The Quiet Road

The dream of a united Europe is one I share. Hell, I’d extend it further… a world without borders would be a glorious thing. Imagine there’s no countries.

But sadly that original European dream, first envisioned after two world wars had ravaged the continent, has been hijacked by financial institutions and the forces of the free market. It has become simply a mechanism by which the rich and powerful use the sweat and blood of the masses to lubricate the machinery of capitalism and further entrench their wealth and power. Some have said that it was ever thus. That the European dream was always just a way for the few to prosper at the expense of the many. But I don’t believe that. The remnants of my erstwhile idealism still provide enough of a reminder that sometimes we people do things for the right reasons. That it’s not always craven and manipulative self-interest that drives us.

But who today can still place their faith in the European dream? As our governments collude with private capital to heap unearned debt onto the shoulders of the masses, who can now believe that this once great project still has The People at heart?

Which is why I do not lament the first fractures appearing in our continental unity. The past few days have heard furious denials from Athens that the Greek government is considering withdrawing from the single currency. Our political classes don’t seem to realise that we have become familiar with the pattern… first the denials (that there’s a problem, that the banks are in trouble, that we need an IMF bailout) and then the reluctant embrace of that which was denied.

The Greeks deny any such idea is being considered or has been discussed. Others suggest that it has been discussed but that it’s merely a negotiating ploy to put pressure on the IMF and ECB to soften the terms of the bail-out. Either way, it’s causing problems for the single currency and we’re hearing rumours of frantic secret talks aimed at holding the Euro Zone together.

I know people who will gleefully cry “I told you so!” And hey, let them have their whoop. Those who predicted the single currency would fail look like being right. Though the sad thing is… it wasn’t inevitable. Just as with the European dream as a whole, I kind of like the single currency idea. I think it would work better in tandem with ultra-local currencies built on a date-limited model, just as I think government works best as a combination of the ultra-local and supranational with little need for the middle tier. But sadly, although it was not inevitable, it looks as though we are fast approaching the fragmentation of the euro. I imagine it will be retained by a smaller “inner circle” of nations, but those of us on the periphery (Greece, Portugal and Ireland to start with) will find ourselves forced to withdraw unless an agreement to write-off the vast majority of our debt is reached. And while that’s still a possibility, I’m not holding my breath.

Put simply, the repayment of our debt (especially when you chuck in the massive bank debts run up here in Ireland that have been immorally thrust onto the public) will be impossible without massive economic growth, akin to that experienced in the late nineties / early noughties. And that’s not coming back. In fact, we are entering a period of long-term economic contraction which will be caused by resource depletion. By 2015 (and probably a lot sooner) economic growth in Portugal, Greece and Ireland will be at an end for the foreseeable future. The only possible way to repay our debt at that point will be to withdraw from the single currency and rapidly devalue our local currency.

This need not lead to massive social problems in itself (if done right) though the root cause of the trouble – resource depletion (particularly but not limited to peak oil) – inevitably will. I still see Ireland as a better place to weather the coming storm than most other places… but only if we grasp the bull by the horns and begin a massive peak oil mitigation strategy in the near future. Our current government don’t possess the vision or the competence to journey that particular road, but I don’t expect them to last the full term. We may have another roll of the dice sooner than we think.

I’d intended writing something about the Osama bin Laden assassination, but figured I’d wait until the US government get their story straight. The lovely Citizen S seems to think that these daily revisions of what happened are all about sowing confusion and deliberately creating a fertile breeding ground for conspiracy theories. I don’t see what Obama’s administration gains from that strategy, but I must admit that I can’t come up with a better explanation for their inability to stick to a single version for more than a few hours.

So I’ve decided to hold off on that issue until things get a bit clearer (which may never happen of course). Instead let me take a few moments to urge my UK readers to consider voting “Yes” in the referendum on the Alternative Voting (AV) system. Those of you who were paying attention in the run up to the last UK general election will recall that I advised voting for the Liberal Democrats on the single issue of electoral reform. Given how disastrous they’ve been in government, I can only apologise for that. In fact, they’ve been so disastrous that I’ve heard people seriously argue for a “No” vote on the grounds that it would punish Nick Clegg. While I completely understand the level of betrayal that many feel (remember, I voted Green in the 2007 Irish election!) “punishing Nick Clegg” is an absurd rationale for rejecting electoral reform.

Don’t get me wrong, if after careful consideration you decide that First Past The Post (FPTP) is a fairer and more democratic system than AV, then by all means vote “No” in the referendum. Frankly I consider that a mystifying position to take (you can pretty much prove on an etch-a-sketch that while AV is far from a perfect voting system, it’s definitely better than FPTP if fairness and democracy are your chief concerns) but we’re all entitled to our opinion, however ridiculous.

