OOPS: Saudi Arabia says the world has too much oil

Too much oil will make gasoline prices go down. Yeah!   Don’t you feel better that the world’s largest oil producer is cutting back? 

Wait a minute. 

That means they are trying to keep prices up.   Yea that’s it.  Low prices mean anarchy in Saudi Arabia.  You are paying to ensure that there is no revolution in the oil kingdom.  THAT’s bound to make you feel better


Saudi slashes oil output, says market oversupplied


By Amena Bakr and Reem Shamseddine Amena Bakr And Reem Shamseddine

KUWAIT (Reuters) – Saudi Arabia’s oil minister said on Sunday the kingdom had slashed output by 800,000 barrels per day in March due to oversupply, sending the strongest signal yet that OPEC will not act to quell soaring prices.

Consumers have urged the exporters’ group to pump more crude to put a cap on oil, which surged to more than $127 a barrel this month, its highest level in 2 1/2 years amid unrest in North Africa and the Middle East.

Oil Ministers from Kuwait and the United Arab Emirates echoed Saudi Arabia’s Ali al-Naimi’s concerns about oversupply and said rocketing crude prices were out of the hands of OPEC, which next meets in June.

“The market is overbalanced … Our production in February was 9.125 million barrels per day (bpd), in March it was 8.292 million bpd. In April we don’t know yet, probably a little higher than March. The reason I gave you these numbers is to show you that the market is oversupplied,” Naimi told reporters.

Two Saudi-based industry sources told Reuters last week the kingdom had cut output due to poor demand, prompting selling by traders who saw it as a sign of a well-supplied market.

But crude rebounded later in the week on optimism about the state of the U.S. economy.

Naimi’s words are the clearest indication yet that OPEC is unconvinced there is a need for more oil despite the civil war that has slashed Libyan output and expectations Japanese demand will rise as it scrambles to rebuild its earthquake-shattered electricity grid.

“These statements underscore the breadth of the security premium currently in (oil) prices. Overall supplies are sufficient,” said John Kilduff of energy hedge fund Again Capital. “As we’ve seen in the past, however, a well-supplied market is not always a barrier to very high prices.”


Naimi, who has previously spoken of $70 to $80 a barrel as a desirable range for crude, declined to comment on the price.

Oil prices fell early last week on concern that demand may be eroding under pressure from high prices, but rebounded on Friday following encouraging U.S. economic data.

Nobuo Tanaka, the head of the International Energy Agency, which represents oil importers’ interests, stopped short of saying OPEC needed to boost output, but suggested the group be more flexible in its thinking about supply.

“The market is getting tighter and if it is tighter the price may go up, which may have a negative impact to economic growth,” Tanaka told reporters.

OPEC last formally discussed output policy in December and is not scheduled to do so again until June. Members have ruled out holding an emergency meeting before then.

Unrest in North Africa and the Middle East has left Saudi Arabia and other Gulf nations nervous of political instability and of a sharp fall in oil prices that could lead to a fiscal crunch while populations are restive.

The kingdom promised nearly $93 billion in handouts to its citizens in the wake of the wave of unrest that swept the Arab world this spring, making a sharp fall in oil prices a major risk for its budget.

Saudi Arabia and some other OPEC members unilaterally boosted oil production after the March uprising against Libyan leader Muammar Gaddafi shut down the bulk of the North African OPEC member’s oil industry but weak demand for the additional production appears to have prompted the reduction in output.

Naimi said Saudi Arabia had sold 2 million barrels of a special blend of crude that tried to replicate the high quality Libyan barrels lost. Demand for the blend has been tepid, according to oil traders.

Kuwait may also have reduced output from the 2.42 million bpd analysts and oil traders estimated it pumped in March.

The Gulf state’s Oil Minister Sheikh Ahmad al-Abdullah al-Sabah told reporters Kuwait was currently producing 2.2 million bpd but did not say whether output had been reduced.

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Chevron CEO: Forget peak oil

All is well.  All is well.  And the Wall Street Journal always has a “journalist” to help get the word out.

But it sure seems to me that all this guy wants is new areas to drill in the US.  Chevron, like most private oil corps, is pretty much shut out everywhere but the US.  So, to get what they want – which is more drilling – Chevron begins to tell the story of “affordable energy.”   And it will work.  We all do really want nothing so much as “affordable energy.”  Yet the truth – as this guy’s attitude seems to convey – is that energy will never really be affordable again.  So this is all nothing but a plea to get us to allow them to do whatever it takes to get them in  the oil  bonanza here in the only place that’s open to them.   The Earth, and you, be damned.


Oil Without Apologies

John Watson, Chevron’s CEO, says Americans must stop taking affordable energy for granted. That means more ‘oil, gas and coal.’


San Ramon, Calif.

It’s the day after President Obama delivered his most recent vision of America’s energy future, and I’m sitting in the sunny corporate offices of Chevron, the country’s second-largest oil company. Let’s just say John Watson has a different view.

The Chevron CEO is a rare breed these days: an unapologetic oil man. For decades—going back to Jimmy Carter—politicians have been peddling an America free of fossil fuels. Mr. Obama has taken that to an unprecedented level, closing off more acreage to drilling, pouring money into green energy, pushing new oil company taxes, instituting anticarbon regulations. America is going backward on affordable energy, even as oil hits $110 a barrel.

Enter the tall, bespectacled Mr. Watson, who a little more than a year ago stepped into the shoes of longtime CEO David O’Reilly. An economist by training, soft-spoken by nature, the 53-year-old Mr. Watson is hardly some swaggering wildcatter. Yet in a year of speeches, he has emerged as one of the industry’s foremost energy realists. No “Beyond Petroleum” (BP) for him. On energy, he says, America “has a lot to learn.”

Starting with the argument—so popular among greens and Democrats—that we are running out of oil. “Peak oil”—the theory that global oil production will soon hit maximum levels and begin to decline—is a favorite among this crowd, and it is one basis for their call for more biofuels and solar power. Mr. Watson doesn’t dismiss the idea but explains why it remains largely irrelevant.

In theory, he says, “we’ve been running out of oil and gas for a long time,” yet technology creates new opportunities. Mr. Watson cites a Chevron field long in decline down the road in Bakersfield—to the point that for every 100 barrels of oil “in place,” the company was extracting only 10 or 20. But thanks to a new technology called steam flooding, Chevron is now getting 70 to 80 barrels. “Price creates incentive, and energy will be developed if there’s demand for it at the price you can develop it,” Mr. Watson says. In that sense, “oil and gas are plentiful.”

Don’t believe it? Over the past 30 years, even as “peak oil” was a trendy theme, the world’s proven reserves of oil and natural gas increased 130%, to 2.5 trillion barrels.

Or consider America’s latest energy innovation: hydrofracking for abundant and cheap natural gas. This advance, says Mr. Watson, took even the industry “by surprise”—as evidenced by the many U.S. ports to import liquid natural gas that are now “sitting idle.” Chevron last year paid $3.2 billion to buy natural-gas producer Atlas Energy as its foray into this new market.

Mr. Watson has little time for the Beltway fiction that America will soon be able to do without, or nearly without, fossil fuels. Yes, “we need all forms of energy.” But the world consumes 250 million barrels of energy equivalent today, only a “tiny fraction of which” is wind and solar—and even those “are not affordable at scale,” he says.

As for biofuels, “we would need to consume land the size of states” to hit the country’s current ethanol targets. Chevron is investigating biofuels, but Mr. Watson says the “economics aren’t there” yet. Unlike many CEOs, Mr. Watson insists on products that can prosper without federal subsidies, which he believes are costly and lacking in transparency when “consumer pockets are tight, government pockets are tight.”

Bottom line: “We’re going to need oil and gas and coal for a long time if America wants to keep the lights on.”

He seems to mean it, too: Chevron recently announced the largest capital and exploratory budget in its history, $26 billion to drill in Australia, Western Africa and the Gulf of Thailand, among other places. Some of that cash will go to the Gulf of Mexico, though Mr. Watson wishes there were more U.S. opportunities.

“Most of the well-developed world—Australia, Western Europe—they develop their resources base, they inventory it, they develop it, and they view it as a good source of jobs and revenue,” he says. The U.S.? “We are a country” that for too long has taken “affordable energy for granted.”

The Chevron exec was “pleased” to see Mr. Obama acknowledge that “oil and gas were fuels of the future—because I hadn’t heard that before. That’s a significant step.” Looking to reassure Americans about rising gas prices, the president nonetheless resorted to the old standby of calling for a one-third reduction in U.S. oil imports by 2025. Mr. Watson thinks that’s a fine goal, but he points to the enormous disconnect between what the president is proposing and existing policies.

The only conceivable way to meet that goal is by dramatically increasing U.S. oil production—immediately. The White House recently bragged that last year American oil production hit its highest levels since 2003. What it failed to mention is that it takes years for leases to start producing, so credit for last year’s surge goes to the Bush administration.

But what about the BP Gulf spill? Mr. Watson blames the “cultural aspects and behavioral aspects” of the particular drilling rig that exploded. He roundly disagrees with the finding of Mr. Obama’s spill commission that the “root causes” of the spill were “systemic” to the industry.

“There is no evidence to support that. I don’t know how that conclusion was reached. I know the industry has drilled 14,000 deep water wells without having this sort of problem.” As for the moratorium, “I can understand taking a pause. I can’t understand shutting down a whole industry for a better part of a year.”

Chevron has three deep water rigs in the Gulf, so the ban cost it millions of dollars in idle rigs and lost jobs. For the country, says Mr. Watson, it means “less oil.” Offshore drilling takes years of lead time. Mr. Watson cites Chevron’s Gulf “Tahiti” project, which started producing about 18 months ago. It has taken “the better part of a decade to do the seismic work, drill the exploratory wells, evaluate those wells, drill other development wells, to delineate it, to build the facilities and to place the oil wells online,” he explains.

The endless moratorium has already meant that “if you go out to the middle of the decade, there are already 200,000 to 300,000 barrels a day of oil that aren’t going to be produced that year. . . . That won’t be retrieved.” And the lost production number is getting larger, since the new Bureau of Ocean and Energy Management is still dallying on permits—and those primarily for backlogged projects, not new leases.

Democrats are now arguing, as Mr. Obama did in his speech, that the oil industry already “holds tens of millions of acres of leases where it’s not producing a drop.” Some are advocating “use it or lose it,” calling for the government to strip oil companies of their leases if they don’t immediately start producing.

