Monday's Top 10: New view on mobility; Dunedin's problem; multinationals and climate change; end of low rents; gold's odd demand/price setting; Dilbert, and more

Monday's Top 10: New view on mobility; Dunedin's problem; multinationals and climate change; end of low rents; gold's odd demand/price setting; Dilbert, and more

Here's my edition of Top 10 links from around the Internet at 11:00 am today. We now have a Monday-Wednesday-Friday schedule for Top 10.

Bernard will be back with his version this Wednesday. We will have another guest posting on Friday.

As always, we welcome your additions in the comments below or via email to david.chaston@interest.co.nz.

See all previous Top 10s here.

1. Using data to reveal
It's become urban 'fact' that social mobility has declined as income equality has worsened.

In the US, even their President has accepted this as true in his country.

However a huge new study that has tracked back incomes using tax records has more or less debunked the idea.

And this study has the advantage that it uses records up to 2012, so it's still valid.

Basically the odds of moving up (or down) the US income ladder have not changed in the past 20 years.

Because their data is so recent, they were able to look at how members of Generation X, and even some Millennials, are doing. They tracked the incomes of individuals born between 1971 and 1986. By 2012, the youngest were twenty-six, and the oldest were forty-one. In addition, for individuals born between 1986 and 1993, the researchers used college-attendance records, which are a good predictor of future incomes, to measure their social mobility. And here is their conclusion:

We find that all of these rank-based measures of intergenerational mobility have not changed significantly over time. For example, the probability that a child reaches the top fifth of the income distribution given parents in the bottom fifth of the income distribution is 8.4 per cent for children born in 1971, compared with nine per cent for those born in 1986.

You might suppose the picture would vary across the country, with social-mobility levels declining in areas where it was already particularly low, or where income inequality has risen most. But the researchers don’t find any evidence of that, either. They write:

[I]ntergenerational mobility is fairly stable over time in each of the nine census divisions of the U.S., even though they have very different levels of mobility.

For a variety of reasons, one might want to challenge these findings. But if you do, you had better come armed with robust arguments. Chetty and Saez are established leaders in their field, and their previous work has stood up to inspection very well. “The facts themselves are pretty unassailable,” David Autor, a well-known labor economist at M.I.T., told the Times’s David Leonhardt. “How to interpret them is the question.”

2. Why now
William Pesek at Bloomberg explains why so many emerging markets seem to be in all sorts of strife at the same time. Thailand, Turkey, Russia, Argentina, Indonesia, and soon to be others.

The common denominator in all these countries is weak leadership, and it’s appearing at the worst possible moment. The rapid growth Asia has enjoyed since the 2008 global crisis had more to do with Ben Bernanke than we like to admit. All that hot money pumped up gross domestic product, boosted asset prices and pushed yields lower to make government debt loads appear manageable.

The Fed chairman’s largesse made growth too easy. It bred hubris. Officials in Bangkok, Jakarta and Kuala Lumpur were too busy cutting ribbons, toasting flashy new skyscrapers, applauding splashing initial public offerings, and basking in headlines about Asia having decoupled from the West to do their jobs properly.

Thailand may offer the clearest example of how the Fed’s ultralow interest rates helped cover up deep-seated structural problems in emerging markets. But as the Bernanke bubble deflates, officials throughout Asia will regret ignoring the well-nigh suicidal course that they’re on.

3. Ah, er, whose money is it?
The BBC is reporting that HSBC has refused customer requests to withdraw 'large amounts' unless they can satisfy the bank about the purpose of the withdrawal. The British Bankers Association is supporting them. But the backlash has been strong, and HSBC have backed down it seems. (H/T Plan B.)

A consequence of AML laws? Or is this the bank reacting to getting caught breaking AML laws?

Stephen Cotton went to his local HSBC branch this month to withdraw £7,000 from his instant access savings account to pay back a loan from his mother.

A year before, he had withdrawn a larger sum in cash from HSBC without a problem.

But this time it was different, as he told Money Box: "When we presented them with the withdrawal slip, they declined to give us the money because we could not provide them with a satisfactory explanation for what the money was for. They wanted a letter from the person involved."

Mr Cotton says the staff refused to tell him how much he could have: "So I wrote out a few slips. I said, 'Can I have £5,000?' They said no. I said, 'Can I have £4,000?' They said no. And then I wrote one out for £3,000 and they said, 'OK, we'll give you that.' "

He asked if he could return later that day to withdraw another £3,000, but he was told he could not do the same thing twice in one day.

He wrote to complain to HSBC about the new rules and also that he had not been informed of any change.

The bank said it did not have to tell him. "As this was not a change to the Terms and Conditions of your bank account, we had no need to pre-notify customers of the change," HSBC wrote.

4. They built it, but no-one came
The 'new' Dunedin stadium is in trouble - as predicted by opponents. It seems to be being used just for a relatively few rugby games and not much else. Acoustics are apparently terrible, rendering it unsuitable for concerts. Its financial viability is poor unless changes are made, and the groups that opposed it want it mothballed.

Its fortunes are weighing on other stadium projects, Christchurch's in particular. RadioNZ has the Dunedin story:

The $230 million stadium opened in 2011 to replace the Carisbrook ground, but controversy has continued over its construction costs and resulting council debt.

