Queuing outside the stadium
……
Prologue
In 1992, George Soros took down the
He bet that he could push
the price down to a position that he would win buy buying it back cheaply to
settle futures contracts. Actually, he astutely estimated that the
George won, the UK Treasury lost.
In the last article we said that
the IMF was looking at “thinking about alternatives to the dollar”.
So what does the worlds leading currency trader think…..? (He tells us that he's retired, but..... from the annals of Sun Tzu:
VII. Maneuvering
15. In war, practice dissimulation, and you
will succeed.)
Interviewer: "So how are you positioned currently in the
Dollar?"
Mr. Soros: "Well, I was in retirement, I came out of retirement to
preserve my capital, which I did….. so I’m not active in taking positions….Actually
the dollar currently is very strong, much stronger than it was this time last
year and that is actually a measure of the sickness, the fever chart in a way,
because people don't buy dollars because they want to
hold dollars, they buy dollars because they owe dollars and can’t
Interviewer: “Would you advise
your fund managers to be long the Dollar at this point?”
Mr. Soros: "Well look, it's a very complicated thing and of course
I know exactly what the dollar is going to do but I'm not at liberty to
(tell)…”
Interviewer: “What about the British
Mr. Soros: “Same thing applies.”
Interviewer: “And the Euro ?”
Mr. Soros: “I’m pretty
convinced that the Euro will hold together.”
So
there you have it, George obviously agrees with the IMF (see Part II of this
series of articles).
In
the interview, Mr. Soros did give some sage advice….
Mr. Soros: Now we
have a dual task… One is to stop the collapse… and the second to build a new
system.
In Hungarian, "Soros" means, Tight, Strong, Enforce.
He
probably wasn’t referring to major
banks assisting in the bankruptcy of a country….
IV. Tactical
Dispositions
1. Sun Tzu said: The good fighters of old first put themselves beyond the possibility of defeat, and then waited for an
opportunity of defeating the enemy.
2. To secure ourselves against defeat lies in our own hands, but the opportunity of defeating the enemy is provided by the
enemy himself.
3. Thus the good fighter is able to secure himself against defeat,
but cannot make certain of defeating the enemy.
4. Hence the saying: One may know how to conquer without being
able to do it.
In
Australian Liabilities in
Various Currencies
Australian
Position in the US Dollar – Decreasing Dollar Reserves
So
it would seem that we are reducing our US Dollar Assets (well since the beginning
of last year) , but increasing our US Dollar Liabilities. It would appear that
the Australian Reserve Bank is betting that the US Dollar will go down. By
doing this, we can buy Dollars in the future to pay off our increasing USD
liabilities, cheaper, which is good for Aussie Taxpayers.
OK,
now lets see what currency has to do with oil.
Australians
love their cars and their consumption of petrol and LPG shows it…..
Australian
Annual petrol consumption per capita.
Source: http://www.abare.gov.au/publications_html/energy/energy_09/G_09.xls &http://www.abs.gov.au/AUSSTATS/subscriber.nsf/log?openagent&3105065001ds0003_2008.xls&3105.0.65.001&Data%20Cubes&8CB6A3D76A0F3ADFCA2574CC0010B8A6&0&2008&23.09.2008
However,
before you say, “Hey Koltai, we’re keeping it stable….. the above excludes diesel
(mainly because it’s too difficult to differentiate between semi-trailer fuel
and domestic use.)
According
to the ABS; “Overall passenger
vehicle registrations increased by 13.1% between the 2004 and 2009 MVC
snapshots, yet the number of passenger vehicles registered with diesel fuel
increased by 80.0%.”
Source: http://www.abs.gov.au/ausstats/abs@.nsf/mf/9309.0/
O.K.
We’re at our seat in the stadium now… the pre-game tension is rising…..
Koltai
looks around for the hot-dog vendor……
The term "Peak
oil" -- the notion that global production of oil will soon reach its
maximum, and will subsequently decline (even while demand continues to rise) --
is getting quite a bit of journalistic attention lately. It's not surprising;
peak oil is a useful metaphor for the broader problem of not paying attention
to longer-term problems, as well as an implicit driver for a move away from
fossil fuels.
Australian Crude and Condensate Production.
As one engineer put it…..
There
are five types of “oil”: "black
oil", "volatile oil", "retrograde gas-condensate",
"wet gas", and "dry gas".