Mr. Watson explains why this is bogus. Only one-third of Chevron’s offshore leases are classified as “producing” oil and gas today. The other two-thirds either are “unsuccessful” (they don’t hold viable oil or gas) or “are in varying stages of development—seismic work, drilling wells, constructing facilities.” Mr. Watson says companies would be crazy to sit on productive lands, since leases require costly bonus payments and annual rental payments to the government.

If Washington institutes Mr. Obama’s “use it or lose it” policy, Mr. Watson says, it will mean less U.S. oil production. And how does this help Mr. Obama with his goal of reducing imported oil?

As for soaring oil prices, Mr. Watson blames growing demand, tighter supply, Mideast uncertainty and inflation. He doesn’t predict future price trends, though during a recent analyst call he warned that the drilling moratorium would only make them higher. Lost production in the Gulf is “going to represent a sizable chunk of the spare capacity that the industry expects to see. And that will impact prices, and that will retard economic growth.”

The economy is also why Mr. Watson won’t pay the usual energy CEO lip service to new carbon regulations. The cap-and-trade bill the House passed in 2009 was “poorly conceived and it collapsed under its own weight for good reason,” he notes.

The EPA move to regulate carbon is no better: “It’s not why the Clean Air Act was put in place, and it doesn’t seem to be the right way to attack concerns about greenhouse gas emissions,” he says. The EPA is “placing huge new regulatory burdens on industries that are import sensitive.” The regulations will place burdens on refineries, putting “their competitiveness at risk, and ultimately we’ll produce less gasoline here and end up importing it from refineries that are less energy efficient overseas.”

Mr. Watson says Americans can accomplish a great deal with “affordable conservation.” And “a wealthy economy,” he adds, “is better able to deal with the costs of greenhouse gas abatement than a poor economy.” Since “large numbers” of countries are “unlikely to take aggressive action on greenhouse gas emissions,” the “U.S. is going to have to decide, just as California is going to have to decide, if they want to go it alone. . . . Are they willing to place the burden on our economy and our consumers, at the expense of jobs?”

That pretty much sums up the broader choice America faces on energy policy. It can listen to the Washington siren song on alternative energy, pouring scarce dollars into green subsidies, driving up the cost of energy, and driving out U.S. manufacturing and jobs. Or it can embrace our own fossil fuel resources, which are cheap and plentiful.

“What I see are people who want affordable energy,” says Mr. Watson. “They want strong environmental standards—they want a lot of things—but first and foremost they want affordable energy. And if you want affordable energy, you want oil, gas and coal.”

Ms. Strassel writes the Journal’s Potomac Watch column.

Copyright 2011 Dow Jones & Company, Inc. All Rights Reserved

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America’s energy use, in one nifty chart

Periodically, it’s nice to step back and get reacquainted with some energy basics. There’s no better way to do it than with Lawrence Livermore National Laboratory’s famed (or oughtta be famed) energy flow charts. Here’s the most recent, from 2009 (click for larger version):

LLNL: US energy flows, 2009Chart: Lawrence Livermore National Laboratory

I’m not going to ruin the pretty picture with a bunch of wonk talk. Just a few basic things that are worth noticing:

1. Holy sh*t we waste a lot of energy!

I mean seriously. Look up there in the top right — “rejected energy.” Well over half of the raw energy that enters our economy goes to waste. That is a scandal. If we lived in a sane country, it would be the top item on the energy policy agenda. Instead Republicans ignore it entirely and Dems nibble at the margins.

2. Damn we use a lot of oil!

And almost all of it goes to transportation. If we want to cure our “addiction to oil,” we have to drive less and use electricity or natural gas for fuel when we do drive. The oil problem is the car problem.

3. Natural gas is already huge.

Everyone expects natural gas to do the bulk of the work making electricity cleaner in the next few decades. Depending on how fast (or whether) all the new supplies from shale come in on schedule, more natgas for electricity could mean less for heating and industrial uses, or at least higher prices for them. Something to watch.

4. Renewables are nowhere.

You already knew this, but: despite the hype around them, wind and solar are a negligible part of our current energy mix. This isn’t to say they can’t be ramped up quickly — they can and should be — but right now, they are rounding errors. We’ve got a long way to go.

David Roberts is staff writer for Grist.

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Who said it?

“The truly educated become conscious. They become self-aware. They do not lie to themselves. They do not pretend that fraud is moral or that corporate greed is good. They do not claim that the demands of the marketplace can morally justify the hunger of children or denial of medical care to the sick. They do not throw 6 million families from their homes as the cost of doing business. Thought is a dialogue with one’s inner self. Those who think ask questions, questions those in authority do not want asked. They remember who we are, where we come from and where we should go. They remain eternally skeptical and distrustful of power. And they know that this moral independence is the only protection from the radical evil that results from collective unconsciousness. The capacity to think is the only bulwark against any centralized authority that seeks to impose mindless obedience. There is a huge difference, as Socrates understood, between teaching people what to think and teaching them how to think. Those who are endowed with a moral conscience refuse to commit crimes, even those sanctioned by the corporate state, because they do not in the end want to live with criminals—themselves.”

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Random Thoughts April 14

  • The whole “community vision thing”:  Is there a fundamental conflict between where we want to go and where we will be able to go? What if there are unbreachable limits socially, financially, energy, environmental.  How will we resolve this conflict?  Struggle thru denial? Bewilderment?  Anger? Acceptance?
  • I think most everyone here in the LEX agrees that we have a pretty high quality of life.  We’ve got safety, decent schools, a fairly cohesive society, beautiful countryside, solid history, and a uniting sports team.  According to current economic theory, we should be enjoying the fruits of economic success – high employment, increasing wages, declining poverty. 

Yet in each of those measures, we are falling woefully short.  Our regional unemployment is higher than in Cleveland and certainly higher than many other first tier college town regions, our median wages are not keep pace with inflation meaning most of us are actually falling behind, and our poverty rate spiked by 56% the during the last 10 years.  We also have a $27million city budget shortfall.

If the current economic development theory equates quality of life with economic success, how can all this be? Perhaps it’s one of two things.  Either our quality of life aint so great, or that having a high quality of life is no guarantee of economic success.  A third possibility is that we just haven’t tried hard enough to leverage our quality of life.  That’s the one that the powers that be will tout.  But if it hadn’t happened yet, what can we expect as we enter the winter of economic contraction?

  • What will the LEX be like in 10 years?   I think most folks assume that it will be pretty much like today, which in reality proves to be some skewed understanding of what is really going on today.  I think most people view these times with rose colored glasses, seeing what they only imagine to be happening- which is just a continuation of the wonderful past.  But what is really happening here today probably couldn’t have been imagined 10 years ago: 
    • Unemployment is at highs only rivaled by the great depression
    • The percentage of people living in poverty has skyrocketed
    • The city has a $27million budget shortfall
    • City levels of service per capita are falling to unseen levels
    • The economy shifted under our feet  – and changed employment in our city from high value, high employment manufacturing to mchamburg jobs
    • The climate is changing before our eyes – when it rains any more, it rains a lot – since the beginning of the year we’ve had nearly 10 2+” rain storms – and over the last decade we’ve had 2 100 year ice storms
    • The horse industry is struggling like never before
    • Food security issues – both in terms of availability and safety – are rising each year
    • Costs of utilities are rising very rapidly, including the water company’s recent push to raise rates by 50%
    • We’ve seen $4 a gallon gas twice in the last 3 years (its coming this time soon)
    • We have coal companies sponsoring the UK basketball team
    • China didn’t even join the World Trade Organization until December of 2011 and now all we hear about is that we are competing with the rest of the world

Who could have imagined all that?  So, what will Lexington be like in 10 years as we get deeper into the low energy, environmentally damaged future, one where economic contraction is the rule? 

  • Speaking of that, here’s a short sketch of my vision for a low energy Lex: 
    • Pop up stores for micro enterprise/ food carts and trucks everywhere
    • Neighborhood food coops
    • Streets given over to bikes
    • Neighborhood markets in the parking lots of retail sprawl
    • Much less centralized city government – much more neighborhood level activity – we will become a collection of villages – city will be very limited in what infrastructure it can maintain thus much will be allowed to deteriorate – policing will be done from bikes around neighborhood level HQs.
    • I see several types of economies:
      • The 2nd hand economy – we have more shit in our collective possession than will be needed in two generations – rather than buy new,  we will sell, swap, and barter this stuff at a volume never before seen – think permanent yard sale city.
      • The restoration and retrofitting economy – we wont be able to throw anything away, tear anything down – this will spur an increase in jobs in each of these areas
      • The local food economy – there will be an explosion of local farmers growing, processing, packaging, and cooking all things local.

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A Mad Scientist’s 50 Tools for Sustainable Communities

By Leah Messinger, The Atlantic
Marcin Jakubowski’s plan to create low-cost, open-source machines that can make everything you can find in a Walmart

Liberator_wide.jpgThe “Liberator” Compressed Earth Brick Press, designed by Open Source Ecology. Courtesy of Open Source Ecology
In the middle of rural Missouri there is a physicist-turned-farmer looking to redefine the way we build the world. Marcin Jakubowski is the mastermind behind a group of DIY enthusiasts known as Open Source Ecology and their main project, the Global Village Construction Set. The network of engineers, tinkerers, and farmers is working to fabricate 50 different low-cost industrial machines. A complete set, they say, would be capable of supporting a sustainable manufacturing and farming community of about 200 people almost anywhere across the globe—a “small-scale civilization with modern comforts.”

The organization’s final goal? According to the “vision statement” on the group’s website, “A world where every community has access to an open source Fab[rication] Lab which can produce all the things that one currently finds at a Walmart cost-effectively, quickly, on demand from local resources.”

As Valentine points out, “Every single one of [the machines] already exist in real life. It’s not reinventing the wheel; it’s open-sourcing the wheel.”

All of the machines, from the tractors to the laser cutter to the backhoe to the cement mixer, are designed to be modular, require only one engine, and be built with interchangeable parts so that a single machine can perform multiple functions. The machine that clears the land for the foundation of a building, for example, can then be reconfigured to pulverize the cleared soil into uniform pieces just under a centimeter in size. The same machine is then retooled again to transform that soil into bricks. To date, Open Source Ecology has built prototypes of eight of the 50 machines, and it has finalized the design of the brick-maker (a.k.a. the “Liberator” Compressed Earth Brick Press).