Dr Bidrose said it had become increasingly obvious that the existing model set up to manage and operate the stadium and its finances was broken.

She said the stadium's original budgets were too optimistic and it would never be able to raise the $9 million needed to break even. This year, it has a funding gap of $100,000 or $200,000 and the problem will get worse without a better structure.

Dr Bidrose said some point there has to be a trigger to make a change - and that point is now. The full review will look at everything and put everything possible into the public domain.

5. Multinationals as climate change missionaries
Here's a bit of irony for you: as government recoil at the cost of their early climate change policies (Europe especially), and reactive sceptics stay voluble, it is multinational corporations that are now the major institutions that see risks in climate change and are starting to do something practical about it. Insurance companies were the first to get on board, but now mainline consumer and industrial companies are moving too to protect their future business.

I suspect it is a watershed event (excuse the pun). (I was always impressed with the insurance industry response to the issue. If there is no change going on, an insurance company denier would have a pricing advantage over those who make the adjustment - but no hard-headed insurer is out there flaunting their denier status. If there was money in it, they would. But clearly there isn't.)

This from the NY Times:

Nike, which has more than 700 factories in 49 countries, many in Southeast Asia, is also speaking out because of extreme weather that is disrupting its supply chain. In 2008, floods temporarily shut down four Nike factories in Thailand, and the company remains concerned about rising droughts in regions that produce cotton, which the company uses in its athletic clothes.

“That puts less cotton on the market, the price goes up, and you have market volatility,” said Hannah Jones, the company’s vice president for sustainability and innovation. Nike has already reported the impact of climate change on water supplies on its financial risk disclosure forms to the Securities and Exchange Commission.

Both Nike and Coke are responding internally: Coke uses water-conservation technologies and Nike is using more synthetic material that is less dependent on weather conditions. At Davos and in global capitals, the companies are also lobbying governments to enact environmentally friendly policies.

6. Back to the future problems
If you follow our 90 at 9 morning briefings of what went on in the world overnight, you will know that Argentina is currently wracked with [another] currency crisis. Its not pretty, but just one of a series of bumps emerging market countries are experiencing early in 2014. It is serious in Argentina as the chart below shows.

In a somewhat superficial way, perhaps there is a lesson in this for New Zealand this year. Elect the wrong government and things could go pear-shaped. All the tough work to undo the damage Peronist and military governments did in Argentina has been undone by re-electing the Kirchner-Peronists again.

If you are going to have a very 'independent' foreign policy but still want the trade benefits of an interconnected world, the costs can be high if you get it wrong. This background is from the BBC:

Under the presidency of Cristina Fernandez de Kirchner, Argentina has introduced a number of restrictions on transactions with foreign currency.

This week it even introduced new restrictions on online shopping as part of increasingly desperate efforts to stop foreign currency reserves from falling any further.

Anyone buying items through international websites must sign a declaration and produce it at a customs office, where the packages have to be collected.

The government now limits tax-free purchases to two a year.

Argentina's reserves of hard currency dropped by 30% last year, making support for the peso increasingly unaffordable.

In 2002, millions of Argentines saw their incomes and living standards collapse amid a crisis that included a government default on international debts and 41% inflation.

7. Low rents won't last, says Infometrics
In a note to clients, Infometrics says that weak rent inflation is unlikely to last. They say that the RBNZ's LVR restrictions will boost demand because more people will need to rent for longer, especially in Auckland. They also see a surge of demand in Christchurch as the rebuilding really gets underway.

All this comes after what they see is a very weak rental scene:

Nationwide rental yields have also dropped substantially over the last few months. With real bond rates continuing to rise, the implied risk premium for investing in residential property is now below its long-run average for the first time since 2010.

8. Not what it seems
We need to know more about China. But we need to be careful about believing only the negative (like the TV broadcasts of sunrises in smog-laden Beijing - it never happened, as explained here.)

One part of the problem is that China's stats may not be as reliable as they should be, and not for the reason they are officially doctored: it is 'unusual' behaviour by many people that may make it harder for officials and Westerners to read. For example:

China's famously frugal households may be living larger than they are letting on.

Economists have long warned that China needs to pump up domestic spending to offset an over-reliance on credit-fuelled investment and exports for growth, and in their latest blueprint for reform China's leaders have vowed to do just that.

Data released this week showing China's economy grew 7.7 percent last year suggested the imbalance is worsening, with consumption unchanged at just under 50 percent of GDP, but investment growing to slightly more than half.

A growing number of economists, however, say official statistics have got it wrong. To avoid taxes, consumers routinely get employers to buy things for them, resulting in a gross underestimation of how much consumers spend and exaggerating just how lopsided China's $9.4 trillion economy is.

"China's consumption is not low," said Zhu Tian, an economist at the China Europe International Business School in Shanghai, who co-authored a recent report on the subject. "It's actually desirable," he said.

