Showing posts with label All about Money. Show all posts
Showing posts with label All about Money. Show all posts

Tuesday, January 10, 2012

Republican of Angolan Banking System Ready for Influx of Oil Dollars, Emidio Pinheiro CEO Says

Jan. 10 - Angolan banks are preparing to handle hundreds of millions of dollars from foreign oil companies operating in the African country when a law requiring them to use local lenders comes into effect later this year.

Angolan Banking System Ready for Influx of Oil Dollars, CEO Says

Emidio Pinheiro, the chief executive officer of Banco Fomento Angola, the country’s second biggest private bank, expects oil companies to start using local banks to pay part of their taxes and suppliers by the end of June.

“It’s a very significant challenge for the financial system,” Pinheiro said in a phone interview from Luanda. “I believe we will be ready for it.”

In the past, oil companies weren’t required to use banks in Angola, Africa’s biggest producer of crude after Nigeria, as lenders couldn’t handle such transactions, Agencia Angola Press reported on Oct. 26, citing a proposal of the new oil law.

The law, approved by parliament in Luanda on Nov. 29, will be phased in so that Angolan banks can adjust to it, Pinheiro said.

The southern African country, which emerged from a civil war in 2002, is adopting measures to increase transparency in the banking sector, said Pinheiro.

Last year, President Jose Eduardo dos Santos signed into law a bill designed to prevent money laundering and the funding of terrorist activities. The country ranked in the bottom 15 of 183 countries in a Transparency International corruption study last year.

“Such laws will bring more credibility to Angola’s economy and create a more business-friendly environment,” said Pinheiro.

Booming Economy

Angola is attracting more foreign companies as its economy booms. Gross domestic product is is expected to grow 10.8 percent this year, up from an estimated 3.7 percent in 2011, according to the International Monetary Fund.

“There is a lot of interest in Angola from foreign investors, mainly because the country’s energy sector remains robust,” he said. “There is also interest in farming and other industries.”

About 21 banks operate in Angola, including Standard Bank Group Ltd., Africa’s largest lender. Banco Fomento Angola, which is controlled by Banco BPI SA, Portugal’s third-biggest publicly traded lender, accounted for more than 60 percent of BPI’s nine- month net income last year, according to BPI.

--Editors: Hilton Shone, Digby Lidstone | Bloomberg

New Year's Eve show: New Jersey Concert Promoter and Son Held in Angola Over Nas No-Show

LUANDA, Angola –  A New Jersey concert promoter and his son were marooned in Angola Monday, unable to leave the country while authorities investigate a canceled New Year's Eve show by the rapper Nas.

Patrick Allocco, 51, arranged for Nas to perform in the southwestern African nation on New Year's Eve through his company AllGood Concerts, the Star-Ledger reported.

He and his 22-year-old son, also named Patrick, arrived in Angola on Dec. 30 and learned that the rapper had canceled.

"When I told the local promoter that the acts had not traveled, he became extremely angry," he said.

Local promoter Henrique "Riquhino" Miguel is demanding that Allocco return the $300,000 he paid for the concert, plus another $50,000 in expenses.

Allocco has not been arrested, but he said his passport was placed on hold as authorities investigate. "The investigation could last forever," he said. He also claimed that Miguel threatened him at gunpoint.

He said he and his son were battling dysentery at the hotel, but were otherwise in good spirits.

Allocco and his son, of Morris Township, N.J., have contacted the U.S. Embassy in Angola. A US State Department official who asked to remain anonymous said, "The parties are working toward a resolution, and Embassy officials will continue to provide all appropriate assistance."

Allocco said Nas has wired $200,000 to his attorney. "He is supposed to send another $100,000, but now he is reneging," he said.

The Star-Ledger was unable to reach the rapper for comment.

Thursday, August 25, 2011

Angola Economic Growth to Jump to 8% in 2012 on Oil Boost, World Bank Says

Economic growth in Angola, sub- Saharan African second-biggest oil producer, will probably accelerate to 8 percent next year due to higheroil prices and increased spending, World Bank economist Ricardo Gazel said.

The southern African nation’s economy may expand 5 percent this year, Gazel said in a telephone interview yesterday from Maputo,Mozambique’s capital. Gazel is the Washington-based institution’s economist for Angola and Mozambique.

“The economic growth prospects for Angola are solid,” he said.

A recovery in oil prices has boosted Angola’s economy after a drop in 2009 depleted its foreign-currency reserves, leading the government to cut spending and postpone repayment of $6.8 billion in arrears to construction companies that helped rebuild infrastructure after the end of a civil war in 2002. Brent crude has surged 18 percent this year, according to data compiled by Bloomberg.

Oil accounts for about 50 percent of Angola’s gross domestic product, 80 percent of government revenue and more than 90 percent of exports earnings, according to Gazel.

“Today, Angola is in a completely different position and is set to resume investments in the non-oil sector that will further stimulate economic growth,” Gazel said. Lower oil production due to maintenance work this year should be “more than compensated” by higher oil prices, he said.

State spending will probably also increase ahead of elections due in 2012, helping boost growth, excluding oil, expanding by about 10 percent this year, Gazel said.

Budget Surplus

Standard & Poor’s raised the country’s sovereign-debt rating to BB- last month, three levels below the agency’s lowest investment-grade rating, citing its improved state revenue and current-account balance. Moody’s Investors Service and Fitch have also upgraded their credit ratings for Angola this year.

Angola’s budget surplus will probably amount to about 8 percent of GDP this year while reserves have risen to more than $20 billion, making it easier to repay remaining debt to builders and reducing the need for a planned international bond, Gazel said. Reserves declined at about $12 billion in 2010, according to the country’s central bank.

“Angola has no need to issue a Eurobond as it has enough funds to carry out the investments needed in the economy,” he said.

Angola delayed issuing its first global bond, planned for September, because it doesn’t have “difficulties in its treasury,” Carlos Feijo, the country’s minister of state, said July 27. The country plans to settle the outstanding debt of $2.7 billion owed to builders within a year, according to Carlos Alberto Lopes, the finance minister.

Angola’s economy will expand by more than 10 percent next year after growing 3.4 percent in 2011, President Jose Eduardo dos Santos said July 13.