Thus far I’ve heard the following arguments in favour of a “No” vote…

Punish the Lib Dems

Yes, the Liberal Democrats have betrayed those who elected them. The notion that they were anything other than a bunch of free market capitalists was always deluded. That they embraced conservative economic policies and propped up a right wing government shouldn’t surprise anyone who cast an informed vote in their direction last year. So if you voted for them because you thought they were “of the left” (as many people apparently did) then you’ve not been betrayed. You were simply ill-informed. However, that the Lib Dems have so cravenly backtracked on unambiguous promises, without putting up a fight or making any sustained public objection, is a clear betrayal. And they deserve to be hung out to dry as a result.

Nonetheless, it would be utterly insane to “punish” the Liberal Democrats for breaking promises by turning your back on the one promise they kept. They secured a (desperately watered-down) referendum on electoral reform. It’s the single good thing to have emerged from this coalition of the craven. Be a shame to waste it really. After all, if you want to punish Clegg because he’s accepted a role as Cameron’s lackey, then it implies it’s Cameron you have the bigger problem with. Right? So why not punish him instead? He wants you to vote “No”.

Besides, this referendum – the first direct say you’ve had in national policy since 1974 – isn’t about Nick Clegg, or about any single political party. It’s about the political system itself. It’s about making it fairer and more representative. Allowing personality or party politics to influence your decision on this is surely defeating the whole point of a referendum. This is a free vote. No party whips. It transcends the petty grievances of today and its effects will be felt long after Nick Clegg has been consigned to an historical footnote in a dull book.

FPTP is better at producing strong, stable government

Well, let’s break that down shall we? It was the current, FPTP system that gave Britain this rather unsavoury coalition of arseholes. If you look at Cameron, Osbourne and Clegg and the words “strong and stable” are the first to come to mind then may I suggest you get yourself a more expansive vocabulary. But that’s not really the point. See, while I dispute the fact that FPTP tends to produce strength and stability, let’s assume for a moment it’s true. It begs the two word question… so what?

See, there’s no doubt that having a strong and stable government is a bonus. But it’s very much a secondary concern for those who want their democratic elections to be… well… democratic. Isn’t it obvious that the first concern should be electing a government that’s actually vaguely representative of what the people voted for? If “strength and stability” are your primary concerns, then fascist dictatorship wins that particular race every time. Seriously, if you see the production of strength and stability as being the function of an election, then why not check out Saddam Hussein’s version of democracy. It’s the same one they use in North Korea. Every few years the population shows up at the polling booth and votes for the one name on the ballot paper. Pretty much guarantees you won’t end up with a coalition.

So if you like the idea of narrowing choice and reducing representation, then it makes sense to follow the advice of the BNP and vote “No” tomorrow. Strength and stability before proportionality. It’s a fine, if slightly unwieldy slogan I guess.

AV is too complex

Perhaps the most bizarre claim of all. The “No” campaign is apparently insisting that British people are too thick to list things in order of preference. Now, I lived in the UK for a fairly long time and while I met my share of thick people there, I wouldn’t say it was more than I met anywhere else. No doubt there are people in Britain who, when asked to list their top five albums of all time, don’t agonise over whether The White Album is better than Astral Weeks but instead agonise over what the word “list” means. But there can’t be that many of them surely. Certainly not enough to warrant making them the central demographic for a national political campaign.

Here in Ireland we’ve got a semi-proportional Single Transferable Vote system with multi-member constituencies. That’s waaay more complicated than AV. But except for the people who stare at their ballot paper wondering what number comes after “1”, we all pretty much grasp it. So when someone tells you that AV is too complicated for you, they are lying to you and they are insulting you. Which means it’s unlikely they have your best interests at heart.

AV is more expensive

Nope. It’s really not. Leastways, it doesn’t need to be. Yes, the referendum itself is going to cost money, but that money’s being spent whatever way it turns out. It’s not like the treasury gets a refund if the nation votes “No”. And the notion that voting by AV will require expensive voting machines, or expensive counting machines, is complete nonsense. Sure, you can invest in those things if you want, but they’re not a prerequisite for an election under the AV system. Here in Ireland, with our even more complicated system, we manage perfectly well voting with a pencil and counting by hand. Sure, we still elect terrible governments, but sadly no voting system can stop that happening. That’s down to the quality of the candidates and the willingness of the electorate to believe any old bullshit.

Bullshit like how expensive, complex and unstable AV is.

