Oil: A Beginner’s Guide

Notes from Oil: A Beginner’s Guide by Vaclav Smil:

* In 2016 motor and aviation gasoline accounted for a third of global refinery throughput. The US share of global gasoline consumption was about 41% of the total, or more than 1,200kg/capita: the country now consumes more gasoline than the combined total for the EU, Japan, China and India.

* Nearly two-thirds of the world’s refined products are now used in transportation (roughly 2.5Gt in 2005) and in the US that share is now more than 75%. Transportation’s dependence on liquid fuels is even higher: in 2015 about 93% of all energy used by road vehicles, trains, ships and planes came from crude oil.

* In 1900 American farmers needed an average of about three minutes’ labor to produce 1kg of wheat, but by the year 2000 the time was down to just two seconds and the best producers now do it in one second.

* The second most voluminous non-fuel use of a refined petroleum product is asphalt.

* Only about 20% of diamonds are sold to the jewellery trade; most of the rest go into drilling for hydrocarbons and metallic ores.

* Record US well depths reached with rotary rigs increased from 300m in 1895 to more than 1.5km by 1916; the 3km mark was reached in 1930, the deepest pre-WWII well was 4.5km (in 1938) and the 6km mark was surpassed in 1950.

* The average depth of new US exploratory oil wells increased from about 1,460m during the 1950s to nearly 2,300m during the first decade of the twenty-first century.

* Fracking fluid is about 90% water. Most of the rest is sand, and additives (hundreds of substances have been tried) usually make up less than 0.5% of the volume but they contain a mix of chemicals (acids, corrosion inhibitors, gelling agents, surfactants, biocides) that should never be allowed to contaminate drinking water. Usually this is not a problem as fracking takes place far below the aquifers, and steel and cement in properly finished wells should prevent any contamination closer to the surface.

* Moving Alaskan oil 3,800km by tanker from Valdez to Long Beach in California requires energy equivalent to only about 0.5% of the transported fuel. And a 300,000dwt supertanker needs an equivalent of only about 1% of the fuel it carries in order to travel more than 15,000km from Ra’s Tanūra, the world’s largest loading oil terminal on the Saudi coast of the Persian Gulf, to the US East Coast.

* By far the largest oil storage is the US Strategic Petroleum Reserve that began to fill in 1977 with imported Saudi oil. Crude oil is stored deep underground in four massive salt caverns along the Texas and Louisiana Gulf Coast. The maximum capacity is 713.5Mb and the reserves stood at 685Mb in June 2017, representing about 10% of US annual oil consumption.

* The chances of ending the fossil fuel era in a matter of two or three decades appear quite unrealistic: in 2017 the world derived about 85% of its primary commercial energy from the combustion of fossil carbon.

“A fifth of Americans believe that winning the lottery is the most practical way for them to accumulate large savings.”

George Loewenstein, reporting for the Washington Post:

A fifth of Americans believe that winning the lottery is the most practical way for them to accumulate large savings, according to a 2006 survey by the Consumer Federation of America. More recently, a 2019 survey conducted by the investment app Stash found that about 40 percent of respondents, including 59 percent of millennials, think that winning the lottery could be a good way to fund retirement.

Powerball and Mega Millions jackpots have gotten much larger in recent years because both lotteries reduced the odds of winning. In 2015, Powerball added more numbers to the drawing, dramatically decreasing the chance of winning the jackpot, from 1 in 175 million to 1 in 292 million. The odds of winning the Mega Million jackpot are even lower: approximately 1 in 302 million.

Lottery is basically a form of additional tax you get to choose not to pay.

Also, this.

“The forces that have held the current fiat system together now look fragile and they could unravel in the 2020s.”

Deutsche Bank Research:

* The forces that have held the current fiat system together now look fragile and they could unravel in the 2020s. If so, that will start to lead to a backlash against fiat money and demand for alternative currencies, such as gold or crypto could soar.

* Until now, cryptocurrencies have been additions, rather than substitutes, to the global inventory of money. Over the next decade, this may change. Overcoming regulatory hurdles will broaden their appeal and raise the potential to eventually replace cash.

* Eventually, it is possible that inflation will become more and more embedded in our system and doubts will rise about the sustainability of fiat money. The demand for alternative currencies will therefore likely be significantly higher by the time 2030 rolls around. Will fiat currencies survive the policy dilemma that authorities will experience as they try to balance higher yields with record levels of debt? That’s the multi-trillion dollar (or bitcoin) question for the decade ahead.

Full report in PDF here.

“A stroll through a modern art gallery shows artistic works whose production requires no more effort or talent than can be mustered by a bored 6-year-old.”

Saifedean Ammous, writing in The Bitcoin Standard: The Decentralized Alternative to Central Banking:

A stroll through a modern art gallery shows artistic works whose production requires no more effort or talent than can be mustered by a bored 6-year-old. Modern artists have replaced craft and long hours of practice with pretentiousness, shock value, indignation, and existential angst as ways to cow audiences into appreciating their art, and often added some pretense to political ideals, usually of the puerile Marxist variety, to pretend-play profundity. To the extent that anything good can be said about modern “art,” it is that it is clever, in the manner of a prank or practical joke. There is nothing beautiful or admirable about the output or the process of most modern art, because it was produced in a matter of hours by lazy talentless hacks who never bothered to practice their craft. Only cheap pretentiousness, obscenity, and shock value attract attention to the naked emperor of modern art, and only long pretentious diatribes shaming others for not understanding the work give it value.