But there’s more. The communities Jakubowski is hoping to build will all be sustainable, energy-efficient, and off-grid. Additionally, as the name of his organization implies, all of his designs are open-source, available to anyone with an Internet connection and basic welding skills. As Jakubowski himself admitted last month during his presentation as a TED Fellow in Long Beach, California, it’s “a very big, hairy, audacious goal” to seek to build and distribute the plans for all 50 of the machines. Oh, and he hopes to finish the bulk of the designing by the end of 2012.

“Marcin is a mad scientist,” says Severine von Tscharner Fleming, a farmer in New York’s Hudson Valley who also promotes the open-sourcing of agricultural and rural hardware. In fact, although Open Source Ecology’s project is called the Global Village Construction Set, indicating an international focus, domestic farmers might be its most receptive audience. Currently, many American farmers tackling small acreages are making do with 1940s-era tractors and other solidly built but outdated equipment. Jakubowski’s self-fabricated tractors and backhoes may provide one of the only affordable alternatives for start-up farmers looking for small-scale machinery.

That appeal is one reason Open Source Ecology’s followers have recently been growing in number. In addition to the collaborators who convene at Jakubowski’s 30 acres in Missouri, donors numbering in the “upper hundreds” are offering varying levels of financial support, according to Julia Valentine, a long-time activist who recently joined the group to do outreach and fundraising. And small groups in Oberlin, Ohio; Eastern Pennsylvania; New York; and California have started getting involved by helping develop blueprints and by building prototypes.

Although the Global Village Construction Set is ambitious in scope and attempts to create open-source blueprints where previously only proprietary information existed, its concepts aren’t entirely new. As Valentine points out, “Every single one of [the machines] already exist in real life. It’s not reinventing the wheel; it’s open-sourcing the wheel. All of these technologies have been proven.”

That comes as a relief to Mireille Cronin Mather, executive director of the Foundation for Sustainable Development, which potentially could use some of Open Source Ecology’s blueprints and machines in the projects related to health, environmental sustainability, and economic development that it pursues throughout the developing world. Having worked in Africa and India, among other places, Mather says she has observed many high-concept projects prove unrealistic on the ground. “I’ve seen very, very well-meaning ‘appropriate technology’ projects just lying unused because the sustainability aspects aren’t all the way thought through,” she says.

One short-term stumbling block for Open Source Ecology, however, may turn out to be the more mundane, less revolutionary aspect of maintaining organizational momentum. That is, continuing to grow its ranks and develop cohesive support and funding. That will be key if the group intends to reach its goal of completing the design of the remaining 49 machines and raising the $2.4 million needed to do so by the end of 2012. “We haven’t really formed up some of this business part of it,” Valentine says.

So far most of the money coming in has been in the form of small, individual, recurring donations. Venture capital is an unlikely source of future funding since there’s not expected to be any return on investment. But that hasn’t stopped the small groups in Ohio, Pennsylvania, and elsewhere from helping out, which Valentine says is the only way Open Source Ecology will be able to finalize 49 more machines in 21 months.

The partners from Ohio, based at the New Agrarian Center in Oberlin, are testing blueprints for the Compressed Earth Brick kit. They’ve drawn up plans for a large storage center for their Community Supported Agriculture project and a “mushroom chamber” for cultivating fungi, and they are trying to use Jakubowski’s blueprints to build the compressed earth brick machine to produce the bricks needed for the building. “We love the concept of what he’s doing,” says Sandy Kish-Jordan, the director of the center. “We loved the concept, but also the notion of collaboratively creating something that can provide a purpose in our community, and at a reasonable cost.”This article available online at:


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5 reasons economic “growth” is over

The Breakdown Of Economic Expansion In The 21st Century

By Dave Cohen

Although the International Monetary Fund (IMF) assures us that global economic growth is proceeding apace, there are good reasons to believe that GDP numbers recording that growth exaggerate the economic expansion underway. The United States has experienced a statistical recovery in which GDP grows due to the enormous fiscal and monetary stimulus, but without creating many jobs, and despite the fact that the housing market is only a pale semblance of what it once was.

Growth in the European Union is jeopardized by the debts of several of its member countries. Japan’s economy was languishing before the devastating earthquake. The emerging economies are said to be booming, but the growth numbers in China are suspect. Do newly constructed ghost cities where no one lives count? Or newly constructed ghost malls?

We have witnessed a substantial breakdown of economic expansion in the developed (OECD) economies, and there are good reasons to believe that whatever growth the emerging economies are experiencing will not last forever as many optimists predict. Does it seem plausible that China’s future growth will be as vigorous and longlasting as Japan’s long expansion (circa 1960-1989) after World War II?

My thesis is that global economic expansion has broken down, and where there are pockets of economic growth as in China or Brazil, it is unlikely that growth will continue for much longer. (I am thinking on decadal scales.) Clearly this is a subject for a book, whereas today I am going to outline why this thesis is credible in a blog post. It’s been decades since the “Limits To Growth” crowd published their systems analysis of what might happen in the 21st century. There has been no systematic follow-up since then, yet decades have passed in which we have gained valuable experience. A number of independent researchers have investigated these problems since the 1970s. Today it’s my turn.

I am going to list the primary reasons why I believe it is reasonable to expect a breakdown of human economic expansion in the 21st century. Underlying everything I say is the ultimately impossible requirement of exponential growth in economies to meet the needs of exploding human populations. But long before humankind hits a strict mathematical wall on a finite planet, things start to fall apart. That is where we stand in 2011. And now, here are the five main causes of slowing and ultimately waning economic expansion.

1. The adoption of fiat money — when the United States abandoned the gold standard, all limits on the expansion of the world’s reserve currency (the dollar supply) were lifted. The debasement of the dollar has proceeded as expected. Fiat money paved the way for unlimited expansion of credit (debt). After the oil price shocks and inflation of the 1970s, this expansion made it possible for growth to occur as it had after World War II. However, the replacement of economic growth based on savings and investment by growth based on the expansion of credit was a devil’s bargain. The advanced economies have now hit the limits on debt-based growth. One nasty side-effect was the financialization of everything (including commodity markets) and an astonishing expansion in derivatives of all kinds. Thus did gambling replace savings & investment. As a result, there has been an inevitable trend toward more mal-investment and unwarranted asset price inflation (bubbles). The explosive expansion of credit/debt has also created the astonishing and growing income & wealth inequality we see not only in the United States, but all over the world. I contend that such inequality stymies “real” economic growth everywhere it occurs, as opposed to growth measured by GDP. Does a feudal economy “grow” if only the landowners get richer?

2. Higher energy costs — energy imports are a tax on economies. The world has entered the era of permanently high oil prices, although there is great volatility as we’ve seen over the last 4 years. Despite fiat money expansion and inflation, the taxes paid by developed economies are rising in real terms, and will continue to rise over time. It is notable that most of the world’s 15 largest economies, including emerging economies like China and India, are net oil importers. The relationship between oil price shocks and recessions is well-established. There are a number of reasons for the increasing scarcity of oil, and thus its rising price over time. I will not go into those reasons here. However, the classic economic theory of non-renewable resources predicts a switch to substitutes for oil which has not occurred, or has occurred unsustainably at great cost (e.g. biofuels). Thus we can expect the energy tax on growth in the world’s largest economies to continue to increase.

3. Growing external costs — this is a catch-all cause of the breakdown. Name your favorite environmental or resource shortage disaster! Economists view the costs of climate change and other disasters as external costs, also known as negative externalities — “when the private calculation of benefits or costs differs from society’s valuation of benefits or costs. Pollution represents an external cost because damages associated with it are borne by society as a whole [societal costs] and are not reflected in market transactions.” I can not even begin to list here all the external costs being imposed upon modern societies as a result of human population and economic expansion, but consider the costs imposed by 1) anthropogenic climate change; 2) overfishing and destruction of the oceans; 3) growing freshwater shortages; and 4) various threats to future crop yields. Societies must bear these growing costs, which severely crimp economic expansion in the traditional sense. Bear in mind that we are still in the early stages of most of these disasters—we have already reached “peak wild-caught fish”—and thus external costs will rise inexorably over time. For example, consider the costs of (only) a 1 meter rise in sea level by 2100. If the big ice sheets (Greenland, West Antarctica) react to greenhouse gas forcing in an unforeseen, detrimental way, an outcome which is possible based on our evolving knowledge of their behavior, 1 meter of sea level rise could easily turn into 2 meters.

4. Faltering technological progress — the primary driver of economic expansion is technological progress. If such progress fails to materialize—to abate external costs, for example—or does not materialize at a sufficiently high “rate” to support economic growth, that growth will not occur. In recent decades, technological progress has continued in areas such as wireless communications, nanotechnology, biotech, and so forth. However, to support economic expansion, such developments must be commercial and widely deployed. While we have seen an explosion of wireless devices that make entrepreneurs like Steve Jobs wealthy, we have not seen a comparable expansion of commercial technnology in almost every other area in which research is ongoing. For example, improvements in transportation technology (plug-ins, etc.)  have been painfully slow. Ditto with energy technology. While incremental improvements happen all the time, breakthroughs, as the name implies, are rare. As things stand in the early part of the second decade of the 21st century, commercial technological progress has not been sufficiently robust to support continuing economic expansion. Sorry, Ray Kurzweil!

5. The problem of complexity — as globalized human economies expand, the complexity of the systems (e.g. fossil fuel energy extraction and distribution) required to support those economies explodes. As Joseph Tainter has noted, there are diminishing returns on such complexity, meaning you are getting less bang for the buck (a lower cost-to-benefit ratio) as systems become more complex. Unfortunately, that is not all there is to it. Human beings vastly overestimate their ability to manage risk in such systems, a subject Nassim Taleb has spent considerable time elucidating. Not only are there unintended, disastrous consequences—Black Swans!—but it is also the case that human beings vastly underestimate their own ability to subvert the complex systems they create—no system is human-proof. The financial meltdown of 2008 demonstrates all this beyond any doubt. It would be naive to expect there will be no future economic catastrophes like the ones we’ve seen in the last decade. Before the world became so economically interconnected and interdependent, financial blow-ups could be contained locally. Clearly, global economic expansion can not proceed apace if it is more and more frequently thrown for a loop.

I am going to leave it at that this morning. As I see it right now, these are the main causes of a breakdown of economic expansion in the 21st century. I considered adding other causes, e.g. the dangerous hubris of the United States. Much of what I’ve explained here may not have been well understood or foreseen when the “Limits To Growth” studies were undertaken decades ago. Readers may want to add to this list of causes, or consolidate different causes, or expand on certain causes. I have stuck to a high level of generality here, and the causes of the breakdown interact in myriad ways.

