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.

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.

Press review 06-12-2014 - Bitter Oranges

This week I attended the opening session of a photo-exhibition on the life of illegal immigrants stranded in Italy. Either because they fail to obtain a working visa or because they are prosecuted in their country of origin, these immigrants are left to their luck, at best getting a place to sleep in a container or a tent.

Three Luxembourgish researchers have been visiting regularly the camps where these immigrants live, documenting their stories and the ordeals they go through just to survive. They have to work to buy food and clothing; the orange harvest is the only possibility, where they can earn 0.5 € for each box of 22 kg. At the height of the harvest they earn little over 200 € per month; many months go by when they have no income at all. Although these migrants originate from all over North Africa, more than half of them were settled in Libya at the beginning of 2011. Back then they had relatively normal lives, with a real job and proper housing.

I have been writing on Libya and its demise for over six years, studying the implications to our economy and way of life. Behind all these big stories are real lives and great human suffering. All this happens literally in our neighbourhood, and goes largely unnoticed to the general public.

Bitter Oranges is the name of this research project. There is a photo gallery to visit and also a short video to watch.