UK: Gaudy

photo: H M Cotterill, 2007

By the time I had parked in St Giles and collected my room key from the girl in the College porters' office, the dinner was ending. Changed into smart casual, I headed for Third Quad and the College Bar, passing wine-loudened stragglers in the dining hall, knots of blacktied alumni on the path and a servant watching a man being helped back into his wheelchair at the foot of the steps.

Second Quad, where the JCR (junior common room) used to be. This comprised four rooms:  first, an oak-lined room for morning toast and newspapers (and a small red-haired mathematician who would complete the Times crossword as fast as he could write the answers). This opened onto a second room with a TV, where we would watch Match of the Day and hold JCR meetings; the year before I came up, the students elected a goldfish as President (because like his predecessors, he went round in circles, opening and closing his mouth) and appointed an interpreter to convey the President's rulings. Across the stairway entrance, the Piggery, where they played poker and table football, and one Welshman would regularly smash the glass top on the Gottlieb pinball machine when he failed to get a replay.

Once, as the dons proceeded from sherry in the Senior Common Room to the dining hall, they were met with a hail of breadrolls from the open JCR windows as they passed; from then on, they simply used the path on the other side of the quad. Late at night, Bill, the medical student and rugby player, would shamble through the archway from Third Quad, stand solus in mid-lawn facing the Junior Proctor's room, drop his trousers and sing the Sheep-Shagger's Song in a hoarse, drink-exhausted voice. A decade or two ago, the bar (smartened and relocated) included a reference to his ritual in its decor, echoing the way that Oxford had become a theme park dedicated to a cute version of its history; missing the jab of atavistic defiance in his nightly bawling against authority. The decor has changed again, now that a new, ambitious generation is in possession and society here is restratifying (as a St Andrews graduate confirmed to us later that night); the low Gini Index days of the Seventies are gone.

Escaping the roar of the bar, I drank my vodka tonics and exchanged news and reminiscences with half-remembered faces. Below the College library (where one used to catch glimpses of a silent, white-haired professor of Celtic) once lay the evil-smelling toilets or "traps", graffitied ("beware of limbo dancers"); and the baths to whose provision an earlier Principal had objected, saying that the terms were only eight weeks long, and besides, he and wife went to Rhyl every summer.

I went out of the massive wooden side gate to get a lamb kebab from the large, clean van on Broad Street (no more dodgy late-night boiled hot dogs on Magdalen Bridge now, I expect) and got back in using the electronic key, for the days of open College premises have passed. "Weren't you at dinner?" "No, you only get to talk to two or three people and you can't hear anyway. What was the food like?" "Not bad, though there wasn't very much." "And the wine?" "Better than last time." The speeches had been few and short; the Principal had said that if this were America, the doors would have been locked and donations solicited. We expect to be invited back more frequently now, the retired and retiring, the greyhairs watching the smartly-attired whippersnappers walk past from their post-Finals celebrations. There is the sound of fireworks, startling a bat; youngsters are collecting each other and working out where to go; the lights come on in the Graduate Common Room.

A few minutes to go before the bar closes; last chance to get one or two more in. My friend strolls into First Quad to find a toilet and look for an off licence; comes back empty-handed and goes down the bar to get a couple of bottles of red. We sit on a bench in the moonlit sky, chatting to the late leavers. Isolated wisps of backlit clouds drift above the parapets; ghostly white birds wheel over the buildings at midnight; the moon's face appears at a crenel. It is Midsummer Night, and the stage is all but empty.

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Catlin's Indian portraits

Catlin's painting of Little Wolf

The National Portrait Gallery's exhibition of George Catlin's American Indian Portraits has come to Birmingham Museum (until 13th October). Well worth a visit, for the social history and the powerful personalities Catlin painted.

The NPG has published a hardback catalogue (£25, but currently available for as little as c. £15 + P&P via Amazon).

How will shale gas impact the UK market?

See The Energy Page for Nick Drew's analysis of how even small amounts of shale gas could make the UK energy market cheaper.

Shale and the Price of Gas

When push comes to shove, people really don't understand markets very well. Perusing the increasingly lively meeja coverage of putative shale gas in the UK, we find people who say shale discoveries will bring down the price of gas, and seemingly even more who say it won't - including, remarkably enough, the shale gas lobby itself. Wishing, I suppose, to be cautious in their claims, some of them say the effect will be minimal.

