Wednesday, March 27, 2013

SCOTUS Predictions and Same-Sex Marriage

Yesterday the Supreme Court of the United States (SCOTUS) heard arguments regarding California's Proposition 8 (the amendment to the state constitution that made same-sex marriages illegal in California).  Today the Court heard arguments on the constitutionality of one portion of the federal Defense of Marriage Act (DOMA).  Lots of Internet discussion about what all the questions and comments asked/made by the justices meant.  I see the problem somewhat differently than most of what I've read: in some fashion, Chief Justice Roberts needs to find a majority (or majorities) that will produce coherent consistent decisions about three things: DOMA, Prop 8, and the fact that several states have now passed laws allowing same-sex marriage.  The last one wasn't argued in either of this week's cases, but it's still a pretty big elephant in the room.

To start, why do I think the burden is on Roberts?  My perception is that he is desperate to avoid going down in history as the Chief Justice under whom the SCOTUS became a blatantly partisan beast.  He voted with the four liberal justices for a strained compromise over the Patient Protection and Affordable Care Act (PPACA) last year.  I also have another opinion about the Chief Justice: whatever the decision, he wants it to benefit big corporations.  The PPACA decision certainly seems to provide benefits to large business interests.  Big insurance gets millions of new policy holders.  Big hospitals get reimbursed for what has been until now charity care (the remaining states will come around on the Medicaid expansion when the hospitals lean on the governors and legislators hard enough).  More insured patients has to be good for big pharma.  And it is at least the beginning of the light at the end of the tunnel for employers no longer having to provide employees with subsidized access to group health plans.

So, where does the large corporate interest lie in same-sex marriage?  The only one that comes immediately to mind is consistency in treatment of marriage from a benefits perspective.  As part of a corporate acquisition, I retired from a large company for which I had never actually worked.  That company acquired, along with the instantly-retired me, legal obligations to provide a variety of retiree benefits to me [1].  These obligations are quite different than those the company provides to its own long-term employees who retire.  Human resources absolutely hates the small group of us who receive special treatment [2].

If that's the corporate interest, then the outcome will be Roberts and the four liberal justices ruling in the two cases that the 14th Amendment's equal protection clause makes it improper to treat same-sex couples any differently than different-sex couples with respect to civil issues.  The federal government, state governments, and employers will be required to recognize same-sex couples as "married" couples.  Can't leave the decisions up to the states if the goal is HR consistency; and probably can't outright ban same-sex marriages because of the partisan thing. Religious organizations will be allowed to pick and choose the couples for whom they will perform a ceremony (as they do today), but will be stuck with the same kind of situation they're struggling through over abortion and birth control when they act as an employer in the civil sense.

The other four justices will just be stuck writing whiny dissents.


[1] As an aside, most of those obligations had followed me through three previous corporate reorganizations.  The original plan terms were broadly set by a company that had long since ceased to exist.  A few other things had been tacked on as the plan and I (and the people in the same situation) moved along.  Most of those add-ons were attempts to make retirement attractive enough that we would take it.

[2] Hate as an organizational thing.  The human-resource representatives with whom I have interacted over the last decade have been uniformly courteous and helpful.  It's just that instead of being able to be helpful immediately, it sometimes takes several days because they have to go research if and how my special status changes the normal answer.  Even longer if they have to go get an opinion from the legal staff.

Monday, March 25, 2013

Energy-Economics Models

Dave Summers at Bit Tooth Energy comments on ExxonMobile's new Outlook for Energy publication (PDF). I particularly like his last paragraph:
If I can put it another way. At the beginning of the report, after projecting a reasonable estimate of global growth over the next 25 years, EM put in a very optimistic level of improvement in energy efficiency in order to significantly lower energy demand. Then, to balance supply to that lower level of demand, they seem to have picked the most optimistic of assumptions about potential growths in that supply. I rather suspect that they are seeing the writing on the wall, but obfuscating it with optimism beyond the bounds of realistic expectation.
I want to write briefly today about dividing various energy-and-economics forecasting models into two camps.  The ExxonMobile model falls into the first camp, as do the models used by the EIA and the IEA.  The basic structure of these models is to: (1) assume a global economic growth rate (2.8% per year in ExxonMobile's case); (2) calculate the amount of energy required to support that growth; and (3) allocate the necessary energy production across various sources.  As Dave points out, one of the sources ExxonMobile has depended on heavily in this year's forecast is energy efficiency.  Despite those improvements, the 2040 forecast when compared to 2010 figures calls for a 30% increase in global liquid fuel consumption and an 85% increase in global electricity consumption.  Models in this camp are optimistic: they predict continued rapid global economic growth for the duration of the time frame they examine.

