Dry-Clean at Home Clothes Washer Uses Just 1 Cup of Water per Load

That's right. To clean a washer load of dirty, sweaty, grimy clothes will use only one cup of water.

Billions of gallons of clean water could be conserved every year simply by adopting this dry cleaning technology. Less water also means less drying, which can add energy savings to those with energy-hungry clothes dryers.

The process uses plastic granules, which tumble with your laundry and a little water and detergent. The plastic absorbs the dirt or grit and can be reused for up to six months. __CleanTechnica

More information and links at the source above.

With environmental emphasis moving from "global warming" to the need for clean water and water-saving technologies, you can imagine the demand for this type of machine--particularly in water-parched third world countries such as California. (pronounced: Caw-lee-forn-ya.)

High Oil Prices Affect Economies and Stocks

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China's Shanghai Composite is still by far the worst performing index at -45%. China is followed by India, Hong Kong, Italy, France and Germany. The US has held up relatively well, ranking 6th out of 21 countries analyzed in terms of market performance. Mexico, Brazil, Canada and South Africa are the only countries with positive stock market returns. __Source

China is the tail that is wagged by North America and Europe. If the developed world catches cold, China gets pneumonia. China's huge demand for oil has helped drive world prices higher, which has rebounded back to hurt China's stock markets and bottom line. China subsidises fuel costs for consumers and industry, and has been stockpiling oil supplies in the lead up to the Olympics. Both policies spur demand and lead to higher fuel costs.

Spotless Sun is Not a Fluke: A Solar Slowdown Once in a Century or Less

Solar physicists are finally beginning to admit that something unusual is happening with the master of the daytime sky.

...we are returning to the quiet solar conditions we have observed about every 100 years, and cycle 24 will probably be lower than 23, just as 14 was lower than 13, although we don’t know why there should be such a ~100 year cycle. _LeifSvaalgard

Svaalgard, David Hathaway, and other NASA solar physicists have not been very helpful in teasing out what the sun is trying to do in its current "between cycles" state of paralysis. They are baffled, but continue trying to put a knowing, expert face on the situation. Fortunately, meteorologist Anthony Watts has devoted a significant amount of time to analysing this curious ongoing situation with our sun. In his latest post on the topic, Watts looks at various metrics of solar activity and becomes further convinced that something quite unusual is going on.

...it appears we continue to slide into a deeper than normal solar minima, one not seen in decades. Given the signs, I think we are about to embark upon a grand experiment, over which we have no control. __WattsUpWithThat

Go to the link and look over the graphics, read the commentary. Something unusual is happening to the sun at the same time that colder than normal weather is impacting large parts of the Southern Hemisphere yet again this year, while curious winter-like weather continues to impact parts of the Northern Hemisphere quite close to the summer solstice.

Most of the world's resources devoted to climate are focused upon greenhouse gases and warming events. How ironic that nature, and the real climate, appears to be pointing toward more cooling, and suggesting as loudly as it can that the sun may be involved.

Oil: Bubbleheads vs. Fundamentalists

The diagram above portrays the basic fundamentals of the oil market. It resembles an engineering flow diagram, for those with an engineering or computer science background. The diagram comes from an essay by economist Ferdinand E. Banks. In the essay, Banks explains to the rest of us why oil prices cannot possibly be caught up in a speculative bubble. Banks claims that recent price trends in oil are fully explained by the fundamentals of supply and demand--of flow. His argument is reasonably straight forward and comprehensible. If Banks is right, oil prices should continue to climb in a zigzag manner.

In opposition, Bill Jamieson claims that oil prices have been caught up in (and are feeding into) a generalised commodity price boom over the past 18 months. Jamieson claims that the fundamentals do not support oil prices well over $130. He points out several reasons for speculative over-reaction in oil prices, and suggests that a large downward correction is in order. If Jamieson is right, a lot of speculators will soon be thinking about jumping off high buildings.

Shell Oil president John Hofmeister thinks the fundamentals point to oil under $90 a barrel. The US Congress is looking at ways to close speculative loopholes for investment bankers in the commodities markets.

The economics of any important global commodity is quite complex. It is often difficult to determine how closely prices are tracking fundamentals. The larger and more complex the market, the greater the difficulty.

The instant giveaway for speculative influence in a market is volatility. When a commodity jumps significantly up and down on the basis of newsreleases and rumours, it is not fundamentals that are driving the price. It is fear. Fear drives speculation, and speculation drives prices.

Investment banks such as Morgan Stanley, Goldman Sachs, etc. have stockpiled at least 8 times the amount of oil that is contained in the US strategic reserve. Iran and other Gulf states have stockpiled at least as much. Saudi Arabia promises to increase its output by 500,000 barrels a day, starting in July 2008. China's stockpiling of oil for the Olympics should be curtailed after August. India is slowly phasing out its fuel subsidies, which should reduce demand in the subcontinent.

The threat of global price inflation from a "cascade-down" effect of high oil prices further confuses the economic picture. Hints at future interest rate hikes from Brussels and Washington have had a slight subduing effect on an irrationally exuberant commodities market.