As the Medicis have been replaced with the artistic equivalents of DMV workers, the result is an art world teeming with visually repulsive garbage produced in a matter of minutes by lazy talentless hacks looking for a quick paycheck by scamming the world’s aspirants to artistic class with concocted nonsensical stories about it symbolizing anything more than the utter depravity of the scoundrel pretending to be an artist who made it. Mark Rothko’s “art” took mere hours to produce, but was sold to gullible collectors holding millions of today’s unsound money, clearly solidifying modern art as the most lucrative get‐rich‐quick scam of our age. No talent, hard work, or effort is required on the part of a modern artist, just a straight face and a snobby attitude when recounting to the nouveau riche why the splatter of paint on a canvas is anything more than a hideous thoughtless splatter of paint, and how their inability to understand the work of art unexplained can be easily remedied with a fat check.

“A constant supply of news that make us afraid with little to instill trust in one another and in our institutions has always been the best press demagogues can hope for.”

Max Roser, writing for The Washington Post:

The story that we tell about ourselves is the most important story of all. Journalists and intellectuals who almost exclusively focus on what goes wrong risks us losing our faith in one another, and that faith is the essential foundation without which our ideal of a free and democratic society is impossible. A constant supply of news that make us afraid with little to instill trust in one another and in our institutions has always been the best press demagogues can hope for.

Freedom is impossible without faith in free people, and if we are not aware of our history and produce and demand only the information on what goes wrong, we risk to lose faith in one another.

“Stacked up, the Stasi’s complete files reached 125 miles. They weighed fifty tons per mile; in total, 62,500 tons.”

Tina Rosenberg, writing in The Haunted Land: Facing Europe’s Ghosts After Communism:

The Stasi complex on Normannenstrasse in the Lichtenberg district consisted of 41 brown concrete buildings. In addition, the Stasi possessed 1,181 safe houses, 305 vacation homes, 98 sports facilities, and 18,000 apartments for meetings with spies. The Stasi had a budget of 4 billion East German marks. It had 97,000 full-time employees—after the army, it was East Germany’s largest employer. There were 2,171 mail readers, 1,486 phone tappers, and another 8,426 people who monitored phone conversations and radio broadcasts. In addition, there were about 110,000 active unofficial collaborators and perhaps ten times that many occasional informants. The Stasi kept files on 6 million people. There were 39 separate departments—even a department to spy on other Stasi members. A master file with a single card for each Stasi employee, collaborator, and object of surveillance stretches for more than a mile—the cards for people named Müller alone reach a hundred yards. Stacked up, the Stasi’s complete files reached 125 miles. They weighed fifty tons per mile; in total, 62,500 tons.

“This struggle of the human female toward sex equality will end in a new sex order, with the female as superior.”

Nikola Tesla, back in 1926:

It is clear to any trained observer, and even to the sociologically untrained, that a new attitude toward sex discrimination has come over the world through the centuries, receiving an abrupt stimulus just before and after the World War.

This struggle of the human female toward sex equality will end in a new sex order, with the female as superior. The modern woman, who anticipates in merely superficial phenomena the advancement of her sex, is but a surface symptom of something deeper and more potent fermenting in the bosom of the race.

It is not in the shallow physical imitation of men that women will assert first their equality and later their superiority, but in the awakening of the intellect of women.

Through countless generations, from the very beginning, the social subservience of women resulted naturally in the partial atrophy or at least the hereditary suspension of mental qualities which we now know the female sex to be endowed with no less than men. But the female mind has demonstrated a capacity for all the mental acquirements and achievements of men, and as generations ensue that capacity will be expanded; the average woman will be as well educated as the average man, and then better educated, for the dormant faculties of her brain will be stimulated to an activity that will be all the more intense and powerful because of centuries of repose. Woman will ignore precedent and startle civilization with their progress.

The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War

Notes from The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War by Robert J. Gordon:

* Advertising developed in part as a result of mass production; likewise, it was said that advertising made mass production possible. Firms decided that there was a limit to attracting customers through lower prices, and they tried the alternative strategy of increasing volume by brand-centric advertising. Although advertising began in the late nineteenth century with the development of the first branded products, its true explosion came in the 1920s, when it became increasingly tied to the newly invented radio.

* The 1902 Sears catalog contained 1,162 pages. The explosive growth of circulation of the Sears catalog attests to its growing influence—catalogs went to 3.6 percent of American households in 1902, 15.2 percent in 1908, and 25.7 in 1928.

* Electric lights are an example of a technology that had a great burst of innovation early, in this case 1880–1920, and then stood still afterwards. Although the fluorescent bulb had come to dominate lighting in commercial and industrial settings by 1950, virtually nothing changed in home illumination from 1920 until the development of the compact fluorescent bulb after 1990.