9. Rising demand, falling prices
As readers will be well aware, the price of gold is in the doldrums - but you may not be aware that demand for coins and bars is growing. In fact, demand by individual investors is embarrassing the Mints that make these products - they just can't keep up. Still, no 'experts' think that will translate into higher prices. 'Investing' in gold is a funny business. More from Bloomberg:

Austria’s mint is running 24 hours a day to meet orders for gold coins, joining counterparts from the U.S. to the U.K. to Australia in reporting accelerating demand boosted by the bear market in bullion.

Global mints are manufacturing as fast as they can after a 28 percent drop in gold prices last year, the biggest slump since 1981, attracted buyers of physical metal. The demand gains helped bullion rally for five straight weeks, the longest streak since September 2012. That won’t be enough to stem the metal’s slump according to Morgan Stanley, while Goldman Sachs Group Inc. predicts bullion will “grind lower” over 2014.

The U.K.’s Royal Mint, which traces its history back more than 1,000 years, ran out of 2014 Sovereign gold coins because of “exceptional demand,” it said in a statement on Jan. 8. Coins weren’t available to customers until six days later when inventories were replenished. Sales by the Perth Mint, which also has workers producing coins in three shifts a day, will probably beat last year’s record, Ron Currie, the marketing director, said Jan. 20.

“It’s been a very bad year for gold,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. “People who bought coins have lost value, but they are not looking at short-term gains, and hope springs eternal.”

10. Today's quote
"The problem of social organization is how to set up an arrangement under which greed will do the least harm, capitalism is that kind of a system. - Milton Friedman

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

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Re; Argentina - want to know the REAL underlying cause of their problems?
a) Oil and gas output in Argentina has been falling since 2004 (once upon a time they were important producers)
b) In 2011 Argentina became a net importer of energy, for the first time since 1984.
c) Energy imports were estimated to reach $14B in 2013, up from $9.2B in 2012 (The Economist).
d) Energy imports are massively eroding foreign currency reserves - look again at that graph in article 6 and see when Argentina's currency reserves started to fall.........
It is always and forever about energy. Or we can all pretend otherwise.
Whine on.

So you don’t think that incompetent corrupt economic management had anything to do with their problems

Think about your comment for one moment - Argentina has had incompetent corrupt economic management for most of the time since at least the 1970s. So clearly nothing has changed in that department - or can you tell me otherwise?
Here is a hint - the Kirchner's have been in power since 2003, and have thus been mismanaging the country for 10 years. They got away with it until a few years ago but now the country can no longer afford its energy import bill and so their reserves are disappearing.
Same government, different energy situation.
No government, of whatever stripe, can magic away depletion.
 

No government can magic away "depletion" but the private sector sure can.
"The agency forecast that American production would continue to rise in 2014, adding 782,000 barrels, to 8.3 million barrels a day.
If that forecast proves to be accurate, United States oil production will have increased 46 percent over the three years from 2011 to 2014. There has not been a three-year increase that large since the years 1921-24, exactly nine decades earlier."
and also
"Shell Argentina will increase its shale capital expenditures to about $500 million next year from $170 million at year-end, Chief Executive Officer Juan Jose Aranguren said. The company that mainly refines crude in Argentina will boost test drilling in Vaca Muerta with a long-term goal of producing light crude from its shale operations, he said.
Argentina will need $300 billion to develop Vaca Muerta in a six-year period that would make the country oil sufficient starting in 2020 and will keep producing for as many as 40 years, Aranguren said yesterday in an interview at his Buenos Aires office. Vaca Muerta, the world’s second-largest shale gas and the fourth-largest shale oil formation, is in Neuquen province in southwestern Argentina."

Yet by 2016 we'll see a peak in US tight oil output. Again, no matter what the "private sector" does, even if its 2017 or 2018 its at best a delay and then a decline.
So what areyou pushing here? a few years extra output proves free markets are best? Without a direct  comparison with a simlar good Govn owned oil company I see no valid theory here.
regards
 
 

You're going to make a fortune on that 2016 prediction.
Last year the EIA said shale oil production would peak in 2020 at 2.8 mbpd but then revised it last December to 4.8 in 2021. Even trying to predict 2013 shale oil production one year in advance had EIA out by 50%.
What a difference a year makes.
What are your predictions for US shale gas?

Profile - I am intrigued - how did the private sector magic away depletion in the UK North Sea? Or in any of dozens of other depleting oil basins I could name you? A record $25Billion was ploughed into the UKs oil sector last year yet production has declined 38% in 3 years and like Argentina the UK is now a major energy importer (with a balance of payments that continues to get worse).
And before you get carried away by the Argentinian shale oil story why dont you take a look at what has happened in Poland - reckoned to have the biggest shale energy deposits in Europe and yet companies are exiting stage right at a fierce rate:
http://www.reuters.com/article/2014/01/14/poland-eni-idUSL6N0KO0LB20140114
As an aside it is funny that Shell is supposidly getting involved in Argentinian shale. They have been dumping their US shale assets because they couldnt get them to add up:
http://www.bloomberg.com/news/2013-09-30/shell-begins-sale-of-u-s-shale-...
So now they will make Argentinian shale work for them? Chuckle.
Whine on.

In your first post it was all about the energy. Its not all about the energy is it. Its all about the crappy goverment. There are plenty of energy resources there. Why pretend otherwise.

