They drive to the corner store, to the movie theatre, downtown, home to the ex-ex-ex-urbs. There’s no need for public transit any longer because everyone can afford one of these cars. Yet…
The amount of paved surface on the earth reaches 65% because everyone is driving everywhere in their “Green Cars”. Water runoff is poisoning every living creature in nearby waterways. Our food must be imported for further away because our agricultural land is nothing but a bunch of new ex-ex-ex-ex-urban subdivisions named “Meandering Way Estates” et al. Our national average weight is so large that the human life expectancy, for the first time in recorded history, is actually worsening due to Type 2 diabetes wiping out entire families of automorphs.
But at least our cars don’t emit greenhouse gasses, right? That’s technology for you and the way our society reacts to technological advances.
Chris.
They do exist…..
http://www.popularmechanics.com/automotive/new_cars/4217016.html
NNNNNNNNNNOOOOOOOOOOOOOOoooooooooooooooooo!!!!!!!!!!!!!!!!!!!!
Silly you! Chris! Sure everybody might be able to drive everywhere but they couldn’t build roads fast enough to avoid a system wide choking grid lock, look how long it is taking Windsor to address E.C. Row, Manning, Blandwell et al and we have gas!
Most technology has unintended consequences or an adaptation for other than it was invented for, it is called innovation or variations on a theme by pack your panini!
Air is free, but putting it into your air car isn’t or having a service station available when you run out of air. Now if they were to build hovercraft that ran on air, then we wouldn’t have to build roads of concrete, just level greenways and some could cut the grass at the same time.
Then someone will come along and offer different scents for your air car to exhaust, so you can smell like french fries, Nascar or somethin’. The air will become just as toxic as it is now but smell prettier!
Yeah, but the technological changes I’m talking about are ones that benefit higher density neighborhoods such as higher tech amenities or next generation libraries that are stimulate the desire to move next to.
And its not just technology. CVB just sponsored half the cost of an inflatable screen that when combined with WIFF’s 35 mm projector provides an outdoor attraction on the riverfront, art gallery etc… Far more accessible to people in the core. Look for its first use in late June on Bert Weeks Memorial Gardens Park where we will show the western “All Hat” provided by the Film Circuit, division of TIFF.
We just need to build upon our asset list to encourage the societal shift that is needed. Its that whole asset driven method vs. Deficit driven method.
If we keep building our assets in the core, eventually we’ll hit a tipping point. Technology such as WIFI etc.. will act to facilitate that asset list
Technology is like any other tool, it depends how its used as to whether its good or bad. It is not inately good or bad in itself
It sure would be nice if some of that technology could be simply used to guard against these boil-water advisories, On the other hand, perhaps these sub-urb-villes prefer they’re sprawled out lifestyle over having clean water in their ticky tacky raised raches..and maybe… just maybe.. now they’re starting to see the trade offs…. hows the water in the core? pretty clean i bet!
I don’t think belittling those who live out in the county is very conducive to engaging people in discussing (and finding a solution to) the issues of urban sprawl.
Mr. Poseur, sorry you feel that way. Just don’t drink the water, eh!
That’s Ms. to you!
And also, I don’t live out in the county.