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.

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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

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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?

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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?

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

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

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John Ward: "THE SATURDAY ESSAY: What else are they manipulating?"

Answer: FOOD PRICES

Too much food costing too much money is killing people

 

Sector by sector, the truth is at last trickling out: ICAP, Libor, Gold, Currency values, oil…..none of them are natural markets, all of them are being ‘directionalised’….as in, manipulated for the good of the few – and never for us. But the most important commodity we have probably represents the most criminal scam of the lot.

The ‘price’ of gold plunged another $33 net yesterday. As usual, the drop made no sense. As usual, it took place on a Friday. As usual, the two steep declines happened when the London and New York markets opened. Those who have spent half a decade or more presenting clear signs pointing to manipulation of everything from fiat currencies to interbank rates have in the last year gone from fringe conspiracy theorists to vindicated commentators.

If it can be manipulated to the advantage of those in charge, then it will be. One thing big business can’t manipulate is the weather. And the weather is behaving strangely at the moment. The Italian Giro Cycle Race director Mauro Vegni confirmed to Agence France Presse yesterday that snow and winter-like temperatures on the upper flanks of the Col du Galibier may force Giro officials to remove the historic climb from this Sunday’s 15th stage. Yesterday was the 17th of May. Multiple freezes in U.S. hard red winter wheat country have further reduced the expected size of this year’s crop – after drought screwed up the region last autumn and during the winter.

So it makes sense that the wheat futures are suggesting high prices, right? Er no actually, it doesn’t: global cereal production will increase 6% to 2.708 billion tonnes in 2013 from the previous year, said the usually definitive Food & Agriculture Organisation (FAO). For while Asia is consuming more wheat now, to meet that demand more countries around the globe are growing it.

Yet the very same FAO yesterday pointed out that World food prices rose during April…for the second straight month. Now obviously, there’s more to ‘food’ than wheat, but let’s get this into some kind of perspective. Here in South West France, for example, we have had a cold and wet Spring: but every tree I can see is heavily laden with fruit. We are going to have a bumper harvest. Indeed, wholesale food prices should fall this year, according to the world’s large agricultural trading houses – like Glencor, which expects bumper crops in the US and South America. USDA says 125m more bushels of corn will remain in silos before harvest, an estimate that should see prices tumble.

But world food prices still rose for the second month in a row. In Brazil, for example, the price of tomatoes has gone through the roof. “I’ve had this restaurant for 48 years and this has been the worst price rise I have seen,” said Walter Taverna, whose restaurant Conchetta is a fixture of São Paulo’s historic Italian district, Bixiga. Where I live in France, not far from me is Marmande – Europe’s biggest producer of tomatoes. I go to the markets and supermarkets to buy fresh almost every day: my observation is that tomatoes have gone up by a good 25% year on year. In India, wholesale onion prices rose 50-60% in December and are up sixfold from a year ago. But the Government admits there is no crop-failure reason for this.

The fact is that there are umpteen ways to manipulate the price of food: it’s done by governments, by agribusiness, by Wall Street speculation – and then by supermarkets. (It’s also done indirectly via oil-price manipulation, which affects the cost of using machinery to crop, clean and prepare everything from apples to prunes. But we did that story already).

Many governments around the world depend on big cash crops to balance their deficits and amass foreign exchange. Argentina has had money problems forever, and there is blatant evidence to show that big farming there, hand in glove with government, has been hoarding soya beans given that the price has been depressed for a while now. Although Argentina isn’t a major-league heavy hitter in the global soyabean market – it accounts for about 10% of world production – its warmer temperatures allow it to crop early… and meet demand from huge net importers like China – until the US starts harvesting in the second half of the year. They’re hoarding the crop right now, and so prices are rising.

The last fifty years have seen a decline in the numbers of small to medium-sized farms across the world. Last year, deep in the constipated bowels of Brussels, a committee set up to find out this sort of thing came up with a frightening statistic: only 6% of European farmers are under 35. Farming is going out of fashion. Or rather, family farming is: agribusiness is going from strength to strength. Or from bad to worse, depending on your moral outlook. In 2004, the market share for the Big Four agrochemical and seed companies reached 60% for agri-chemicals and 33% for seeds. Seven years earlier, the figures were 47% and 23% respectively. The concentration continues – again with help from Big Government. The European Union is currently trying to slip through a law making it illegal for home growers to trade in seeds.