Did you read his first post? As he explained the 'crappy government' has been around in Argentina for a long time. What has changed is that depletion has forced Argentina into becoming an energy importer rather than an exporter. Suddenly money that was going into their economy is now being sucked out. As I said, this is the same reason the UK and Eygpt are hurting.

Energy ultimately rules economy.
 

What's the New Zealand situation?
 
Do you have access to data for the locals instead of worrying about Argentina? or the UK for that matter

World marke, open economy, soNZ's output is moot, we'll pay the same as anybody else unless the Govn restricts it...or I should say when.
regards

Yes the crappy government has be around for a long time and their mismanagement of resources has cost them dearly.  The resource isn't depleted - it is still there in abundance. Just lacking competent government to utilise the resources.
"It is always and forever about energy. Or we can all pretend otherwise." I would hazard a guess it was more about governance than resource depletion.
The same reason the UK and Eqypt is hurting perhaps?

So if we follow your logic the reason that the UK (for example) is in trouble with a major balance of payments problem having to import ever increasing amounts of energy is because it also has had incompetent corrupt economic management for most of the time since at least the 1970s'.........
That is despite the North Sea having been exploited ovewhelmingly by your beloved private sector with effectively a free hand given to the energy companies?
The same UK North Sea sector that just over a decade ago was producing 2.5million barrels of oil per day but now struggles to produce 800,000 bopd?
Nothing at all to do with depletion???
 
As I have said the evidence for the Argentinian resource which you so willingly accept at face value may well go the same way as the Polish example. Better still ask their neighbours  the Brazilians about their wonderful pre-salt oil fields. Five years ago production from these much hyped fields were going to make Brazil a major oil exporter. Strange then that Brazil's oil imports are actually increasing and the pre-salt fields remain virtually untouched.

Yes, Labour (UK) must have been managing the North Sea the most competently as this was when oil production was at the peak. Obviously the Tories are mismanaging it big time in the last few years despite record investments!

I also remember in the early 2000's when Brazil was going to be the next big thing! In fact, here's an article from 2009 that predicted Brazil would be producing 4.63 million barrels / day next year! To put this in context oil output declined to 1.9 million barrels / day last year  (Graph here). Hype and reality don't always agree Profile.

 

Also as an aside, David C also mentions Indonesia as a troubled economy with a 'bad' government. Wait, what do we have here!? Indonesia also recently became an energy importer. I'm sure it's just another coincidence!?!
 
Indonesia peak

 

Absolutely! If only Indonesia let the privaye sector in they would be able to magic up some oil in no time - maybe even some abiotic oil, I am sure we are due a visitation from a believer in that any time now.
All of this would be mildly amusing, other than the fact that the fate of nations is being decided by peoples complete inability to understand what is right in front of their noses.
 

Given that Indonesia is a tropical country and imports fresh coconuts I think the lousy government may play a hand in it becoming a net energy importer. Thanks for supporting my argument btw.

I rather think we have knocked your arguements out of the park everytime. Do try harder.

No support there. Chevron is I think the or one of the biggest oil companies in Indonesia. Despite that it hasnt stopped the net oil for export going negative.
regards
 

You don't think this has something to do with it?
http://www.thejakartaglobe.com/news/lawmakers-threaten-pertamina-chief-o...
You are telling me Pertamina is better run than Chevron? That a tropical country that can't manage its fresh coconut supply is an excellent manager of its oil resource?

Just reading that piece, as it stands no.
Yet chevron is there as well....btw actually its fairly easy with a new field to force its output in order to get a quick return but that decreases its total final output. So really yes sure you can make the numbers look good, but not in hindsight at teh end of the fields production.
regards

Ahh - the hand of the government curtailing investment:
"Oil & Gas UK expects production to rise to 2m barrels of oil equivalent a day by 2017, up from about 1.5m boe/d this year. That is a remarkable turnaround for a basin largely written off as a spent force by some of the world’s largest oil companies barely a decade ago.
The statistics suggest that the slump in investment during the 2000s – which the industry has blamed on Britain’s notoriously unstable tax regime – may finally be over.
George Osborne, chancellor, stunned the sector with a £2bn tax raid in 2011, when marginal tax rates on North Sea operators were raised to between 62 and 81 per cent. But the effect of that was later blunted by a series of targeted tax allowances to promote exploitation of small and technically challenging fields."

You dont follow the oil  and gas industry much do you?
Pretty much every year there have been claims that UK production would rise and every year it has fallen.
Try this from 2012:
http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/9723913...
In 2013 production fell significantly again.
The fact is the private sector is already spending record amounts in the North Sea and yet every year production declines (generally by about 10%). That will not change.
As for the O+G industry pleading for tax breaks to allow them to produce more - dont make me laugh.
 

And don't think the slump in investment in the 2000's (earlier posting) had anything to do with UK reduced production? The record investment was only last year so you would not expect to see it in production figures.
As for predictions I leave them to Steven. Even the the EIA data above for shale oil was out by 50% a year out. Technology will advance with or with lousy governement. Look at the Permian field - was in decline in 1960 but with the help of oil independents latest recoverable reserves are equivelent to what was produced in the last 90. Look at proven oil reserves 640 billion barrels in 1980 - now 1.5 trillion.
Going back to your original post... we won't know if the resource is extractable or not without competent governance in the first place. Perhaps South America could learn from Texas.
 