My apologies to all those who have also thought about these problems for many years now. I thought I’d throw my two cents in, having also thought about these problems on and off for a long time. In fact, I have lived long enough to watch the disaster unfold, which is not an outcome I expected.

Unless humankind engages with what appear to be clear limitations on its economic prospects in the 21st century, we will be completely unprepared for the chaos to come. Lack of preparation is the outcome I expect.

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Visions of a post-carbon civilization

From Planning Magazine April 2011

Jeremy Rifkin’s Revolution

By Timothy Beatley

Few individuals have thought more carefully than writer Jeremy Rifkin about how our planet will make the transition from fossil fuels to more renewable forms of energy. In books like The Hydrogen Economy, The European Dream, and most recently, The Empathic Civilization, he has shown us where we need to go — and how hard it will be to get there.

I had the chance late last year to talk with Rifkin about his ideas for what he calls the Third Industrial Revolution. He believes that we must move quickly to lay the foundations for a post-carbon civilization that is less materialistic and more centered on the health of the biosphere. Time is running out on our oil-based global economy, he says. He refers to the growing consensus that peak oil is a real phenomenon, with most experts disagreeing only about the time frame (10 years? 20 years? sooner?).

For Rifkin, the most telling event took place in 2008, when the global price of a barrel of oil rose to $147, causing widespread food riots, followed soon after by the collapse of the financial markets. To him, this was a powerful signal of the beginning of the end for our current oil-soaked life style.

We tend to forget how profoundly oil affects our lives: “Most people think of it as petrol for the car. But all the construction materials are petrochemical. … It’s all carbon,” he says. A more important concept than peak production is peak production per capita. The average amount of oil available per person has been in decline since 1979. “We have found more oil since then, but population grew quicker,” he adds.

With declining oil, everything will change, and we have a narrow window to head off disaster. The first step in Rifkin’s plan is to shift to a “distributed network” of renewable energy. That means we must reimagine every office building and every home as a mini power station. The result will be the “democratization of energy.” He argues against the approach that relies on large, centralized production facilities (solar arrays in Greece, wind farms in Ireland) that require energy to be transmitted over long distances. He believes instead in looking for renewable energy closer to home.

There are 191 million buildings in the European Union, he says, and all of them could be producing power. The trick is to find ways to store and share this energy. The first is accomplished through a variety of potential storage technologies, although he believes hydrogen holds the greatest promise. Plug-in vehicles will also help with storage. Sharing energy will be accomplished through highly interconnected smart grids (what Rifkin calls an “intergrid”) that function like the Internet, decentralized and collaborative. In his vision, “millions of buildings are collecting energy, even a little bit of surplus. They store it and ship it.”

One striking example is the Elithis Tower, in Dijon, France (headquarters of Elithis Engineering), which is purported to be the world’s first “positive energy” office building. The 54,000-square-foot structure, completed in 2009, was designed to use a miniscule amount of energy compared with conventional office buildings (only about 20 kilowatts per square meter, or five percent of the French average). A distinctive “solar shield” on the south facade reduces summer heat loads, and the relatively narrow 10-story building allows cross-ventilation and admits daylight throughout. The roof is entirely covered with photovoltaic panels that produce the electricity needed for the building. By 2020, all new buildings in France will be similarly positive-energy.

What it means for planning

The implications for planning in all this are considerable. Adjusting codes and facilitating rooftop and neighborhood energy production remain significant tasks. In addition, much investment in infrastructure is needed, and incentives must be put in place to move us toward this new global model. Rifkin endorses the sort of feed-in tariffs that exist in Europe and parts of Canada (a guaranteed price that utilities must pay small energy producers), and he envisions new housing finance instruments such as “green mortgages” that will encourage homebuyers to produce power.

There is a social vision here as well, including a marked shift away from lifestyles dominated by material consumption to ones that emphasize relationships, quality of life, and community (themes Rifkin explored in The European Dream). He points to evidence that humans are more inherently cooperative than we commonly think, and he has amassed a convincing set of data and trends (from religion to language to travel) that suggest that global empathy is on the rise.

It’s no surprise that Rifkin’s ideas have had more traction in Europe than in the U.S. Indeed, he has developed a Third Industrial Revolution strategy for the European Union. He has also worked on an ambitious master plan for Rome, which aims to become the “world’s first post-carbon biosphere city.”  At least some elements of his vision have a foothold in such diverse American cities as San Francisco, Houston, and New York, where support for distributed forms of renewable energy is growing. And on a national scale, we have made much progress in green building. A significant achievement is the requirement that all new federal buildings must be net-zero (producing as much energy as they require) by 2030. That’s not quite as sweeping as the French requirement, but certainly it pushes new office design in the direction of Rifkin’s vision.

Whether we can make the transition to Rifkin’s Third Industrial Revolution soon enough to do any good is still unclear. There is no doubt, however, that we need to begin in earnest very soon.

Timothy Beatley is the Teresa Heinz Professor of Sustainable Communities at the University of Virginia.

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A light exists in spring…..

A few daffodils taken late one night to brighten a really gloomy day….

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Who said it?

“It’s no use pretending that what has obviously happened has not in fact happened. The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats. That response would be misguided. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school degrees, the decline has been precipitous—12 percent in the last quarter-century alone. All the growth in recent decades—and more—has gone to those at the top. In terms of income equality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride. Among our closest counterparts are Russia with its oligarchs and Iran. While many of the old centers of inequality in Latin America, such as Brazil, have been striving in recent years, rather successfully, to improve the plight of the poor and reduce gaps in income, America has allowed inequality to grow.”

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A Tale of Two Lexingtons

As oil prices spike, as relentless unemployment continues, and as real economic opportunity continues to decline, our little slice of paradise here in the LEX  is increasingly at risk.   Poverty here has increased 58% over the last 10 years.  Nearly 50% of our fellow citizens are paying more than 20% of their incomes for food and energy alone.  That leaves very little for anything else. There can be no wealth building in that kind of box.  That means that the American Dream is dead or dying to nearly 150,000 people in this city.  Now what?

Are we willing to live in a place where one out of every two people are absolutely struggling?  Can those of us who aren’t struggling just write them off as “losers”?  Will those who are struggling decide that the system isn’t fair?   How will this all play out?

I haven’t heard Mayor Gray or any City Council member or any other “leader” in the community speak about the stagflation tsunami that is raging through our city right now.  Is that because they can’t see it, as it hasn’t affected them yet?  Is it because they think it will get better soon – that it’s not the real issue?  Is it because they think it’s too bad for those who were unprepared?  Is it because it seems like a political issue that we can just vote away? Is it because they think that an “economic development” strategy can turn this all around?

I do hear too much talk from our leaders about the supposed future and our rightful place in it.  As if we could just get some better downtown development, and manage traffic a little better, get some jobs here, and deal with our growth/preservation issues, then all will be well.  That is nothing but a backward glance at the city that used to be, with its old dreams of the future.

We must deal with today.

There are ways in which we can adapt.  We can become a city that closes in around each other.  We can put philanthropy to work in deeply meaningful ways.  We can put our false civic ambitions aside and deal with the reality in front of us.  We can remember that human life is about community, about helping each other.  We can acknowledge the situation instead of wishing, dreaming.

We can begin this spring with a monumental food localization effort.  For the price of seeds, we can help our city on its path to become more food self-sufficient.  Right now, we can get our institutions to begin a local economic policy that ensures that every dollar spent is spent for the benefit of our city.  Right now, we can make it easier for our citizens to move around the city by ensuring that Lextran reacts to the need, instead of its archaic model, and that bikes are a legitimate option.

Unless we speak out about what is really happening – and give up the ancient memes about who we want to be – times are going to be very rough here in the LEX.  They don’t have to be.

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Planning for people, not cars

Projects like this are just the beginning – if we have the economic ability after the transition.  We have to remake our urban life to one scaled for people and not our cars.  I love cars.  I own two.  And their days are numbered. We must get ahead of the curve if we are to have a place worth living in by mid-century.


Seoul tears down an urban highway and the city can breathe again

Cheonggyecheon in Seoul, Korea

This downtown green space in Seoul was once a looming, congested elevated freeway.Photo: Kyle NishiokaCross-posted from Sightline’s Daily Score blog.

As a sustainability-loving transportation planner, I was thrilled to learn that Dr. Kee Yeon Hwang would be visiting Vancouver and talking about the project that has made Seoul, Korea a legend in urban planning circles: the Cheonggyecheon Restoration Project.

What he and his colleagues accomplished — tearing down a busy, elevated freeway, re-daylighting the river that had been buried beneath it, and creating a spectacular downtown green space, all in under two and a half years — is nothing short of amazing, not because it actually worked (there was plenty of evidence from other cities to suggest that it could), but because they were able to get public support for it. It’s the stuff urban planners dream about — not to mention a timeline for a major freeway project that would make Seattle drool.

I went to the lecture ready to record all the juicy stats I was sure he was going to throw out: peak hour traffic flows, mode shares, level of service, lane miles. What I got instead was a story told not in numbers and data, but a story about people and the profound impact the project had on the city.

The story of the Cheonggyecheon (pronounced chung-yay-chun) started hundreds of years ago during the reign of the Joseon Dynasty, when the kingdom’s castle was considered the “head” of Seoul and the river the “body”. That was its glorious past.

By the early 20th century, as Seoul was burgeoning into the megacity of 10 million it is today, the river was bordered by a slum and used as a dumping ground, resulting in an eyesore of polluted water. As Dr. Hwang said, “sometimes it was blue, sometimes black, sometimes red.” It seemed a logical decision, then, to cover it up and build a freeway over it in the 1950s. By 1976, the four-lane elevated Cheonggyecheon Freeway — similar in form to Seattle’s Alaskan Way Viaduct — was standing as a symbol of successful industrialization and modernization of Korea.

What followed, however, was not only traffic, pollution, and the decline of downtown Seoul — which the river and then the freeway ran through the heart of — but also decades of horrible luck that befell a succession of Korean leaders. Some were shot to death, others imprisoned for bribery. It became known as the “Cheonggyecheon Curse.”

“If the sun is blocked, bad things happen,” Dr. Hwang told us during his story, referring to the covered river.