The
distinctions are useful, but the boundaries are hardly distinct. The term
"black oil" is particularly imprecise and context-dependent; to a
reservoir simulation engineer like me, that means the simplifying assumption
that the fluid can be characterized by only two components, one of which can
exist in only one phase whose properties we can characterize the other
component dissolves in that phase; that phase is "black" as in box,
not color. Usually the non-partitioning phase is the "heavy"
component (separator oil may contain dissolved gas, but the gas phase contains
no oil), but it works the other way, too (separator gas can contain condensate
vapor, but condensate can dissolve no gas). When it's applicable, the black-oil
assumption saves *lots* of computational effort.
"Condensates"
tend toward the lighter end of the spectrum, "crudes" to the heavier.
Since most hydrocarbon liquids are pretty close to (CH2)n
formula, the "energy" (heating value) content per pound is fairly
constant (to a decent first approximation, about 17000 BTU/lb IIRC; for
reference a thousand cubic feet of lean natural gas delivered for home uses
yields about 1 million BTUs [and weighs about 46 pounds {yes, that's 22000
BTU/lb, but it's mostly CH4). That is, a barrel of 50 API (a density
measure) condensate from Hugoton has less energy than a barrel of 12 API crude
from Midway-Sunset (API gravity is lower when density is higher).
So if we are running out of
oil, how will we live?
Don’t Panic! This is not the first time that the “End
of the Industrialised world – as we know it” has been forecast. Nearly 30 years
ago “Limits
to Growth”, one of the most influential books of the 20th century, was published
(Meadows et al., 1972). It purported to
demonstrate, by means of a computer model, the imminent economic collapse of
industrial civilization due to the exhaustion of critical resources.
It was followed shortly by the 1973 "oil
crisis", which immediately lent credibility to such scenarios. However, when queues at petrol stations went
away and oil prices dropped in the 80s, many people concluded the crisis was
"phony"--and by implication, resource shortages were too.
It wasn't, and they aren't.
Unfortunately, cheap foreign oil is limited.
Economists and consequently the Governments they work for have vastly
underestimated the effects that Peak Oil exploration and production will have
on our socio-economic oil dependent lifestyles.
A report http://criepi.denken.or.jp/en/e_publication/a2004/04kiban03.pdf
(no longer available) in March 2002 stated that oil prices would rise from $30
per barrel in 2000 to $40 per barrel by 2025.
(Boy did he get it wrong…..)
Although the prospect of "imminent resource
shortages" now has an ethereal real-time reality feel, it's simply been
postponed by cheap foreign sources.
However, the devaluing US Dollar is ensuring that
those cheap sources are going to keep increasing the prices.
It's also extremely disturbing that so many of the
technical community also seem unaware of the
degree to which the brave new high-tech future still relies on coal,
oil, and minerals all ultimately--and messily--dug out from the Earth. In
addition, the global communications revolution is causing a worldwide
revolution of rising expectations, which puts further pressure on the resource
base. If nothing else, exporters now
have other markets for those resources than the industrialized countries such
as the
Eventually domestic political concerns may make
exporting resources politically impossible, as has already happened in many of
the industrialized countries.
Australian Oil Imports –v- Exports
Source: ABS & Abare various
Finally, resource issues are being exacerbated by
environmental concerns. As is well-known, present technology is polluting, and
a major part of that pollution stems from the production and consumption of
resources. The extraction,
transportation, and consumption of petroleum have familiar environmental
hazards ranging from oil slicks to photochemical smog. Coal is abundant and cheap, but byproducts
of its combustion include acid rain and fly ash, and its mining is both
dangerous and environmentally disruptive.
There is a groundswell to clean up the environment and
find alternative fuel sources for both transport and power production.
In fact it is the authors opinion that the Energy markets
are now at the same financial point as the Internet was in 1994.
The ,most likely looking candidate are bio-fuels
including Hydrogen.
Hydrogen gas is being explored for use in combustion
engines and fuel-cell electric vehicles. It is the third most abundant
element on the earth's surface, where it is found primarily in water and
organic compounds.
It is generally produced from hydrocarbons or water;
and when burned as a fuel, or converted to electricity, it joins with oxygen to
again form water. Hydrogen is most commonly produced from sources such as
natural gas, coal, gasoline, methanol, or biogas through the application of
heat; from bacteria or algae through photosynthesis; or by using electricity or
sunlight to split water into hydrogen and oxygen. As stated above, Hydrogen can be extracted or
“re-formed” from many organic bases and can be done so extremely cheaply.
However, the easiest, most economical and least talked
about methodology is the insertion
|
of two ferric iron anodes into a glass of water with
1.3 Volts of DC current. Why the least talked about ? Why don’t we as
citizens of a free Western Nation just generate our own Hydrogen for free and
run our cars on it ? Why don’t we use
“free” Hydrogen to power our Electricity Generating plants. Because our entire economy is based on a fossil fuel
source. |
|
Removing the Fuel suppliers from the industrial world
would in fact present the financial world with some severe pressures on asset
revaluation and potentially remove trillions from market capitalization.