Current popular expectation is that prices will continue to go up-up-up. But there is no economic model that supports such an indefinite upward trend in prices. Except the bubble. And bubbles eventually pop.

PS: Inflation in the context of a fiat currency constitutes one type of bubble.

Update: Here are two interesting blog posts trying to tease out some of the more relevant aspects of the problem:
Brian Westenhaus looks at the refinery bottleneck and who is responsible
JD looks at the surplus of heavy crude on the market

Asian Markets Slip on Inflation, Recession Scare

Asian markets stumbled badly again last week, with yet another bad week expected. The main fear for China is inflation, primarily from rising energy costs.

China’s previous two bouts with inflation, in the late-1980’s and mid-90’s, both triggered social unrest. The protestors in Tiananmen Square spoke of democracy and human rights, but it was the central government’s economic mismanagement that fueled the nationwide discontent.

In recent years, the Communist party has been able to paper over policy mistakes with growth. The failure to make substantial progress on implementing the rule of law, creating enforceable property rights, and eliminating corruption has not appeared to crimp the expansion. But the game cannot go on forever; no country is immune to economic cycles or the consequences of bad governance. __GordonChang

Potential economic slowdowns in Europe and North America are also causing more than a few sleepless nights in China's economic planning circles. Central Banks in Europe and the US are uncertain how to handle interest rates to avoid both recession and inflation.

Meanwhile, global financial markets just recovering from the sub-prime mortgage crisis, are faced with uncertainties over an out of control CDS (credit default swap) market, and the investment bank speculatory oil bubble threatens to burst.

Interesting times.

Human Extinction: Pro and Con

How do you feel about the prospects for human extinction? More specifically, are you in favour of human extinction, against it, or indifferent?

Listed below are several websites dealing with human extinction, both pro and con:

Pro Extinction

Voluntary Human Extinction Movement
Dieoff.org
Gaia Liberation Front
Church of Euthanasia
More links here

Pro Survival

Lifeboat Foundation
Alliance to Rescue Civilization
More links with emphasis on space
Surviving Future Technologies

"Civilisation is Doomed" Sites

Life After the Oil Crash
Timeline of Doom
Survival Blog
Survivalist Blog
Survival Links (just in case)

Several bona fide existential risks are hanging over the Earth. Unlikely visions of doom such as "peak oil" and "global warming" are popular catastrophes du jour, but they are two of the less likely sources of doom we face. Over the next two decades, humans will move progressively away from petroleum and fossil fuels, to substitute fuels and energies. And for the foreseeable future, a devastating ice age will be more likely than any type of warming catastrophe.

Al Fin blog salutes those working to mitigate the influences of the several bona fide existential risks that threaten the planet. For those such as the current US Congress, the IPCC, NASA GISS, and other incompetent political/bureaucratic groups who divert important resources away from solving real problems, only to waste precious resources on phantom fears, Al Fin--together with Oynklent Green [OTC:OYNK]--is helping to devise suitable remedies and work arounds.

Hybrid California Power Plant 24 h Renewable

Two new hybrid power plants are to be built near Coalinga, California, to provide roughly 106 MW of renewable power 24 hours to an energy starved US state. It will be powered by the sun in the daylight, and by bio-gas powered steam at night.

The two planned solar thermal-biomass hybrid power plants - the first of their kind - will be managed by Martifer subsidiary San Joaquin Solar LLC and will provide enough power for nearly 75,000 homes in northern and central California. They combine solar thermal technology with steam turbines powered by gas made from locally available biomass (agricultural waste and livestock manure.)

When the sun is shining during peak hours, it will just be the solar facility. As the sun sets, biomass will be available to support the solar generation, and then at night the biomass will run purely on its own. - Andrew Byrnes, project developer __Biopact

This use of bioenergy as an after-hours backup power source for solar power plants is quite logical. Biomass and biofuels are simply another form of solar energy, containing their own built-in storage.

This is only one small step toward moving power generation back into the golden state from neighboring states that are less fastidious. Most of the new energy plants in California over the past 20 years are of an intermittent, non-baseload nature--solar and wind. That means that during long spells of energy shortages, one could not always count on California utilities to reliably provide needed service. As more ingenious ways of using bioenergy come online, expect it to find more of a place across North America--even in California.

Amphibious Sport Aircraft Folds for Trailer

Store this sport plane in your home garage, and trailer it to the water or runway for launch. This new plane is made by Icon Aircraft, and plans to start deliveries this year. US $ 139,000.00

The A5 belongs to the FAA’s new “light-sport aircraft” class, whose planes don’t have to go through the same lengthy certification process that discourages bold design in larger planes...You can fly the A5 with a simple sport-pilot certification, which requires half the training time of a standard license. A cockpit designed with input from carmakers such as Nissan has minimal instrumentation and a GPS navigation system, making the plane easier to pilot.