At a meeting for concerned residents at a potential fracking site in West Sussex, a Cuadrilla representative was asked to comment on whether shale gas could drive down customers' energy bills. “We've done an analysis and it's a very small…at the most it's a very small percentage…basically insignificant,” said Mark Linder, a public relations executive at Bell Pottinger who is also responsible for Cuadrilla's corporate development. (Inde) 

Some PR he is, eh? At least he didn't say prices would go up, though we may be sure that in due course someone will - the whole renewables policy is a massive bet on this. The argument seems to be that under EU trading laws we'll be 'forced' to sell it to the wretched continentals, (read: they'll offer to buy it, and if the price is right we'll sell it !), thus neutralising any tendency to lower UK prices. (Even Peter Lilley seems to be willing to concede this.)

Let's put some perspective on this.

• in 1994 a relatively small gas surplus in the UK brought down the price of (wholesale) gas by 60% in 8 months - and it stayed down for 5 years 

• it went up again when in 1999 the UK became connected for the first time to the gas networks of the continent, where gas prices were higher - set by oil-indexed gas contracts. The quantities of gas being exported from the UK that effected this price-shifting arbitrage were relatively small (indeed, on a net year-round basis, extremely small, as UK gas was exported in summer, but there were imports from the continent in winter) 

• European gas importers still paying oil-indexed prices (to Gazprom, Sonatrach et al) have been seriously hurt as spot prices have once more fallen, based on another relatively small surplus stemming from the 2009 industrial downturn. (In consequence they have forced Gazprom to reduce their prices.) 

• US gas prices have been absolutely trashed by substantial amounts of shale gas, and have stayed low despite warnings for several years that this can't go on. Of course, as yet they are only able to export very small amounts of the net North American surplus (the US is still a net importer, from Canada). 

So: gas prices like other prices, as any fule kno, are frequently set by marginal effects, and move in the predictable direction. Surplus => down, just to be clear ... If there is any economically recoverable shale gas lurking there, its directional impact on price is not in doubt. If and when it is produced in fair amounts (say, equivalent to 10-20% of UK demand - a lot less than some predict will flow) it will have the potential to impact on spot-gas prices not only in the UK but in Europe as a whole.

The absolute effect of this will hinge entirely on the detailed supply-demand dynamics of the time. This being a good few years into the future, we have no idea whatever what those will be. OK ?

PS: The Horizon programme on shale 'n fracking was fairly balanced and well done. It's on again this evening, and here.  


This post first appeared on the Capitalists@Work blog


All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

New energy sources just kick the can

"Fire ice" is a term to intoxicate the word-lover. The substance is methane hydrate (or clathrate, meaning "caged"): a crystalline structure of water contains the gas molecules deep under the sea, and it's thought there may be a lot of it.

In this week's Spectator "Energy Special" section, Charles Mann spins a candy-floss speculation about its implications "for oil sheiks - and for greens", before admitting that the Japanese exploration may come to nothing, or prove very expensive. For it's one thing to identify an energy source, and another to exploit it in a cost-effective way.

Similarly, Martin Vander Weyer reflects on the dubious prospects for UK shale fracking: maybe 10-15 years of another cheap energy bonanza, maybe nothing.

Of the three articles in that section, Matthew Sinclair's is the most penetrating, because he sees that the more money spent on getting energy, the less there is for the rest of the economy.

Setting aside ecologists' concerns about the climatic effects of the large-scale burning of fossil fuels of any kind - and I think they're legitimate - there is A K Haart's question posed on The Energy Page last month: will we use the opportunity wisely? Otherwise, as he says, quoting Michael Edwardes from 1980, we'd be better off leaving the stuff in the ground.

Britain's Industrial Revolution began in the eighteenth century with coal and water (and the construction of canals and railways); then there was Easy Oil, taking off in the second half of the nineteenth century, and the opening of world markets to the products of Western technology. After that, we came to Harder-to-Get Oil and a globalised economy that has undercut Western labour for thirty years, plus an increasingly detached Western uberclass that blithely imported dividend-sustaining cheap labour and painted its critics as racists. Now we have increasing structural unemployment and pseudo-Green global energy policies that transfer industrial productive capacity to the East, where fossil fuels are ruthlessly exploited to stay ahead of political-economic disaster, like a fox running through the fields with its tail on fire.

It's demand we must manage, not supply. After all the energy efficiencies we can introduce, we shall have to expect less materially per capita - though that is not the same as diminished happiness.

If we run to the agenda of the amoral elite, the solution will be in various appalling forms of population reduction; the alternative is a kind of revolution - peaceful, of course, as those in power have more information and destructive capability than ever.