By Henrique Almeida - Aug 25, 2011 4:19 PM GMT+0200

Monday, May 16, 2011

The Logic of Abundance: The unwillingness to think through the consequences of an age of contracting energy supplies

By John Michael Greer

(The Intelligence Daily) — The last several posts here on The Archdruid Report have focused on the ramifications of a single concept – the importance of energy concentration, as distinct from the raw quantity of energy, in the economics of the future. This concept has implications that go well beyond the obvious, because three centuries of unthinking dependence on highly concentrated fossil fuels have reshaped not only the economies and the cultures of the industrial West, but some of our most fundamental assumptions about the universe, in ways all too likely to be disastrously counterproductive in the decades and centuries ahead of us.

Ironically enough, given the modern world’s obsession with economic issues, one of the best examples of this reshaping of assumptions by the implications of cheap concentrated energy has been the forceful resistance so many of us put up nowadays to thinking about technology in economic terms. It should be obvious that whether or not a given technology or suite of technologies continues to exist in a world of depleting resources depends first and foremost on three essentially economic factors. The first is whether the things done by that technology are necessities or luxuries, and if they are necessities, just how necessary they are; the second is whether the same things, or at least the portion of them that must be done, can be done by another technology at a lower cost in scarce resources; the third is how the benefits gained by keeping the technology supplied with the scarce resources it needs measures up to the benefits gained by putting those same resources to other uses.

Nowadays, though, this fairly straightforward calculus of needs and costs is anything but obvious. If I suggest in a post here, for example, that the internet will fail on all three counts in the years ahead of us – very little of what it does is necessary; most of the things it does can be done with much less energy and resource use, albeit at a slower pace, by other means; and the resources needed to keep it running would in many cases produce a better payback elsewhere – you can bet your bottom dollar that a good many of the responses will ignore this analysis entirely, and insist that since it’s technically possible to keep the internet in existence, and a fraction of today’s economic and social arrangements currently depend on (or at least use) the internet, the internet must continue to exist. Now it’s relevant to point out that the world adapted very quickly to using email and Google in place of postage stamps and public libraries, and will doubtless adapt just as quickly to using postage stamps and libraries in place of email and Google if that becomes necessary, but this sort of thinking – necessary as it will be in the years to come – finds few takers these days.

This notion that technological progress is a one-way street not subject to economic limits invites satire, to be sure, and I’ve tried to fill that need more than once in the past. Still, there are deep issues at work that also need to be addressed. One of them, which I’ve discussed at length elsewhere, is the way that progress has taken on an essentially religious value in the modern world, especially but not only among those who reject every other kind of religious thinking. Still, there’s another side to it, which is that for the last three hundred years those who believed in the possibilities of progress have generally been right. There have been some stunning failures to put alongside the successes, to be sure, but the trajectory that reached its climax with human footprints on the Moon has provided a potent argument supporting the idea that technological complexity is cumulative, irreversible, and immune to economic concerns.

The problem with that argument is that it takes the experience of an exceptional epoch in human history as a measure for human history as a whole. The three centuries of exponential growth that put those bootprints on the gray dust of the Sea of Tranquillity were made possible by the conjunction of historical accidents and geological laws that allowed a handful of nations to seize the fantastic treasure of highly concentrated energy buried in the Earth’s fossil fuels and burn through it at ever-increasing rates, flooding their economies with almost unimaginable amounts of cheap and highly concentrated energy. It’s been fashionable to assume that the arc of progress was what made all that energy available, but there’s very good reason to think that this puts the cart well in front of the horse. Rather, it was the huge surpluses of available energy that made technological progress both possible and economically viable, as inventors, industrialists, and ordinary people all discovered that it really was cheaper to have machines powered by fossil fuels take over jobs that had been done for millennia by human and animal muscles, fueled by solar energy in the form of food.

The logic of abundance that was made plausible as well as possible by those surpluses has had impacts on our society that very few people in the peak oil scene have yet begun to confront. For example, many of the most basic ways that modern industrial societies handle energy make sense only if fossil fuel energy is so cheap and abundant that waste simply isn’t something to worry about. One of this blog’s readers, Sebastien Bongard, pointed out to me in a recent email that on average, only a third of the energy that comes out of electrical power plants reaches an end user; the other two-thirds are converted to heat by the electrical resistance of the power lines and transformers that make up the electrical grid. For the sake of having electricity instantly available from sockets on nearly every wall in the industrial world, in other words, we accept unthinkingly a system that requires us to generate three times as much electricity as we actually use.

In a world where concentrated energy sources are scarce and expensive, many extravagances of this kind will stop being possible, and most of them will stop being economically feasible. In a certain sense, this is a good thing, because it points to ways in which nations facing crisis because of a shortage of concentrated energy sources can cut their losses and maintain vital systems. It’s been pointed out repeatedly, for example, that the electrical grids that supply power to homes and businesses across the industrial world will very likely stop being viable early on in the process of contraction, and some peak oil thinkers have accordingly drawn up nightmare scenarios around the sudden and irreversible collapse of national power grids. Like most doomsday scenarios, though, these rest on the unstated and unexamined assumption that everybody involved will sit on their hands and do nothing as the collapse unfolds.

In this case, that assumption rests in turn on a very widespread unwillingness to think through the consequences of an age of contracting energy supplies. The managers of a power grid facing collapse due to a shortage of generation capacity have one obvious alternative to hand: cutting nonessential sectors out of the grid for as long as necessary, so the load on the grid decreases to a level that the available generation capacity can handle. In an emergency, for example, many American suburbs and a large part of the country’s nonagricultural rural land could have electrical service shut off completely, and an even larger portion of both could be put on the kind of intermittent electrical service common in the Third World, without catastrophic results. Of course there would be an economic impact, but it would be modest in comparison to the results of simply letting the whole grid crash.

Over the longer term, just as the twentieth century was the era of rural electrification, the twenty-first promises to be the era of rural de-electrification. The amount of electricity lost to resistance is partly a function of the total amount of wiring through which the current has to pass, and those long power lines running along rural highways to scattered homes in the country thus account for a disproportionate share of the losses. A nation facing prolonged or permanent shortages of electrical generating capacity could make its available power go further by cutting its rural hinterlands off the power grid, and leaving them to generate whatever power they can by local means. Less than a century ago, nearly every prosperous farmhouse in the Great Plains had a windmill nearby, generating 12 or 24 volts for home use whenever the wind blew; the same approach will be just as viable in the future, not least because windmills on the home scale – unlike the huge turbines central to most current notions of windpower – can be built by hand from readily available materials. (Skeptics take note: I helped build one in college in the early 1980s using, among other things, an old truck alternator and a propeller handcarved from wood. Yes, it worked.)