(Probably, not a good thing to do during a global
financial crisis.)
In other words, minerals in the ground have an asset
value that can be securitised and held as a guarantee over for example,
Insurance premiums.
In fact this is just how some of our large “super
funds” are guaranteed.
The following Table shows just how Crude affects our
balance of payments.
Compare this chart with the graph above for
Australian Crude Oil Balance of Payments
(So every Australian personally owns approx. $2,800.00 of our
overseas deficit just because we like to drive cars.)
OK, I’ll do it for you….
Add to this the fact that your Government needs its
fuel excise tax to balance its budget and the problem becomes not a technical –
how do we make/store/burn Hydrogen, but an economical, how can we
introduce Hydrogen into our economy without undermining the very foundations on
which our house mortgages, social security payments and public transportation
rely on.
But remember, Mr. Soros said – that we had to develop
a new system……
And he’s right. The above chart shows that if we keep
importing oil, the country will go bankrupt.
So, how about that condensate stuff….. can’t we just
convert all our cars to LPG?
Condensate is not actually natural gas or LPG per
se….. but let’s not swap our present time bomb for another.
Economically, there is little doubt that we need to
divorce ourselves from fossil based fuels.
Jules Verne in 'The Mysterious Island' in 1870, wrote:
"And what will they burn instead of coal?"
"Water", replied Harding.
"Water!" cried Pencroft, "Water as fuel for steamers and
engines! Water to heat water!"
"Yes, but water decomposed into its primitive elements", replied
Cyrus Harding, "and decomposed doubtless, by electricity, which will then
have become a powerful and manageable force, for all great discoveries, by some
inexplicable laws, appear to agree and become complete at the same time. Yes,
my friends, I believe that water will one day be employed as fuel, that
hydrogen and oxygen which constitute it, used singly or together, will furnish
an inexhaustible source of heat and light, of an intensity of which coal is not
capable. Some day the coalrooms of steamers and the tenders of locomotives
will, instead of coal, be stored with these two condensed gases, which will
burn in the furnaces with enormous calorific power. There is, therefore,
nothing to fear. As long as the earth is inhabited it will supply the wants of
its inhabitants, and there will be no want of either light or heat as long as
the productions of the vegetable, mineral or animal kingdoms do not fail us. I
believe, then, that when the deposits of coal are exhausted we shall heat and
warm ourselves with water. Water will be the coal of the future."
So let’s talk about Hydrogen.
Hydrogen can be stored as compressed gas in high pressure
cylinders or liquefied at -253˚C in cryogenic tanks.
But these ways of storing hydrogen are cumbersome and
expensive. Furthermore, outside a limited area in
The cost of pure hydrogen is also relatively high
compared to the cost of conventional liquid fuels. The cheapest (commercially
available) hydrogen is made from natural gas, has an on-site cost of about $4.85
per gigajoule (i.e. $0.15 per litre equivalent gasoline), whereas liquid
hydrogen (delivered) now costs $16.00 per gigajoule (i.e. $0.64 per litre equivalent
gasoline).
Delivered, compressed hydrogen costs up to $3.20 per
litre equivalent gasoline, due to the weight of the cylinders transported along
with it. For future transportation needs it could therefore be more suitable to
generate hydrogen on board from a primary fuel such as a fossil fuel (gasoline
or diesel) or from a chemical intermediate (ammonia, methanol or higher
alcohols).
It can also be made from wood (gasifiers), water (electrolysis),
methane (sewerage). Actually, you can even grow plants and use their
photosynthesis to extract hydrogen.
Hydrogen is a widely utilized chemical whose industrial
production has been considered common technology for over a century. Various
processing options exist depending on the type of primary fuel considered and
on the purity of gas needed.
Today, in industry, most hydrogen is produced by steam
reforming or partial oxidation of hydrocarbons (76% from natural gas and 23%
from light or heavy oil distillates). But, for small hydrogen quantities, or when
high-purity hydrogen is required, processes such as water electrolysis, ammonia
decomposition or methanol reforming are also used. The largest consumption of
hydrogen occurs in petroleum refining and in the petrochemical industries for
ammonia and methanol synthesis,
Many trade-offs for on-board hydrogen production therefore
exist, both in the choice of fuel and in the choice of the process.
And of course, for the economy to convert to a
Hydrogen base, it would need to be taxed.