The wings are designed to minimize the danger of stalling, where they lose lift because the plane is traveling too slowly or its nose is pointed up too high. With the A5, stalling occurs gradually, providing plenty of warning for the pilot. __PopSci

It runs on unleaded gasoline, and has the cockpit design of a sports car. Seastead dwellers will find it the perfect vehicle for visiting friends on neighboring seasteads. Or you can move to that offshore island you've had your eye on, and commute to work by plane.

China: Balancing Wealth, Poverty, and Authority

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By historic standards, China is well situated to play a powerful role in global affairs. China is secure militarily, due to geographical isolation and due to its domination over Tibet, Xinjiang, and Mongolia, as well as current cooperation with Kazakhstan, North Korea, and Russia. China has no current enemies pounding at its gates. China is economically secure due to heavy foreign investment and commerce through its gateway harbour cities on the Eastern seaboard. International trade routes are secured by the world hegemon, the United States--saving China (just like Europe) a great deal of expense maintaining the security of its own trade.

China's population is crowded to the east of the 15" annual rainfall line (see above graphic). China's wealth is crowded even farther to the east, along the coastal cities. One of the biggest problems facing China's authoritarian government is balancing the needs of the wealthy east, with the needs and demands of the impoverished center and west of China.

China is providing many trade and labour opportunities for poor inlanders to transplant to Africa and other third world regions. There, these transplanted inland Chinese can save goodly sums of money and later move back to China relatively well off, compared to their initial situation. Large numbers of inland Chinese are also moving toward the coastal cities, where income opportunities are more numerous and lucrative.

China's great balancing act--economic, military, sociopolitical--hinges upon the wealth being generated in international trade by the coastal cities. As long as it is profitable for European, North American, and wealthy Asian countries to build their factories in China and to use Chinese factories as suppliers, China will continue to generate high growth and income, and maintain a favourable trade balance.

...as energy prices rise, the cost of production rises and the relative importance of the wage differential decreases. At a certain point, as China's trading partners see it, the value of Chinese imports relative to the political cost of closing down their factories will shift.

And all of this is outside of China's control. China cannot control the world price of oil. It can cut into its cash reserves to subsidize those prices for manufacturers but that would essentially be transferring money back to consuming nations. It can control rising wages by imposing price controls, but that would cause internal instability. The center of gravity of China is that it has become the industrial workshop of the world and, as such, it is totally dependent on the world to keep buying its goods rather than someone else's goods. __Source

Much of China's farmland is being taken out of play by mismanagement, loss of labour to the cities, poisoning by industry, erosion, and the caprice of weather and climate. China's food and water supplies are so unsafe, that many Olympic teams heading to Beijing would like to bring their own food and water--but are being denied that option by the Chinese authorities.

Corruption in Chinese construction and finance is rampant, as the need for ever faster and greater growth is drilled into Chinese officials at all levels from above and below. Bridges, buildings, and high voltage power lines crumble as a result, and stock markets--the repository of much of the hard-earned wealth of the Chinese labourer--teeter.

They said that at least Hitler made the trains run on time--until he tried to defeat the entire world in battle. And at least the Chinese government has made the country secure from foreign invasion, and economically prosperous--if only in a very spotty way. China cannot afford to take on the entire world--no matter how large the discontent grows within the country, between regions of wealth and poverty.

So long as China stays safely at home, the largest challenge to its government will be containing the ever-present centripetal forces that perpetually strive to pull China apart into rival factions. As long as the costs of transport of goods remains low enough to make Chinese manufacturing economical for N. America and Europe, China's government should succeed at that containment.

But should the price of oil ever shoot through the roof, or should automated manufacturing methods become widely adopted in the more developed world, the advantages of low wages and trainable labour force would be lost to China. At that point, the first in a long line of dominoes would begin to topple, with China's future very much in question.

The Post-Humans Among Us

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The recent IEEE Spectrum special on the singularity brought a lot of comment across the blogosphere. The NYT's John Tierney weighed in on the topic recently with a piece: When Do Post-Humans Show Up? Tierney gives Ray Kurzweil a chance to fight back against the "singularity deniers", and Kurzweil obliges.

These critics obviously have not read my book and have not read this chapter because they do not respond to anything I’ve written. It is as if they’ve just heard a superficial presentation of these ideas and respond without any engagement of the extensive discussion that has already taken place about these issues. _NYT

That may very well be, or it may be that Kurzweil is mentally fixed on a particular set of mechanisms and scenarios of singularity. It may be that Kurzweil's "extensive discussion that has already taken place about these issues..." is not as extensive or profound as Kurzweil imagines.

Kurzweil's discussion about how easily the human brain/mind will be emulated is particularly naive. This naivete comes naturally when a prolific and esteemed person such as Kurzweil is insufficiently familiar with the subject matter he is discussing--the genetics (and epigenetics) of the mind/brain.

I point out that the complexity of the design of the brain is at least 100 million times simpler than it appears because the design is in the genome. Even including the genetic machinery that implements the genome, the compressed genome is only about 50 million bytes (which I analyze in the book), and that is a level of complexity we can handle. We are already showing that we can develop realistic models and simulations of brain regions like the cerebellum and others. The cerebellum, for example, repeats a basic pattern a few billion times with some random variation within certain prescribed constraints. There is a lot of apparent complexity in the cerebellum but not very much unique design information, and we’re showing we can reverse-engineer it.