In the end, all these practical issues will resolve themselves into philosophical, moral and spiritual questions about the Good Life.

All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

A parade of Polish dragons

See World Voices for the Dragons of Krakow.

Poland: Dragons in Krakow

The day we were due to leave, the sun came out and shone on the thirteenth annual Malopolska Dragons' Parade. Organised by Teatr Groteska, dozens of monsters proceeded from the Wawel fortress down to the packed Rynek Square.

(Photographed by author, 2 June 2013)

This picture combines several local elements. First, there is the traditional dress, indicating the strong ties of language and culture that have  kept the Poles together, despite the fact that since 1795, the country has only been united and independent for a total of 45 years. After the interlude of 1918-1939 came fifty years of totalitarianism in two varieties, so for many of the onlookers the habit of celebration is still fresh. The Central Square has a plaque to commemorate the suicide there of Walenty (Valentine) Badylak, who set himself on fire to protest the suppression of the truth of the Soviet massacre of the Polish elite at Katyn. We were fortunate to have seen the Corpus Christi procession ("never seen so many nuns in one place," said my wife) the Thursday before this parade, and the green-clad Army formed part of the march past - neat and steely serious.

Next is the character seen here riding a dragon. His name is Lajkonik and he has appeared a little early, since he has his own festival a week after Corpus Christi ("konik" is Polish for "horse", though Google translates the whole word as "festivities").  Krakow was attacked by the Mongols in 1241 and it's said that a citizen who had killed a Tatar came back into the city mounted on a horse and clad in his foe's robes. The invaders won, but had to break off their conquest of Poland and return home because the Grand Khan had died, forcing the election of another. They came back twice more before the end of that century, and to this day a warning clarion is blown hourly from the tower of St Mary's Church in the square; the call ends abruptly because the guard was killed mid-note by a Mongol arrow. The current trumpeter is the third generation of his family to perform the ritual, a tradition dating back as least as far as the fourteenth century.

Last is the dragon himself. Legend has it that he dwelt below the Wawel rock on which the castle now stands (commanding a bend in the Vistula). Smok ate girls as his tribute until fooled into swallowing a sulphur-stuffed lamb, which made him so thirsty that he drank from the river until he burst. A forty-year-old, seven-headed sculpture of him stands by the castle, emitting flames every few minutes to the delight of passing children (and now he even belches in response to SMS messages). A huge T-Rex-like carnivorous dinosaur, the remains of which were found 100 miles away near Lublin, has been named Smok Wawelski in his honour.

Whether dragons ever really existed is a question for another article, though my answer to that isn't no. Meanwhile, here are some more images from this year's crop of Smoks:

 

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Nick Drew on energy market distortions

See The Energy Page for Nick's piece on why helping little energy companies compete isn't doing them or us any favours.

Bilderberg, Max Keiser, Alex Jones and Nigel Farage

Some comments on Max Keiser's latest piece indicate discomfort with Alex Jones' performance on Andrew Neil's Daily Politics show. My two cents' worth:

Jones' performance has been described as in "meltdown" (e.g. by the normally shrewd Guido) - but that's a serious misreading. This wasn't John Sweeney exploding impotently at the Scientologists.

The British approach is that you can say what you like because it makes no difference, so you may as well be cool about it, too, maybe even ironic, and we expect the usual ending: "Thanks for your input, it'll be interesting to see what happens".

Jones was pushing through that in forthright American style and when he (in effect) accused Neil of supporting the status quo I heard a little bell ring. Neil's "loopy" hand gesture suggested some frustration that he hadn't been able to dominate and kebab his guest as he had with Chris Mounsey of the Libertarian Party.

Some say of cars, "Drive it like you stole it"; this was "Do politics like you mean it." We've had mealy-mouthed twisters up to here (gesture: hand parallel to chin); I think Keiser is right to suggest that we're ready for brash. Keiser himself acts gonzo but is nobody's fool, and when you see what he's criticising you begin to perceive that reality has become so bizarre that the Oxford common room debating style just isn't up to the challenge.

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Womanly care

 Heaven knows what taste the lieutenant could boast of, but even he noticed one characteristic peculiarity about the whole place, which no luxury or style could efface--a complete absence of all trace of womanly, careful hands, which, as we all know, give a warmth, poetry, and snugness to the furnishing of a room. There was a chilliness about it such as one finds in waiting-rooms at stations, in clubs, and foyers at the theatres.

 Anton Chekhov – Mire (1886)

Do we say such things today? Or if we do, is it with a hint of embarrassment or defiance? Or like the fabled file in a prisoner’s cake, is it better to slip them in as Chekhov quotes?