It’s not Full Proportional Representation

No, it’s not. AV should produce a more proportional result than FPTP because it will reduce tactical voting and increase the number of “swing seats”. But it’s far from fully proportional. It won’t eliminate tactical voting completely, and there’ll still be safe seats and swing seats. But rejecting a better system because it’s not the best system doesn’t make much sense. Especially since there’s no evidence that sticking with FPTP will increase the likelihood of full PR. In reality the opposite is probably true. Rejecting AV will allow those in favour of FPTP to insist that the British people don’t want change. And some of those in favour of electoral reform will decide it’s a vote loser.

A vote for AV will strengthen the position of those who claim that Britain wants a fairer system. A vote against AV will weaken that position.

Ultimately though, it’s in your hands Britain. You have it in your power to make your democracy marginally more representative. Alternatively, you can voice your support for ‘politics as usual’. How’s that working out for you?

If you know me at all, you can probably imagine that I keep a watchful eye on energy related news stories. And what with google alerts and RSS feeds, that’s not all that difficult to do. Over the past few weeks, however, a difficulty has arisen. Put simply, there’s just not enough hours in the day to keep up with the recent flurry of activity in the sector. In fact, there are considerably more “peak oil”, “renewable energy”, “tar sands” and “gas pipeline” stories right now than at any time I can remember. More even than when oil prices were rising towards $150 per barrel a couple of years back. So what’s the reason for all this activity?

Well, it seems as though the reality of peak oil is finally beginning to sink in. Not that it’s made it onto the front page of The Sun yet… but while the popular media is obsessing about the Royal Wedding, furrowed brows are appearing elsewhere as what was once a fringe theory preached by a handful of lunatics has finally been accepted by those who once derided it.

Ugly as the words may sound and however petty they may make me seem, I’m going to say this once and then move on… I told you so!

Ahhh… it feels good to get that off my chest, even if it implies some terrible things.

Welcome aboard: IEA

The International Energy Agency has been hmm’ing and hah’ing about their forecasts over the past couple of years. Roughly three years ago, even as oil prices rose to unprecedented levels, the IEA was predicting a steady rise in oil production until at least 2030. Careful analysis of their production forecasts seemed to suggest, according to ASPO (the Association for the Study of Peak Oil and gas) that the IEA was essentially relabelling oil demand projections between now and 2030. Think about that… the international agency that advises the majority of major governments on energy policy was simply asking “how much oil do we want?” and then telling everyone that’s how much oil would be produced. There was apparently no attempt to match their production forecasts to the real-world capabilities of the oil industry. Their projections were based purely on economic data rather than geological or engineering data. And unsurprisingly these projections turned out to be even more optimistic than those coming out of BP, which if you’ll recall are little more than political artefacts designed by OPEC nations to maximise oil revenue.

Recently this has begun to change. And now the IEA is back-pedalling furiously and seems to be sounding alarm bells – albeit rather quiet and diplomatic alarm bells. Dr. Fatih Birol is the Chief Economist at the International Energy Agency. In a recent interview, Birol stated that he believes global crude oil production peaked in 2006. Yes, you heard that right. We passed peak about 5 years ago according to the the IEA.

An Australian TV company made a short film (it’s a shade over 12 minutes) about peak oil which includes that interview. I recommend you take the few minutes to watch it; it’s sobering stuff. I’m particularly gob-smacked by his final remark, right at the end of the film, when asked how urgent the problem is. He responds by suggesting that “time is running out […] I think it would have been better if governments had started to work on this at least ten years ago”. This from a man who was insisting, up until three years ago, that there was no problem!

Don’t get me wrong, I’m happy that the man and his agency have seen the light, but frankly I think a Mea Culpa might be in order given that plenty of people were arguing this very point ten years ago and the IEA was lambasting them as fools while cautioning governments to ignore them.

And welcome aboard: IMF

Yes indeed. It’s not just the IEA who has suddenly realised “whoops!” During the past seven years or so we’ve had an acknowledgement of a serious problem from the US Department of Energy (see the graph on this page for their latest projections), the US Defence Department and at least two specific branches of the US military. The Irish and Swedish governments both received comprehensive reports detailing the problem (the Swedes acted on it, the Irish built a motorway system and had a property bubble) and about a dozen other non-fringe organisations have sounded caution. A few days ago these organisations were joined by one of the heavy hitters… the International Monetary Fund.

