Wednesday, July 23, 2008

The General Mobilization of Ants
On Monday, two bombs exploded on buses in Kunming, China. According to news reports, many residents of the city received text messages on their phones earlier that morning with a cryptic warning not to ride certain bus lines that day, including the line targeted by the attack. The message was signed "The General Mobilization of Ants." The articles I read have uniformly mentioned the fact that bus bombings are common in China (!), but that they are usually the work of "disgruntled farmers or laid-off workers"--not by organized revolutionaries, no siree! And certainly not by ants (hitherto believed to be the most Communist of insects)!

The Chinese government, anxious to avoid any unpleasantness before their Olympics, quickly issued a statement denying the existence of the message and the existence of any terrorist group responsible. I'm sure this is of great comfort to the two people killed on the busses.

Tuesday, July 22, 2008

Planning for Sprawl

Highway enthusiasts and "anti-planners" scoff at the notion that freeways cause sprawl, much less that freeways are essentially subsidies provided by government to developers. And I can see why--when you start thinking that way, everything starts looking like a conspiracy. But then you see things like this:

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That's a map of the proposed Grand Parkway section between 290 and I-10. The shaded areas show the population/employment density within three miles of the Parkway. The lightest grey is 0-230 persons and jobs per square mile, the middle greay is 251-750, and the dark grey is 751-1750. There are only 80,000 people currently in this area that would be served by this 20-odd mile long grandiose debacle.
So why would we build a highway that serves so few people? It’s not to deal with congestion, since there is no congestion there. It’s not to provide an alternate to 290 — the way to do that is to build the Hempstead toll road, running along 290 rather than taking a 20 mile detour.

There’s only one reason to build Segment E: to encourage development. If the commissioners approve it, it’s because they want new subdivisions built in the open space of the Katy Prairie. We’re building a highway for people who don’t live here yet in hopes that developers will build houses for them and that they will want to live on a toll road 30 miles from Downtown in a world of $4 gas. This is, simply put, land use planning, Houston style. And the question for the commissioners is this: is this good planning?

So asks Christof Spieler of Intermodality. This is, in fact, the kind of planning that "anti-planners" actually believe in. It's amazing to think that this is still even on the drawing board--but I have little doubt that it will indeed be built. And transit spending will continue to struggle.

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Sunday, July 13, 2008

J'aime Picasso!

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And I especially love A Life of Picasso: The Triumphant Years, 1917-1932. This book, as with the previous two volumes, is too overwhelming to try to reduce into a pithy blog post. Read it (but start with the first volume) and love it. Just to leave you with a taste, here are a few pits I liked.

On Classicism:
Picasso saw eye-to-eye with Stravinsky, who believed "the only critical exercise of value must take place in art, i.e., in pastiche or parody." [How postmodern!] Picasso chose parody.
On Picasso's relations with other artists:
Picasso seldom put lesser artists down. Time and again, he would discreetly give them money, buy their work or get dealers interested, and even marry them off. [Juan] Gris, however, was not a lesser artist. He had absorbed the lessons of cubism at Picasso's elbow and had gone on to take cubism a stage further by dint of calculations, the like of which Picasso and Braque always distrusted. Ironically, Gris's discoveries were so impressive that Picasso did not hesitate to take advantage of them.
On being rich:
Despite the devaluation of his work, Picasso suffered little from the crash. [...] Picasso was about to buy one of the most expensive cars at the Salon de l'Automobile, a large, luxurious Hispano-Suiza coupe de ville. Picasso, who had experienced greater poverty than most of his painter friends, ejoyed driving around, to Olga's dismay, in this ostentatious chaufffeured car wearing an old suit the worse for paint stains, cigarette burns, and plaster dust. As he said more than once, "I would like to live like a pauper with lots of money."


Friday, July 11, 2008

Iran's Easy Money

OK, let's say you have four missiles sitting around. I don't know what they cost, but let's say it costs less than $3.9 million to fire them and replace them. Does that sound reasonable? Because if it does, then Iran made money off their missile test on Wednesday.

Here's how I figure it. According to BP's Statistical Review of World Energy, last year, Iran produced 4.4 million barrels of oil a day. It consumed 1.6 million barrels, so we can conclude that it exported 5.6 million barrels a day. Let's also assume that Iran has continued to export about that much oil this year as well.

Now after they "tested" their missiles yesterday, the price of oil went up day-on-day about $5.60 per barrel. So on Thursday, all things being equal, Iran made $15.6 million more than it did on Wednesday. So as long as their missile test cost less than that amount, Iran made a decent little one day profit off it. Nice work if you can get it!