I’m sure nobody is unaware of what Chekhov meant by the chilliness of public spaces. As to why they are chilly - moderns are not so likely to borrow his domestic ideal as an evocative contrast.

Yet our homes are not the private and highly personal spaces they were in Chekhov’s day. Corporate and government interests have seen to that.

All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

Small Electricity Suppliers Have No Right To An Easy Life

Ofgem, whose uselessness over the past decade is a disgrace to the excellent work done by its predecessors Ofgas and Offer in the 1990's, is at it again.

Britain's big six energy companies will face fines unless they open up the electricity market to competition from smaller rivals, under proposals by the regulator designed to "break the stranglehold" of the biggest suppliers.  (DTel)

The details of this are less dramatic than one might imagine: they intend to 'force' the biggest 8 generators (not just the 'Big 6') to become market makers in the forward market out to 2 years.  Since liquidity in the 2-year energy forwards is pretty unsatisfactory - and since that, in turn, is pretty damaging - no one can be happy with the status quo.  Ofgem have been farting around worrying aimlessly about energy liquidity for 8 years now and the only positive development has been the advent of hedge fund and PE money since around 2006 - mostly in the gas sector because electricity trading is fiendishly difficult.  On the downside, banks have been progressively scaling back their commodities trading altogether.

Of course, the real issue is that in the '00s, Ofgem and the competition authorities (against their better judgement but under instruction from Gordon Brown) allowed dumb vertical integration to take hold once more in the electricity market, after the successful efforts of 15 years to break it up.  EDF being allowed to buy BE was the final straw in the structural undermining of liquidity, a point I made at the time. The European authorities, who ought to be a back-stop against this kind of thing, were equally supine.

What I don't understand is why anyone thinks small, under-capitalised electricity suppliers have a God-given right to thrive.  This is the most capital-intensive of industries - whether or not a player intends to back ts energy positions with physical assets (power plants, gas production or storage facilities etc).  Even if they intend to operate on a 'merchant' model - just buying wholesale to meet retail demand - huge quantities of risk capital are required to back the big, long-term deals that are required for that business model.  That is the lesson of 'asset-lite' Enron:  it's a game for big boys with a credit rating of at least A, preferably higher.

What's needed is real competition between ten or so properly-capitalised players. Boutique energy marketing outfits with no credit won't be able to transact 2-year hedges anyway - unless the new 'rules' force the Big 8 to take the credit risk, the merest featherbedding.  Along with the free ride that is currently given to windfarms in terms of not being charged the full cost of their intermittency, plus a heap of social obligations as regards 'poor' retail customers, and even more nonsense contained in the Energy Bill, the burdens being heaped on the big players will one day make some of them decide it's not worth the candle.  Obvious candidates for giving up in disgust are cash-strapped RWE of Germany (nPower) and Spanish Ibderdrola (Scottish Power).  It's not too much of a stretch to see E.ON having second thoughts as well.

See how we like it when Big 6 becomes Big 3, eh?  No amount of flaky, subsidised suppliers called 'Nice Clean Energy' or 'Friendly Power' will help us then.


This post first appeared on the Capitalists@Work blog

All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

The PRISM Scandal: it gets worse

The ten o' clock news is full of distraction and non-denial denials from the Prime Minister and Foreign Secretary. The PM is vapouring on about the importance of the role of the intelligence services; and the FS is denying that GCHQ is breaking the law without denying that we have all our telecommunications spied on, thus confirming that the law here already permits what the Americans are doing.

I am not surprised, but I am disgusted. Caught with their pants down and without the courage to tell it like it is.

If only libertarians could leave off their trivial consumer obsessions and tackle the subject of the full-scale tyranny in front of us.

Gedankenexperiment

Caveat: I am not an economist, I just like playing with numbers.

Consider an economy with 3 classes of people.

Class C: 50% of the population, earning an average of $50,000 per year, and spending all of it.

Class B: 49% of the population, earning an average of $100,000 per year, spending $95,000, and investing $5,000.

Class A: 1% of the population, earning an average of $1,000,000 per year, spending $300,000, and investing $700,000.

Assuming equal rates of return, class A will receive 74% of any gain in wealth.

Take modest growth of 3.03% per year for 60 years. The total wealth W has now grown to 6W.

Even if they started with nothing, class A now has 3.7W, almost 2/3 of the total wealth.