* The current system of airport security all over the world represents an overreaction to the September 11, 2001, hijackings. There was only one weakness in the U.S. airline security system on September 11, and this was that the cockpit doors were flimsy. Within days, they were replaced by completely secure doors that nobody could break through. Although the security issue was completely solved within a week, fourteen years later billions of dollars per year of passenger time continues to be wasted in unnecessary additional security precautions. The pre-2001 security system, based on a quick walk through an X-ray machine to check for guns and metal weapons, would be enough.

* The unrivaled autonomy of the medical profession began to erode after the 1950s. As hospitals became larger and more complex, administrative control fell increasingly into the hands of professional administrators. Patients also began to challenge the authority of the medical profession. While “for the most part, the authority of the doctor was unquestioned” in 1960, with the surgical profession even earning such high praise as being called a “religion of competence,” by the early 1970s patients were demanding greater say in how they were treated. What had always been a tradition of “doctors know best” changed in 1972 when a federal appeals court in Washington, D.C., for the first time established a legal requirement for informed consent. “According to the new standard, the physician had to tell the patient whatever ‘a reasonable person’ would want to know in order to decide whether to accept the treatment.” In 1973, responding to increasing pressure from healthcare consumers, the American Hospital Association came out with a Patients’ Bill of Rights.

* One of the most important improvements in American industrial efficiency was the establishment by Herbert Hoover of the National Bureau of Standards. Its aim was to create a system of uniformly sized parts, down to screws and bolts, aimed at “simplification of practice, elimination of waste, conservation of materials, minimum training of workers, reduction and savings in supply purchasing and unwieldy inventories, defeat of confusion, and speed in production.”

* Social Security has been central to the reduction of the poverty rate among the elderly, from 35 percent in 1959 to 10 percent by 2003.

* The ratio of annual immigration to the U.S. population dropped from an average 1.0 percent per year during 1909–13 to 0.25 percent per year during 1925–29, and the growth rate of the population fell from 2.1 percent during 1870–1913 to 0.9 percent between 1926 and 1945.34 The anti-immigration legislation has long been cited as a cause of the Great Depression, in the sense that the overbuilding of residential and nonresidential structures in the 1920s was based on an expectation of continued rapid population growth that did not occur.

“The lottery’s only objective is to maximize the funds you pay for educational activities.”

Salil Mehta, via Statistical Ideas:

One should remember that the only objective for the Lottery, anywhere in the world, is not to make you rich. Contrary to their advertisements, the objective is not to show you a good time. Wasting your money is never a good time. The lottery’s only objective is to maximize the funds you pay for educational activities. The lottery does this by taking all of the proceeds, then first diverting nearly 45% of it towards educational benefits, and also towards store commissions and advertisements designed to trick you into spending more into the system. Say you played 292 million times with hypothetically a $1 ticket, and then won exactly one time. In this case your reward would not be anywhere close to $292m. The funnel would start at a gross level of just 55% of $292m (or a loss of $131m on your ticket purchases since 45% was skimmed straight away to the government). And then your net amount would still be less than this 55% gross payout, since this reward is again taxed as income. There is nothing sexy about this arrangement; it extorts a non-tax deductible dollar from you and many others, who could least afford it. And each time putting offering 55 cents into a community savings jar, until one day that amassed jar is given to basically just one person at random (but not before the government comes back to tax that jar as “income”). The whole scheme is an educational tax for those who instead could use a free education in probability theory.

Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens

Notes from Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens by Nicholas Shaxson:

* Over half of world trade passes, at least on paper, through tax havens. Over half of all bank assets, and a third of foreign direct investment by multinational corporations, are routed offshore.

* The offshore world is not a bunch of independent states exercising their sovereign rights to set their laws and tax systems as they see fit. It is a set of networks of influence controlled by the world’s major powers, notably Britain, the United States, and some jurisdictions in Europe. Each network is deeply interconnected with, and warmly welcomes offshore business from, the others. Wealthy U.S. individuals and corporations use the British spiderweb extensively: Enron, for example, had 881 offshore subsidiaries before it went bust, of which 692 were in the Cayman Islands, 119 in the Turks and Caicos, 43 in Mauritius, and 8 in Bermuda, all in the British spiderweb. The United States returns the favor to wealthy British interests investing tax-free, in secrecy, via Wall Street. Not only that, but the world’s most important tax havens in their own right are not exotic palm-fringed islands but some of the world’s most powerful countries themselves.

* The story about the origins of Swiss bank secrecy is no more than an appealing fiction. The argument about it being set up to protect Jewish money first appeared in the November 1966 Bulletin of today’s Credit Suisse. It wasn’t true. The reason bank secrecy was strengthened in 1934 was a scandal two years earlier when the Basler Handelsbank was caught in flagrante facilitating tax evasion by members of French high society, among them two bishops, several generals, and the owners of Le Figaro and Le Matin newspapers. Before that, there was professional secrecy (such as exists between doctors and their patients), and violation of this secrecy was a civil offense, not a criminal one as it is today. The law had nothing to do with protecting Jewish secrets.