Seoul, Korea\'s leftover concrete columns

The city left a few columns of the elevated highway that once ran over the river as a reminder.Photo: Kyle NishiokaFast-forward to 2001. As Dr. Hwang said, “some crazy people got together” and dreamed up the project. Hwang developed a traffic model to see what would happen if they took out what was considered a vital traffic artery carrying 168,000 cars per day. In the model, he included adjustments to other streets and increased transit to see if Seoul could survive without the freeway. (Is this now sounding vaguely familiar to a particular proposal regarding the Alaskan Way Viaduct replacement, Seattle?)

The results of the model surprised him: not only could it work, but it would actually improve travel times in downtown Seoul.

But the model was the easy part. Getting public and political buy-in was going to be harder — not to mention that people kept telling him this was “suicide” as a transportation planner and that if the project were built it would create “gridlock!” and “traffic chaos!” (Yet another familiar refrain heard in Seattle when mention of the “Transit and Streets” proposal for replacing the Viaduct is made — not to mention other successful freeway removals in Portland, San Francisco, New York, and Milwaukee).

With a mayoral election coming up, Dr. Hwang and his “crazy” colleagues decided to shop the idea around to the candidates and found one willing to make it part of his central campaign platform: Lee Myung-bak. He ran on tearing down the elevated freeway and restoring the river — and won. There’s an ironic twist to the story at this point that made me happy to sacrifice all those stats in order to hear this fascinating tale: Lee Myung-bak had been the president of the construction company that built the freeway. Who better than he to admit it was a mistake to have been done in the first place?

It would seem ,from Dr. Hwang’s telling, that political campaigns in Korea are strikingly similar to those in North America. Now that the election was over, he didn’t expect that the new mayor would actually make good on his promise. But to the contrary, the project was announced and commenced on inauguration day. Dr. Hwang was swiftly appointed as the director of the Research Center for the Cheonggyecheon Restoration Project at the Seoul Development Institute and was directed to complete what should’ve been a two-year design process in six months.

That isn’t to say that the project sailed through the public process. Far from it. In addition to the wary business owners in the corridor (if the cars were removed, the cars they were sure their business would go with it), there were 3,000 street vendors who made their living selling their wares to the people stuck in traffic. Some even threatened to kill themselves if the project went forward. Fortunately the mayor anticipated the backlash and set up a staff of public engagement personnel just as large as the design team. In the end, they were able to get enough support to begin construction, and the project was completed and opened to the public in 2005.

The results were nothing short of spectacular. The pictures tell the story better than any words can. In place of a blight-perpetrating freeway, the mayor created an astounding public amenity. A 3.6-mile linear, green river park that beautified downtown Seoul and gave its residents a spectacular setting in which to walk, splash, linger, and truly enjoy the city.

But the success story doesn’t end there, Dr. Hwang went on to discuss the several other positive externalities that resulted from the Cheonggyecheon Restoration Project:

  • A central business district revitalization plan is now underway
  • Another elevated freeway in Seoul was removed and replaced with a surface street soon after
  • A 16-lane road in Seoul was reduced by half and a massive public plaza built with the additional space
  • A major street interchange in front of Seoul’s City Hall was replaced with a public plaza
  • An urban streams renaissance spread across the country, with citizens everywhere wanting to restore their local rivers and streams
  • Property values adjacent to the corridor increased by 300 percent
  • Species of fish, birds, and insects have increased in and around the river
  • The “urban heat island” effect was diminished in Seoul, with temperatures in the vicinity of the river on average 5.6 degrees F lower than surrounding areas

Oh, and there were two other “positive externalities” that resulted: Lee Myung-bak is now the president of Korea, and Dr. Kee Yeon Hwang is now the president of the Korea Transport Institute.

There is a big lesson here for Seattle and the rest of Cascadia as the region faces impending crises of diminishing funding for transportation construction and maintenance, rising fuel prices, diminishing air quality, and climate change: It can be done, and it has been done. Whether in Seoul or Portland or any of the many other cities where freeways have been removed and not replaced — if even once had the cries of “gridlock!” and “traffic chaos!” ever come to fruition, then I might not be so confident that Seattle could do it too. But as Dr. Hwang and the citizens of Seoul will tell you, crazy ideas can work — with beautiful results at that.

Kamala Rao, member of the Canadian Institute of Planners, is a transportation planner in Vancouver, B.C., and a Sightline board member.

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Who said it?

“The second half of the oil age will be very, very different from the first half. It is truly, to coin the term usually used to describe football, “a game of two halves”. The first half was awash with cheap, easy-to-find and easy-to-produce oil and gas. The second half will be the story of expensive-to-produce hydrocarbons, from increasingly inaccessible places, with a rapidly falling energy return on investment and an increasing impact, both environmentally and in terms of carbon emissions. It will be (unless we are able to break our addiction to hydrocarbons sooner rather than later) a wretched and increasingly desperate time of squeezing fuel out of anything we can. It will be the societal scraping of the barrel. ”

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Good news on the Legacy Project front

Still lots of good things happening around the Legacy Projects.

We are celebrating Isaac Murphy’s 150th birth year with lots of activities.   A key one is at birthday party at Blue Grass Stakes Day at Keeneland on April 16th.  Come out and support Isaac! We’ll also be doing an archeological dig on Isaac’s house, which stood where the park will be.  Look for that in early May.

We’re more than 80% of the way toward reaching our goal of having $500,000 to complete the Isaac Murphy Memorial Art Garden. We’re doing big fund-raising, as well as micro fund raising.   You can text “Isaac” to 85944 to donate $10. You can also swing by Third Street Stuff and purchase a handmade lucky horseshoe made by kids at the 7th Street Kid’s Cafe. All proceeds go to the park.  Thanks Jodie K!

We’ve also – with poet and biker Frank X Walker – created the Isaac Murphy Bike Club, as a way to link inner city youth with the Legacy Trail.  Our goal is to outfit 100 kids with a complete biking set – including helmet  – this year.  You can text “Isaac – Bike” to 85944 to donate $10.   If you have a gently used kids bike, you can drop it off at our bike corral at the High Street YMCA.  The bike will go to a kid, and you’ll get a tax deduction.

See our Facebook page for more details.

To begin this process, we supported a bike rodeo on Monday April 4 for kids in the East End at the William Wells Brown elementary school.  We had 26 kids come out – during spring break! – and they learned safety and laws from Lexington Police, basic maintenance, as well as just how to have even more fun on a bike. We’ll do more of this as we get more kids bikes, and we’ll have an inaugural Isaac Murphy Bike Club Ride later in May during Bike Lexington Month.

Finally, we’ve been working on improving the Legacy Trail.  Last week, folks from the YMCA, volunteers and professionals from Henkel/Denmark planted 46 fruit trees on the Trail.  Our goal is to make the Legacy Trail and “Edible Trail” to teach people about fruit trees and to encourage healthy eating.   We’ll do more planting as time goes on. Thanks Geoff M for the photos.

We’ve also secured funding to complete the first phase of the Legacy Trail art program, so look for more art on the Trail soon.

We also need volunteers to do things that the city just can’t afford to do but that will ensure that we keep the Legacy Trail the highest possible quality.  Let me know if you want to help – nothing to hard but it is vital.

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The true economic picture in LEX

Following up on the post below –

We like to think that this region is weathering the economic storm, but the real numbers don’t back that up.  Our February 2011 regional unemployment was 9.4%. We rank 193th in employment out of 322 metros in the USA, behind places such as Cleveland, Ohio, and Buffalo, New York for example.  Perhaps we really aren’t doing as well as we think we are.   In fact, the Lex Metro ranks 5th highest in unemployment among the 23 regions I comped for this Bluegrass Tomorrow study in 2008.  (See chart at bottom.)

Now, we have this new economic strategy report that is going to get us back on track.  But I have not heard one person say what it is exactly we aspire to.  How many jobs will it take to get us back on track?  The call center at Coldstream is projected to add 200 jobs – at $12 an hour including benefits.  Is that what we are talking about?

Since we’re not really talking about it, I can only conclude it’s either out of fear of reality or ignorance of what it would really take to get back to “normal.”

Either way, I have some figures to begin the discussion.

We have basically the same number of jobs in our region today that we had 10 years ago.  In the last 10 years, we added 16,624 people to the regional labor force and created a net grand total of 2,905 jobs.  That means that for every five new people entering the labor force, only one job was created.  And most of the last 10 years were the supposed “good times!”

So just to get back to 5% unemployment right now, we’d have to create 10,682 new jobs in the region.

Remember in 10 years we only created 2,905 new jobs.  Doing the math one way, we’d have to wait nearly 37 years to create enough jobs.  Now obviously, that won’t work, because of both the time factor and the fact that new people are always entering the work force here.

So we need to add 10,000 + jobs quickly.  Yet between technological advances that increase efficiency and thus reduce demand for people and the fact that China and India and other places can do the same jobs we can for far less money, adding jobs in that kind of bulk seems very unlikely.  Yes, we could always get a hit with a big new factory or someother, but it’s more likely that we wouldn’t.  There’s just too much competition and I don’t think even we are prepared to race 15,000 other American cities to the bottom that fast.

High tech industries won’t save us because they don’t employ mass numbers of people and anyway, although we are a fairly well educated region, what will happen to the 70% or so of the population not suited to high tech?

Innovation?  A bullshit word hiding an empty concept.

This is my point:  we’ve reached the end of mass employment. We can see it in numbers – we will never employ industrialized numbers of people again, even though we have an industrialized population size.  When you hear an elected official or a chamber booster talk about jobs, ask them:  where are the jobs going to come from?

I predict that at least for the next two years that we will continue to chant plaintively the mantra of jobs and economic development.  And I do hope that we can add some.  I do not think however that we will add anything like the number needed to get employment down to 5%.  This means wages will remain stuck at best, all the while inflation in food and energy, and now even things like clothing, will continue to increase. The peak oil time has got us in its grip, and it is very likely to send our entire global economy back into recession.  A very scary thought considering that the last recession finally bankrupted us.

The best economic adaptation to this reality is small numbers of employees working for large numbers of businesses that supply our local and regional needs utilizing local and regional resources.  We could get every person who wants to work into this localization strategy.  That or accept ever higher unemployment.

(The figures below represent the unemployment rate in Feb 2011.)