Steps like this have seen very little discussion in the peak oil scene, and even less outside it, because the assumptions about technology discussed earlier in this post make them, in every sense of the word, unthinkable. Most people in the industrial world today seem to have lost the ability to imagine a future that doesn’t have electricity coming out of a socket in every wall, without going to the other extreme and leaning on Hollywood clichés of universal destruction. The idea that some of the most familiar technologies of today may simply become too expensive and inefficient to maintain tomorrow is alien to ways of thought dominated by the logic of abundance.

That blindness, however, comes with a huge price tag. As the age of abundance made possible by fossil fuels comes to its inevitable end, a great many things could be done to cushion the impact. Quite a few of these things could be done by individuals, families, and local communities – to continue with the example under discussion, it would not be that hard for people who live in rural areas or suburbs to provide themselves with backup systems using local renewable energy to keep their homes viable in the event of a prolonged, or even a permanent, electrical outage. None of the steps involved are hugely expensive, most of them have immediate payback in the form of lower energy bills, and local and national governments in much of the industrial world are currently offering financial incentives – some of them very robust – to those who do them. Despite this, very few people are doing them, and most of the attention and effort that goes into responses to a future of energy constraints focuses on finding new ways to pump electricity into a hugely inefficient electrical grid, without ever asking whether this will be a viable response to an age when the extravagance of the present day is no longer an option.

This is why attention to the economics of energy in the wake of peak oil is so crucial. Could an electrical grid of the sort we have today, with its centralized power plants and its vast network of wires bringing power to sockets on every wall, remain a feature of life throughout the industrial world in an energy-constrained future? If attempts to make sense of that future assume that this will happen as a matter of course, or start with the unexamined assumption that such a grid is the best (or only) possible way to handle scarce energy, and fixate on technical debates about whether and how that can be made to happen, the core issues that need to be examined slip out of sight. The question that has to be asked instead is whether a power grid of the sort we take for granted will be economically viable in such a future – that is, whether such a grid is as necessary as it seems to us today; whether the benefits of having it will cover the costs of maintaining and operating it; and whether the scarce resources it uses could produce a better return if put to work in some other way.

Local conditions might provide any number of answers to that question. In some countries and regions, where people live close together and renewable energy sources such as hydroelectric power promise a stable supply of electricity for the relatively long term, a national grid of the current type may prove viable. In others, as suggested above, it might be much more viable to have restricted power grids supplying urban areas and critical infrastructure, while rural hinterlands return to locally generated power or to non-electrified lifestyles. In still others, a power grid of any kind might prove to be economically impossible.

Under all these conditions, even the first, it makes sense for governments to encourage citizens and businesses to provide as much of their own energy needs as possible from locally available, diffuse energy sources such as sunlight and wind. (It probably needs to be said, given current notions about the innate malevolence of government, that whatever advantages might be gained from having people dependent on the electrical grid would be more than outweighed by the advantages of having a work force, and thus an economy, that can continue to function on at least a minimal level if the grid goes down.) Under all these conditions, it makes even more sense for individuals, families, and local communities to take such steps themselves, so that any interruption in electrical power from the grid – temporary or permanent – becomes an inconvenience rather than a threat to survival.

A case could easily be made that in the face of a future of very uncertain energy supplies, alternative off-grid sources of space heating, hot water, and other basic necessities are as important in a modern city as life jackets are in a boat. An even stronger case could be made that individuals and groups who hope to foster local resilience in the face of such a future probably ought to make such simple and readily available technologies as solar water heating, solar space heating, home-scale wind power, and the like central themes in their planning. Up to now, this has rarely happened, and the hold of the logic of abundance on our collective imagination is, I think, a good part of the reason why.

What makes this even more important is that the electrical power grid is only one example, if an important one, of a system that plays a crucial role in the way people live in the industrial world today, but that only makes sense in a world where energy is so abundant that even huge inefficiencies don’t matter. It’s hardly a difficult matter to think of others. To think in these terms, though, and to begin to explore more economical options for meeting individual and community needs in an age of scarce energy, is to venture into a nearly unexplored region where most of the rules that govern contemporary life are stood on their heads. We’ll map out one of the more challenging parts of that territory in next week’s post.

John Michael Greer is the author of the widely read blog The Archdruid Report and two books on peak oil and the future of industrial society, The Long Descent  and The Ecotechnic Future.

The Imminent Crash Of The Oil Supply: What Is Going To Happen And How It Came To Pass That We Weren’t Forewarned

By Nicholas C. Arguimbau

(The Intelligence Daily) —  Look at this graph and be afraid.  It does not come from Earth First.  It does not come from the Sierra Club.  It was not drawn by Socialists or Nazis or Osama Bin Laden or anyone from Goldman-Sachs. If you are a Republican Tea-Partier, rest assured it does not come from a progressive Democrat.  And vice versa. It was drawn by the United States Department of Energy, and the United States military’s Joint Forces Command concurs with the overall picture.

What does it imply? The supply of the world’s most essential energy source is going off a cliff.  Not in the distant future, but in a year and a half.  Production of all liquid fuels, including oil, will drop within 20 years to half what it is today.  And the difference needs to be made up with “unidentified projects,” which one of the world’s leading petroleum geologists says is just a “euphemism for rank shortage,” and the world’s foremost oil industry banker says is “faith based.”

http://www.eia.doe.gov/conference/2009/session3/Sweetnam.pdf
This graph was prepared for a DOE meeting on May 9, 2009. Take a good look at what it says, assuming it to be correct:
1.  Conventional oil will be almost all gone in 20 years, and there is nothing known to replace it.