Today, it is impossible to separate the dominance of agribusiness from the power of hedge funds. The United Nations special rapporteur on the right to food Jean Ziegler recently indicted multinational companies for badly aggravating the food crisis and raising food prices. Speaking in Geneva, Ziegler told journalists, “Until early March, prices of many food articles followed the demand and supply forces. But since then there has been an explosion in prices which is largely due to the role of big corporations and hedge funds.” These big agri-corporations, he said, had huge stocks and, aided by hedge funds, had indulged in speculative activities so that “food access decreased for poor people while the profits of these companies were inflated”.

I’ve never met Mr Ziegler, but his empirical data clearly reflect my shopping experiences since February. The US Department of Agriculture (USDA) agrees that there will be food-price inflation in 2013: it forecasts a 2.5 – 3.5% increase for all wholesale and retail food prices in 2013. But the snag with this USDA forecast is that such an increase is way, way below what we’re seeing on the ground.
Some of this reflects the concentration in turn of food retailing into the five main UK multiple giants, the four in France, the five in Germany and so on. They all have form when it comes to screwing both farmers and consumers on price to lift their margins: the UK’s main shops nearly killed off the entire lamb farming sector some years back, and both milk and eggs have seen farmers in poverty while shoppers pay through the nose. Not only does this exacerbate the trend towards large agribusiness, it also lets the Tescos of this world look dirt cheap on, say, pork products in order to pile more margins onto other foods and thus end up making more money.

But the most damning evidence points the finger clearly at Big Business and Wall Street. According to a report in January 2013 from the World Development Movement, Goldman Sachs made about $400 million betting on food prices last year. (In 2010, they made a billion doing it). But using the word ‘bet’ implies that Goldman took a risk. In fact, the firm has a track record of buying long and in bulk to artificially push up prices…..and making a quick exit before the late price drop then inevitably occurs. By this time, of course, the folks who need the food to be cheap may well be dead. But Lloyd Blankfein is doing God’s work, so we mustn’t get in his way.

As always, the banks and hedgies have an answer for the anti-speculation lobby most obviously represented by Oxfam: they (Deutsche Bank and Allianz being prime movers here) argue that there “is no evidence that price rises are to do with anything beyond population growth and rising demand”. It’s a Jeremy Huntesque answer, because most of the evidence in fact points the other way. Indeed, other banks are clearly sensitive on the issue: Oxfam’s Belgian office has targeted KBC Bank and Dexia’s exposure to agricultural commodities, and has had some success in France by getting Credit Agricole and BNP Paribas to drop their food ETFs. In the UK, Barclays too has withdrawn from food commodity trading. This last, of course, is yet more backwash from the Bob Diamond era, and on message with being a nice clean rather than nasty cheating bank.

These are, however, small victories in the scheme of things. If pro-speculation people say price rises are solely to do with demand, then they need to explain this: the market for hedge betting and speculation in global food prices began to take off big time around 2007. Up until then, there had been considerable success in reducing the percentage of malnourished humans and deaths from starvation. But as a recent FAO report shows, ‘Since then, global progress in reducing hunger has slowed and levelled off….the undernourishment estimates do not fully re flect the effects on hunger of the 2007–08 price spikes or the economic slowdown experienced by some countries since 2009, let alone the more recent price increases’. It’s not necessarily causal, but it is correlated. It requires a better answer than “there is no evidence”.

But the most damning data of all come from those with no agenda beyond stating the problem clearly. The fact is that 867 million people are woefully malnourished, yet there is enough food in the world today for everyone to have the nourishment necessary for a healthy and productive life. One in eight humans on planet Earth do not get enough food, making hunger and malnutrition the number one risk to health worldwide – greater than AIDS, malaria and tuberculosis combined.

There are myriad reasons why this is. But among these are definitely (1) The decline in smallholding farms that produce foods cheaply and locally, (2) the globalisation of food pricing putting the cost beyond the reach of the poor (3) hoarding by governments and agribusiness to wait for the best price, and (4) deliberate price-directionalisation by speculators.

Frederick Kaufman, author of Bet the Farm: How Food STOPPED Being Food told The Daily Ticker last October that the price of global grains tripled from 2002 to 2012…..after decades of stability, and just two years after deregulation allowing derivatives food trading was applied. “Something new has come to this market and we’re seeing absolute levels of volatility that we’ve never seen before,” Kaufman said, “the exponential growth of commodity derivatives. U.S. derivatives trading in wheat alone has surged from $10 billion to $300 billion in less than a year….speculators are completely overwhelming the commodity futures market, subverting a market that worked so well for over a hundred years.”

