Press review 27-07-2013

When I studied Economics at the University Demand and Supply where injective functions in the Cartesian Price vs. Quantity plane; the former with negative slope, the latter with positive. Now in Stanford University they seem to have found new Demand and Supply functions that are bijective, thus pretending to explain everything that went on in the oil market the past decade. They don't even try to clarify if the "peak" they refer to is relative to Quantity or Price, much less formalise the building of such awkward functions. Several media outlets picked up this piece of nonsense and diffused as if it was science; criticism is too much to asked from journalists these days.

Stanford Report
Stanford researchers say 'peak oil' concerns should ease
Mark Golden, 09-07-2013

Fears of depleting the Earth's supply of oil are unwarranted, according to new research, which concludes that the demand for oil – as opposed to the supply – will reach its own peak and then decline.

"Peak oil" prognosticators have painted pictures of everything from a calm development of alternatives to calamitous shortages, panic and even social collapse as the world reaches its peak of oil production – and then supplies fall.

But according to the study by researchers at Stanford University and the University of California-Santa Cruz, those scenarios assume that an increasingly wealthy world will use all of the oil pumped out of the ground.

Instead, the historical connection between economic growth and oil use is breaking down – and will continue to do so – because of limits on consumption by the wealthy, better fuel efficiency, lower priced alternative fuels and the world's rapidly urbanizing population.

But for those that deal day by day with the petroleum market things look a just a tad differently. Ask for instance to Charlie Munger.

Business Insider
CHARLIE MUNGER: Energy Independence Is A Dumb Idea
Rob Wile, 24-07-2013

Some surprising people, including the CEO of Exxon, think true American energy independence is actually a bad idea.

Add Berkshire Hathaway Vice-Chairman Charlie Munger's name to that list.

Munger recently spoke at the Committee of 100 U.S.-China relations conference (via Farnam Street Blog's Shane Parrish notes and Tim Harford).

The moderator asked Munger a basic question about which sectors Berkshire believes are ripe for growth.

He responded by begging off that question and launched instead into a critique of America's energy policy, especially the continued insistence on independence.

But unlike other commentators who've refuted the concept, Munger approached the question from a more apocalyptic angle:

Still on oil, there's a subtle sign of concern coming out of Alberta. The Canadian oil sands have remained far from fulfilling production promises in recent years. While it is true that shale oil, with a slightly lower marginal price (at least for now), came to ruin the party, the fact is that the techniques employed to exploit these reserves seem far from perfect.

Mother Jones
The Alberta Oil Sands Have Been Leaking for 9 Weeks
Thomas Stackpole, 23-07-2013

Nine weeks ago, an oil leak started at a tar sands extraction operation in Cold Lake, Alberta, and it's showing no signs of stopping.

On Friday, the Toronto Star reported that an anonymous government scientist who had been to the spill site—which is operated by Canadian Natural Resources Ltd.—warned that the leak wasn't going away. "Everybody [at the company and in government] is freaking out about this," the scientist told the Star. "We don't understand what happened. Nobody really understands how to stop it from leaking, or if they do they haven't put the measures into place." The Star reported that 26,000 barrels of watery tar have been removed from the site.

The impacted area spans some 30 acres of swampy forest, said Bob Curran, a spokesperson for the Alberta Energy Regulator (AER), which oversees these sites. According to the Star, pictures and the documents provided by the scientist show that dozens of animals, including loons and beavers, have been killed, and some 60,000 pounds of contaminated vegetation have been removed. (You can see the pictures at the Star's website.)

Curran confirmed to Mother Jones that the leak was ongoing as of Tuesday afternoon and said AER was working with the company on a plan to contain the damage. He added that he couldn't make a firm assessment of what caused the leak until after AER had completed its investigation. "We don't get into probable causes," he explained. But he did say that AER was concerned, adding that the leak was "very uncommon—which is why we've responded the way we have."