Call the second camp the Limits to Growth models, as that one is probably the best known.  These models work in the reverse direction from those in the first camp: (1) estimate the resources that are available; (2) estimate how effectively those resources can be used; and (3) calculate the economic growth (either positive or negative) that results.  Other models in this group include those done by Robert Ayres and Benjamin Warr.  In the Ayres-Warr models, the critical resource is high-quality energy.  The models in this camp are quite pessimistic about the future: pretty much all of them predict a global economic collapse of some sort within a few decades (some sooner than others) as population outgrows a shrinking resource base.

Given the drastic differences in the predictions, it seems reasonable to ask how well the two camps have done at forecasting the future.  The figure to the left [1] compares the standard run of the model published in Limits to Growth in 1972 with actual data from the 30 years following.  The pastel solid lines from 1900 to 1970 are the historical data that went into model; dotted lines are the results from the standard run; and the bold solid lines from 1970 to 2000 are estimates of how the variables actually changed over those 30 years.  The predictions have held up quite well.  Non-renewable resources have not declined as rapidly as predicted, and food-per-capita has grown somewhat faster, but the differences are still relatively small.

The models in the first camp have, IMO, not done nearly so well.  For example, it has become sort of an annual tradition in some forums to compare the IEA's forecasts to what actually happened over time (and make fun of the predictions).  For example, in the IEA's World Energy Outlook 2001, they forecast that conventional oil supplies should be adequate to meet global demand through at least 2020. They predicted that in 2010 demand would be 96 million barrels per day at a price of $21 per barrel, increasing in 2020 to 115 million barrels per day at a price of $28 per barrel.  Looking back from today, we know that conventional oil production peaked at around 75 million barrels per day around 2004.  Total liquid fuels production in 2010 (conventional oil, plus unconventional oil, plus natural gas liquids, plus biofuels including ethanol) was about 87 million barrels per day.  As I write this, the price for Brent crude is above $107 per barrel.  Oil prices below $30 per barrel appear to be gone for good (well, absent a very large global economic collapse): this past week, the oil ministers for Saudi Arabia and Kuwait said publicly that $100 per barrel is a reasonable price for oil.

So the pessimists appear to be winning.  I admit to being a pessimist, but not as much of a pessimist as the Limits to Growth group.  The reason I'm not that pessimistic is because I think looking at global numbers is not the right way to do things.  Different regions have different characteristics, with different population growth rates and different endowments of both renewable and non-renewable resources.  As limits on the availability of liquid fuels make the world a bigger place, those regional differences will matter.  Collapse in one region need not spill over into other regions.  I really need to put time into building my own model, where it's possible to look at the projected outcomes for specific regions of my own choosing.


[1] The figure is taken from the Smithsonian.com web site piece titled "Looking Back on the Limits to Growth".

Sunday, March 10, 2013

North Dakota Bakken Oil Projection

A few weeks ago I put up a post that summarized some results from playing around with a simple depletion model for oil production from a shale formation.  I'm not the only one who plays with toys like that, of course.  On January 10th of this year, the North Dakota Department of Mineral Resources made a presentation to the North Dakota House Appropriations Committee (PDF).  I used to work for the Colorado state legislature's Joint Budget Committee -- trust me when I say that the department did their best to give the Appropriations Committee an accurate picture of how things were most likely to unfold in the Bakken Shale oil play in western North Dakota in the near future.  Legislators, particularly those that decide on executive-branch spending levels, dislike getting bad information and seem to remember forever that you once gave them bad information.


Here's the slide that summarizes the expected outcome, used in the sense of what is most likely to occur.  Once drilling was ramped up to its full level, the shape of the curve is a close match to those generated by my toy model.  This isn't surprising; there seems to be good agreement among geologists about how fractured shale wells behave.  Production peaks at 850,000 barrels per day in about 2015, then begins a steady decline.  This behavior reflects an assumption (which appears on the slide preceding the one shown) of a constant 2,000 new wells per year.  Other scenarios in the presentation vary the number of new wells per year, with optimistic forecasts having more and pessimistic ones less.  All of them have an important characteristic in common: the peak of North Dakota production happens sometime in the next several  years.