Again, it’s a seriously accusatory correlation. And as one finds so often with the financial community, all attempts to reverse the deregulation of the trade are met with a wall of lobbying cash. Call me suspicious, but common sense suggests pretty strongly that this means they’re making a bundle out of it. Throughout 2011, efforts to do re-regulate within the Dodd-Frank Financial Reform Bill were met by massive Wall Street lobbying of everything from Congress to the Commodity Futures Trading Commission (CFTC) and the Security Exchange Commission. Goldman Sachs alone spent $1.08bn protecting the trade. Now, you can’t make a turn by directionalising a sector downwards. Sure, you can win a bet by backing a fall in prices, but then that would mean shafting global agribusiness on occasions. And there are two chances of that happening.

Finally – and probably conclusively – we have to recognise that since 2008 the major part of the commercial world has been either heading for, in, or just limping out of recession. To suggest a boom in food demand when money is tight simply doesn’t make marketing sense….any more than Gold trackers falling in price while bullion roars ahead makes for the remotest iota of sanity. Certainly, there are specific factors of real importance: the Japanese Tsunami raised seafood prices, 2012 crop damage (especially in Australia) meant a spike in vegetable prices, biofuels have reduced the percentage of grain used for food, Chinese and Indian consumers are turning to wheat, and drought weather can ruin most crops before too long. Also some trends do have genuinely unforeseen consequences: it’s more profitable to sell grain to China than give it to laying hens…so that puts the price of eggs up, as laying hen numbers fall. But almost all of even these are the direct result of having globalised the food business: whether the troughers like it or not, market-driven global trade in food extends the length of the food hugely, creates concentration that increases the impact of one failure, and pushes up prices even without speculation.

But far too many factors cited by the greedy few are excuses: nothing more, nothing less. In a piece last year, Forbes magazine totted up the ten big factors impacting on food prices, and guess what? Speculation and derivatives were nowhere on the list. But even that article had to concede that food inflation early in 2011 (at the height of the recession) was the highest for 36 years – despite interest rates being close to zero. Ultimately, it cannot make sense for those from poor economies to pay the same prices as Sherman McCoy in Manhattan….but that is increasingly happening. The real impact of artificially expensive food is felt by the global poor. In places like Tajikistan, for example, the average family spends almost 80% of its income on food now. Price spikes in such regions can mean the difference between life and death.

The problem is globalisation of the food business, too much power held by big agribusiness, and financial provider speculation/directionalisation. Such ‘betting’ screws the price of gold, raises the price of oil, fixes the interbank lending rate, dilutes the value of a citizen’s currency….and raises food prices.

It is yet another reason why The Slog’s mantra remains tediously consistent: we should make regional self-sufficiency the goal of economies in general and farming in particular, and only trade in natural surpluses. This would reduce unemployment by putting people back on the land, secure the food supply with a far greater spread of risk, reduce national deficits, feed the Third World more cheaply…..and reduce both shareholder returns and financial centre profits. So we won’t be doing that then.

The neocon business model is mad, globalist mercantilism is a crock, and permanently high unemployment in the West and elsewhere is not a social price worth paying so that institutions can get their returns and keep us all in savings growth and pensions…..not. Lest we forget, until the late 1950s virtually no big financial providers anywhere were even in the stock market: the stock market was there to finance business – which is what it should be for.

None of this is fluffy Leftie bollocks: it’s common sense and common decency. But the Mr Creosotes keep trotting out their feeble defences, getting away with it, and then laughing until they wet themselves. The size of the task faced by those who would like to make the world a better place without violence never looked bigger than it does in 2013.

This piece is reproduced with the kind permission of the author. The original is at The Slog blog here.

I beat Hitchens: Clegg to collect his reward as an EU Trojan Horse?

Peter Hitchens tells us today that he has long predicted the LD/Con spat and that it will result in Clegg getting the lucrative post of EU Commissioner.

Three years ago - long before Hitchens - I reminded readers of Clegg's early stint as a student at the College of Europe, and predicted the EU job for him:

"It is, I think, significant that Clegg's postgraduate learning included a spell at the College of Europe in Bruges, an outfit whose purpose was described by postwar Euro-idealist Henri Brugmans as "to train an elite of young executives for Europe." I read that as a sort of McKinsey for pliable idiots. Other British Isles alumni include former Tory MP Nigel Forman, Neil Kinnock's sprog Stephen, LD stiff Simon Hughes, ScotNat MEP Alyn Smith (how a nationalist and a federalist? explain!), and Irish-born ex-Gen Sec of the European Commission David O'Sullivan.

"Now, for a short spell, Clegg's playing with the big boys, and they're going to have his marbles and the bag they came in. [...]