 

A very easy rebuttal. Pray tell us what has been the fate of oil production within the Norwegian sector of the North Sea? Of course the Norwegians do things entirely differently  to the UK (much of their oil is produced by a state owned company) and have not been subject to your claimed underinvestment because of taxes (the apparent UK model you are so desperate to believe). Surely things must have gone differently in that sector?
 
Errrrrrrr well no.
Norwegian oil production has halved in 10 years:
http://finance.yahoo.com/news/norway-oil-production-hits-low-171219096.html
Whine on.

and yet those proven reserves keep going up and up. Go figure.
http://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm?tid=5&pid=57&aid=6&c...
 

And yet with all these supposid reserves (and all this apparent flood of new US oil) 2013 was the 3rd highest annualised oil price (after 2011 and 2008) ever recorded - that in a year in which oil demand was significantly suppressed by a EU economy (30 % of global GDP) in and out of recession and a US economy (another 30% of global GDP) growing sub-par. Go figure.
 

Let's hope the US start exporting oil and drive down the price. We can't reply on places like Indonesia and Argentina to keep the oil flowing.

Indnesia is a net oil importer last time I looked.  
http://www.eia.gov/countries/country-data.cfm?fips=ID
http://www.indexmundi.com/energy.aspx?country=id&product=oil&graph=produ...
Argentina is barely an oil exporter and its internal demand is set to pass its production aka Indonesia.
http://www.eia.gov/countries/cab.cfm?fips=AR
The US doesnt have to export oil directly to drop the price as it used to buy on the open market. We can see that in effect the US buying less has not dropped the price signficantly..
At best we'd see a match between Brent and WT.
regards

Given that the US uses around 18 million barrels of oil per day and yet it only produces 8 million barrels of oil per day I think you are going to require a lot of hope to sustain you.
http://www.eia.gov/tools/faqs/faq.cfm?id=33&t=6
 

Yes I can see the private oil companies doing very well,
"Quarterly earnings for Royal Dutch Shell have declined sharply due to large expenditures, delays, and lower than expected production. The oil-giant reported that it expects fourth quarter earnings from 2013 to come in 70% lower than the same quarter for the previous year. Fourth quarter earnings are expected to decline to $2.2 billion, down from $7.3 billion in 2012. The decline prompted Shell to issue a profit warning, its first in 10 years, hitting its stock price. The company expects to release a full-earnings report on January 30."
http://oilprice.com/Energy/Energy-General/Rising-Costs-Hit-Balance-Sheet...
regards

Small and technically challenging....peaked in 1999...
So really the best we can look to is a small bump....unless (or even if) the govn coughs up.
regards
 

Profile appears to be smoking a lot of 'hopium'. I have long suspected David C is a dealer! ;-) (tongue in cheek!)

I think actually its "blinkered free-market fixium" - not
He must have buckets of it.
He's certianly in la la land.
regards

Even if we go with 4.8mbpd that is a peak in 2021, 7 years off and the best that "private enterprise can do, its still a peak in our lifetime and that is just the US.
Yet the US uses considerably more so its never going to meet its own demand let alone export as such by your own numbers.  Make some money for the producers short term, yes sure.
Try EIA's 2014 figures, peak in 2019 or there abouts.
"U.S. production of crude oil (including lease condensate) in the AEO2014 Reference case increases from 6.5 MMbbl/d in 2012 to 9.6 MMbbl/d in 2019, 22% higher than in AEO2013 (Figure 11). Despite a decline after 2019, U.S. crude oil production remains at or above about 7.5 MMbbl/d through 2040."
Not taht such Govn organisations are too hot on predictions....
http://oilprice.com/Energy/Energy-General/Why-Following-EIA-Forecasts-is...
Funny how on the one hand you say Govn bad, yet rely on their mnumbers on the other.
"Of course, a deus ex machina like this raised more than a few eyebrows, including here at Post Carbon Institute; so we looked into it. We found that the EIA report's authors had tallied up 15.4 billion barrels simply by assuming that every square mile of the Monterey would be more productive than practically all the best areas in America's two best tight oil plays, the Bakken shale (in North Dakota) and the Eagle Ford shale in Texas. That's it. No consideration of the Monterey's significant geological complexity compared to the two plays, nor of data from actual Monterey oil production. In other words, our new cornerstone of energy independence rested on a back-of-the envelope calculation that any first-year petroleum geology student would recognize as unrealistic."
Shale oil,
This piece lays it out very well,
http://peakoil.com/consumption/why-shale-oil-boosters-are-charlatans-in-...
Meanwhile the rest of the world has or is about to peak and decline,
http://www.scientificamerican.com/article/has-peak-oil-already-happened/
Shale gas is moot...its not easily exportable and its not a good transport fuel.
But interesting to go and re-look...things are changing fast....or the hype is anyway.
Argentina, well
"Interestingly, the Lux report also names Chilean neighbour Argentina as a place where shale development might take off."
"might" being the operative word.
http://oilprice.com/Finance/investing-and-trading-reports/They-Say-This-...
regards

You are assuming the technology stands still. Perhaps this is why the EIA consistently underestimate oil reserves. And then there is substitution and efficiency gains.
LNG/DME fueled trucks
http://www.volvogroup.com/group/global/en-gb/newsmedia/pressreleases/_la...
25% Sweden diesel/petrol from black liquor DME
http://www.topsoe.com/about_us/green_commitment/dme.aspx
LNG fueled Ships
http://online.wsj.com/news/articles/SB1000087239639044384740457763080412...
 