UK: Green slime

Reading SAS stories, I often come across the nickname "green slime" for the Army Intelligence Corps. I'd hazily thought it was a squaddie comeback at the alien, slightly threatening nature of the people who know more than they'll ever tell you.

It's a bit simpler than that. The Corps beret is a bright green, and so when massed on parade the soldiers will seem to be a moving, verdant carpet.

The kit was devised by its Colonel-in-Chief, the Duke of Edinburgh. The CIC came down to Regimental Headquarters for an inspection shortly after the new outfit had been issued, and asked the Sergeant-Major what he thought of it.

"Bloody horrible, Sir."

"Did you know that I designed the uniform myself?"

"Well then, we've both made a mistake, haven't we, Sir?"

Smoking: a question

Are we to give up smoking because it "causes fatal diseases", or welcome it because it provides much-needed tax revenue?

As Peter Cook said about his smoking, "I risk my life for my country on a daily basis." And it was liver disease that killed him.

Plain packaging for alcohol, anyone?

USA: Murder in the chicken shack

Email from America 3: the rural dream, and bloodstained reality

A decade ago, our second son had just been born and I was settling quietly into middle age. My wife had other ideas, and decided that we should move to the country. We bought 9 acres with a house and a barn, our own well and sewage system, and neighbours who leave us in peace. We cut our own wood for winter heat, breed goats for meat and milk … and raise chickens.

It started innocently enough with a call from the main post office on a Saturday afternoon, letting us know that we could pick up a package of live animals. What we got was a small cardboard box, stuffed with 50 fluffy chicks. We cooed over them, moved my car out, and installed them with a heat lamp in the garage. Within a month, they had some real feathers, and looked like badly-dressed inner-city schoolboys. One more month, and they were fully-fledged chavs – pushing, pecking, shoving, and occasionally killing each other.

They were so nasty that I didn’t feel really guilty when we drove them to the processor. They returned neatly wrapped and ready for the freezer, costing only 2-3 times what our local supermarket would charge. But they tasted better, or so we told ourselves.

We are now 8 years into our hobby, and have learned a lot. For example, give a rooster 10 hens, and he will hump and torment all of them. Put 20 hens with two roosters, and the dominant one will fight the other for all of them. It isn’t just the males. Remove all roosters, and one hen will take over, like a bad lesbian prison movie. It is distressingly human.

With selective breeding, we now have roosters who will defend their hens, but (usually) not attack people. In our microcosm of social engineering experiments, that may be the best that we can do. At the very least, it has given our children an appreciation for the convenience of grocery stores, and survival skills that rival those of an Eagle Scout.

Tim is a math professor in Ohio.

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Costa permanence

Consider this Santayana quote on the deceptive desire for permanence

That the end of life should be death may sound sad: yet what other end can anything have?

The end of an evening party is to go to bed; but its use is to gather congenial people together, that they may pass the time pleasantly. An invitation to the dance is not rendered ironical because the dance cannot last for ever; the youngest of us and the most vigorously wound up, after a few hours, has had enough of sinuous stepping and prancing.

The transitoriness of things is essential to their physical being, and not at all sad in itself; it becomes sad by virtue of a sentimental illusion, which makes us imagine that they wish to endure, and that their end is always untimely; but in a healthy nature it is not so.

George Santayana - Some Turns of Thought in Modern Philosophy

If we extend the idea, it is easy enough to see how a deceptive yearning for permanence may be used to justify all kinds of authoritarian trends. There are some curious byways one might explore with the idea too.

Take Costa coffee shops for example. After much vehement local opposition a new one has opened in Bakewell, Derbyshire. Bakewell is in the Peak District National Park but it made no difference in the end. Veni, vidi, vici as usual.

There are other factors of course, but do huge corporate bodies provide the illusion of beneficial permanence? Do we cosy up to the illusion via a cup of Costa’s second-rate coffee?

All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

Will fracking help us - or hinder us?

AK Haart asks the more penetrating questions about the benefits of shale oil, over at The Energy Page.

Mixed blessing?

Suppose the UK has vast quantities of readily accessible shale gas – what then?

If the Cabinet do not have the wit and imagination to reconcile our industrial needs with the fact of North Sea oil, they would do better to leave the bloody stuff in the ground.

Sir Michael Edwardes on North Sea Oil in 1980

Do we have the wit and imagination to reconcile our energy and social needs with a shale gas bonanza? If the gas is there in abundance, are we likely to use it wisely? 

What would count as using it wisely?

All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

Bill Oddie (naturalist): HSBC funding ecological destruction in Borneo

http://www.globalwitness.org/hsbc-sarawak/

All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.