2.  Production of petroleum from existing conventional sources has been dropping at a rate slightly over 4% per year for at least a year and will continue to do so for the indefinite future. 
3.  The graph implies that we are past the peak of production and that there are750 billion barrels of conventional oil left (the areas under the “conventionals” portion of the graph, extrapolated to the right as an exponentional).  Assuming that the remaining reserves  were 900 billion or more at the halfway point, then we are at least 150 billion barrels, or 5 years, past the midpoint.
4.  Total petroleum production from all presently known sources, conventional and unconventional, will remain “flat” at approximately 83 mbpd for the next two years and then will proceed to drop for the foreseeable future, at first slowly but by 4% per year after 2015.
5.  Demand will begin to outstrip supply in 2012, and will already be 10 million barrels per day above supply in only five years.  The United States Joint Forces Command concurs with these specific findings.http://www.jfcom.mil/newslink/storyarchive/2010/JOE_2010_o.pdf, at 31.  10 million bpd is equivalent to half the United States’ entire consumption. To make up the difference, the world would have to find another Saudi Arabia and get it into full production in five years, an impossibility. See The Oil Drum, http://www.theoildrum.com/node/5154
6.  The   production from presently existing conventional sources will plummet from its present 81 mbpd to 30 mbpd by 2030, a 63% drop in a 20-year period.
7.  Meeting demand requires discovering, developing, and bringing to full production 60mbpd (105-45) of “unidentified projects” in the 18-year period of 2012-2030 and approximately 25 mbpd of such projects by 2020, on the basis of a very conservative estimate of only 1% annual growth in demand.  The independent Oxford Institute of Energy Studies has estimated a possibe development of 6.5mbpd of such projects, including the Canadian tar sands, implying a deficit of 18-19 mbpd as compared to demand, and an approximate 14 mbpd drop in total liquid fuels production relative to 2012, a 16% drop in 8 years.
8. The curve is virtually identical to one produced by geologists Colin Campbell and Jean Laherrere and published in “The End of Cheap Oil,” in Scientific American, March, 1998, twelve years ago.  They projected that production of petroleum from conventional sources would drop from 74 mbpd in 2003 (as compared to 84 mbpd in 2008 in the DOE graph) and drop to 39 mbpd by 2030 (as compared to 39 mbpd by 2030 in the DOE graph!).http://www.jala.com/energy1.php.Campbell and Laherrere predicted a 2003 “peak,” and the above graph implies a ‘peak” (not necessarily the actual peak, but the midpointr of production of 2005 or before.
So here we are, if the graph is right, on the edge of a precipice, with no prior warning from either the industry, which knows what it possesses, or the collective governments, which ostensibly protect the public interest.  As Colin Campbell, a research geologist who has worked for many large oil companies and studied oil depletion extensively (http://www.peakoil.net/about-aspo/dr-colin-campbell) says, “The warning signals have been flying for a long time. They have been plain to see, but the world turned a blind eye, and failed to read the message.” http://www.greatchange.org/ov-campbell,outlook.html    The world was completely transformed by oil for the duration of the twentieth century, but if the graph is right, within 20 years it will be virtually gone but our dependence upon it will not.  Instead, we have 
zero time to plan how to replace cars in our lives;

zero time to plan how to manufacture and install milions of furnaces to replace home oil furnaces, and zero time toproduce the infrastructure necessary to carry out that task;

zero time to retool suburbia so it can function without gasoline;

zero time to plan for replacement of the largest military establishment in history, almost completely dependent upon oil;

zero time to plan to support nine billion peolple without the “green revolution,” a creation of the age of oil;

zero time to plan to replace oil as an essential fuel in electricity production;

zero time to plan for preserving millions of miles of roads without asphalt;

zero time to plan for the replacement of oil in its essential role in every industry;

zero time to plan for replacement of oil in its exclusive role of transporting people, agricultural produce, manufactured goods.  In a world without oil that appears only twenty years away, there will be no oil-burning ships transporting US grain to other countries, there will be no oil-burning airlines linking the world’s major cities, there will be no oil-burning ships transporting Chinese manufactured goods to the billions now dependent on them;

zero time to plan for the survival of the billions of new people expected by 2050 in the aftermath of  peak everything;

zero capital, because of failing banks ansd public and private debt, to address these issues.

Why zero time? 
– If we at any time use more oil than allowed by the graph, we will have even less later.
– We are already committed to supporting 2.5 billion more people on what we have.
– Every day we continue upward in our oil consmption, even though we continue to have more people who need it and billions who deserve to rise from abject poverty, we are making the future supply shortage worse.
By looking at the graph, it is clear that demand will outstrip supply starting at the end of 2011, and severely outstrip supply in five years.  What are we going to do, and how are we going to do it?  We have no time to decide.

Is that graph correct?

It is very unlikely that things can be better than the graph indicates.  Why?
The great majority of authorities believe there is little more than 1 trillion barrels of conventional oil left.  You can make a simple calculation from that: At the present rate of 30 billion barrels per year, 82 million barrels per day, it will all be gone in 33 years, and consumption has been rapidly increasing, not decreasing, so if anything it will all be gone sooner…

A closer look at the graph reveals that it was drawn on the assumption that the world’s existing conventional fields contain only 750,000 barrels at this time, enough to keep us going only 25 years.

The graph assumes a decline rate of 4% per year.  As long as the estimates of remaining reserves are right, that can’t be far off.  In fact, 4% is a relatively low decline rate compared to what has been observed in oil fields generally.  Hold on, it’s going to be a fast ride down!

The major oil companies, which presumably know better than we do how much oil is in their possession, “conspicuously fail to invest in new refining capacity, which would surely be needed if production were set to rise.’” Campbell, http://www.greatchange.org/ov-campbell,outlook.html .  The excess of refining capacity over demand remained close to 10 million bpd during the nineties, but dropped to almost nothing in the last decade as a result of failure to build new capacity.http://www.imf.org/external/pubs/ft/weo/2006/01/chp1pdf/fig1_21.pdf.  The United States Joint Forces Command has also reported the failure of the oil industry to invest in the refining capacity necessary to permit expanded production, and that “Even were a concerted effort begun today to repair that shortage, it would be ten years before production could catch up with expected demand.” “Joint Operating Environment 2010,” at 26. http://www.jfcom.mil/newslink/storyarchive/2010/JOE_2010_o.pdf