Ann Arbor   6.5%
Athens GA  7.7%
Austin  6.9%
Baton Rouge  8.1%
Boulder  7.5%
Bowling Green  10%
Charlottesville  5.3%
Chattanooga  8.8%
Cincinnati  9.7%
Columbia MO  6.6%
Columbia SC  8.5%
Eugene  10.6%
Fayetteville AR  6.7%
Fort Collins  8.3%
Gainesville  7.8%
Greenville SC  8.5%
Knoxville  8.2%
Lexington  9.2%
Louisville   11%
Madison  6.0%
Nashville  8.8%
Raleigh  8%
Tuscaloosa  8.7%

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Lexington’s revised economic development study is here: It appears that I anticipated it in 2007

After the cut and paste debacle, Angelou Economics has sent the city a revised economic development strategy report.  It sure seems that much of the meat of the study reveals the same things I did in a study as CEO of Bluegrass Tomorrow.

Some of the key points and recommendations from the Herald Leader:

A new draft of a report on Lexington’s economic development strategy emphasizes the role of the mayor and other elected officials and suggests tapping the state for a $5 million regional economic development fund.

The strategy still emphasizes regional cooperation and said economic development efforts must be “funded appropriately.”

The report suggests lobbying the state to “dedicate a portion of existing state sales or property tax revenue to create a $5 million pool for local and regional economic development.”

While I’m over the belief that competing in the global economy is actually a good thing for communities, the words I wrote as the preface to a study I did for Bluegrass Tomorrow ring even truer today – see below .  We are facing severe crisis in revenue collections. Our state constitution limits how local governments can be funded- which must be changed to reflect economic reality. And we must act regionally to be the strongest economically.

Read the whole report and see if we didn’t nail it in 2007.  Our plan was to lobby Frankfort to allow for a local option sales tax.  This tax would have been imposed in communities only by majority of citizens vote, and it would be used to either eliminate or substantially reduce local payroll taxes, which are the most regressive known.  Excess sales taxes – generated because we are a tourism destination – would then be pooled regionally to fund infrastructure and quality of life improvements.  Those improvements then would have become the springboard to a global economic presence.

There’s nothing new under the sun.  We didn’t need to spend money to hire Angelou – we already had the answers in front of us.  But I guess they didn’t come with a large price tag from an out of towner.


In 2006, Bluegrass Tomorrow and numerous regional partners, undertook this groundbreaking study to better understand our regional communities and economy. Our goal was to determine how we can be more economically successful by growing jobs and tax base, while at the same time improving our quality of life.

Our research revealed some disturbing trends. Our regional communities are facing a crisis in revenue collections . This crisis could diminish the provision of effective local services and infrastructure, and could hinder our regional ability to compete for jobs in the global economy.

It is vital for our regional leaders to understand that rapid advances in communication and technology, combined with a worldwide expansion of a free-market ideology, have given goods, services, and capital unprecedented mobility—a reality known as “economic globalization.” The International Monetary Fund defines globalization as “the growing economic interdependence of countries worldwide through increasing volume and variety of crossborder transactions in goods and services, and a more free flow of international capital as well as more rapid and widespread diffusion of technology.”

Put simply, the economic world has changed almost overnight. Today economic competitiveness is not measured against neighboring cities or towns or even against other states. Rather, it is far more complex, and competition now extends on a worldwide basis. As a result, our communities are not only competing against other communities within our region and within Kentucky’s border, but also with cities and communities across the nation and the globe.

The Bluegrass Region has undeniable strengths and unique characteristics to facilitate its competition in the global arena. However, our region must overcome the challenges revealed by this study in order to sustain its economic base and expand its economic growth for the future.

Without new local and regional investments in infrastructure and quality of life amenities and without a vigorous regional effort to attract and keep high wage jobs and skilled workers, the Bluegrass Region will not succeed in the global economy.

Unfortunately at the very time the economic world has changed, our local communities are being squeezed financially by a combination of a State Constitution that forces over-reliance on a limited range of revenue producing systems and a fundamental change of the make-up of our regional economy.

The diminished revenue capacity of our local governments hurts not only their ability to provide the necessary infrastructure and services for today’s residents and businesses, but also their ability to improve local attractiveness to the global economy. Further, diminishing local revenues mean that no funds will exist that could be pooled regionally to make the fundamental improvements to our regional infrastructure, quality of life, and economic development necessary to compete effectively.

As stated above, without these improvements to make ourselves attractive to the world, our region cannot succeed in growing a high value economy. This diminishing revenue base has potentially severe consequences for our local communities.

To deal with this reality, they may be forced into making unappealing choices such as raising taxes, reducing services, limiting growth, or adopting a “growth at all costs” approach. All of these options have significant consequences to the citizens of our region.

The bottom line of this study is this: Do our communities, and our region as a whole, have the money necessary to grow a great economy? The bad news is that under current trends and policies, we do not. The good news is that there are alternatives that can help our communities grow their revenues immediately and provide regional funds necessary for improvements without forcing negative choices such as raising payroll or property taxes on communities.

Our region cannot hide from these facts. Our region cannot wish away the future, nor rely solely on hope for improvements to occur. We must be proactive. We must be dynamic.

We must be unified. And we must act soon. We can create a world-class region in which to live and do business with all the benefits that will accrue or we can accept second-rate status and resign ourselves to that fate.

The choice is ours.

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Conservatives to bike riders: “Bike lanes violate a fundamental principle of democracy”

Hatefulness posing as a comedy trying to mask conservative’s true feelings….

From the Wall Street Journal, of course

Dear Urban Cyclists: Go Play in Traffic

From Dublin to Bogotá, bicycles are taking over city streets. What’s next, lanes for hopscotch and pogo sticks?


[bikes1] Getty ImagesCyclists ride over the Brooklyn Bridge. ‘Although the technology necessary to build a bicycle has been around since ancient Egypt, bikes didn’t appear until the 19th century. The reason it took mankind 5,000 years to get the idea for the bicycle is that it was a bad idea.’

A fibrosis of bicycle lanes is spreading through the cities of the world. The well-being of innocent motorists is threatened as traffic passageways are choked by the spread of dull whirs, sharp whistles and sanctimonious pedal-pushing.

Bike lanes have appeared in all the predictable places—Amsterdam, Copenhagen, Berkeley and Palo Alto. But the incidence of bike lanes is also on the rise in unlikely locales such as slush-covered Boston, rain-drenched Vancouver, frozen Montreal and Bogotá, Colombia (where, perhaps, bicycles have been given the traffic lanes previously reserved for drug mules). Even Dublin, Ireland, has had portions of its streets set aside for bicycles only—surely unnecessary in a country where everyone’s car has been repossessed.

Then there is the notorious case of New York City. Not long ago the only people who braved New York on bicycles were maniacal bike messengers and children heeding an abusive parent’s command to “go play in traffic.” Now New York has 670 miles of bike lanes—rather more than it has miles of decently paved streets.

The proliferation of New York’s bike lanes is the work of the city’s indomitable transportation commissioner, Janette Sadik-(Genghis)-Khan. Her department has a horde of 4,500 employees and a budget nearing a billion dollars. The transportation commissioner’s job is—judging by rush-hour cab and subway rides and last December’s blizzard—to prevent the transportation of anybody or anything to anywhere in New York. Bicycles are the perfect way to go nowhere while carrying nothing.

The bicycle is a parody of a wheeled vehicle—a donkey cart without the cart, where you do the work of the donkey. Although the technology necessary to build a bicycle has been around since ancient Egypt, bikes didn’t appear until the 19th century. The reason it took mankind 5,000 years to get the idea for the bicycle is that it was a bad idea. The bicycle is the only method of conveyance worse than feet. You can walk up three flights of stairs carrying one end of a sofa. Try that on a bicycle.


The Image WorksA French racing cyclist, in 1912

Almost everything that travels on a city street, including some of the larger people in the crosswalks, can crush a bicycle. Everything that protrudes from or into a city street—pot holes, pavement cracks, manhole covers—can send a bicycle flying into the air. When the president of the United States goes somewhere in Washington, does he ride an armored bicycle?

Given that riding a bike in a city is insane and that very few cities need more insane people on their streets, why the profusion of urban bike lanes? One excuse for bike lanes is that an increase in bicycle riding means a decrease in traffic congestion. A visit to New York—or Bogotá—gives the lie to this notion. You can’t decrease traffic congestion by putting things in the way of traffic. Also, only a few bicycles are needed to take up as much space as my Chevrolet Suburban—just one if its rider is wobbling all over the place while trying to Tweet. And my Suburban seats eight. The answer to traffic congestion is lower taxes so that legions of baby boomers my age can afford to retire and stay home.

Bike lane advocates also claim that bicycles are environmentally friendly, producing less pollution and fewer carbon emissions than automobiles. But bicycle riders do a lot of huffing and puffing, exhaling large amounts of CO2. And whether a bicycle rider, after a long bicycle ride, is cleaner than the exhaust of a modern automobile is open to question.

If drops in pollution and traffic congestion are wanted and if discomfort and inconvenience are the trade-offs, we should be packed into tiny circus clown cars. These fit neatly into bike lanes and provide more amusement to bystanders than bicycle wrecks.

In fact, bike lanes don’t necessarily lessen car travel. A study by the U.K. Department for Transport found that the installation of “cycle facilities” in eight towns and cities resulted in no change in the number of people driving cars. Bike lanes don’t even necessarily increase bike riding. In the late 1980s and early 1990s the Dutch government spent $945 million on bicycle routes without any discernible effect on how many Dutch rode bicycles.

“The bicycle is a parody of a wheeled vehicle—a donkey cart without the cart, where you do the work of the donkey.”

But maybe there’s a darker side to bike-lane advocacy. Political activists of a certain ideological stripe want citizens to have a child-like dependence on government. And it’s impossible to feel like a grown-up when you’re on a bicycle if you aren’t in the Tour de France.

All but the most athletic among us get on and off a bicycle the way a toddler goes up and down stairs. Wearing bicycle shorts in public is more embarrassing than wearing Depends. Exchanging briefcases for backpacks takes us from the boardroom to the schoolyard. And it’s hard to keep a straight face when talking to anyone in a Skittles-colored, Wiffle ball-slotted bike helmet that makes you look like Woody Woodpecker.

Bike lanes must be intended to foster immaturity or New York would have chosen instead to create 670 miles of bridle paths. Being on horseback has adult gravitas. Search plazas, parks and city squares the world over and you won’t fine a single statue of a national hero riding a bike.