In the April 2011 World Economic Outlook report, the IMF have starkly stated that they expect global oil shortages “within a year”. This tallies with the predictions of the US Defence Department who claimed that we would see “significant supply constraints” by the middle of 2012. The IMF report tries not to sound too downbeat and claims that so long as the oil supply falls gradually it won’t be too big a problem. I have two points to make regarding this claim… first, it won’t drop gradually. Once the reality of the situation kicks in there will be a variety of dramatic responses (producer nations hoarding, rich importing nations trying to buy up available supply on long-term contracts, invasions and wars) which will prevent a gradual reduction in supply. I would suggest that this has already begun in some quarters and we’ve not seen the half of it. Second… even if it did drop gradually, it would still be a big problem.

So although – like over at the IEA – some of this is starting to sink in at the IMF, they still can’t see beyond their free market ideology. And I’m afraid it simply does not work in the arena of essential non-renewable resources. Future generations will view the free market in natural resources as possibly the single most stupid thing ever to have emerged from the human mind. I know some intelligent, decent people who read this blog and subscribe to the notion that a free market in non-renewable natural resources is a good idea. It’s perfectly possible for smart people to have some stupid ideas. And selling natural resources into the open market for profit is a stupid idea.

Anyway you can read more about the IMF’s eleventh hour conversion over at crudeoilpeak.com (IMF warns of oil scarcity and a 60% oil price increase within a year). And here’s a link to the original (and lengthy) World Economic Outlook report (PDF, see Chapter 3).

And joining us tonight: GMO Capital

If you thought the IEA and IMF were surprise guests at the peak oil awareness gig, an even bigger surprise – in its own way – is GMO Capital. These guys are a global investment management firm controlling over a hundred billion dollars in assets. While the IEA and IMF are international agencies that advise governments and proselytize about the wonders of the free market, GMO Capital pretty much are the market. Or a bit of it anyway. In a sense. Oh, you know what I mean.

Anyway, one of the most remarkable essays I’ve read over the past while comes from Jeremy Grantham, the Chief Investment Officer of GMO Capital. Not because of what is says per se, but because of who is saying it. You can read the article at the GMO website (PDF). In essence the article claims that the past 100 years of market-led growth and prosperity is about to come to a crashing end. It’s remarkable stuff considering who wrote it and the audience it’s aimed at (GMO Capital’s investors). Well worth your time to read, or even just skim.

And so it goes

Elsewhere in the news we read about wind farms being paid to shut down because the national grid cannot absorb the power they are producing. The first thing to be said about this is that these payments represent a clear failure in grid management and this needs to be addressed. The second thing that needs to be said is that the BBC should be ashamed of itself for allowing almost half the article to be dominated by the REF. The REF (Renewable Energy Foundation) is a lobbying organisation founded by… wait for it… Noel Edmonds, and has been described as “an anti-wind lobbying organisation”. It’s been suggested that “they actually exist to undermine Renewable Energy – in that respect their name is a deceit”.

In reality we have two choices… we can either embrace a mix of renewable energy solutions (wind, wave, tidal, solar, etc.) or we can resign ourselves to a life without electricity. Whatever George Monbiot and others might claim, nuclear power is simply not the solution to our energy problems. The reasons for this are outside the scope of this blog post, but essentially it is not a sustainable solution, and replacing one unsustainable energy system with another unsustainable energy system is sheer madness. Especially given the massive energy expenditure it would take to do so. We have one more roll of the dice with regards to building a new electricity supply system (the problems of transport and the other uses of petrochemicals still seem insoluble to me, but we can at least keep the lights on and the refrigerators running) and wasting our remaining fossil fuels building a network of nuclear power stations destined to fail is a recipe for disaster.

Instead we need to rethink our consumption patterns. We need to build far more storage into the grid to cope with excess production. We need to massively increase the geographical spread of our renewable energy infrastructure to reduce the “calm day” effect. And we need to ignore the petty grievances of TV presenters with a personal axe to grind. I accept that, aesthetically speaking, wind farms aren’t to everyone’s taste (I think they look great, but that’s just me). But if we want to keep the lights on in a world faced with Climate Change and fossil fuel depletion we need to get past that.

The last thing I want to say here is that I expect to be hearing a lot more about “shale gas” over the coming months. Already China is looking towards it (PDF) as a solution to a decline in global oil supplies (once again, the notion that replacing one unsustainable resource with another, albeit a slightly more abundant one, is being described as “a solution” dismays me). Few things, however, give me the screaming heebie-jeebies as much as the thought of a massive expansion in shale gas production. It may well be the only fossil fuel that’s ecologically worse than tar sands from an extraction and production standpoint. Both tar sands and shale gas production have the potential to massively accelerate fresh water depletion, as well as lay waste to vast areas of the planet.

Fact is, in the face of peak oil we need to start looking at reducing our energy consumption. Every other option leads to disaster.