The most frequiently discussed significant source of unexploited petroleum is the tar sands of Alberta, Canada.  Because a high percentage of the energy value of the tar sands has to be expended in their extraction, the reported quantity of reserves is misleading, and two independent researchers have estimated respectively that production from the tar sands by 2020 may be expected of 3.3 milion bpd and 4 million bpd.  Consequently, the likelihood of the tar sands making a significant contribution to the world’s petroleum demand in the foreseeabe future is low.Phil Hart and Chris Skrebowski,  “Peak oil: A detailed and transparent analysis,”http://www.energybulletin.net/node/30537

The shortfall, labelled “unidentified projects,” that needs to be filled in 20 years is an unprecedented 60 million barrels per day, equivalent to 3/4 of today’s total production.  We have never in history done anything comparable to that.  Although there are large deposits of “unconventional” oil such as the Canadian tar sands, most are making only slow progress at development and consume as much or more  energy in their production as they can generate. The independent Oxford Institute of Energy Studies has estimated a possibe development of 6.5mbpd of such projects, when we’ll need more than  that every two years just to keep our place.  So the likelihood of anything at all making a significant dent in the shortfall is small.  Indeed, the “unidentified projects” can be perceived as just a “euphemism for rank shortage” (Campbellhttp://www.greatchange.org/ov-campbell,outlook.html) The United States Joint Forces Command has come to the similar conclusion: that of all potential future energy sources, “None of these provide much reason for optiimism,” http://www.jfcom.mil/newslink/storyarchive/2010/JOE_2010_o.pdf Petroleum industry investment banker Matt Simmons calls them “faith-based.”http://www.simmonsco-intl.com/files/Northern%20Trust%20Bank.pdf at 4

The “Hubbert Peak” theory of oil field depreciation, which predicted the peak and subsequent demise of the US oil inudtry 15 years in advance and within 2 years of its occurence http://www.hubbertpeak.com/hubbert/1956/1956.pdf, says that with normal production methods, a country reaches peak production in its oil fields when they are 50% depleted, with the production curve being bell-shaped.  The peak can be postponed with innovative extraction techniques, but this only causes subsequent more rapid decline of the deposits and total extraction if anything decreasing.   The world reached the midpoint of its reserves in the last decade, so the 2005 “peak” implied by the above graph is very close to what would be expected.

Astonishingly, Dr. Hubbert in the same 1956 paper predicted, based upon records of only 90 billion barrels of oil having been recovered worldwide, that the peak of world petroleum production would be approximately the year 2000; this apparently quite accurate prediction by Hubbert has largely been forgotten.http://www.hubbertpeak.com/hubbert/1956/1956.pdf .  One is tempted to ask why, if one man could predict the timing of the peak 44 years before it occurred, the United States Department of Energy is incapable of recognizing it after it occurred.

There’s a common feeling that just becase we don’t know where the oil is, doesn’t mean the Mother Lode isn’t right around the corner. But if you’ve looked everywhere, the chances are a lot slimmer.  The lag time between discovery and bringing to full production of a field is 30-40 years, which means that even the virtually impossible discovery of another Saudi Arabia would barely change the graph above, of production between now and 2030. But no such discoveries are left to be made.  The rate of discovery of new conventional oil has been steadily dropping now for FORTY years despite ever-more searching with ever-more-sophisticated technology. There have been two pivotal events: the peak of discovery around 1968, and the day in 1981` when discovery of new oil deposits no longer kept up with  production.  There is nothing complicated about this.  As Campbell says, the warning sign there for anyone to see
“simply recognised two undeniable facts:

You have to find oil before you can produce it

Production has to mirror discovery after a time lag

“Discovery reached a peak in the 1960s – despite all the technology we hear so much about, and a worldwide search for the best prospects. It should surprise no one that the corresponding peak of production is now upon us.” Indeed,  Campbell’s second point means that the inevitable peaking of oil production in the early 21st century, should have been clear for all to see since the peaking of discovery in the late sixties. 
Campbell does not stand alone.  As the US Joint Forces Command observes, “The discovery rate for new oil and gas fields over the last two decades (with the possible exception of Brazil) provides little reason for optimism that future efforts will find major new fields.” “Joint Operating Environment 2010,” at 31.
Saudi Arabia’s largest field, the Ghawar, is now in decline and it appears that the country has nothing to offset that decline.  That has led many to conclude that “Peak Oil is a Done Deal.” (Dave Cohen, ASPO/USA Energy Bulletin, July 16, 2008.http://www.energybulletin.net/node/45940)
IF IT’S A “DONE DEAL,” WHY DID IT TAKE UNTIL THE LAST MINUTE TO GET HERE?
“We can wish it, we can dream it, but it will never be, oil is not renewable, and therefore in time it must be realized that THERE WILL BE NO OIL.”  ENO Petroleum Corporation, “Peak Oil – The Global Oil Crisis,” http://www.enopetroleum.com/opecoilreservers.html.  It is hard to conceive of an act or omission causing more pain to more people and creatures than the failure of “those in charge” to announce with reasonable forewarning that the oil supply was going to crash.  But it is upon us with no forewarning to the general public at all.
The government planning agencies charged with helping the public survive the end of oil could not have performed worse than by recognizing peak oil only after it has happened.  Like anthropogenic global warming (“AGW”), “peak oil” has been the subject of decades of denial.  Notwithstanding Hubbert’s famous coup in pinpointing the peak of US oil production through the simple observation that production naturally peaks when the supply is half gone, few would listen that because the worldwide supply of conventional oil would reach the halfway point in the first decade of this century, trouble was right around the corner.  The fact is, coming to that point meant we were in trouble regardless, because the early stages of development of an oil field (like the early stages of growth of virtually anything else) follow  an exponential growth curve, and the world’s growth addicts love exponential curves, but once you get beyond the halfway point, it is a mathematical certainty that the longer you attempt to conform the field to a pattern of exponential growth, the more the end is going to be precipitous.  If you don’t decelerate rapidly, that is preciely what has to happen – the decline after the halfway point can only be more rapid than the rise beforehand.
What Hubbert observed with respect to the US oil reserves has an intuitive sense to it – as the amount of oil in the field drops, its pressure drops, so the flow begins to slow down – the gusher goes down to a trickle.  But if the owner of the field doesn’t make full disclosure of what’s there, outsiders can only make educated guesses from general geological principles and what the owner is selling, as to what the future holds.  And as we all know, full disclosure is not the name of the game in the oil business.
If the field is just allowed to release its liquid gold at its natural rate, that’s not too bad, because observations like the Hubbert Peak can be applied.  But as technology improves and well pressure can be jacked up to compensate for declining reserves, (for instance by pumping water into the wells) the outside observer loses certainty..There remains information about the company’s reserves, but the accuracy of that information is seriously open to question.  Within OPEC, which allows its members to market in accordance with the amount of their reserves. Hart, “Introduction to Peak Oil,”www.philhart.com/content/introduction-peak-oil, there are great temptations to fudge.  Outside observers can follow a country’s reports on its reserves, but those reports are highly suspect.  They will remain constant for years while the country is pumping great amounts of oil without reporting any new discoveries, and indeed they can take sudden leaps upward also without reports of new discoveries.  Such “records” lead to the inevitable conclusion that many OPEC reserves reports are fictional.  If you would like to see charts of OPEC oil reserves mysteriously contorting themselves, you are invited to take a look at Hart’s essay.  So if you thought the experts had it all in hand and would reliably warn us when trouble was a’brewin’, think again.  Not only do OPEC members have internal business reasons to exaggerate their reserves, but companies on the public stock market want to satisfy their stockholders of their long-term viability, and all oil producers want to make their customers confident that they can rely on oil for the long haul.  By concealing their future from homeowners, oil companies have made trillions for the real estate business and the banks at the expense of those who chose urban sprawl over dense “near-in” housing, and the companies themselves will make trillions in the near future selling to consumers trapped into oil addiction, who might have sought alterntives more vigorously had they known how close the crash was.
Matt Simmons, the investment banker who has spent his post-Harvard-Business School career advising oil companies and seving as peak oil advisor to the last Presidential administration and specifically to President Bush, ought to know.  And what he says is that Western oil companies like ExxonMobil would be strongly opposed to the idea of transparent data because it would reveal “how crappy and old their fields really are.” Energy TechStocks.com, “Meeting the Challenge Matt Simmons: Force All Oil Producers to Give Transparent Data,”  According to EnergyStocks.com, Simmons has warned that “the failure of Saudi Arabia and other major oil producers to provide transparent production data has left the world in a lurch, unable to know whether it can maintain an adequate supply of oil in the face of burgeoning demand Such uncertainty has led to indecision about whether the world should invest the huge sums of money necessary to develop alternative transportation fuel sources.”
        Just how bad the published reserve figures for the major oil-producing nations are, has long been understood.  We like to say that what goes up, must come down, but not OPEC member-nation oil reserves.  Their allowed production quotas depend upon their reserves, so there is a built-in temptation to overstate reserves and never reflect in reduiced reserve figures, what they have pumped out.  In 1988, the OPEC oil reserves “magically and miraculously increased twofold,” without any corresponding discovery of new fields.  The officially reported reserves follow graphs that would be comical were it not for the fact that 6.8 billion people, and counting, depend upon the real numbers.  Seehttp://www.enopetroleum.com/opecoilreservers.html
        Now we are facing the consequences of the major oil producers “leaving the world in a lurch”: almost complete inability to cope with the severe difficulties we face in transporting, feeding, housing, and keeping warm the burgeoning billions of our numbers.  It is hard to conceive of how any private entity could impose so much pain on so many.  It didn’t need to be that way. The US Government and its cohorts around the world could have imposed transparency on the oil companies as to their true reserves, and we would have had fair warning and the possibiity of coping.  Yes, and the moon could be made of green cheese.
        Of course, as noted, it is possible to produce a graph roughly like the one above with nothing more than production data and reserves data. The former are public, and the latter are known to a limited extent.  It has been the consensus of decisionmakers for many years that the world had a total (both produced and still in the ground) of approximately 2 trillion barrels of conventional oil, and as pointed out by Campbell, four decades of dwindling discoveries have left us with an absolute inability to increase available reserves in a timely manner to mitigate the looming shortfall.  The two trillion barrel figure was absolutely critical for doing what planning could be done, but at the beginning of the last decade, the US broke ranks with the consensus of the rest of the world, declared through the historically-reliable US Geological Survey (USGS) that world reserves of conventional oil (both consumed and yet-to-be-consumed) were in fact in the neighborhood of three trillion barrels rather than two, a claim which if true immediately provided the world by sleight of hand  with an extra thirty years’ supply at present consumption rates.  To be sure, USGS former employees disputed its estimates as relying “heavily on guesses to calculate new oil discoveries,” and on doubling the usual 30 percent recovery rate from reserves “with no technology in mind capable of doing that.” Gordon, “Worries Swelling Over Oil Shortage,” Energy Bulletin March 20-, 2005.  The concerns about overestimation of discoveries proved correct: they continued on their downward track.  This alone created a discrepancy between the USGS projections and reality of approximately 900 billion barrels. At the same time, the production data appeared to peak in 2005, prominent Princeton University petroleum geologist Kenneth Deffeyes predicted that 2005 was the year, and Simmons suggested similar concerns.http://www.energybulletin.net/node/4835 and http://www.simmonsco-intl.com/files/Northern%20Trust%20Bank.pdf (p. 31).   Nonetheless, based upon the USGS wishful thinking, during the Bush Administration, the Department of Energy was forecasting a “production peak somewhere between 2021 and the start of the next century, with 2037 the most likely date.”  http://www.energybulletin.net/node/4835 Not to worry.
        With the peak imminent in reality, like the global warming “scientific skeptics,” industry in 2006 came up with a “theory” published in a non-peer-reviewed report, that “peak oil” was in its totality a false concept, and that the true behavior of an oil field or conglomeration thereof was a peak followed by an “undulating plateau” and then a gentle decline by around 2% per year, years, perhaps decades later.  According to Cambridge Energy Research Associates (CERA), ““It is likely that the situation will unfold in slow motion and that there are a number of decades to prepare for the start of the undulating plateau.  This means that there is time to consider the best way to develop viable energy alternatives that would eventually provide the bulk of our transport energy needs.” www.cera.com/aspx/cda/public1/about/about.aspx  Not to worry.
        CERA faulted the “peak oil” proponets with failure to take into acount the facts that reserve estimates evolve with time and that so does the technology used in extracting oil.  The criticism is  disingenuous given that the industry refuses to disclose either the technology it is using at any one time or its true reserves, and the reserve estimates evolve with time more for political reasons than geological one..  The facts the proponents of “peak oil” fail to take into account are facts that the industry will not disclose.  As Simmons has pointed out, “With solid global field-by-field production data, ‘Peak Oil timing could be ‘proved’.”  And, or course, if the “undulating plateau” theory is correct, all the industry has to do is to disclose their true facts to prove it, but  they won’t.  Regardless, average decline rates of an oil sujpply are dictated by only two numbers: how fast we are now using the oil, and how much is left.  Lower decline rates now mean higher decline rates later.  Those are immutable facts even if the “undulating plateau” is correct.  So to avoid a rapid decline in available oil, we must discover and bring to production staggeringly large new supplies, right now today.  Nonetheless, the CERA “theory”  has sufficiently intimidated the bureaucrats that DOE’s official position at the moment, as expressed to Le Monde, notwithstanding the graph, is that we are “entering a plateau.” petrole.blog.lemonde.fr:80/2010/03/25/washington-considers-a-decline-of-world-oil-production-as-of-2011/
        At the same time all of this was happening, the UN, the US Congress, the Obama Administration and the oil industry were negotiating over goals for global warming legislation.  Miraculously, although arguably coincidentally, the percentage-reduction goals agreed to fit quite precisely the percentage reductions in oil consumption that will be physiclly forced upon us all if you believe the above graph: an 18% drop from 2005 by 2020, and an 85% drop from 2005 by 2050.  (It is possible to extrapolate the graph, which assumes exponentially dropping levels of existing reserves at a 4% per year rate.) This compares to reductions of CO2 emissions 17% from 2005 in 2020 and 80% from 2005 in 2050 in the bill.   So it would appear that the legislative goals have been set, for whatever reason, so that the oil industry will have to do little if anything it won’t have to do in any event because of dwindling reserves. http://ecoglobe.ch/energy/e/peak9423.htm .  It is hard to see how the negotiators could have come up with such correspondence if they had not all  been aware of the impending crash of production and the expected decline rate..  Coincidence?  Maybe, but somehow it seems unlikely.  Whether or not by intent, the goals fit the needs of the oil companies rather than the needs calculated by the scientists.
        In short, with all the evidence available, it is hard to see how the industry and the Department of Energy could have failed to see this coming.  Their failure to warn the public, given the consequences, verges on the criminal.  And if somehow they can claim innocence, then we still have to ask why they did not heed the warning of Matt Simmons, advisor on peak oil to the Bush administration, as to the importance of transparency.  But they did not, and here we are.
CONCLUSIONS
We are on our own.  We are rapidly going to have to deal with less and less oil, since there has been no forewarning and no planning.  It is a time for communities to prepare for community energy independence, because only that way will be safe.  This means relying on the sun and wind and water that have always been with us.  It means cooperation with each other to get through seriously difficult times.  It means finding altenatives to oil throughout our lives as quickly as possible – the oil that runs our cars, the oil that heats our houses, the oil that runs generators for our electricity, the oil from which chemical fertilizers and insecticides and plastics and polyester are made, the oil that brings countless manufactured goods to us from overseas, the oil on which farmers depend for irrigation pujmps, for transporting produce to market, for working the soil to bring us food.  If you believe the graph, it will almost all be gone in 20 years. And the progressives and Tea-Partyers must remember that the people who brought this calamity to us are not our friends but are people we trusted and they trusted, so we must work together to cope with the mess that is upon us, and  “to throw the rascals out.”.
The author, Nicholas C. Arguimbau, is an appellate and environmental lawyer licensed in California and residing in Western Massachusetts.  He may be contacted atnarguimbau@earthlink.net.