This promotion of childishness in the electorate means that bike lanes are just the beginning. Soon we’ll be making room on our city streets for scooter and skateboard lanes, Soapbox Derby lanes, pogo-stick lanes, lanes for Radio Flyer wagons (actually more practical than bicycles since you can carry a case of beer—if we’re still allowed to drink beer), stilt lanes, three-legged-race lanes, lanes for skipping while playing the comb and wax paper, hopscotch lanes and Mother-May-I lanes with Mayor Bloomberg at the top of Lenox Hill shouting to the people on Park Avenue, “Take three baby steps!”

A good, hard-played game of Mother-May-I will make us all more physically fit. Fitness being another reason given for cluttering our cities with bike lanes. But why is it so important that the public be fit? Fit for what? Are they planning to draft us into forced labor battalions?

Bike lanes violate a fundamental principle of democracy. We, the majority who do not ride bicycles, are being forced to sacrifice our left turns, parking places and chances to squeeze by delivery trucks so that an affluent elite can feel good about itself for getting wet, cold, tired and run-over. Our tax dollars are being used to subsidize our annoyance.

Bicycle riders must be made to bear the burden of this special-interest boondoggle. Bicycle registration fees should be raised until they produce enough revenue to build and maintain new expressways so that drivers can avoid city streets clogged by bike lanes. Special rubber fittings should be made available so that bicycle riders can wear E-ZPass transponders on their noses. And riders’ license qualifications should be rigorous, requiring not only written exams and road tests but also bathroom scales. No one is to be allowed on a bicycle if the view he or she presents from behind causes the kind of hysterical laughter that stops traffic.

Bike lanes can become an acceptable part of the urban landscape, if bicycle riders are willing to pay their way. And if they pay enough, maybe we’ll even give them a lift during the next snow storm.

—Mr. O’Rourke’s many books include “Don’t Vote—It Just Encourages the Bastards.”

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Act local, start now, think big: 10 “yes in my backyard” steps to a more sustainable community

Published by Solutions
by Leo Wiegman, David Blockstein

Wendy Tomajko builds a cucumber trellis at the Croton-on-Hudson community garden Photo credit: Marc Fader/Solutions

Wendy Tomajko builds a cucumber trellis at the Croton-on-Hudson community garden Photo credit: Marc Fader/Solutions

In Carmel, New York, Town Supervisor Ken Schmitt put it this way when we met him: “We’d like to know how we can save money.” After a career in local law enforcement, Schmitt got himself elected supervisor a few years ago only to inherit a municipality with aging infrastructure, outdated codes, and a population very wary of property tax increases.

Schmitt leaned forward. “Do you have many wood-fired boilers in Croton? We have folks putting in outdoor wood boilers to save money on heating their homes and water. But some neighbors have been raising strong health concerns over what is coming out of the flues of these wood boilers.”

Supervisor Schmitt’s question hit on two major motivators for local communities to measure the environmental impact of their ongoing lifestyles and develop realistic climate action plans: saving money and protecting public health. As much as the climate choir likes to talk to itself about gigatons of carbon dioxide equivalents, the atmospheric message has little application for the average local resident or shopkeeper. But when we shift the discussion to childhood asthma rates, algal blooms in local lakes, or runaway energy costs, everyone’s eager to find solutions.

A recently published book, The Climate Solutions Consensus, describes the state of what we know about climate disruption, how to think about solutions, and how to work together with enough scale to make a difference. As the authors of that book, we would like to highlight some steps communities can take toward creating climate solutions.

The good news is that natural- and social-science experts agree we have lots of solution paths for adaptation or mitigation to avoid catastrophe. The climate choir needs to turn technical data into social information that allows these solution messages to become “me too!” What we need is a bottom-to-top rethink of how we address climate change, starting in a town near you.

Municipalities can and must learn to ask for information, share this knowledge with like-minded groups, and turn data and ideas into action plans. Here are 10 “Yes in My Backyard” (YIMBY) steps to kick-starting your community’s effort to become more Continue reading

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7 billion people want something that 7 billion people cannot have

What is adapting in place?

So what is Adapting In Place anyway? I’m writing a book about it (coming out next fall), I talk about it a lot, but what exactly am I getting at? It is partly about preparedness, both individual and community, partly about changing expectations, partly about achieving a kind of balance. It seems pedestrian in a way – lots of questions about how to do the laundry and keep food cool and work with your neighbors – ordinary things. Trivial seeming things.

Or perhaps not. In a way this may be the biggest question of all – how do we go on where we are with what we have in this new world? Moreover, how do we create a model of a life worth aspiring to that isn’t destructive, that honestly takes a look at where we’re going? This is not trivial, and it isn’t purely personal – in fact, you could argue that this is the world’s single most central question, because for the last 70 years, the US and other Global North nations have exported a vision of a life that has penetrated across the globe. With policy and with military might and with money and with Hollywood and with everything we have, we have modelled consumption, we have modelled cheap energy, and we have set up almost 7 billion people to want something that 7 billion people cannot have.

We can’t have it because the earth can’t sustain it – it lacks the resources. It lacks the capacity to absorb the pollution and outputs. And the longer we keep up the lie that some people don’t mind that you have 5, 10, 20, 1000 times more than they do, the harder the adaptive process will be, and the more fighting and the more dying it will cause. Most of us will die or kill for a dream we hold strongly enough. Re-creating the dream, creating a vision of a life worth having that takes limits into account is a project that is quite literally life or death.

It starts with staying. The world cannot handle more people who pick up and leave for new territory after they’ve raped the place they live in. And while we know that there will be many relocations and radical changes, most people are going to make the best of the infrastructure we’ve created over the last years, simply because we have no choice.

I personally think that there is insufficient time to remake our world dramatically. Now there are people who would argue with me about this – and they may even have a case. But I think there are compelling reasons to believe that we may not have enough time to take a world created for cheap energy and transform it into one that can handle expensive energy and replace much of that with renewable power. The idea that we will be able to make a massive societal retrofit occur rapidly depends in large part on, I think, the idea that the current economic crisis is just an unpleasant coincidence that happens to be occurring just as peak oil and climate change are really hitting us. This, I think is a radical error in reasoning – in fact, as nearly every serious analyst who really grasps peak oil gets, the economic limitations are part and parcel of our present crisis. That is, our ability to do new things is going to be more and more constrained over time.

Which means that most of us aren’t going to be living in new urbanist walkable communities or in perfect ecovillages driving electric cars – we’re going to be living where we are. Some projects will be done – but the idea that we’re going to do a full-scale overhaul of our society seems deeply wrong – we did a radical build out to get ourselves here, and we used up the easy, cheap segment of our resources. Which means that most of us are going to be limited to what we can accomplish ourselves, using our personal resources, what resources are available through family, friends, community and governments of various levels. Much of our way of life may have been, as Kunstler refers to suburbia, the greatest-misallocation of resources in history, but is how we allocated the resources – we’ve done this build out, and we’re going to be living with the results.

While the current situation has created mobility for some people – those who have already lost jobs and homes, those who know they are in a situation that can’t possibly improve -on the other hand, for many people, the current situation works to keep them in place. Nothing is selling in their area – so they can’t sell their house and move to another. Or they are afraid to change jobs, because the loss of seniority would lead to making them easy targets for layoffs in this economy. It may not be possible any longer to get back what they owe on their house – but it may still make sense to keep paying the mortgage, because they expect extended family to move in, or because they can grow food on the land. They may be tied down by elderly or disabled family members who can’t be easily moved, by a shared custody agreement, or by need to access to certain kinds of medical care. Family – biological or chosen – may tie them to an area, as may familiarity with the climate and region. We may decide that strong community ties make an imperfect area (and all areas are imperfect) enough to keep us there. Or we may lack the resources to move.

Staying in place isn’t always the best of a bad lot of options – sometimes it is simply the best option. There’s been a tendency to rhetorically abandon areas we don’t know what to do with – inner cities, exurbs, suburbia – all of these are dismissed sometimes, as though this will magically vacate them. The fact is that 300 million people in the US or 60 million in Britain cannot simply all go out to the countryside to their own bunkers, unless we wish to create a new suburbia, with barbed-wire, each ticky-tacky bunker lined up in the countryside next to its neighbors . Nor can we move everyone into cities – there aren’t jobs enough, nor room enough to grow food. Food alone will mean that the countryside and suburbs (near the city markets, often built on good farmland) will have to be populated – and the cities were usually cities for reasons long before oil – those reasons won’t go away.

More and more, I am advising people to stay put, or at most move to a place fairly near and like the one they live in now. I don’t think there’s enough time to adapt to new climates and environmental conditions, to retrofit new homes and build communities – now that doesn’t mean some people won’t have to move. But if you can stay put, I think there are some real advantages for most people – it takes *time* to build community, to build soil, to learn the bus lines, to get into the carpools, to find the cheap produce, to learn about pests and diseases and how to keep cool or warm. We need a model of a new life now – not ten years from now when we’ve found the perfect place.

The nuts and bolts of adapting in place are ordinary, so ordinary they seem small. Should I insulate? How do I collect rainwater? How little electricity can I do with? What do I do if the power goes out entirely? What is the right thing to eat for dinner? How shall I preserve it for later? What do we teach the kids? What do well tell Grandma about what we’re doing?

I don’t live in the perfect place, and these ordinary trivial seeming things are the bread and butter of my life too. They become almost invisible, and we learn to miss their enormous impact – the aggregate of 300 million Americans or 1 billion developed world dwellers eating and pooping and keeping warm and cool and getting around.

I don’t live the perfect life in the perfect place, but I remake it in the image of my dream a little more each year. I once read that people who build their dream houses spend 2 years building them – and then live in them for an average of 7 years. Because dreams change. Because sometimes what we dream about is the thing we can’t have, not the thing we do. And yet most of us in the developed world have more possessions, more comforts than the kings of old, than the richest people of our great-great grandparent’s time. We have more ease than the slave owners of the past, with fossil-fueled slaves to do our bidding. If we can’t come to embrace what we do have, and a fair share, who can? If we can’t do with less, will you ask someone who lives a harder life with less to do it? If we who made the dream and sold it to the rest of the world can’t change our dream when it doesn’t fit us anymore, what hope is there?

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Local Government in a Time of Peak Oil and Climate Change

Our friends at the Post Carbon Institute have released another installment in their Post Carbon Reader series.  This one deals with local government responses to energy and environmental crises. Sure seems like some common sense ideas for our local government.  But how many of you get the feeling that we have a “business as usual, nothing we can’t overcome, it’s all going back to the way we like it” mentality?


