November's Democratic Blowout

Even from halfway around the world you can sense a sea change. Hillary’s campaign is running on fumes and she just needs a few days to find a graceful exit. Former Speaker Newt Gingrich warned the Republicans were headed for a November blowout.

Gingrich says the Republican loss in the special election in Louisiana’s sixth congressional district this past weekend should be “a sharp wake up call” for party members.

Gingrich noted President George W. Bushcarried the district by 19 percentage points in winning reelection in 2004. In the end, Democratic State Rep. Donald Cazayoux defeated Republican Woody Jenkins. Republicans tried to cast Cazayoux a liberal by comparing him to Democratic presidential hopeful Barack Obama, but voters didn’t seem to buy it.

The former Georgia lawmaker also pointed to polls that show Americans now favor Democrats on a host of issues, including taxes and the war on terrorism.

But the real bad news for McCain is that the economic headwinds are getting stronger. Goldman Sachs predicted we will see $150-200 oil within the next two years. $150 oil would translate to $5.00 gas, if not more. There was an article in the WSJ regarding the giant Saudi oil field, Ghawar, and whether it’s in decline. If you have to argue about it, it’s in decline. The field is over 50% of Saudi production. The Saudi’s are employing three times the number of drilling rigs now compared to just a few years ago, and production is not increasing.

In the region where I am, the inflation story is getting scary. There is a great deal of rice hoarding and the price has climbed 20% in the last month alone. Gasoline is $10 a gallon and there are often lines at the gas station on TV. There are reports that Indonesia, a long time OPEC member will drop out of the organization as early next year as they will soon be a net importer of oil. Production from aging wells is in decline and investment has lagged. The environment in Indonesia is not likely to attract investment capital any time soon. Back in the 80’s I made a documentary series for PBS and The BBC called “The Prize”, based on a book by Dan Yergin. Dan has been a peak oil skeptic his whole life. Reading the Wall Street Journal yesterday, I almost fell off my chair.

“It’s not that the genie is out of the bottle — it’s that 100 genies are out of the bottle,” said Daniel Yergin, chairman of Cambridge Energy Research Associates. Normally known for optimistic forecasts of lowering oil prices, Mr. Yergin’s firm now says the price could rise to $150 a barrel this year.

The world’s diminished spare production capacity remains the strongest single catalyst for high prices, Mr. Yergin says. The world’s safety cushion — the amount of readily available oil that could be pumped in a moment of crisis — is now around two million barrels a day, according to most estimates. That’s just 2.3% of daily demand, and nearly all of the safety cushion is in one country, Saudi Arabia. Everyone else is pretty much pumping all they can, which makes the world vulnerable to political or other shocks.

John McCain is running for George Bush’s third term. He doesn’t stand a chance, short of some “October Surprise”

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0 Responses to November's Democratic Blowout

  1. John says:

    Goodness! Yergin undergoes an apostasy! Didn’t see your tv program but Yergin’s book was a pageturner. Wonder what Calouste Gulbenkian would say today?

  2. Hugo says:

    Jon, your analytical skills are undimished despite the distance, but the Oct. surprise stuff isn’t a GOP play; it’s Clintons’ people who’ve been shopping that one today—principally to the superdelegates. Nothing literal there, of course. It’s an old-school shakedown very much in the Now. You called it right, with your Tonya post: she’s threatening to play Godzilla vs. Tokyo with whatever awful stuff she’s got on Barack. It has nothing to do with the Republicans. They’ll disgrace themselves later.

  3. Reto says:

    When we started working on our film “A crude awakening” about peak oil just a few years ago, we were laughed at and over and over we were referred to Mr. Yergin’s comments about how stupid the idea of nearing Peak Oil really is. To read Mr. Yergin’s comments in the WSJ has me really worried for the first time. If even the sceptic starts to worry, where will this lead? So not only have we a dire economic outlook but the run for Saudi Arabia’s remaining reserves will only increase geopolitical tensions in the near future.
    This is not a pretty picture.

  4. Morgan Warstler says:

    If I were McCain – I’d make it a war for oil. Period. The end.

  5. Thom Dowting says:

    October surprises that come to mind…

    -Israel hits Iran. Iran hits back. U.S. hits Iran. We all fall down.

    -Osama bin Laden is finally killed. Well, found dead in Vegas with a Hooker.

    -Hillary Clinton declares martial law.