Of course the cerebellum is only peripherally involved in most conscious activity. It is an important "co-processor", but not the central processing center of consciousness. One can derive no comfort in the quest to understand human cognition from the apparent simplicity of cerebellar structure.

Similarly, if one supposed that the apparent simplicity of the brain genome implied a simplicity of the brain/mind itself, one would have to overlook much recent research detailing the "post-genomic", meta-genomic, and epigenetic development of central nervous system structures. These critical aspects of brain development are not well enough understood to allow useful modeling or quantification. Worse yet, even a complete understanding of how to create a human brain will not immediately put us in a place to understand how that brain works, or how it might be improved.

The road to the "singularity" will not be a smooth exponential curve. It will be a fractal fracturing of boundaries and limitations that will take decades to sort out. We will have pieces of the singularity existing a hand's breadth away from other pieces, with neither recognising the other. It will be up to post-humans to put the pieces together so that they do not blow up into a Skynet or Colossus.

If western civilisation survives attacks from desert religious fanaticisms, and 19th century cloistered ghetto-inspired central planning, various critical parts of the "singularity" may achieve capabilities and versatilities that allow them to connect with other critical parts in the same place at the same time. It is up to the post-humans among us to follow the threads of accomplishment, splice them together into a self-generative, autopoietic symbiotic whole, and wrap it all in a sustainable energy/matter matrix.

In Kurzweil's vision, the singularity drives the post-human. But doesn't it make more sense the other way around?

Eventually, the biological substrate of consciousness will be outpaced by other forms of conscious cognition. Post-humans will build their world around that knowledge, so as not to be left behind. Currently, only science fiction provides the speculative power to imagine the transformations that will come from genomics, nanotechnology, advanced hyper-parallel computation, robotics, evolved machine intelligences, and any combination of the above. After science fiction, Kurzweil provides a more "connected" view of our potential. Finally, there is mainstream science, which runs a very distant third in scope and vision to SF and Kurzweil.

But if you want a realistic assessment of what is likely to happen, you need scientist/engineers trained in multiple disciplines, who are also thoroughly steeped in biology, cognitive science, history, and science fiction. Post-humans will have to be able to bridge disciplines, cultures, even civilisations.

The Sun is Dead, Long Live the Sun!

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Solar scientists continue to be perplexed concerning the persistence of SolarCycle 23, and the reluctance of SolarCycle24 to begin in earnest.

The sun today. There appears to be an emerging Cycle 23 spot at the left, but still no new Cycle 24 spots.

The sun has been laying low for the past couple of years, producing no sunspots and giving a break to satellites...The scientists said periods of inactivity are normal for the sun, but this period has gone on longer than usual. “It continues to be dead,” said Saku Tsuneta with the National Astronomical Observatory of Japan, program manager for the Hinode solar mission.

...In the past, they [solar observers] observed that the sun once went 50 years without producing sunspots. That period, from approximately 1650 to 1700, occurred during the middle of a little ice age on Earth that lasted from as early as the mid-15th century to as late as the mid-19th century.

_WattsUpWithThat

Solar physicists are simply stumped. The 5 billion year old sun operates on a much longer time scale than the years and decades that individual scientists are capable of observing first-hand. Solar science has not been a human discipline long enough for solar physicists to truly understand the sun's activity.

While politicians, bureaucrats, carbon traders (Al Gore), and other opportunists obsess over "catastrophic" green house gas warming (CAGW), the sun continues along its own path. Will short-lived, short-sighted humans be surprised by what the sun does? Mais, oui!

Case History 2006: Index Speculator Selloff

JD at Peak Oil Debunked presents an account of a selloff of "long-only" indexed oil futures by Goldman Sachs in 2006.

In addition to the issue of index funds accumulating long positions and thereby imputing an upward bias to commodities, there is another opportunity for market manipulation with respect to the construction and rebalancing of prominent commodity benchmarks such as the Goldman Sachs Commodity Index (GSCI).

As reported by the New York Times on September 30, 2006 Goldman Sachs significantly readjusted in August of that year the GSCI's gasoline weighting. Index products tracking the GSCI, and representing an estimated $60 billion in institutional investor funds, were forced to rebalance their portfolios resulting in an unwinding of positions. Originally, unleaded gasoline made up 8.75 percent of the GSCI as of 6/30/2006 , but this was changed to just 2.3 percent, representing a sell-off of more than $6 billion in futures contracts.

As a result, gasoline fell 82 cent in the wholesale market over a four-week period, an unprecedented move; and crude oil, which in July 2006 traded over $79 per barrel for August delivery—at the time an all-time record—subsequently fell to around $56 by January 2007. _PeakOilDebunked

Follow the link for more information on that story. What you are seeing in the long-only index futures is an "ever-tightening" of a spring. Eventually, the spring will unwind, and with will unwind a lot of pension and retirement plans. You may want to check and see where your pension fund manager is putting your pension money.