Friday, April 15, 2011

Credit default swap (CDS) – All about swap contract and agreement

A credit default swap (CDS) can almost be thought of as a form of insurance. If a borrower of money does not repay her loan, she "defaults." If a lender has purchased a CDS on that loan from an insurance company, the lender can then use the default as a credit to swap it in exchange for a repayment from an insurance company. However, one does not need to be the lender to profit from this situation. Anyone (usually called a speculator) can purchase a CDS. If a borrower does not repay his loan on time and defaults not only does the lender get paid by the insurance company, but the speculator gets paid as well. It is in the lender's best interest that he gets his money back, either from the borrower, or from the insurance company if the borrower is unable to pay back his loan. However, it is in the speculator's best interest that the borrower never repay his loan and default because that is the only way that the speculator can then take that default, turn it into a credit, and swap it for a cash payment from an insurance company.

A more technical way of looking at it is that a credit default swap (CDS) is a swap contract and agreement in which the protection buyer of the CDS makes a series of payments (often referred to as the CDS "fee" or "spread") to the protection seller and, in exchange, receives a payoff if a credit instrument (typically a bond or loan) experiences a credit event. It is a form ofreverse trading.

A credit default swap is a bilateral contract between the buyer and seller of protection. The CDS will refer to a "reference entity" or "reference obligor", usually a corporation or government. The reference entity is not a party to the contract. The protection buyer makes quarterly premium payments—the "spread"—to the protection seller. If the reference entity defaults, the protection seller pays the buyer the par value of the bond in exchange for physical delivery of the bond, although settlement may also be by cash or auction. A default is referred to as a "credit event" and includes such events as failure to pay, restructuring and bankruptcy. Most CDSs are in the $10–$20 million range with maturities between one and 10 years.

A holder of a bond may “buy protection” to hedge its risk of default. In this way, a CDS is similar to credit insurance, although CDS are not similar to or subject to regulations governing casualty or life insurance. Also, investors can buy and sell protection without owning any debt of the reference entity. These “naked credit default swaps” allow traders to speculate on debt issues and the creditworthiness of reference entities. Credit default swaps can be used to create synthetic long and short positions in the reference entity.Naked CDS constitute most of the market in CDS. In addition, credit default swaps can also be used in capital structure arbitrage.

Credit default swaps have existed since the early 1990s, but the market increased tremendously starting in 2003. By the end of 2007, the outstanding amount was $62.2 trillion, falling to $38.6 trillion by the end of 2008.

Most CDSs are documented using standard forms promulgated by the International Swaps and Derivatives Association (ISDA), although some are tailored to meet specific needs. Credit default swaps have many variations. In addition to the basic, single-name swaps, there are basket default swaps (BDS), index CDS, funded CDS (also called a credit linked notes), as well as loan only credit default swaps (LCDS). In addition to corporations or governments, the reference entity can include a special purpose vehicle issuing asset backed securities.

