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31 January 2015

Press review 31-01-2015 - Hopes for energy storage

For a change, this review starts with an highlight on renewable energies. Or better said: technologies that may facilitate the expansion of renewable energies. The liquid metal battery developed by American company EOS is coming to the market next year. This is one of the technologies I have been following closest in recent years and things start to look definitely good after real context testing (among which a pilot run by GDF Suez). The zinc cathode based battery is to sell for a third of a lithium-ion battery on a €/kWh basis, and boast an operational lifetime 5 to 10 times longer.

Is technology about to save us? Perhaps not, but developments like these clearly show that "collapse" is not the unavoidable predicament of Mankind. There are certainly other planetary constraints to overcome and the herculean task of swaying governments away from impoverishment centred policies. By ultimately, the Future is largely unknown, marred with bad and good surprises.

24 January 2015

Press review 24-01-2015 - The Greek Rubycon

Photo by Myrto Papadopoulos.
Impoverished and humiliated, Greeks are electing an unrecognisable Parliament next Sunday. The Social Democrats are splintered in 3 parties, that together should not get to 10% of votes; the sole Conservative party will likely stay under 3%. The ruling liberal party (New Democracy) is holding well its voting base, but aspires at best to 30%. Far head is SYRIZA, a motley crew of modern socialist movements. With over 35% of votes forecast on every single poll published this week, SYRIZA should end an hair shy of absolute majority.

It is a make or break moment for Europe. After loosing a third of their wealth in 6 years, without any apparent outcome, the Greek folk is saying enough is enough. Now it is up to the Council - will it simply insist on failed impoverishment policies? It will be easy to force Greece into default, but to what consequence? As it stands, Austerity is a mere disease that will eventually obliterate members states one after the other. All know it, but an act of contrition is something modern politicians perceive as sheer capitulation.

There is no way to tell the final outcome of the story that starts this Sunday. And there is certainly no guarantee the European Union can survive to it. What is certain is that it will dominate European politics for many months, in the mean time overwhelming the constraints that cornered our economy.

17 January 2015

Press review 17-01-2015 - Shocks

This was a week of shocks. Thursday the Swiss Central Bank announced the de-pegging of the Swiss Franc from the Euro, leading to a flash appreciation of the Helvetian currency by some 20%. Albeit Switzerland being a small economy at the global scale, some frisson erupted with confusion and contradictions stamped in the mainstream press. Stock markets in Europe rallied, while that of the US tanked; India devalued the Rupee. Various commodities rallied to multi-month highs, petroleum inverted early week losses to close exactly where it closed the week before. That a small country as Switzerland can cause such an amount of turmoil around the world attests by itself to the uncertainty and fear presently dominating markets.

In fact, the Swiss gambit ended up covering another shock, with much more relevant and lasting consequences. The conflict in Ukraine drags on, without progress at the negotiations table and renewed intensification of military action. Finally Russia announced the likely outcome of this stand-off: gas deliveries to Europe through Ukraine are coming to an halt. As soon as the Russia-Turkey pipeline is finished, Ukraine stops being a gas transit nation.

The Commission spent decades promoting internal market deregulation as the tenant of energy security. Here is the outcome: there might be not enough gas to supply the deregulated market. Failing to deal with reality, the Commission got dealt back by reality.

10 January 2015

Press review 10-01-2015 - Nous sommes tous Charlie

Over the past decade Europe has been the stage of various terrorist attacks resulting in great loss of indiscriminate civilian lives: Madrid in 2004, London in 2005, Utoya Island in 2011. To these adds the Beslan massacre of 2004, that while taking place in the Caucasus, sent similar shock waves across the continent. This week similar events took place in France, with 17 lives lost in the course of 3 days. If the death toll is not as large as in previous cases, this latest attack hit far more than civilian lives. It was an attack on one of the tenets of modern European societies: freedom of expression, and thus an attack on European identity itself.

The reaction unleashed by this attack is naturally one of unity but above all it must counter the goals of its perpetrators. In first place the fear of expression, the ability to put forward one's opinion, however controversial. And secondly the spread of hatred; if that is the only answer we can muster, then we are no better than the disturbed individuals that committed such hideous acts.

Issuing a newspaper, authoring a book, hosting a radio talk show, composing politically aimed music, even writing a blog, are possible today for many of our ancestors fought for it, in many cases with their blood and their lives. Freedom of expression is not for granted, we must never forget that, and fight for it when necessary.

03 January 2015

Press review 03-01-2015 - Peak Oil in China?

The big energy story of 2014 was certainly the halving of petroleum prices. But on the long term the most relevant piece of news of last year was the official admission of a petroleum extraction peak in Russia. And by the very last days of the year a similar story brews up in China. Daqing, the super-giant field that accounts for one fourth of the petroleum extracted in China is entering its terminal decline phase. This information definitely sits China's peak in the not-so-distant future.

Petroleum prices are still searching for a bottom, leaving an ever grimmer picture for the industry. News of lay-offs, spending cuts, equity loss and downward revisions to reserves have now become routine. This is certainly not the best of environments to replace "easy oil" giants such as Daqing.

20 December 2014

Press review 20-12-2014 - Contraction

The decline in petroleum prices continues to dominate the news. The Brent index fell further this week, finding an apparent bottom around 60 $/b; it may be merely temporary. All bets are off for 2015 and price forecasting at this stage is mostly a futile exercise. If earlier the owes of this price rout were coming mostly from North America, they now spread, with every other petroleum region facing a grim forecast.

Russia popped in the news in the first days of the week with drastic measures to support the ruble. The parallels with previous historical petroleum price bottoms in 1998 and 1985 are obvious and do not spell anything good. And it is not only petroleum, Russia relies on exports of all sorts of raw materials whose prices have fell across the board during 2014, in face of an anaemic world economy. One thing is now certain: 2013 will go in history as the year petroleum extraction in Russia peaked. Henceforth it is mostly about the steepness of the decline.

13 December 2014

Press review 13-12-2014 - A bursting bubble

American energy writer Richard Heinberg entitled his book on petroleum extraction from source rocks "Snake Oil". This title was a sharp choice, possibly in more ways than Richard himself could have anticipated. For a few years the US investment community was completely intoxicated with stories of limitless supplies of fossil fuels and even energy independence. Every day more wells would be drilled, more infrastructure would be sourced, more news of a bright future would be written. And more debt would be issued to feed the beast.

Until one day. It turns out source rocks were not so good after all, relying on wells with lifetimes counted in years, instead of decades. Thousands of millions of dollars were piled up on resources lying at the top end of the supply curve, thus vulnerable to the slightest shifts in the market equilibrium. Today that equilibrium renders source rocks money loosers and battered investors flee the market in hordes. Behind they leave a pile of debt on the verge of collapse, threatening the whole financial system; and not only in the US.