More links and information at this POD post.

High Oil Prices Lubricating Global Fault Lines

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High oil and fuel prices continue to drive news headlines. Saudi Arabian oil ministers are feeling particularly uncomfortable in the midst of windfall profits, and have called an international meeting to discuss the "unjustifiable rise" in fuel prices. Why would Saudi Arabian ministers call rises in fuel prices unjustifiable?

Why do you think oil prices are high? Here is my list:
1. Low value of US dollar
2. High demand from emerging economies and oil-producing economies themselves
3. National oil companies (mostly developing world) slow to improve production and maintenance technologies
4. US Congressional foot-dragging on domestic fuels and energy production
5. Recurrent inflation and popping of oil price bubbles over the decades discourages long term investment in alternatives and infrastructure
6. Discovery of oil price bubble by pension and hedge fund managers and resultant "gold rush" to profit from it
7. Bad government policies, bloated bureaucracies, obstacles to new business generally
8. Political mischief by Iran, Pakistan, Syria, and Venezuela
9. Failure worldwide to use the latest technologies to search for and develop new petroleum resources, particularly by national oil comanies as in #3, but also more developed nations as in #4

More factors are involved, including "luddite" opposition to nuclear energy and coal to liquids etc., and when taken as a whole present a troublesome Gordian knot of causation. Certainly it is problematic that intense research and development into alternative fuels did not truly begin until the price of oil became an acutely painful economic stimulus.

How much influence does the low value of the US dollar have on current oil prices and consequent global inflation?

How will higher interest rates in Europe affect the global economic picture?

What effect do "long-only" futures contracts have on present and future oil prices? How much "blow-back" pressure does this investment bubble gambling on ever-rising oil costs put on the real oil market?

"Peak Oil" is an ambiguous euphemism which means many things to different people, similar to "Global Warming." But when you break down the meanings involved in such euphemisms, you often discover that "there is no there, there". People who are falling into the "prices can only increase" trap are repeating the classic bubble chasing mob behaviours of millions of losers before them. Too bad so many pension fund managers are finding themselves among the surging mob.

Global Inflation from Oil Hikes: No Nations Immune

Optimistic analysts had been hoping that economic booms in the BRIC nations--Brazil, Russia, India, China--would supply needed global economic growth that the US and Europe have failed to supply. But price pressures from inflated oil prices are putting the BRICs under a lot of inflationary strain. The emerging economies simply do not have the firepower to substitute for slow US economic growth.

"They (BRIC economies) are running very large combined trade surpluses in the order of 500 billion dollars... so if there's weakness in the advanced economies, you are going to see weakness in the emerging markets," McCormack said.

"The trade flows are going the other way, so the conclusion that we reached is that strong growth in the emerging markets is not really going to help offset weakness in the advanced economies."

Both India and China still account for a relatively small portion of global imports which means their economies' influence on international growth is limited, the US ratings agency said.

India only accounts for two percent of the world's gross domestic product, said McCormack.

"So in some sense, it doesn't matter how fast India grows and it's not a very open economy," he added.

"It's not really going to contribute to stronger growth in other markets. It doesn't import that much. It's just too small." __AFP

Obvious, no? But financial analysts and journalists can easily overlook the obvious in their enthusiasm for emerging markets. It gets worse.

As oil prices rise, Russia's inflation rate is approaching the high teens. China and India have been subsidising fuel prices for consumers, driving demand and putting an ever greater strain on the government infrastructure as oil prices mount. Inflation from higher oil prices is the greatest threat to world economies.

The Shanghai stock exchange has lost almost 35% of its value this year, representing a huge loss to Chinese savings. Far from providing a life vest to a struggling global economy, China itself--and much of Asia--is flirting with significant regional slowdowns. China's remarkable boom--like India's--has been built upon outside investment and exports. As the more developed economies slow down with higher fuel costs, China's economic engine itself is being strained for fuel.

Oil prices are in the driver's seat for now. Until the US Congress wakes out of its deep coma, and takes the handcuffs off of energy providers in the US, oil prices will be driving the global economy in an increasingly erratic manner.

The BRIC economies are too small and too closed, to substitute for slowdowns in the US and Europe. And they are not immune to high oil prices--far from it.

Oil Bubble? Seriously? Oh, Yeah

What has been driving the cost of oil so wildly and erratically over the past several weeks? Where will it all end? How high can the price of oil go without toppling the global economic cart?

Before getting to the underlying causes of the current rapid expansion in the oil price bubble, we should consider how much higher oil may go in this cycle. The answer is, not much higher. The reason is that global economies are having trouble dealing with current prices. Any higher and a global recession will ring the gong on this act.

...the price of oil is extremely cyclical - that is, it tends to rise during economic booms and fall during contractions. It dropped 44 percent in the last recession (from November 2000 to November 2001), 48 percent from October 1990 to January 1992 - and 71 percent from July 1980 to July 1986. __Source

A full blown recession is not required to trigger an oil price drop, but if it happens, the fallout for many financial institutions will be worse than fallout from the recent credit crisis.