More interesting is the effect that is left out in this chart.  Down at the bottom there's a statement that 40,000 more (than exist today) wells are possible in the "thermal mature area."  Thermally mature is jargon that means "there's oil there."  At 2,000 wells per year, though, it only takes 20 years to drill 40,000 more wells.  That chore will be done by 2033 or so.  What's missing in this chart, that extends all the way to 2055, is any change in production when the drilling stops.  My toy depletion model, and assorted professional ones, show what happens when there are no more reasonable places to drill: exponential decline in production.  I can understand why the department chose not to include that in their model.  It's a scary looking collapse.  The Committee isn't going to make decisions about today's funding based on what's going to happen in 20-30 years.  Sometimes politicians engage in a "kill the messenger" response to bad news.  Still, it would have been nice to include, so the politicians understand that the end to this particular party happens within many of their lifetimes.

Tuesday, March 5, 2013

Military Biofuels

Earlier this month, Robert Rapier put up a piece about a US Air Force report to Congress criticizing the US Navy's biofuels research program (part of the "Great Green Fleet" program, a play on Teddy Roosevelt's Great White Fleet).  The Oil Drum picked it up, and one of the comments there caught my attention.  Basically, the comment was a short summary of all the reasons that biofuels are a waste of scarce resources: the fuel costs too much, the energy-return on energy-invested (EROEI) is terrible, and so on.  This post is about why those objections are largely immaterial if your perspective is that of the US military.

 The US military burns through on the order of 300,000 barrels per day of liquid fuels to power deployments, training, and operations.  A US Navy carrier strike group may be led by a nuclear-powered aircraft carrier (possibly accompanied by a nuclear-powered attack submarine), but the aircraft wing on that carrier is dependent on JP8 jet fuel and the screening elements that protect that carrier on diesel fuel.  The US Air Force relies on JP8.  The US Army's 5,300 Abrams tanks can burn most liquid fuels, but just one of them slurps down 10 gallons per hour at idle and 60 gallons per hour at speed.  The US military depends on gasoline, JP8/kerosene and diesel to prepare for and execute its mission.

Any logistics analyst [1] taking a long-term look at fuel supplies wants options.  After all, petroleum-based liquid fuels have significant risks associated with them.  There are a variety of alternate [2] sources possible: coal-to-liquids, gas-to-liquids, and biofuels are three of the most obvious.  The first two of those are relatively well understood, particularly compared to biofuels.  In part, that's because of the wide range of biofuel approaches that are possible.  These include gasification or other rendering of plant and animal mass; algae; and a wide range of fermentation approaches.  Even more exotic techniques are theoretically possible.  One such scheme would use excess electric power generated by the reactor in newer aircraft carriers to combine sea water and carbon dioxide extracted from air to produce diesel fuel and JP8.  None of the research projects may pan out, in which case coal- or gas-to-liquids is the fallback position.  The goal is to get those 300,000 barrels per day reliably, with cost and EROEI as secondary considerations -- because the current mission can't be executed without that many barrels.

2020 is a relatively short-term target, though.  In the longer term, it seems unlikely that the mission will survive various trends.  By 2035, say, it seems more likely to me that the US will be getting by on six million barrels per day of liquid fuel than that we will still be able to get our hands on the current 18 million barrels.  If true, it is probably that the military will have to take comparable cuts in its supplies.  The most probable outcome of the experiment in Iraq/Afghanistan is that a trillion dollars accomplished very little, and as a result the American public will be reluctant to engage in such adventures for a long time.  US infrastructure is falling apart at an increasing pace; yet another reason for the public to be increasingly reluctant to spend money abroad rather than at home.

My predictions?  Biofuels or not, in 25 years the US military will be much smaller and have a much smaller mission than it has today.  No other global power will have arisen to fill the gap.  Security will be much more a regional thing.


[1] "Amateurs talk about tactics, but professionals study logistics," is probably the pithiest quote on the subject, but it's an old concept.  Quotes for the Air Force Logistician (PDF) attributes Alexander the Great with "My logisticians are a humorless lot . . . they know if my campaign fails, they are the first ones I will slay."

[2] The goal for the Great Green Fleet program is to get 50% of liquid fuels from alternate sources by 2020.  Not renewable sources, alternate.  Despite nice words about other objectives, this is about fuel security.