Moving now to solar, expectation is building up around off-the-grid systems, that seem beating retail electricity prices in some places of the world. Eventually, the strategies by some governments to keep solar away from the grid, scrapping feed-in tariff programmes, will rotundly fail, imposing much higher challenges to the electrical grid.

Forbes
Solar Energy Storage About To Take Off In Germany and California
Justin Gerdes, 18-07-2013

The surge in companies entering, or expanding into, the energy storage space is no accident. Bankruptcies, a panel supply glut, and falling feed-in tariff rates have shaken the PV industry. Panel and system manufacturers are looking for ways to grow earnings, and one likely new revenue source is energy storage. According to Elsaesser, the PV industry expects to boost revenue by $10 billion by 2017 globally with storage.

“The PV industry needs to look for future profit pools,” Markus Hoehner, founder of the International Battery and Energy Storage Alliance (IBESA), said at an Intersolar briefing. “When we look at the PV industry on the global level, most of it was feed-in tariff driven. It was about IRR [internal rate of return], making money out of the PV system. Now, due to the downturn in the feed-in tariff markets, and due to the much lower system cost, we’re talking about saving money.”

Homeowners in markets with high retail electricity rates, he said, are looking to shield themselves from rising energy costs with storage. Take the example of Germany. Matthias Vetter, a researcher with the Fraunhofer Institute for Solar Energy Systems (ISE), who also spoke at the briefing, said that he pays 26 euro cents ($0.34) per kilowatt-hour (kWh) for grid electricity in Germany.

And now for a bit of optimism. Accenture expects a tripling of the building embedded PV market in just two years. I don't, but it is interesting to note the hype that PV prices are generating.

Bloomberg
Foster’s Solar-Skinned Buildings Signal Market Tripling: Energy
Louise Downing, 23-07-2013

From stadiums in Brazil to a bank headquarters in Britain, architects led by Norman Foster are integrating solar cells into the skin of buildings, helping the market for the technology triple within two years.

Sun-powered systems will top the stadia hosting 2014 FIFA World Cup football in Brazil. In Manchester, northern England, the Co-operative Group Ltd. office has cells from Solar Century Holdings Ltd. clad into its vertical surfaces.

The market for solar laid onto buildings and into building materials is expected to grow to $7.5 billion by 2015 from about $2.1 billion, according to Accenture, citing research from NanoMarkets.

The projects mark an effort by designers to adopt building-integrated photovoltaics, or BIPV, where the power-generating features are planned from the start instead of tacked on as an afterthought. Foster and his customers are seeking to produce eye-catching works while meeting a European Union directive that new buildings should produce next to zero emissions after 2020.

A topic that I've frequently highlighted is the conflict in the Near East. The Deutsche Wella has this a week a very good article on it, the war in Syria is the war in Iraq, and one won't end without the other ending too. Underneath these battle fields may lie the last cheap oil reserves of the world, the main reason not to expect an easy end to the conflict.

Deutsche Wella
Escalating Iraq violence tied to Syria civil war
19-07-2013

Iraq has been shaken by its worst wave of violence in the last five years. The United Nations has warned that the sectarian bloodshed in Iraq and the civil war in neighboring Syria are merging into one conflict.

The outgoing UN envoy to Iraq has warned the Security Council that Syria's civil war has spilled over into Iraq, saying that "the battlefields are merging" into one conflict, which could destabilize the broader Middle East.

"These countries are interrelated," UN Iraq envoy Martin Kobler said. "Iraq is the fault line between the Shia and the Sunni world and everything which happens in Syria, of course, has repercussions on the political landscape in Iraq."

Closing a quick note on Portugal. I wrote some weeks ago that the country had to choose between Democracy and Austerity, and so it did. The President simply backtracked on all his promises of the week before and delivered back full executive powers to the Liberals/Conservatives coalition. The government is given 2 more years to apply its failed policies, starting right away with spending cuts of some 5 G€. It has the full backing of the President and the complete opposition of the people.

Go out and get sunburned.