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Thursday, July 10, 2008

Oil Speculation Explained

How can speculation in the futures market affect spot prices? This is a question I’ve asked several times over the past few weeks. I was doubtful that this could occur, because in a futures market, the futures price is based on the spot price (and a couple of other things—interest rates, the cost of storage, and for commodities, the convenience yield). I heard several convincing explanations why futures speculation couldn’t affect current spot prices (without lots of secret hoarding), but none from the speculation fear-mongers about how this was occurring, which it seems incumbent on them to explain. Especially since, as we have seen, they want laws enacted to stop or curtail the process.

Finally, I found a piece that carefully explains how speculation occurs in the oil market—and why futures prices are decoupled from spot. The blog-post, on the blog Peak Oil Debunked, is well worth reading in its entirety. It is a well-sourced, clear explanation. (And all you peak oil peoples, don’t be put off by the name of this person’s blog—the post has nothing to do with peak oil per se, and neither supports nor debunks it.)

To put it in a nutshell, when the price of oil is quoted, it is quoted either as West Texas Intermediate (WTI), Brent Crude, and Oman-Dubai. These three are very specific grades of oil. However, when a refiner buys oil from a producer, the refiner is going to get something rather different from WTI, Brent, or Dubai.
Most crude oil is traded based on long-term contracts, and the prices in those contracts are set by a system known as "formula pricing". In this system, the price of delivered crude is set by adding a premium to, or subtracting a discount from, certain benchmark or marker crudes…
Now a problem has arisen over time in that there isn’t enough WTI or Brent or Dubai oil actually being traded for the market in these grades of oil to be completely liquid. It’s possible to game those spot markets. This is done through a mechanism called a “squeeze.”
Low volumes of crude oil available for spot trading make price discovery problematic and increase the vulnerability of markets to squeezes, distorting prices and undermining market confidence. A squeeze refers to a situation in which a trader goes long in a forward market by an amount that exceeds the actual physical cargoes that can be loaded during that month. If successful, the squeezer will claim delivery from sellers who are short and will obtain cash settlement involving a premium. It is true that all markets are prone to squeezes and in the last few years there have been occasions on which the Brent market was subject to successful squeezes. But it is also true that it is easier to squeeze thinner markets.
Now since oil is priced based on a premium or discount from WTI, Brent, or Dubai spot, and WTI, Brent, and Dubai spot can be manipulated via squeezes, many exporters turned from basing their premia/discounts on spot to basing it on futures price (using some kind of formula for averaging futures prices).

Now we know that there are more futures contracts than physical oil. For one thing, lots of hedgers who use futures contracts are not actually in the business of buying and selling oil. Airlines, for example, hedge the price of fuel with crude oil futures. And, of course, there are speculators who use futures to make bets on the price of oil. This has exploded in the past few years, as capital has looked for a new place to live following the dotcom crash.

But what JD over at Peak Oil Debunked is saying is that all this activity in the futures market doesn’t come out in the wash—it actually ends up affecting the price of spot oil precisely because no one trusts the spot prices of WTI, Brent, and Dubai. Now I think the futures market for crude is too big to be manipulated, but it most certainly could be a bubble. And that bubble can then affect spot for actual (as opposed to benchmark) oil.

(This blog is interesting, and peak oil believers should read it to get another view. And JD is quite a mystery man—he provides no information about himself, except that he lives in Japan and his favorite book is "The Illusion of the End" Jean Baudrillard! You don’t find too many fans of French postmodern theory writing about oil…)

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Tuesday, July 08, 2008

Pickens Plan for Wind and Natural Gas

T. Boone Pickens announced his vision for lessening the U.S.'s dependence on imported oil today. You can read more about it on the site he's set up, PickensPlan. Here's what Justin Fox at Time has to say. Fox does a little more motive sifting than I'd like, but that's inevitable, for reasons that shall become clear.

The plan, in a nutshell, is this. The U.S. should convert as much of its automobile fleet as possible from gasoline to compressed natural gas (CNG) as quickly as it can. The benefit is that we produce most of our natural gas domestically, whereas we import 70% of our oil--sending American dollars out of the country, into the grubby fists of various thugs, kleptocrats, fanatics, and all-around assholes. (There is also an environmental benefit, as natural gas burns cleaner than gasoline.)

But wait a minute? Don't we already use every Btu of gas that we produce? Yep--about 22% of America's electricity is generated with natural gas (not to mention homes that are heated with and cook with gas). So if we switch all that electricity-producing gas to vehicle-powering gas, where do we get the electricity from?