    If I were McCain I would thank George Bush for allowing me to get past that pesky FEC and get my hands on some of them non-gov’t mule type election funds.

  6. Hugo says:

    And another thing, Mr. Taplin: your brazen republication of the offending photograph of the two albeit consenting adult males in political embrace. I’ll thank you not to run—especially without proper notice—such kratographic material in this otherwise worthy and even estimable space.

    The graphic depiction of the trade in raw power is not a commodity that even the most cosmopolitan standards of decency ever could countenance. Surely you know this, and yet here we have the thing, before our eyes. And under your very name, sir!

    I would submit that it is one thing to refer to the fact of that the human lust for power exists, and quite another thing actually to engender it by trafficking in its depiction. Frankly, it is beneath you.

  7. rhb says:

    But as Ariana so completely exposes, they don’t even like each other. Could this photo be just another example of what the oh so pure Mr. Beck claims that all politicians are about? The show that wants to win the office.

  8. Adam says:

    War for oil hey….

    Iraq reserves = 112.5 billion bbl (2004) ~ $US14 trillion @ $125/bbl

    Direct cost of pacification: say draft of additional 2m troops with wages & equipment costing $US100,000 per year = $US200 bn p.a.

    Looks like a bargain on a cost basis! Of course I’m ignoring opportunity costs, etc

    Problem is the US is using 8bn bbl/year, so when Iraq runs out after a decade or and the USA comes begging to the rest of the world for oil it probably won’t find a welcome reception. But then it will be time to conquer another country.

  9. Hope you’re right that McCain doesn’t stand a chance. But why do I have this sickening feeling about the “October surprise” part of the equation?

  10. Hugo says:

    Don’t worry. Whatever it is, it’s nothing to do with October, but rather with the present moment. It’s a shake-down play within the Democratic Party. Call it the cost of healing, if you will.

    Unless the Clintons don’t get their way. In which case it will be time to distract young children—and also, and especially, undergraduates—from the television.

  11. Morgan Warstler says:

    Just a small bit to add:

    “The respected Petroleum Economist Magazine estimates that there may be as many as 200 bbl of oil in Iraq; the Federation of American Scientists estimates 215 bbl; a study by the Council on Foreign Relations and the James A. Baker III Institute at Rice University claimed that Iraq has 220 bbl of undiscovered oil; and another study by the Center for Global Energy Studies and Petrolog & Associates offered an even more optimistic estimate of 300 bbl—a number that would give Iraq reserves greater even than those of Saudi Arabia. In a Guardian interview before the war, Taha Hmud Moussa, Saddam’s deputy oil minister, said that all of Iraq’s oil reserves “will exceed 300bbl when all Iraq’s regions are explored.”

  12. Adam says:

    Interesting link Morgan – looks like there’s conflicting opinions on reserves that can only be resolved with a lot of drilling.

    If your perspective on the Iraq war is correct, I can’t quite get my head around the mercantile thought process of the Bush administration over oil. It’s sooooooo 1800’s.

  13. Rick Turner says:

    And it’s so easy to just go there and start doing deep infra-sounds and sub-surface imaging. There are all the happy brown faces welcoming our oil explorers with flowers and smiles; there are beds of flowers for our hardworking scientists, male and female; there are air-conditioned condos for American workers there; and the population is ready to do our bidding and shine our shoes and whisk the sand off our shoulders and bring us our gin and tonic in the club at the end of the day and fan us with peacock feathers and shoe pesky flies and mosquitoes away from our tender white flesh. Yes, it will be just like the wonderful days of yore when the sun would never set on the British Empire and the servants would iron the newspaper before handing it to their betters that the ink might be set and not sully our hands.

    That’s what Morgan fantasies…

    Sorry, I don’t think it works like that anymore. Now we have hot cocktails of ionized liquid copper blowing holes in our armored vehicles from cheap munitions. We have suicide bombers going to heaven to get their fair share of virgins. We have absolute weaponized insanity above ground making sure nobody gets what’s below ground without paying a stupid price in blood.

    And we’ve got immoral assholes like McCain and Warstler trying to lead us into a deal with Satan.

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  15. Rick Turner says:

    One more comment…

    That war is being considered a legitimate path to acquire oil is a perfect example of how far we have fallen in imagination, technology, and world leadership in intellectual property. We’re the newest Third World country if that’s all we can do…

  16. Jon Taplin says:

    Rick-Even though I’m a bit disoriented from flying back from Asia, I’ve got to say your last two comments make the most sense I’ve heard in four days. We are nothing unless we learn to innovate again on a massive distributed scale.