One option would be to tax Hydrogen on a Vehicle Miles
Traveled (VMT) basis.
In
From the introduction page of the
“Vehicle Miles of Travel
(VMT) is the sum of distances traveled by all motor vehicles in a
specified system of highways for a given period of time.
The VMT for each road section is calculated by multiplying the average daily
traffic (ADT) by the length of the road section and the length of the time
period. Those section VMTs are summed to calculate the VMT for a road or
road system.
The VMT is used to determine the amount of use that a highway or system of
highways receives over a given period of time. The VMTs supplied here are
annual vehicle miles traveled for
Source:
http://www.oregon.gov/ODOT/TD/TDATA/tsm/docs/VMT_Graph.PDF
So there you have it, a different methodology of
assessing taxable value, no longer dependant on the distribution of a declining
resource.
Clever people those Oregonians….
So now, (if VMT is taken up by every State and Federal
Government globally) the way is open to allow citizens to run their car on
anything they like.
Bio-deisel, Ethanol, Compressed Natural Gas (from your
at home gas supply…..), LPG or plain old Hydrogen.
So the only question that remains, is that if we
converted all vehicles to run on Hydrogen, and oil is no longer the black gold
that it has been, what will the world use as securitization for credit.
I have three answers for that:
a)
cash savings (let’s go back to basics – only buy what
we can afford to pay for.)
b)
Consumer
generated Carbon Credits – (in effect more cash).
c)
It still has all it’s other precious mineral reserves
to use for securitization.
Consumer generated? Yeah, why not. Let the poor schmucks
that generate the pollution – also obtain benefit by not generating the
pollution. After all the banks have had their way for the last 98 years, I think
it’s the turn of the little guy.
I suggest the world votes for any Politician that
mandates consumers are capable of earning REC’s (Renewable Energy Certificates),
thereby removing the ability of a limited few to control all the wealth of the
world.
With Consumer generated REC’s, the world is your
oyster, the sky is the limit and Planet Earth will breathe a big thank-you.
Your earning capacity will only be limited by your own
lack of inventiveness.
Imagine earning money for walking. I wrote about this
last year….
A
beginning methodology of Calculating Walking REC’s for Consumers.
|
Distance (Kms) |
Distance
(Metres) |
Steps
Per Metre |
Km
per hr |
Kcal
Per Min |
Kjoules |
Mwatts |
Apparent
value $ |
Value
per Step $ |
|
1 |
1000 |
2 |
4 |
4 |
16.66667 |
0.0046 |
0.05 |
0.000102 |
|
216 |
216000 |
2 |
4 |
4 |
3600 |
1.0000 |
11.00 |
0.000102 |
Man could be the master of his destiny.
No longer reliant on Total, Chevron, Shell or BP.
No longer at the whim of his bank manager.
No longer at the whim of his employer.
No longer just a sheep to be harvested.
I wonder if this is the level of change that George
Soros meant?
(Koltai, ducking and running…… changing my name to
Smith. Moving to a bullet proof cave in the
In our next exciting installment, we will discuss –
“Home Experiments with Hydrogen”.
The above is a page scanned from the October 1936
issue of Popular Mechanics.
|
Hydrogen Energy Equivalents |
|
|||||||
|
Equivalent Energy Source |
Cubic Metre |
Cubic Foot |
Liter |
Gallon |
Kilogram |
Pound |
|
|
|
H2 Gas |