 
 

No Im not assuming technology stands still.  I sure do question vested interests and politicos selling the latest snake oil though, and snake oil it mostly is.
EIA are taking vested interests numbers and simply feeding them into spreadsheets. There are Qs on how accurate they are.  We'll get to see  over the next 2 years.  PS You cant really substitute something for oil, it has to be as energy dense, cheap and have a EROEI above 8 to 1, nothing does.
Efficiency gains, yes sure, problem is scale of gains which taper off.
Yes we have some LNG trucks, issue is time to upgrade the fleet out there to LNG...years.  Yes we could burn LNG instead of bunker fuel....so the odd company is trying it.  Last year or year before Air NZ trailed biofuel. 
regards
 
 

The question on how accurate they are is on the downside not the upside. How else do you explain oil reserves have gone from 640 billion to 1.5 trillion in the last 35 years? A truck is probably on a five-ten year life cycle so not a big deal to change fuel types. It looks like a pretty good substitute to me - especially if it is DME derived from black liquor.
 
http://theuticashale.com/fyda-energy-solutions-converts-vehicles-natural...
 
 

Lets say for once that you are not cherry picking data as 640billion and 1.5trillion, since I dont know where you got the data from, so I cant comment.
I can say this however, in terms of conventional global reserves, for some years the mathematical number of total recoverable oil is 2.2 to 2.4trillion barrels of conventional crude of which we have used about 1/2. So of conventional crude we have around 1.2 to 1.3 trillion barrels left, that is peak oil or the maximum output per day. We are at that now, more or less.
 
regards

I stuck the link up yesterday. Don't you read my links?!
http://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm?tid=5&pid=57&aid=6&c...
Starts in 1980 when Jimmy Carter said we had about eight years of oil left...

Actually yes I did, I forgot.
If  you look at the US and canada in 2002 they had 54 and 4.8 (conventional crude?).  2003 they had 215 and 180. Im assuming thats the estimate for shale and hvy now thrown in.
Venezuala does the same about 2010, they went from 99 to 210, I assume now incl their hvy crude.  Ive been there btw, used to sail on small tankers (100,000 tonnes) shipping it to the US.
When you look EROEI its unlikely to say the least that this economic as they think. On top of that the non-conventional oil output per day is a fraction the output of conventional.  So even if its true the problem is its not going to make much of a dent on daily supply.
So if these reserves are so good and useable, why then dont we see huge increases in daily output to match?
Hence really its moot.......its output is going to be low per day and expensive.
but then you dont want to listen.
regards

I think that up till recently the US has been happy import oil, leaving their own reserves comparitively untapped and in some cases reinjecting imported oil into depleted fields.  I believe that their reserves, particularly with the recent technological advances (if that is and appropriate term) are sufficient to keep them going for hundreds of years.  Remember too that they are smart in not permitting oil exportation.  Then of course you have all the oil and gas over the border in under populated Canada.

Chris M - please supply evidence that the US has ever reinjected imported oil into depleted fields (or are you confusing this with the US strategic oil reserve?).
Whine on.

Sorry I cant find any refernce to it on the net.  I heard about it years ago when oil was really cheap.  From memory it might have been in that period after the first oil shock when prices subsequently collapsed.  Japan was rumoured to have done something similar; filling a bay with imported coal.

I am afraid you can't find any reference to the US pumping oil into depleted fields because it never happened.
I suspect you are confusing it with the US strategic oil reserve ( a mere 36 days worth of their consumption)which was set up in the 70's. Thus:
''The reserve is stored at four sites on the Gulf of Mexico, each located near a major center of petrochemical refining and processing. Each site contains a number of artificial caverns created in salt domes below the surface.
Individual caverns within a site can be up to 1000 m below the surface, average dimensions are 60 m wide and 600 m deep, and capacity ranges from 6 to 37 million barrels (950,000 to 5,900,000 m3). Almost $4 billion was spent on the facilities. The decision to store in caverns was made in order to reduce costs; the Department of Energy claims it is roughly 10 times cheaper to store oil below surface with the added advantages of no leaks and a constant natural churn of the oil due to a temperature gradient in the caverns. The caverns were created by drilling down and then dissolving the salt with water.''
If I were you I would start to question some of your other beliefs as well - the one about the US having hundreds of years of supplies is particularly open to question.
Whine on.