"The best that can be hoped for by Nick Clegg, I think, is to do a Blair: sell out to powerful interests who will springboard him into some position less vulnerable to the people's franchise. Perhaps the reward for his long service to Europe will be a seat on the European Commission (maybe he still speaks to David O'Sullivan and friends - see above). He, and ultimately his descendants, will be accepted into that modern equivalent of the Hapsburg dynasty that is the nascent power support structure of the EU."

As with Peter Mandelson, doubtless Clegg's putative position will mean that he cannot criticise the EU (even if he wished to), because to do so will result in the loss of his pension.

I'm not sure whether these days, selling out to a foreign power that wishes to infringe or abolish our sovereignty could in theory provide grounds for a prosecution for treason. I also don't understand why there has been so much done since 1998 to water down or abolish the relevant legislation and punishments.

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.

Great new Energy Page pieces! Nick Drew on energy security, AK Haart on scientific uncertainty in climate studies

Nick Drew closes his latest series on energy threats in the UK - something that has suddenly become a focus of attention in the mainstream media, as for example in The Spectator's latest edition here.

And we welcome a new voice to the Energy Page: distinguished scientific blogger and author AK Haart shows how "an inconvenient truth" may be inconveniently flawed, or unfairly ignored. AKH has been blogging regularly for two years and has taken a temporary (we hope) online vacation following the completion of his latest book.

A Climate of uncertainty

Many years ago I was chatting to an accountant who had been given the job of costing a range of standard analytical techniques used to assess pollution in natural waters.

I still recall the look on his face when I told him that the true value of an ammonia result of say 1.0 milligrams per litre (mg/l) might lie somewhere between 0.9 and 1.1 mg/l and occasionally would lie outside that range.

He was astounded. At first he couldn’t believe that a value of 1.0 mg/l of ammonia might not be exactly that. Even worse, it was unlikely to be exactly 1.0 mg/l even if that was the result reported and paid for. I had to draw a bell curve for him and explain the role of statistics in such analyses.

In the end he realised he’d learned something about chemical analysis and we moved on. What I didn’t mention was another word I could have introduced him to :-

Assuming...

Assuming the sample was taken from the right place.

Assuming the sampler used the standard protocol.

Assuming the analyst didn’t mix up the samples on the analyser.

Assuming there is nothing unusual to affect the analysis.

The natural world is exceedingly complex and the environmental sciences are riddled with measurement uncertainty and analytical pitfalls. Inevitably we always have to deal with that thoroughly human aspect of real life – we have to assume certain conditions which could affect our analytical results, measurements and our conclusions.

Suppose you are to conduct a limited survey of lead in a stretch of trout stream lying between two bridges. You have a sampling protocol borrowed from the Environment Agency and a contract with an accredited analytical laboratory where your samples are to be analysed.

Everything goes well, your samples are collected by a student and the analytical results are as expected for a trout stream. All seems hunky dory.

Apart from one result.

This single result shows an extremely high lead concentration in a single sample taken from the downstream bridge. So you have that particular sample reanalysed. After reanalysis the result stands – one high lead result is confirmed.

What do you do?

Report it and the entire stretch of trout stream comes under intense suspicion for intermittent contamination by lead. Yet the result appears hopelessly anomalous. You check with the student who took the samples. No problems there – all sampling protocols were followed.

After some soul-searching you leave the high result out of the final report. It’s too anomalous and too contentious. Frankly you don’t believe it because human error is hardly unknown in such cases, from contamination to mixed-up samples. 

This is key – you don’t believe the result. You are convinced it is due to human error.

After your report is published, you discover that a field adjoining the trout stream was spread with sewage sludge in the nineteen seventies. The sewage sludge may have had a high lead content from lead in petrol and road runoff into the sewers. The anomalous lead result occurred shortly after a heavy storm so there may have been runoff from that field.

Oh dear.

This little story is pure fiction and the high lead result could still have been due to human error. The problem it highlights is common in all environmental analysis - even satellite temperature measurements of the atmosphere.

When studying the natural world, we have our expectations and very often anomalous findings are due to human error, process malfunction or instrument failure. So one way or another, anomalous findings tend to be left out of the picture and the picture itself migrates towards a consensus.

There are often political pressures behind those expectations too. Good scientists know this and cope with it, but the potential for deceiving ourselves and others is considerable and insidious.

A few decades ago, climate scientists had a far more complex problem to deal with and many flunked it. They failed to cope with climate complexity and the pressures their assumptions eventually brought on their incautious heads. We should not be particularly surprised.

The much trumpeted climate consensus means all our assumptions are correct. Oh dear – have our energy policies been bent to breaking point over something so naive?

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.