All consumers are beginning to cut back on oil consumption. Current high prices are driving consumption down, and will eventually drive production (and substitution) up.

It takes a while to develop new supplies of oil, but the signs of a surge are already in place. Shale oil costing around $70 a barrel is now being produced in the Dakotas. Tar sands are attracting investment in Canada, also at around $70. New technology could soon minimize the pollution caused by producing oil from our super-plentiful supplies of coal.

"History suggests that when there's this much money to be made, new supplies do get developed," says Brown.

That's just the supply side of the equation. Demand should start to decline as well, albeit gradually.

"Historically, the oil market has under-anticipated the amount of conservation brought on by high prices," says Brown. Sales of big cars are collapsing; Americans are cutting down on driving. The airlines are scaling back flights.

We've learned another important lesson from the housing market: The longer prices stay stratospheric, the worse the eventual crash - simply because the higher the prices and bigger the profit margins, the bigger the incentive to over-produce. __Source

But why have oil prices shot up so quickly? 1. Huge recent demand from China, India, and other emerging nations. 2. Recurrent, transient political turmoil in oil producing regions 3. National oil companies that have no incentive to modernise production as long as prices remain elevated 4. The reduced value of the US Dollar causes oil prices to rise relatively 5. A speculative bubble driven by index fund/pension fund investing.

Much of the rise in oil price is the result of activity on the New York Mercantile Exchange, the energy exchange. This is activity by index funds and pension funds that are investing in oil futures, not for direct use but as financial assets for profit. That contrasts with activity by oil producers and consumers who buy and sell to smooth out fluctuations in price and delivery.

These financial institutions – index funds and pension funds – are neither buying oil nor selling it. They are passive investors in commodities. They have invested $260bn (€169bn, £133bn) in commodity markets, compared with $13bn just five years ago. Much of this money is in oil.

...The best way to counter speculation is to make it less profitable. Step one is to protect the regular traders in the real oil economy (those who intend to close their positions by making or taking delivery of oil) and charge them a lower margin than those who have no intention of plying the oil trade. The purely financial traders must be made to pay a proper price for their speculation. This can be done simply by increasing the margin that they have to put down to trade as open interest, from the current 7 per cent to about 50 per cent. __FT

This huge speculative bubble is often overlooked due to peculiar bookkeeping allowed by a government loophole.

Even though they are speculators, they are not included in the data as speculators. Because they get their exposure from an investment bank, they are ultimately listed as a commercial. In total, they represent an enormous part of the commodities markets. But they are providing liquidity, so what's the problem? They are not actually hoarding the commodities. The price is still set at the spot price. But.

But that is not the whole story. They are making it difficult, if not dangerous, to short the market. When massive buying comes into the market, it moves the market and sends the signal to the market that prices are rising. Momentum players move in, and prices rise some more. __Source

Prices continue to rise more, and more, and more . . . because in effect, a ratchet has been inserted into the mechanism allowing quick price rises, but working against falls in price.

Hiding as commercial accounts, thru a Commodity Futures Trading Commission exemption to avoid speculative position limits, these institutional-investors use commodities index-futures to hold positions in oil. But not as traditional buyers of oil would, but as financial speculations. This feeds the demand side, without ever, actually demanding oil. Eighty two percent (82%) of WTI futures [net increase from 01/01/03 to 03/12/08] was purchased by institutional-investors [Testimony of Michael Masters before the Committee on Homeland Security and Governmental Affairs, U.S. Senate, p.3, May 20, 2008].

He further notes that Index Speculators “never sell” their positions but, “roll their positions by buying calendar spreads.” True, their positions are closed but then they are continuously reopened. According to Michael Masters the increase in institutional-investor position's on WTI futures increased 539% over five and one-quarter years [102% per year on average]. Momentum in price attracts attention and so more and more institutions enter trades, ratcheting the price upward. How can experts claim that such an influx of non-traditional buyers into index-futures, at this magnitude, does not effect spot prices?

Answer: they cannot. The pricing signal that index-speculators are sending to the spot market is a false signal. Their financial demand is only for oil futures, not barrels of oil. For persons to claim it is really the huge demand [2% per year + marginal decline] or supply disruptions [that never happen] is to be otherwise engaged. __Source

Even George Soros is concerned about the level of speculation by pension and hedge funds in the oil market. Soros recently testified before Congress on the issue. Now Senator Joe Lieberman of Connecticut is threatening to close down these big money price ratcheting speculators with the power of federal legislation. Given the paper profits these fund managers must be showing right now, imagine their concern over Senator Lieberman's comments.

What should you as a small investor do? Stay out of it. Oil prices may finally tip the US into a recession before all of this is settled. If so, the current bubble would no doubt pop, but it would not be long before the onset of the next bubble--unless substantive reforms are made in US fiscal policy, Federal Reserve policy influencing the value of the US dollar, and CFTC (Commodities Futures Trading Commission) policy in regard to "long-only" index futures.

More: See Bruce Hall's interesting take on fuel prices here.