Boone's answer is windmills. He believes that vast quantities of windmills, built north-to-south in the Great Plains, where wind blows down unimpeded from Canada, can produce that 22% of America's electricity currently being produced by gas.

Now here is the intentions part--Pickens is building right now the world's biggest wind farm. And this is T. Boone Pickens--he's not doing it for charity. So his multi-million dollar promotion of CNG cars and wind power can be seen as self-serving--$58 million dollars in publicity to help maximize the return on a $10 billion dollar investment. If this campaign helps his investment return more than 5.8%, he's made money. But frankly, if just making 5.8+% were his goal, there are a lot easier ways. Therefore, his motives are not just money.

Can the plan work? Well, CNG cars are not exotic, high-tech devices that still have to be invented (like the batteries for the Chevy Volt). There are many CNG vehicles in the U.S., such as these Logan Airport CNG busses:

Logan Shuttle CNG Buses against the downtown Boston skyline.

In Argentina, 15% of the vehicles on the road are powered by CNG.

So why not? Well, the first thing that comes to mind is that there isn't an infrastructure for CNG vehicles here. But perhaps that is not a problem. If your house is already heated by gas, maybe it would be possible to fuel up at home, using some kind of CNG fueling appliance hooked into your gas, just like your dryer is.

The bigger problem, I think, is with electricity. I hope some readers who work for utilities can jump in here and help explain how the power grid works, but I'll do my best. To simplify, there are two states for electricity usage in a given grid. There is the base load, which is the minimum draw on the power generators, and the peak load, which is the maximum. In hot places like Houston, the base load is late at night, when the AC is straining least, the lights are off, no one is microwaving or watching the plasma TV or playing Wii. This is the minimum amount of electricity that the utilities have to collectively produce. Then in the afternoon, when the ACs are blowing their hardest, and lots of electronic appliances and gadgets are in use, is when you have peak load.

Now what is cool about gas turbines is that they can be relatively easily turned on and off, or their power turned up or down. This gives the utility the ability produce just enough electricity as is needed at a given moment. A record breaking hot day? Crank the gas turbines a little higher. So aside from the fact that it is relatively clean and mostly domestic, gas is great because it allows electricity to be generated efficiently and when it is needed.

Wind turbines are almost exactly the opposite. They produce electricity when the wind is blowing. Period. You can't turn the wind on and off. You can't add capacity when you need it. Is this a fatal flaw? I don't know. But it is a worry if you are going to replace a completely dependable electricity source with an inherently unreliable one.

But let's say the Chevy Volt lives up to its promise, and within a couple of years, we have lots of electric cars available from multiple manufacturers. Well, as America's car fleet is replaced by electric cars (gradually, of course), there will be a larger draw on the electric grid. People will be plugging in their cars at night. If millions of people do this, it may cause the base load time to shift from late at night to, say, 9 am, after folks have unplugged their cars and left for work.

Given this, we will still need all those gas turbine plants. But we will also need wind farms. So T. Boone still wins--he gets even richer, and we reduce our oil imports.

I work for a natural gas E&P company, so this plan has my vote! Heh. Actually, I wonder how it gets implemented, in Pickens' mind. I'm sure we'll hear more about that as time goes on. I'm interested, though.

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Monday, July 07, 2008

One More Reason to Love Colorado

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Maybe moving there would be a good diet plan. And stay the hell out of Mississippi, if you value your heart! (I theorize that Massachusetts moved down in the obesity ratings when I moved away.) (Hat tip Richard Florida, who got it from Strange Maps.)

Saturday, July 05, 2008

A Request From Bliss Blood

[destroy.jpg] I saw this at the Houston Punk Archives blog, and decided to pass it on:
I’m working on a permanent Pain Teens archive that will be a part of my Bliss Blood website, and I was wondering if you could put the word out, even though we weren’t exactly punk, that maybe some of the Houston folks might have photos, flyers or other memorabilia that I could add to my page.

People should email me at

So there you have it, Pain Teens fans. This sounds like a worthwhile project from one of Houston's most talented expatriates.


Friday, July 04, 2008

Great Men and their Ballerinas

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Portrait d'Olga, 1921. Pastel and charcoal.

I'm reading the third volume of John Richardson's overwhelming A Life of Picasso, and an odd coincidence struck me--both Picasso and John Maynard Keynes married ballerinas from the Ballets Russes (Olga Khokhlova and Lydia Lopokova respectively).

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