Housing in China

For some time there has been this slow, but constant, flow of news on the Chinese housing market. A runaway construction spree that has created entire cities out of nothing, to be left largely empty of people. Days ago a friend sent me a link to the video reproduced below that portraits this reality in detail. The term “ghost city” is not an hyperbole, it really exists in China, and not just in one or two places. This piece can only be classified as a good example of reporting journalism, perhaps rare, but refreshening. Nevertheless, is the Chinese housing market really just a speculative bubble or is there something deeper at work here?

The Hydrogen dream

Last week I went to Longwy's university campus, the Institut Universitaire de Technologie (part of the University of Lorraine), for a conference on renewable energies and energy efficiency. It was an event integrated in an InterReg project for innovation, called Tigre, gathering institutions from Lorraine, Saarland, Luxembourg and Wallonie. It kicked off with a session on Tri-generation, and went on with parallel sessions on waste Biomass and on Hydrogen and Fuel Cells. I opted for the later, feeling really curious on the present state of research on this field.

Cesare Marchetti proposed hydrogen (H2) as a large scale energy vector almost fifty years ago. Then the concern was mainly to find a simple enough way to feed transport systems with what seemed to be a fountain of energy about to come from the expanding Nuclear park. The Nuclear dream is largely gone, but hydrogen lives on. Is it about to come true as a piece in the transition puzzle to a post-fossil fuel world? That's what I was expecting to know.

Chorus: Austerity isn't working

A week ago we had another strike by the rating agencies, this time Standard and Poor's. Closing a week that had been relatively successful for the European debt market, the continent was once more bombarded with a swarm of downgrades. Nine states saw their grade derided, with France and Austria loosing AAA status and Italy kicked out of the A area into BBB+. Over the weekend we had the usual cries from political leaders, employing hard words but soft action. Nevertheless this week further signs of relief in the debt market came about: Portugal was able to auction 11 month maturity bonds with interest below 5%, better than before the aid request, Austria was able to auction 50 year bonds for what it seems only the second time in its history and interest rates in the secondary market for Italian bonds have entailed a slow but constant decline. The defense against the rating agencies put up by the ECB seems to be finally yielding results.

But something less visible has remained from last week's attack: the analysis upon which Standard & Poor's supposedly based its downgrades. The company vised particularly the blind Austerity policy followed by the Council, joining the body of voices claiming it is leading Europe to a dead end. This is an interesting and useful outcome of the unsuccessful strike, that echoed through the last days. Le Monde published a wrap up that is worth looking closer.

Interview with Tarja Cronberg

Below is a video published this morning by the EUObserver with an interview to the Green European Parliament member Tarja Cronberg, who is the head of the Parliamentary Iran delegation and an expert on Nuclear technology. Cronberg is very directly opposed to further sanctions on Iran and seems convinced that it can lead to a military conflict in the Strait of Hormuz. Moreover, she says that harsher sanctions will likely lead to a rally of the population around the present political regime, rather than the weakening of the Ayatollahs' power. Instead of being concerned with particular consequences on the EU states most reliant on Iranian oil, Spain, Italy and Greece, the consequences to the world economy of a conflict around Hormuz can be much deeper and far reaching in her view.

It is good to see politicians thinking outside the box laid down on them by the media, especially by those seeded in the Anglo world. Irrespective of the final outcome of the sanctions being planed it is important to understand that OECD economies will hardly come out of it unscathed.

Oil price forecasts for 2012

This week a friend of mine asked about oil prices for 2012. As usual by this time of the year newspapers and investors alike thrive to have an outlook for the following twelve months, more or less trying to devise how their portfolios may fare. I always find this a bit awkward, the dynamics underlying markets like that of crude oil have little relationship to the rhythm of the Earth's revolution around the Sun. But somehow there is this idea that markets have a sort of fresh start in the beginning of a new year. Hence, usually well informed people put out their forecasts around this time, so as to prove how well informed they are. It just happens that for 2012 the most disparate projections exist, either of a fall in oil prices or of a price boom.

Instead of pointing out who is wrong or is right in this story, the importing thing is to understand that both visions can be correct, both can develop through out 2012.

Public Consultation on Renewable Energy

The folks at the Energy Commission are already thinking about Energy Policy beyond 2020. After the 20-20-20 targets there is a much longer term goal of reducing CO2 emissions by over 85% up to 2050. So right now the Energy Commision is starting to think the policies that should further reduce our emissions in the decade between 2021 and 2030. In this context they are asking everyone to participate in a public consultation, with the main goal of understanding if the policies driving us up to 2020 are still viable for the decade ahead. To make things easy the Energy Commission provides a convenient online form. The deadline for answering is the 7^th of February.

Video: “You Are Here: The Oil Journey."

Below the fold is a not to be missed video by the Post Carbon Institute. It is a fictional work with an argument written by Richard Heinberg, Peak Oil's proser. A parable of what cheap oil gave to the industrial societies in the XX century and what peak oil may take away in the XXI century. I do not exactly agree with the assessment that alternative energies cannot provide the same sort of services in similar quantities. To my judgement the challenges are much more the social evolutions we'll have to undertake to guarantee that the transition takes place smoothly: a monetary system compliant with an economy that doesn't grow exponentially, adapting markets to favour long term investments, a different concept of mobility, a different kind of agriculture. Cheap oil was good while it lasted, but what may come after it may not necessarily be worse.

In any case, congratulations to the Post Carbon Institute for this excellent effort.

Pre-salt in Angola is for good

A small piece of news quitely surfaced yesterday that could have an important impact on future oil production. Simply put: hydrocarbons where found in pre-salt layers in Angola's waters. This is the confirmation of the expectations some industry agents (especially Petrobras) had built in recent years around the possibility of an Atlantic wide pre-salt resource. The Danish company Maersk was able to recover oil of “good quality” from a well in a block in the Kwanza Basin, part of a joint venture with Sonangol and Svenska (these are blocks that had been commissioned prior to the large auction that took place last month). In its statement to the press Maersk quoted a potential production figure of 3 000 barrels per day from this well.

A look at Iran's Economy

Between the last log on Iran and yesterday the Rial lost 10% of its value, just to regain about the same terrain today. Meanwhile there's an ever growing bellicose discourse on the naval chess around the strait of Hormuz. In this log I'll look into Iran's economy and try to understand the possible consequences of the sanctions imposed last weekend by the US and to be followed suit by the EU. It doesn't pretend to be in any way a thorough account of Iran's social-economic fabric, simply a collection of points that are relevant in the present crisis. The data presented here was collected mostly from Wikipaedia and the World Factbook.

Former IEA Econmist: Peak Oil within the decade

Last week the French newspaper Le Monde published the English version of an exclusive interview with Olivier Rech, former economist of the International Energy Agency (IEA). Between 2006 and 2009 he was responsible for the Agency's petroleum production models, that make the basis of the reference publication World Energy Outlook (WEO), released every year in November. This document outlines the energy scenarios on which every government of the OECD builds up their energy policies. Government agencies, research institutes and private companies also rely by and large on the IEA's publication. Remarkably, the words of Rech today lay out a scenario entirely different from those the IEA has been publishing.