Measuring Superpowers: Who Has the Biggest?

What qualities does a super power nation possess? How will we know when an emerging superpower outperforms a former leader? When will China finally emerge from corruption, pollution, and poverty, to take its place as world leader?

The Futurist blog attempts to provide a basic framework for discussion, in an interesting update to its most widely read posting. Here is a ten point scaffolding for ranking superpowers:

1. Size of a nation's economy

2. Military capablity and readiness

3. Number of popular worldwide consumer "brands" (Coke, McDonalds etc)

4. Top Universities as household names

5. Center of gravity for scientific research

6. Immigration magnet, opportunity mecca

7. Leader in entertainment, culture

8. History of recent pivotal achievements

9. Uses own resources to solve problems of an ungrateful world

10. Willing to accept the full responsibility of world hegemony, and reside in the cross-hairs of other "wannabe's" without striking out wildly against challengers

_Futurist posting with links and graphics

Many people are willing to predict that China will surpass the US on one or two of the ten points by or before 2030, based upon simple extrapolations of current economic trends. But will that be enough to make China an important world center?

It takes more than a rapidly growing economic infrastructure, a massive buildup of cold war-era military assets, an army of "attack hackers" and industrial/military spies, and a huge industrial/scientific copy and counterfeit industry, to make a responsible world hegemon. China already out-pollutes the US, and is causing untold damage to Southeastern Asian rainforests and its own ecosystems.

The massive corruption within Chinese government and state-owned enterprises points to smoldering, deep seated problems which will not scale well. Recent shoddy construction--leading to at least tens of thousands of unnecessary deaths--were brought to light by earthquakes and an exceptionally cold winter. In the mad rush for "growth at any price", many Chinese officials and regulators at all levels are willing to cut corners and accept bribes--compromising the future health and safety of the people.

It is not necessary to believe that China will be broken up into competing warlord fiefdoms--as has happened multiple times in China's past--to be skeptical of the hugely optimistic predictions for China's future. It is only necessary to see the issue in a larger social and historical perspective, and to maintain a healthy skepticism toward information sources (Chinese government) that have proven unreliable, overly secretive, and outright misleading in the past.

Kindergarchy of the Western World

Having only one or two children allows parents to shower a great deal of attention upon each child. And that must be a good thing, right?

No other generations of kids have been so curried and cultivated, so pampered and primed, though primed for what exactly is a bit unclear. Children are given a voice in lots of decisions formerly not up for their consideration. "If it's your child, not you, who gets to choose your weekend brunch spot,"

...Every high school now has its battery of counselors: guidance, psychological, college. A larger and larger segment of the student population seems to bring its own psychological tics and jiggeroos to school with them: ADHD, dyslexia and other learning disabilities, various degrees of depression requiring regimens of pills and therapy sessions. Some of these defects and disabilities are the result of parents' having their children at a later age. Might others be that the children are so intensely watched over and tested that more and more defects and disabilities show up, some among them possibly imaginary?

...So often in my literature classes students told me what they "felt" about a novel, or a particular character in a novel. I tried, ever so gently, to tell them that no one cared what they felt; the trick was to discover not one's feelings but what the author had put into the book, its moral weight and its resultant power. In essay courses, many of these same students turned in papers upon which I wished to--but did not--write: "D-, Too much love in the home." I knew where they came by their sense of their own deep significance and that this sense was utterly false to any conceivable reality. Despite what their parents had been telling them from the very outset of their lives, they were not significant. Significance has to be earned, and it is earned only through achievement. Besides, one of the first things that people who really are significant seem to know is that, in the grander scheme, they are themselves really quite insignificant. __Source_via_aldaily.com

Even "only children" raised without siblings, full of self-esteem and their own specialness, are in reality "quite insignificant." Sequestered in classrooms until their twenties or later, protected from any real responsibilities, prevented from being tested by the larger world, they are finally tossed into reality demanding everything but qualified for little or nothing.

These "special" children are turning into psychologically neotenised lawyers, politicians, journalists, judges, political activists, bureaucrats, educators, clerks, and any other occupation where they can frequently turn their feelings into a quasi-truth.

Heaven help these poor children who fall into a field where they are actually tested against reality in a meaningful way. Working physicians, engineers, IT workers, technologists and technicians, military, ICU nurses, maintenance and construction workers, law enforcement, pilots, researchers and lab workers who are required to develop things "that work", EMS, business people who must "deliver the goods"--these are examples of people who have to go beyond their feelings and actually be competent.

There are many examples of psychologically neotenised people who got into "competence-tested" fields by mistake. They flew the plane drunk, killed or terrorized innocent people, operated on the patient under the influence of drugs. They fudged their data, produced sloppy code, and designed buildings that fell down.

Unfortunately, parents in developed societies are turning their few progeny into more and more psychologically neotenised princes and princesses. Full of self-esteem and a sense of entitlement, they are spilling out into all occupations and fields. What have they done? Nothing. What can they do? Nothing. What are they willing to learn to do? Almost nothing. What do they want? Everything!