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  18. Ken Ballweg says:

    Early days in the dying Empire, ay whot Gov’?

    I say, who then is going to keep all those little brown people in check and assist them in using their resources?

    Posh tosh; will never happen.

  19. Rick Turner says:

    If it looks like this now, then these are not the earliest days in the dying empire. I’d say we’re well into chapter three of a ten chapter book. Nations do not get where we are overnight. It takes years of pigheaded stupidity, greed, and lies to do it. It started when we got so afraid of the Soviet Union and Communism…a self-defeating political system…that we mortgaged our great grand children in the paranoids’ arms race of the last millenium. Communism would have collapsed on its own and probably sooner if we’d just led the world to a better life.

  20. Morgan Warstler says:

    Good lord, the dying empire line? Here? Again? The Russinas will crush us! The Japanese will buy us! We’ve yet to go up against auto-cratic capitalism, it’ll be interesting. So we’ll see.

    It is’t about empire, we’ve won, as it were. To be clear: The ideas that made us strong, are making other nations strong as well. Nations all over just want to make money. They want to manufacture, sell, trade – why isn’t that a good thing?

    It is nothing like an empire, tho I know it soothes your soul to imagine it as such.

  21. John Hurt says:

    “The graphic depiction of the trade in raw power is not a commodity that even the most cosmopolitan standards of decency ever could countenance. Surely you know this, and yet here we have the thing, before our eyes. And under your very name, sir!”

    C’est vrai, Monsieur St. Victoire.

    And isn’t this place getting all pithy and everything!?!

  22. Rick Turner says:

    The ideas that made us strong were the ideas of the 19th and first half of the 20th centuries. Those ideas are tired and inappropriate for a post modern world where people in huts in the jungles and deserts can see the glitziest of how we live. How you gonna keep them down on the farm once they’ve seen Paree?, and all that. Some want the profligate and wasteful life that Hollywood has advertised; some hate us for it. But everybody sees it. There are not enough old-school resources to go around for everyone in the world to live as we do. You either have to hold them down by force…as Morgan would suggest is right…or you have to reinvent a world where renewable resources extend the non-renewable ones.

    The only ethical goal is a world where everyone can live “the good life”. That means that nobody should deny opportunity or human rights to any others. War for oil is basically immoral, and I would think it to be antithetical to libertarian principles.

  23. Another Jon says:

    “You either have to hold them down by force…as Morgan would suggest is right…or you have to reinvent a world where renewable resources extend the non-renewable ones.”

    Perfect Rick.

  24. Jon Taplin says:

    Rick -The interesting thing about the post Moore’s Law universe, is that many essentials of the communication society will continue to get cheaper, even if energy continues to get more expensive. Bandwidth costs are dropping faster than oil is rising.

    The cool thing is that Morgan’s war for oil meme just doesn’t work as a long term solution. As you say, we have no choice but to be more inventive.

  25. Hugo says:

    Johnny Blind Lemon Shakehurt Williams,

    We’re just pithing around to mess with Jon’s culture-shocked, jet-lagged head.

  26. Rick Turner says:

    Energy need not get more and more expensive, ad nauseum, ad infinitum. Only the non-renewable energy media…oil, coal, and natural gas…are consigned to that fate (or is it humankind who are consigned to that fate?).

    One of the things that the naysayers are fond of spouting re. solar, for instance, is that it takes more energy (from our usual old sources) to make solar panels than they produce. Well, in the first place, I don’t buy that theory. If it were true, then solar generated power would be a net loss, and that does not seem to be the case. In the second place, if solar panels were to be produced using solar generated power, then it turns into a win-win-win. The third issue is that perhaps we have been living in a fool’s paradise of cheap energy for 150 years, and that is over, and the net amount we have to spend on energy will be higher in the forever future. Well that’s a good reason for mandated energy conservation, strict and high mileage requirements for the end game gas automobiles, and a war for energy that puts the trillions now being pissed down a rat hole in Iraq into a Manhattan project for energy independence.

  27. Hugo says:


    I’m with you on this:

    “The third issue is that perhaps we have been living in a fool’s paradise of cheap energy for 150 years, and that is over, and the net amount we have to spend on energy will be higher in the forever future.”