H2 Gas |
Liquid H2 |
Liquid H2 |
H2 |
H2 |
|
||
|
Gasoline Litres |
0.352 |
0.00929 |
0.279 |
1.06 |
3.93 |
1.78 |
|
|
|
Methanol Litres |
0.676 |
0.0178 |
0.536 |
2.03 |
7.55 |
3.41 |
|
|
|
Diesel Litres |
0.279 |
0.00737 |
0.221 |
0.837 |
3.12 |
1.41 |
|
|
|
Jet Fuel Litres |
0.287 |
0.00757 |
0.227 |
0.86 |
3.2 |
1.45 |
|
|
|
Methane (scf) |
11.4 |
0.301 |
9.05 |
34.2 |
128 |
57.6 |
|
|
|
Propane (scf) |
4.48 |
0.118 |
3.55 |
13.4 |
50.1 |
22.6 |
|
|
|
Butane (scf) |
3.45 |
0.091 |
2.73 |
10.3 |
38.5 |
17.4 |
|
|
|
Coal Anthracite (Tons) |
0.000397 |
1.05E-05 |
0.000315 |
0.00119 |
0.00444 |
0.002 |
|
|
|
Coal Bituminous (Tons) |
0.000392 |
1.04E-05 |
0.000311 |
0.00118 |
0.00438 |
0.00198 |
|
|
|
Coal Lignite (Tons) |
0.000731 |
1.93E-05 |
0.000579 |
0.00219 |
0.00816 |
0.00369 |
|
|
|
Barrels of Crude |
0.00176 |
4.66E-05 |
0.0014 |
0.00529 |
0.0197 |
0.0089 |
|
|
|
Gasoline Gallons |
0.093 |
0.00246 |
0.0737 |
0.279 |
1.04 |
0.469 |
|
|
|
Methanol Gallons |
0.179 |
0.00471 |
0.142 |
0.535 |
1.99 |
0.901 |
|
|
|
Diesel Gallons |
0.0738 |
0.00195 |
0.0584 |
0.221 |
0.824 |
0.372 |
|
|
|
Jet Fuel Gallons |
0.076 |
0.002 |
0.06 |
0.227 |
0.846 |
0.382 |
|
|
|
H2 Gas Cubic Metres (STP) |
1 |
0.0264 |
0.792 |
3 |
11.2 |
5.04 |
|
|
|
H2 Gas Cubic Feet (NTP) |
37.9 |
1 |
30 |
114 |
423 |
191 |
|
|
|
H2 Liquid Litres (nbp) |
1.26 |
0.0333 |
1 |
3.78 |
14.1 |
6.4 |
|
|
|
H2 Liquid Gallons (nbp) |
0.334 |
0.0088 |
0.264 |
1 |
3.72 |
1.69 |
|
|
|
H2 Kilograms |
0.0896 |
0.00236 |
0.0709 |
0.268 |
1 |
0.454 |
|
|
|
H2 Pounds |
0.198 |
0.00521 |
0.156 |
0.592 |
2.2 |
1 |
|
|
|
H2 Tons |
9.87E-05 |
2.6E-06 |
7.82E-05 |
0.000296 |
0.0011 |
0.0005 |
|
|
|
Electricity KW-hours |
3 |
0.0791 |
2.38 |
8.99 |
33.5 |
15.1 |
|
|
|
Electricity MW-hours |
0.003 |
7.91E-05 |
0.00238 |
0.00899 |
0.0335 |
0.0151 |
|
|
|
H2 High HV gigajoules |
0.0128 |
0.00034 |
0.0101 |
0.0383 |
0.143 |
0.0644 |
|
|
|
H2 High HV million Btus |
0.0121 |
0.000319 |
0.0096 |
0.0363 |
0.135 |
0.061 |
|
|
|
H2 High HV Btu |
12,100 |
319 |
9,600 |
36,300 |
135,000 |
61,000 |
|
|
|
H2 High HV kilocalories |
3,100 |
80.5 |
2,400 |
9,100 |
34,100 |
15,400 |
|
|
|
H2 Low HV gigajoules |
0.0108 |
0.000285 |
0.0086 |
0.0324 |
0.121 |
0.0544 |
|
|
|
H2 Low HV million Btus |
0.0102 |
0.00027 |
0.0081 |
0.0307 |
0.114 |
0.0516 |
|
|
|
H2 Low HV Btu |
10,200 |
270 |
8,100 |
30,700 |
114,000 |
51,600 |
|
|
|
H2 Low HV kilocalories |
2,600 |
68 |
2,040 |
7,700 |
28,800 |
13,000 |
|
|
|
Equivalent Energy Source |
Cubic Meter |
Cubic Foot |
Litre |
Gallon |
Kilogram |
Pound |
|
|
|
H2 Gas |
H2 Gas |
Liquid H2 |
Liquid H2 |
H2 |
H2 |
|
||
|
Data sources from : |
|
|||||||
|
The Hydrogen World
View by Roger Billings - |
|
|||||||
|
Diesel Fuels Technical Review (FTR-2) by
Chevron Products Company a division of Chevron USA Inc 1998 |
|
|||||||
|
Motor Gasolines Technical Review (FTR-1) by
Chevron Products Company a division of Chevron |
|
|||||||
References:
Soros: Dollar's Strength a Measure of System's "Sickness"; Euro
Will Remain Viable
Banks defend use of sovereign CDS
trade to hedge risk
http://www.ft.com/cms/s/0/62c2e19e-28bf-11df-b86f-00144feabdc0.html?nclick_check=1
ON
BOARD HYDROGEN GENERATION FOR FUEL CELL POWERED ELECTRIC CARS
M. PRIGENT
Institut
français du pétrole
The properties of petroleum fluids
By
William D. McCain
Population
Statistics
4102.0 - Australian Social
Trends (ABS)