In November, voters in the US will have the opportunity to elect a US President who has done essentially nothing. Never flew a jet fighter or served in any type of military or national guard unit. Never operated a successful business or served in an important administrative position. Barely served half a US Senate term. Never faced re-election as US Senator. No record of achievement, legislation, or accomplishment. The very picture of a quite special psychological neotenate, sliding his way toward an important position at a time in history where challenges to western civilisation are growing critical.

Welcome to the Kindergarchy.

Seasteading Book: Updated on New Website

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The new Seasteading Book is updated and enlarged, on the new Seasteading.org website. The old Seasteading Book by the same authors is still online for comparison. The entire web-book is a work in progress by authors who clearly care very deeply about their topic. The authors have put a great deal of thought and research into this free online e-book.

Like Marshall Savage, I tend to see seasteads as preliminary rites of passage and tests of competence. The long term goal for most restless visionaries has always been the vast expanse and richness of space. Unfortunately, humans are not that far evolved from our tree dwelling cousins. It is not clear that entire self-sustaining societies of humans can be serious and competent enough to survive--to thrive--outside Earth's atmosphere.

That is why we need to demonstrate to ourselves that we can survive and prosper on the high seas, in polar habitats, and in undersea habitats. All of these settlements require a higher level of design competency and daily vigilance and competence, than most ordinary cities and towns that house most humans. If we cannot survive virtually anywhere on such a life-friendly planet as Earth, what is it within ourselves that tells us we can survive far away from the resources of Earth?

For those concerned about surviving the next apocalypse--whatever your apocalypse of choice--the new seasteading book contains a lot of useful material about all-purpose needs for communities in general. If you can create a sustainable community on the high seas, you can probably create a sustainable community almost anywhere else on the planet.

A Tale of Two Nano-Arrays

The nano-array pictured above is described as a perfect absorber of light--it reflects none of the incident light, instead turning all radiant energy into heat.

"Three things can happen to light when it hits a material," says Boston College Physicist Willie J. Padilla. "It can be reflected, as in a mirror. It can be transmitted, as with window glass. Or it can be absorbed and turned into heat. This metamaterial has been engineered to ensure that all light is neither reflected nor transmitted, but is turned completely into heat and absorbed. It shows we can design a metamaterial so that at a specific frequency it can absorb all of the photons that fall onto its surface."

...Because its elements can separately absorb the electric and magnetic components of an electromagnetic wave, the "perfect metamaterial absorber" created by the researchers can be highly absorptive over a narrow frequency range.

The metamaterial is the first to demonstrate perfect absorption and unlike conventional absorbers it is constructed solely out of metallic elements, giving the material greater flexibility for applications related to the collection and detection of light, such as imaging, says Padilla, an assistant professor of physics.

Metamaterial designs give them new properties beyond the limits of their actual physical components and allow them to produce "tailored" responses to radiation. Because their construction makes them geometrically scalable, metamaterials are able to operate across a significant portion of the electromagnetic spectrum. __RDMag__via_NEN

The nano-array above was previously discussed here at Al Fin and at New Energy and Fuel. This second array was designed to capture the radiative energy of light and turn it into electrical energy. Compare the two arrays at your leisure and note the similarities and differences. Both nano-arrays can be optimised for particular ranges of photon wavelength.

The potential range of applications for these arrays, and similar "metamaterials" made from precise nano-configuration of ordinary matter, is immense. These nano-arrays are something new under the sun, and worth considering.

Our planet is constantly bathed by showers of photons, and other particles from the sun. Until recently, humans have used the sun for agriculture, tanning, and heating, and inadvertently for Vitamin D production. It is long past time for us to begin using the sun, and other sources of infrared radiation, more thoroughly.

High Transportation Costs Shift Trade Locally

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Transporting commodities over long distances is becoming much more expensive. Both air freight and maritime freight costs are rising high enough to affect industrial sourcing calculations. For the US, it is making more sense to trade with Canada and Mexico--in terms of skyrocketing transportation costs--than China.

Soaring transport costs suggest trade should be both "dampened" and "diverted" as markets seek shorter, and therefore less-costly, supply lines.

"Instead of finding cheap labour halfway around the world, the key will be to find the cheapest labour force within reasonable shipping distance to your market," according to Rubin.

In that type of world, Mexico's proximity to the rest of North America, combined with its labor costs, will give it a second chance to compete with Pacific Rim production, according to Rubin, who predicts that when oil prices reach US$200 a barrel, it will cost three times as much to ship the same container from China than from Mexico. __Source_via_seekingalpha

Higher energy costs generate cascading effects throughout the global economy.

An interesting side effect of higher shipping costs will be a shift to more local food production. Another interesting effect is the "ramping up" effect that higher shipping costs for oil have on oil prices, which further ramps up the costs of shipping the oil. Such a positive feedback effect can play havoc on the futures markets of oil and other commodities.

More: High transportation costs are causing large air carriers to scale back flight schedules, and to retire older fuel-hungry planes early. Cisco's new holographic video-conferencing technology appears custom made to step into the gap.