    Though I can’t sign onto your “rat holes” and “Manhattan Project”, I do so want to join you in shouting LET’S PLEASE LIVE AS IF we’d reached the boundary of our “fool’s paradise”.

    Very well. Count me in.

  28. Rick says, “The only ethical goal is a world where everyone can live ‘the good life.'”

    I agree. But “the good life” would have to be waaaay down-sized to make it possible or sustainable for everyone in the world. All we have to do is overcome human greed and human pride.

  29. JohnHurt says:

    The good life is being downsized as we speak.

  30. Ken Ballweg says:

    The credit bubble is dissolving, but since it was an unsustainable Ponzie scheme that’s no surprise. However, the American expectation of the “good life” is also about to go to V 3.0 (or whatever), and that wouldn’t be so bad if so many people didn’t have the delusion of entitlement to a commodity based “good life”. People who went through the Great Depression, the Dust Bowl, and WW II will tell you that it’s not just access to cheap energy that makes life good. The energy crisis Morgue Man is so willing to kill others to solve is just one small factor in why we’d better all start redefining what a “good life” is.

  31. Rick Turner says:

    I agree with the above comments, but…

    What if trillions a year were not being spent world-wide on murdering people? The world has the human and natural resources for all to live decently. Bucky Fuller was preaching this decades ago. But our human collective morality has not kept pace with our ingenuity in delivering horrific death, and despots who a few hundred years ago could only kill thousands in their own lifetimes can now deal death to millions if not more. The technology of killing has accelerated much faster than have the ethics of those in charge.

  32. Ken Ballweg says:

    Morality, or social biological hardwiring? I think that carrying capacity of the earth is limited, and I think that there are just too many people who have a drive to accumulate power/wealth for Bucky to prove a prophet rather than a poet.

    The irony is that the only way I can see to keep the despots from killing is kill all the despots. But then you need a good system to kill those waiting in the wings to move into the vacated post of “new glorious leader”. And then you need a good system to kill all the killers who become megalomaniacal about killing the killers….

    Oh what the hell; Pierre, grease the axles on the tumbrel, and sharpen up the blade, the Committee of Public Safety meets at noon.

  33. Rick Turner says:

    At the rate climate change seems to be happening, Gaia is starting to show us a future with fewer humans… Unfortunately, one can extend Gaia theory to the kinds of psychosis that bring us folks like the Burmese generals and Mugabe. AIDS, too, may be seen as a regulatory system to reduce population overgrowth. Most of us here in cyberspace have insulated ourselves to a degree with an armor of technology, social behavior, and knowledge, but those on the world social ladder who don’t have our advantages are very vulnerable to Gaiaian extremes. What drives a Mugabe? Why is Haiti still such a toilet of human behavior? Why is it that “leaders” can still play the mass paranoia card so effectively and then cause the deaths of so many innocents?

    As a species, our wiring is out of date, and we need new operating systems. What’s hard-wired into our brains is not working well anymore…if it ever did.

    Are we like bacteria who will grow in a culture to the point where it’s exhausted, thereby causing the population to collapse? Sure looks like it… And yet we have the knowledge to keep our population within the bounds of a sustainable environment…but we don’t have the will.

  34. Jon Taplin says:

    Rick- What if we were to abandon our fanatical belief that growth was the only solution to increasing general welfare? If people aren’t getting any happier and we are savaging the planet, maybe there is a more “stable state” solution?

  35. Rick Turner says:

    Jon, I absolutely agree that “growth” has become a cancerous state of affairs.

    I live in Santa Cruz which is/has run out of water. Our incredibly fertile valley to the South, the Pajaro Valley is/has run out of water. They’ve pumped so much from the aquifer below that salt water from Monterey Bay is starting to encroach in the wells. And yet the call is for more housing in general, more low cost housing, growth of the university (which draws water from Santa Cruz), growth for business, growth of the tourist industry. Of course, if you’re anti-growth, then you must favor outrageously high housing costs, and you must be an effete elitist snob. So what are they doing? They’ve put in a pilot desalinization plant to test the effectiveness of the new reverse osmosis techniques…”But desal will only be used in drought conditions…” Bullshit. They’ll approve desal, and they’ll build a big plant, and we’ll have drought because there will be too many people living here for the natural ecology to sustain during the present and future climate change. And they’ll pump very briney water back out into Monterey Bay…

    I have no fanatical belief that growth is necessary for welfare. I think it’s a thousand year lie. Eternal growth is just impossible and is promoted with ego and hubris being the greatest products of that mentality.