I dont know where you get this belief from on hundreds of years but its heighly misplaced on oil.  Ive seen it said for coal but realistically its probable 80 years for US coal and not the 250 claimed.
The US is one of the most surveyed and drilled countries in the world. So, no there is no un-tapped economically viable oil knowingly being left....its not how Americans do things.
Injecting oil? for the US strategic reserve, yes, old fields, I have never heard of it.
Oil and gas in Canada, yeah sure and its destroying the environment over there plus its not making that much money, think I saw some companies withdrawing from it....and the EROEI is under 5...so not viable for our world economy.
regards
 
 

Egypt became a net energy importer just before they crashed (see here). It's the same reason that the UK is now a basket case (see here).

Here's the oil export graph for Argentina (see here). Looks pretty ominous, pretty sure that explains the sudden interest in the Falkland's along with the UK's (deep sea oil found).

 

Chinese "data" - again.
 
Measuring stuff in an environment where there are at least three streams of activity - conversion from subsistence/cashless economy, movements between white/black economies (black ec act worldwide varies between 10 and 50% depending on where ya lives)  and the conventional 'economy' , is practically impossible. 
 
So rocketship 'growth' in the third activity (white economy) may not signify much of anything - a fact the folk who rely on, trend, and take decisions on such "data", often seem to forget..

The 'new' Nelson stadium is in trouble too. The Trafalgar Centre, basically a massively expensive warehouse, recently had a major upgrade but is now essentially red stickered. Councils are really really good at wasting money. So too are businesses of course, but then the rate payers don't usually get the bill.

Yes $7 million down the toilet because of no geo tech done. Pre earthquake complacency.

Dundedin, are a bunch of pussies. They should get with the program. Take some action.
They are rioting elsewhere to stop the spend up large on the next  World Cup Soccer Stadiums as infrastructure spend on real essentials is not taking precedence over gamesmanship.
But as usual Politicos " know best" ...maybe that is why they are up in arms, all around the "civilised world'.??
 

Dunedin basically dumped the council and mayor that built the stadium. What to do with a white elephant once you have one isn't really a rioting situation. Christchurch, yes, can still stop itself going down the same path.

Good collection of pieces.
#1 I absolutely wouldn't argue with their methods, but as they note absolute mobility has slowed, and I would be very interested to see if there was a difference in the mobility rates at the 5% or 1% level. This would reflect the arguement it is just as easy for the poor to enter the upper middle-class because the upper-middle class have got poorer too.
#4 Please, please, please Christchurch, learn from Dunedin and it's sacrifice upon the alter of large projects based on increased vistor projections. Let its death by rates bailouts for white elephants not be in vain.
#2 (and #6) and the question is, when inevitable downturns come, how strong is the social contract that keeps civil society functioning. Often reflected in how evenly is the pain seen as being spread around.
 

Re 4 - A $200 million stadium and they can't sort out a 100 - 200k operating deficit? Opposition groups still pushing the issue. Sounds like it just needs a competent management. Dunedin will become a backwater without it.

Sorry MikeM.  It's not a $200 asset.  It's a $250 - $300 million mortgage with no significant income stream.  So a great millstone.
It's daft thinking like this that will turn New Zealand (and Dunedin) into a backwater.  I believe in investment but this ain't that.  Investment needs to be into things that actually produce for us.  Feelgood baubles don't cut it Mike.
 

Stadiums.  I have had my era in corporate boxes, paid for by somebody else, and pretty good it was too.
Could be that some people who get a lot of this start to think it's normal.  So you have supposed lefties like Trevor Mallard very supportive of yacht races etc.  And politicians of all shades thinking stadiums are just great.
They think it normal that all this largesse just comes from nowhere.  And you get to go to Valencia, San Fran, and great entertainment in boxes all over the country - free.  Whats wrong with that they think.
Of course somebody pays.  In Dunedin they went ahead anyway, and only afterwards ditched the responsible politicians.   Now the inevitable tradgedy is looming. 
And have you seen the plans for central Christchurch.  They seem bound to repeat the mistakes.   But after all, how else do you get the smoked salmon, and don't have to queue with the the proles to get it.  Wonderful.    

I think politician's have known the power of a circus for thousands of years.
Thinking about it, Dunedin is a bit of a microcosm of #2 with the hubris of flashy large projects.
To me it looks like the beneficiaries of Dunedin's purpose specific stadium tribute are the owners' of the land it was built on, the Rugby Union, and the hospitality sector. To play devil's advocate, if the stadium is critical to Dunedin not becoming a backwater, perhaps the hospitality industry should support Dunedin moving to an Invercargill solution of a Liquor Licensing Trust to pay for it (... sounds of cricket's chirping, tumbleweeds drifting by).

I have never quite understood the stadium question in Christchurch. Surely most of the money is coming from insurance payout on the old stadium?

Er, no. If it can be squeezed out of the reassuance company, the insurance is at best $130 million.
http://www.stuff.co.nz/the-press/business/the-rebuild/8440604/Insurers-f...
Under the agreement with the government the ratepayers are fronting up with 1.9 billion
http://www.stuff.co.nz/the-press/business/the-rebuild/9232310/Stadium-a-...
So insurance covers less than 10%.