Credit default swaps are not traded on an exchange and there is no required reporting of transactions to a government agency. During the 2007-2010 financial crisis the lack of transparency became a concern to regulators, as was the trillion dollar size of the market, which could pose a systemic risk to the economy.[2][4][10] In March 2010, the DTCC Trade Information Warehouse (see Sources of Market Data) announced it would voluntarily give regulators greater access to its credit default swaps database.

From Wikipedia, the free encyclopedia

Friday, April 8, 2011

Best books - Memoir Short Takes: Lost Sense, Self-Destruction, and the College Admissions Process

 

 

 

Thursday, March 31, 2011

Look 88 extreme Advs; Best Controversial and Disturbing Print Ads on 2011

Warning: Viewers Discretion Is Advised!

Extreme Advertisements
Image from: Squid

While some might find them somewhat perverse yet creatively brilliant, others might cringe and be disgusted or disapproving of their content or style. Everyone has a right to an opinion.

80 Controversial and Disturbing Print Ads

Let’s look at these advertisements objectively with an open and analytical mind and appreciate the creativity that went into it. One has to wonder how the creative directors and designers came up with these concepts. What was the thought process and rational behind their radical ideas? Was there prior censorship and surveying done in a control group before the decision to go ahead with the advert was made? No matter the response, such advertisements do exist and are on the rise. Does challenging the norm by being controversial and extreme payoff by leaving an impact or making an impression on viewers? This is an answer we’d love to find out.

Here are 80 controversial advertisements that challenge the boundaries of what is socially and morally acceptable with the use of dark humour and shock tactics. These print advertisements often use gore, vulgarity, sex, violence, and sometimes religion to promote their products or bring across the organisations’ message. These adverts either challenge social, political or moral propriety. That is why some of these advertisements are banned in certain countries. Although the use of such adverts can be effective, it is not for the faint of heart or small of mind. Not everyone can appreciate the beauty in such clever and deliberate ugliness.

Just liquid hand wash: Cockroaches
Liquid Handwash

Ariel: Pervert
Ariel

Amnesty International: Archery
Archery

AMAM - Association of Women Against Genital Mutilation: Plastic doll
Amam

Alka-Seltzer: New Year
Alka Seltzer

Alac: Kitchen
Alac

Ace: Tarantula
Ace

A Bela Sintra: Foot
A Bela Sintra Foot

WWF: Blood
WWF

Amnesty International: Red Little Tender
Violence Against Women

Vergessen ist ansteckend: Tub
Vergessen

TMF: Army
TMF

Queer Travel.de
The Other Side of America

Superette: Elevator
Superette

AIDS Awareness Campaign: Gay
Stop Aids

Stella Coffee Pot: Spider
Stella

SPID Advertising
Spid Advertising

Solid Paint: Cross
Solid

Skins: Defy Genetics
Skin Defy

Shared Responsibility: Kidnapping
Shared Responsibility

Semorin: Mustard
Semorin

Save the Children: Child Labour
Save The Children

Sanctuary, Save the tiger: Binocular
Sanctuary

RSPCA: Woman
Rspca

Pedestrian Council of Australia: Family
Road Safety Australia

Popeye Detergent Hipoalergenic: Hell raiser
Popeye

Pastorini Toy Store
Pastorini Toy Store

Oust: Everything has consequences
Oust

Nycomed: Agony
Nycomed

Cerveira Art Biennial: Botticelli
New Artist

Pet flea & tick spot on: Haircut
Never Keep a Parasite

MTV: Shot, Girl
MTV

Multiple Sclerosis Australia: Use By Dates
MS

Masterlock: Hippes
Masterlock

Lung cancer awareness: One
Lung Cancer

Love Life Stop Aids: Space
Love Life

Glassing Sunglasses: Kiss my glass
Kiss My Glass

Ariel Plus: Ketchup
Ketchup

RSF: Ink
Ink Flow

IndyAct: Bobcat
Indyact

Workplace Safety Insurance Board: Sign
Ignoring Safety

Colombian Association of Arterial Hypertension: Home
Hypertension

Humans for Animals: Seal
Human for Animals

Gringo’s Tequila: El Matador Peligroso
Gringos

Fur Free: Angry Fox
Fur Fury

Findus Fraich'Frites
Fraich Frites

Foundation Abbé Pierre: The Lifeguard
First Aid

Filigranes Bookstore: Las Vegas
Filigranes Bookstore

Procter & Gamble / Febreze: Fly
Febreze

Fashion Outlet Zurich: Cow
Fashion Outlet

Family Network Foundation: Dad
Family Network Foundation

Ramorama: Expose Yourself
Expose Yourself

Emirates Arthritis Foundation: Painful
Emirates Arthritis

Government of the State of Santa Catarina: Hamburger
Don't Swallow Smoke

Mettiamocilatesta.it
Don't Cut a Dream

13th Street
Crime Night

Concordia Children’s Services: Piglets
Concordia

E.N.P.A: Spray
Cosmetic Testing

Colin glass cleaner: Spider
Colin

NoButts.org Anti-Cigarette Butt Pollution Campaign: Catfish
Cigarette Butts Pollution

Coalition to Stop the Use of Child Soldiers: England
Child Soldiers

Child Health Foundation: The Scream
Child Abuse

Casa Do Menor: Hands
Casa Do Menor

Casa & Perfume air freshener: Fish
Casa

Caribu Bitter: Poison
Caribu Poison

Caribu Bitter: Canari
Caribu

Canex: Spaniel
Canex

Eagle Print Awards 2009: Cactus
Cactus

NSW Health
Binge Driving

Aware Helpline: Verbal abuse
Aware

Ashtraymouth: Roach girl
Ashtray Mouth

Vancouver Aquarium
Vancouver

YouthSPK
Youth Spk

One Life Shower
One Life

Domestic Violence: Piece of meat
Meat

The Roy Castle Lung Cancer Foundation
Lung Cancer Foundation

Good Parent
Good Parent

Domestic Violence: Living Room
Domestic Violence

Descriminatie.nl
Discriminatie

Karabine
Karabine

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