Left Flank

John Michael Greer pronounces the Internet dead before he advocates what he calls «the ecotechnic societies of a sustainable future».

There are also few dimensions of modern industrial society more
vulnerable to breakdown in the age of scarcity now beginning. The
internet, the crown jewel of modern communications, depends on a huge
and energy-intensive infrastructure that may well prove unsustainable
in the future. A single server farm can use as much electricity as a
small city, and the technology that makes the internet possible in the
first place requires plenty of energy, exotic raw materials, and a very
high level of technology – none of which can necessarily be guaranteed
in the decades to come. On a broader level, most of today's
telecommunications, including the internet, support themselves through
advertising sales, and the economic model that makes this work will
have a hard time surviving the collapse of the consumer economy.

At the same time, electronic communications media need not be as
dependent on today's industrial systems as they are. It's quite
possible to build a vacuum tube – the backbone of radio communications
in the days before transistors – from commonly available materials
using hand tools; Peter Friedrichs' excellent book Instruments of Amplification,
which details how to do this, has become popular reading on the more
outré end of the do-it-yourself crowd. Fifty years ago, widely
available books for the teen market such as Alfred P. Morgan's The Boy's First (and so on up through Sixth) Book of Radio and Electronics
taught aspiring young electricians how to build remarkably
sophisticated gear out of oatmeal boxes, spare parts and salvaged
scrap. The possibility of viable electronics in a post-peak oil era
deserves exploration.

What would a viable long-distance communications network in the age
of peak oil look like? To begin with, it would use the airwaves rather
than land lines, to minimize infrastructure, and its energy needs would
be modest enough to be met by local renewable sources. It would take
the form of a decentralized network of self-supporting and
self-managing stations sharing common standards and operating
procedures. It would use a diverse mix of communications modalities, so
that operators could climb down the technological ladder as needed,
from computerized data transfer all the way to equipment that could be
built locally with hand tools. It would have its own subculture, of
course, in which technical knowledge and practical expertise would be
rewarded, encouraged, and fostered in newcomers. Finally, it would take
a particular interest in energency communications, so that operators
could respond to disruptions and disasters with effective workarounds
at times when having even the most basic communications net in place
could save many lives.

The interesting thing, of course, is that a network that fills
exactly these specifications already exists, in the form of amateur
radio. During a long and complex history, the original loose network of
radio experimenters who pioneered the airwaves in the first three
decades of the 20th century morphed into a worldwide community of radio
hobbyists, who are assigned their own segments of the radio spectrum.
Licensed and occasionally encouraged by governments, «ham radio» – the
origins of the nickname are a subject of some debate – flies almost
completely under the radar of the wider culture these days, surfacing
only when someone in the media notices that in the wake of some natural
disaster, a group of local radio amateurs stepped up and kept emergency
communications going when all other channels shut down.

Slate's Yves Smith asks, «What is the «right» price for a barrel of oil?»

During congressional testimony, five oil-industry CEOs each gave estimates of where oil «ought» to be, with results ranging from $35 to $65 a barrel to $90. Even the implacable Saudis are reportedly about to increase production by half a million barrels a day, a sign that they are concerned that the current price is too high. Yet BP's chief recently said current price levels are warranted, and the oil bulls at Goldman forecast a «super spike» to $150 to $200 a barrel.

Yet, two energy consultants think that approach is wrong.

So, gentlemen, if I ask you first, Peter Beutel, to give me a quick tour of petroleum economics, why is the price of oil now so high?

PETER BEUTEL, President, Cameron Hanover: Well, there are lots and lots of factors. I would have to say that, since August or September, probably the biggest single factor was the fact that the Fed tipped its hand and let everybody know that it was going to cut interest rates. That put selling pressure on the U.S. dollar.

And since commodities are denominated in dollars, that has made all commodities cheaper for Asians and Europeans. And it's meant that Americans have had to bid the price higher.

But there are a lot of factors here. Certainly, there is more demand than supply, although demand is now falling. China has been subsidizing energy prices, and that's created artificially high demand.

We have had lots of problems in Nigeria, ongoing now for about a year. We've had lower refinery runs, a curious little thing. Gasoline prices are not as strong against crude oil as they were, say, a year or two ago. And that's meant that independent refineries or people without oil in the ground have not been able to run as much.

So it's a combination of factors, but if you ask me, who is the biggest culprit in the last 12 months? Curiously enough, it's been the Federal Reserve.

RAY SUAREZ: Stephen Schork, first, do you agree with that analysis? And how would you explain a doubling over the last year?

STEPHEN SCHORK, Energy Analyst: Absolutely. I am on board with Peter with the Federal Reserve's decision in August.

We have to remember that, in January of 2007, crude oil was below $50. Now, we moved from $49.90 back in January to on the cusp of $80 by the end of July 2007.

Now, if you look at the net length held by large traders, quote, unquote, your «speculators,» your large hedge funds, they were holding record length at the end of July.

Well, what happened last August? You had the credit meltdown. And, therefore, you had all these hedge funds that also had large positions in the commodity markets who also had large positions with exposure to the credit meltdown.

Therefore, when those markets began to get hit and the margins started racking up, these hedge funds had to sell. We know they sold because, at the end of July, like I've just said, they were holding record length, the net obligation to own 127 million barrels of oil at some point in the future.

Four weeks later, at the end of August, these funds were holding only 21 million barrel obligations. They sold the equivalent of 100 million barrels inside of four weeks. Therefore, that drove the price down of oil from about $80 to back below $70.

Now, in September, as Peter just said, the Fed tipped its hand. They were going to cut interest rates. That meant a cheaper dollar. So these hedge funds that liquidated all that selling back in August started piling back into the market back in September. And prices have doubled since then.

CFR's Tom Johnson dissents and quotes calls for caution about scapegoating «speculators».

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Gallup concludes that with higher fuel costs and ameliorative handouts, it will be a very expensive year for Indonesia.

Given Indonesians' already dismal outlook on their standard of living and economy, it raises the question of how much patience they will show with their government -- especially in next year's election -- if high inflation persists as expected. As in 2005, the government is giving Indonesia's poor $1.5 billion in cash handouts over the next year and a half to help stem unrest and ease the financial strain of higher prices. This approach appeared to quell protests then, but double-digit inflation persisted for more than a year afterward.

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At least the GOP consistently uses scare tactics well.

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As if I needed anymore links to show that McCain's offshore drilling flip-flop is bad politically and marginally effective, I will link to both Bill Scher and Michelle Malkin. I hope my blog doesn't crash!

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Fred Krupp, President of the Environmental Defense Fund. supports cap and trade legislation and other business-friendly environmental policies.

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Thomas A. Firey, managing editor, Regulation, puts it about as finely as possible:

Concerns about the environmental impact of drilling are legitimate, as are concerns that the United States may be forgoing the use of a valuable resource by not drilling in these areas. Good public policy would examine the risks and costs underlying both of these concerns, and then make a decision (or perhaps a compromise) about drilling. However, this issue will not be decided in such a rational way. The debate will be dominated by two ideological camps – the «drill at any cost» crowd and the «don't drill at any cost» crowd – and their ideological priors and political power will preempt any good policy discussion.

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