There is nothing wrong with any of the Stadiums in that they are exactly comparable to any other stadium in the world. That is, they all lose money. Is not a matter of if they will lose money, it’s about how much. You can exclude the capital cost, interest costs, and only a few still make a ‘profit’ above the operating costs alone. Once you accept this truth then having a stadium is fine, if that is what you want and you are prepared to pay for it, but you should no more try to justify its cost than you would by saying let’s have a police force because they will be a profit making enterprise. What is the problem is all those private professionals and public officials that pushed for the stadium on the sole grounds that it would make a profit after expenses of capital and operating costs, when ALL the evidence worldwide shows they don’t. They are either ignorant or liars, neither of which is good enough for the position they held and the public money they were in control of.

DH, The Dunedin Stadium deficit is a lot higher than 100-200k per annum. And that is why informed commentators are rightly angry about the fiscal imprudence by our city's leaders. It has been a series of terrible decisions rushed through to get ready for the 2011 World Cup. And lately there has been much high level, tricky accounting at the DCC/ DVML/DVL.  Sifting through the various reports, the Stadium last Financial year had 8m outside revenue, 8.5m interest, 5.7m operating costs.  So net cash loss of around 6m before any allowance for depreciation or loan repayments on the 144m loan.  Tranferring Subvention payments from the profitable city investment funds, and by booking Interest Rate swap gains, they were able to get the loss reduced to a more acceptable level.  This is what was reported.  This fancy book work doesn't change the fact that our small bunch of ratepayers are on the hook for at least 10m cash out a year to pay for the Stadium and its debt. Couple this with no forward concert bookings, a struggling Highlanders Franchise which the NZRU would like sold, and a 2nd division ITM team. The Stadium will also start to require maintenance. Now we see why the DCC need an urgent, and hopefully transparent review.  Good managment can't make it profitable.  I predict big rate rises and that the Highlanders will be sponsored by the long suffering Ratepayers.  Can't see it being mothballed. Too radical! And it's not like they can go back to Carisbrook. 

The Stadium was never going to pay it's way and that was obvious before they built it.  Rugby repeatadly lost in the order of $1m a year at Carisbrook and needed bailing out by the council.  So the council knew how little income rugby would generate.  They had no hope of supporting a $230 m stadium investment and as revealed by your figures are lucky to cover operating costs.  It would be interesting to learn how much of the income came from events other than rugby?  It would also be interesting to see the budget projections (if any) that the council used to make it's decision to build it.  If the projections were widly inaccurate, then whoever produced them should be held to account; - whether they be a council employee or external advisor.

The Dunedin Stadium# Just something else that Forsythe Barr has been involved in that has turned to custard.These guys are compiling a great track record.

I see the New Zealand leads the world in Chicken Littles.
http://www.google.com/trends/explore#q=peak%20oil

Profile - you're a fool to put up something which knocks your case.
 
Yes, we all studied Peak Oil (actually, I've been doing that since I read about it in my 1976 McGraw-Hill Encyclopaedia of Energy.
http://mkinghubbert.com/resources/documents/outlook
 
But we've moved on. That debate has been had, except for the morons left behind. When you ramp into a finite resource (not just finite volume, but with concurrently-descending quality and EROEI issues) and do so at exponentially-increasin rates, there's only one outcome, and it happens sooner rather than later.
 
Then you ask the question: What's the best proactive moves(s) to be made from here, given that reality.
 
No stadiums, obviously - unless you can grow tomatoes on the seats. No debt, obviously - it can vever be paid back. Less population, obviously - we're in fossil-fuelled overshoot. Sustainability obviously - because the unsustainable is exactly that.
 
I don't understand what folk like you expect to 'gain'. Try reading up about 'inverted quarantine', and why it doesn't work. 'Being individually rich' is just inverted quarantine; no use in an overpopulated, resource-depleting world.

Just this week even Forbes has realized energy and GDP are linked and are catching on to peak oil and shale implications!

http://www.forbes.com/sites/jamesgruber/2014/01/26/shale-oil-charlatan

... that is sooooo funny , Mr profile ...... so we beat Australia at something , we're considerably more Chicken Littleish than them ....
 
Speaking of which , where's Hickey hived off to ?

Yeah so that must make interest.co.nz ground zero for chicken littlism?!
I dunno - off building a bunker?

Profile the weird thing about kiwis doom and gloom about peak oil is we have less to worry about. Currently we import something like half of our energy requirements. But we going through renewable energy revolution that could replace all those imports in the medium term future. 20 years ago there was no wind energy iin NZ and it was considered hippie alternative stuff. Now it is conceivable we could double our electricity production from just wind. Given we have not yet 'peaked' in solar, geothermal or hydro this renewable energy revolution is definitely viable for NZ.  There is also considerable research going on using 'waste' hot water that is 50-60 degrees warm from our NI geothermal plants to improve the efficiency of converting waste wood into biofuel. Another unique advantage NZ has that other places do not.

... Agony Aunts ... plural ! .... there's two of them , Mr Ivan ..... hey , how's the new year treating you , all goody good on the home and business front ?
 
Did you see that bit about Japanese medical researchers discovering a process to quickly , cheaply & ethically produce " stem cells " ... awesome potential for our lives .... truely personalised medicine is on the way ....
 
... life is good , friend , and getting even more gooder by the day !