    I’d be happy to live pretty much as my parents did owning about as much as they did and leaving about as much behind to my kids as they did for my sisters and me; that’s not living extravagantly by any means, though it’s certainly not 3rd world, either. And perhaps I could tread lighter on the earth than my parents did, and then perhaps my kids could tread lighter yet…

    It looks to me as though Paul Erlich’s Population Bomb is about to implode. There are huge populations vulnerable to natural and un-natural disasters. Bangaladesh…where millions live barely inches above sea level…Burma where a cyclone whose winds were not all that strong compared to a lot in the world…Sub-Saharan Africa with AIDS and murderous despots…and I’d like to see the numbers projected for population stats for that part of the world. I’d bet there’s a net loss of population happening there…

    Voluntary birth control…good stuff!
    Involuntary population control…not fun, but it’s what’s happening…

  36. Morgan Warstler says:

    Rick, it isn’t that solar costs more than it produces. Thats not what you should be hearing, let alone arguing against. The point is that it takes FF to make solar panels. Even new nano-stuff requires FF, so if the cost of oil is $200 a barrel, the cost of solar to create is higher.

    The question of course is, as always, if you are FOR solar, why are you against a war to ensure the oil flows free?

  37. Hugo says:

    A healthy system grows constantly. If it’s not growing, it’s dying. That’s what systems do.

    We were fools to make our world after our perception of organic “systems”, rendered by engineers of every description and every human gift save the one that matters.

    Guess I should just go soak in my kidney pool.

  38. Jon Taplin says:

    Hugo-“If it’s not growing, it’s dying. That’s what systems do.”-Let’s be careful to not extend this biology metaphor to deeply into the realm of economics. Its too easy to just say “growth is the only formula for survival.” and rule out any number of possible solutions for the coming crisis. Somewhere in one of these recent strings you wrote eloquently about ecological limits. Lets take nothing as an iron law.

  39. Hugo says:

    Righto. Yes. An excess, I confess.

    You’re doing McLuhan at the moment, and I’m doing Parsons, only to discover that he’s doing me. The metaphor shouldn’t have been taken into the realm of economics, agreed. But it was. How much currency flows in circulation at the moment? Is it not all “blood money”?

    The makers and movers and improvers of systems—of the sort of systems that swell the male breast at the mere utterance of the word, “system”, a word that enobles with the hint of expertise and exclusivity—they’ve so consistently and flagrantly assumed that they were the brains of the operation, of the beast. Oh, [p]oops.

    There was a young lady of Riga

    Who smiled as she rode on a tiger;

    They returned from the ride

    With the lady inside,

    And the smile on the face of the tiger.

    I believe that’s an archaic one, long in the public domain. Never can really tell with Limericks. Some say even ER I dabbled in the form. But this one, I dunno. Maybe it’s half-remembered from the collected works of Oppenheimer or Speer. Can’t be sure.

  40. Jon Taplin says:

    Hugo- That’s why we have to consider how we improve our life in a more frugal way. I know this gets into the tricky territory of the Spirit, but the notion of “he who dies with the most toys, wins” does not flow from any spiritual tradition that I am aware of.

  41. Hugo says:

    Amen. Let’s talk limits again. Haven’t heard such talk in 30 years. (I think that’s why the microfinance in which you’re involved is so appealing. It’s not just the scale, it’s the bounds.)

  42. Ken Ballweg says:

    Ah yes, remember when blue chip stocks were expected to bring in a steady income of slightly more than a savings account.

    We have created a level of expectation that is delusional, and unsustainable at all levels of our economy. Capitalism without community concerns eventually has to have a reset. I suspect that’s what depressions are really all about.

  43. Morgan Warstler says:

    Wait, who’s having a depression?

  44. Hugo says:

    We’re talkin’ limits here, A.J. Is there a limit to your depression, or are radical measures in order?

    Ken, that’s interesting, your notion about the periodic need for correctives (not economic “corrections”), but social swings viz laissez faire. As I’m sure you know, The Theodore gave that hypothesis some serious thought. And Leuchtenberg’s influential reading of the New Deal essentially bears you out—though the second Roosevelt, unlike the first, wasn’t reflective about it; on the contrary.

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