Local Government in a Time of Peak Oil and Climate Change

By John Kaufmann

In Post Carbon Cities, Daniel Lerch lists five principles to help guide local government planning efforts in the face of peak oil and climate change:

  • Deal with transportation and land use (or you may as well stop now). Incorporate peak-oil and climate change considerations into all transportation and land-use aspects of policy-making and infrastructure investment decisions.
  • Tackle private energy consumption. Improving government operations is insufficient to address the magnitude of the problem. Create strong incentives and support for innovation, and aggressively engage the business community.
  • Attack the problems piece by piece and from many angles. Meet goals with multiple, proven solutions, and enlist the entire community in the effort.
  • Plan for fundamental changes—and make fundamental changes happen. Change internalized assumptions about the future availability and affordability of energy.
  • Build a sense of community. Strengthen community resilience by encouraging relationship building among citizens, businesses, and government agencies.

To these can be added five principles to guide local government management efforts:

  • Don’t expect to find one grand solution. There are no solutions, just intelligent responses—and there will be many little responses that will help communities adapt and muddle through.
  • Don’t try to do everything all at once. Focus on a few big issues requiring several years of lead time and issues that are immediate problems. Other issues can be dealt with as they become ripe.
  • Consider how energy affects everything and everybody. Government needs to consider how businesses, institutions, and households are affected by high energy prices and energy-supply shortfalls, not just how its own operations are affected. These impacts are significant to the community and the local economy, and will shape what the government needs to do and what it can do.
  • Connect the issues. Climate change, peak oil, diminishing water supplies, topsoil loss, biodiversity loss, and most all major challenges of the twenty-first century are ultimately intertwined. Worsening conditions in one area could affect the ability of society to respond in another area. Conversely, there are synergies to be gained by dealing with these challenges in an integrated fashion.
  • Expect the unexpected. We must avoid making irreversible commitments based on past experience or current projections, expecting the future to be more of the same. We are entering a period of what is likely to be rapid and nonlinear change. We must reconcile ourselves to the idea that there will be no business as usual anymore. We must be able to adapt and reverse direction as conditions change.

Planning for Crisis

In developing strategies and actions to address these challenges, governments should ask four basic questions:

1. How will peak oil and climate change affect the community? What are the expected impacts, and when will they set in?

2. What can government do to cushion the community against the long-term negative consequences of those impacts?

3. What should government be prepared to do in the case of emergencies (e.g., fuel shortage, fuel price spike, prolonged heat wave, drought, wildfires, flooding, etc.), some of which are inevitable?

4. How will future government activities be funded as economic volatility and prolonged recession keep tax revenues from rising as quickly as in the past?

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Brent Near All Time High When Priced In Euros

 Many are quick to point out that oil still has a good $30 to go before passing the all time highs from 2008. True… If one lives in the US. Those on the other side of the pond, who care little about the USD, and who pay for everything in euros, and paid for everything in euros back in 2008, are not quite so fortunate. As the chart below shows, Brent priced in Euros is literally just off its all time previous highs of €92.88. At last check it was just over €86. Which means that the European economy is about to, literally, grind to a halt.

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Obama: turns out he’s only all about the cars

Blowing Green Smoke

By James Howard Kunstler
on April 4, 2011
“We also have Secretary Steven Chu, my Energy Secretary. Where is Steven? There he is over there.”
– President Obama at Georgetown U last week
Blame Steven Chu, then, because when it comes to America’s energy predicament, the president has been woefully misinformed. Mr. Obama pawned off a roster of notions and proposals already product-tested in the public meme-o-sphere. Almost everyone of these ideas is inconsistent with reality, based on faulty premises, or represents some kind of magical thinking. What they have in common is that they’re ideas the public wants to hear, whether they are truthful or not, because we don’t want to change the way we live.
The central idea in Mr. Obama’s speech is that we will reduce our oil imports by one-third in a decade. This is a gross distortion of reality.  The truth is that our oil imports will be reduced automatically, whether we like it or not. The process is already underway. The nations that export oil to us are using much more of their own oil even while their supplies have passed peak production and entered depletion. Countries like Saudi Arabia, Venezuela, and Mexico have some of the highest population growth-rates in the world. They sell gasoline to their own people for less than a dollar a gallon. At the same time China and India are driving more cars and importing a lot more of the world’s declining supply. (China has perhaps the equivalent of a four-year supply of its own oil in the ground, and India has next-to-zero oil of its own).
One meme circulating around the Web these days is that the USA has the equivalent of “three Saudi Arabias” in the shale oil fields of North Dakota, Colorado, Wyoming, and Montana. That is not true. A lot of this magical thinking focuses on the Bakken fields of Dakota. We’re currently producing less than 400,000 barrels a day out of Bakken and the projected maximum ten years from now is around 800,000. We use 20 million barrels a day in the US running suburbia, Wal Mart, and the US military. By the way, Bakken shale oil requires extensive rock fracturing operations – “fracking” – whch means a lot of horizontal drilling, which means a lot of steel pipe. It is not just a matter of sticking a steel straw in the ground like we did in Texas in 1932.
Note: much of the shale “oil” in other western states is not actually oil. It is kerogen, an organic precursor to oil, in effect organic polymers that have not been subjected to enough heat and pressure to turn into oil. If you want to turn it into oil, you have to cook it – which takes energy! That’s after the mining operation to scoop it out of the ground. That takes energy too. Or, you can send machinery into the ground and cook it in place. That takes energy, too. We are not going to get oil out of there anytime soon – and perhaps never.
The “drill drill drill” gang is under the impression that North America has vast unexplored regions where oil is just begging to be discovered. This is not true. The New York Times reported after Obama’s speech – in a disgracefully dumb story by Clifford Krauss – that the eastern Gulf of Mexico and Atlantic Coast contain 3.8 billion barrels of oil. Really? Hello! The US uses over 7 billion barrels of oil every year. Does the Arctic National Wildlife refuge contain between 4 and 11 billion barrels (US gov estimate)?  Great, that averages out to about a year or so of US supply. And I’m not even against drilling there, only against the idea that it represents a meaningful “solution” to our problem.
Meanwhile, the old standby Alaskan oil fields at Prudhoe Bay are depleting so remorselessly that there may not be enough flow in a year or so to move the oil through the famous pipeline.
How about Canada’s tar sands? Well, first of all, they belong to Canada, not us, unless we want to change that – and that could be politically messy. The tar sands will never produce more than 3 million barrels a day. The operations are already too huge, costly, and damaging to the northern watershed. Canada is our number one source of imported oil, but China would also like to buy Canadian oil. Are we planning to invoke the Monroe Doctrine to prevent Canada from selling its oil to parties outside the Western Hemisphere? That could be messy, too.
Mr. Obama returned to the popular theme of bio-fuels. Our initial venture into this area was the ethanol fiasco which, predictably, took more energy to make than it produced, and had disastrous effects (still does) on corn commodity prices – in effect stealing from the food supply in order to drive to the Wal Mart. The next venture will apparently be in algae. We’ll discover (once again) that what works as a science project doesn’t scale to run millions of cars.
Mr. Obama told the nation that we have a 100 year supply of natural gas. (The moronic Larry Kudlow of CNBC told his audience it was 300 years). Neither of them knows what he is talking about (and evidently Energy Secretary Chu doesn’t either). So far, proven reserves of shale gas amount to about a 4 to 6 year US supply at current rates, and total natural gas reserves – including conventional gas, the kind that doesn’t require fracking – amounts to about a 12 year supply. The idea that we are going to ramp up an entire natural gas fueling system for America’s tractor-trailer trucks is an absurdity.
Ditto the notion that we are going to electrify the US auto fleet.
Here’s something to chew on: we run about 250 million cars in the USA. Let’s say we ramped up an electric vehicle fleet of 10 million cars – which, by the way, is a purely hypothetical and wildly optimistic number. Do you think it might be a political problem if 10 million lucky Americans get to drive electric cars while everybody else either pays through the nose for gasoline, or can’t even afford to own a car anymore?
There are a few things you can state categorically about the US energy predicament and the national conversation we’re having about it – including the leaders of that conversation in government, business, and the media. One is that we are blowing a lot of green smoke up our collective ass. None of these schemes is going to work as advertised. The disappointment over them will be massive and probably lead to awful political consequences.
Another is that we are ignoring the most obvious intelligent responses to this predicament, namely, shifting our focus to walkable communities and public transit, especially rebuilding the American passenger railroad system – without which, I assure you, we will be most regrettably screwed ten years from now. Mr. Obama had one throwaway line in his speech about public transit and nothing whatever about walkable neighborhoods.
The reason for this obvious idiocy is that it’s all about the cars. That’s all we care about in the USA, the cars. We can’t get over the cars. We can’t talk about anything except how we’ll find magical new ways to run all the cars. This is a very tragic sort of stupidity and if we don’t change our thinking about it, from the highest level on down, history is going to treat us very cruelly.
A special shout-out here to The New York Times, whose abysmal reporting on these issues, once again, is due to their reliance on a single source: the IHS-CERA group, Cambridge Energy Research Associates, the paid public relations auxiliary of the oil industry, led by that mendacious sack of shit Daniel Yergin, whore-in-chief.

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Recgonize this place? XXXI

UPDATED – Dead motel edition.

No you didnt miss one – there was no XXX – I felt like a headline that included that number would have garnered unwelcome interest.

So, this says the “lakeview” was located “on US 25, New Circle Road NE”  – I got hung up on the confusing New Circle Road description and completely missed the Richmond Road address – definitely read the comment below…  still need to know if there was a lake…


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The Future of Manufacturing Is Local


Think manufacturing, and most likely your brain defaults to abandoned factories, outsourcing and economically devastated regions like the Rust Belt. So strong is our tendency to focus on American manufacturing as something that’s been lost that a chorus has risen up to decry the prevalence of “ruin porn” — those aestheticized versions of the decidedly un-pretty, with a particular focus on the once-triumphant automotive center of the universe, Detroit.

But there are many parts of this country where manufacturing is very much alive, albeit in a different form. The monolithic industry model — steel, oil, lumber, cars — has evolved into something more nimble and diversified. As this country continues to figure out how to crawl out of its economic despair, we could benefit from focusing on the shift.

The Scranton Lace Company was in business 105 years before closing in  2002. The building is now slated to become a condo complex.
The Scranton Lace Company was in business 105 years before closing in 2002. The building is now slated to become a condo complex.

President Obama, looking for ideas for job creation, came to San Francisco last month to pick the brains of tech-industry giants like Steve Jobs, Larry Ellison and Mark Zuckerberg. He would have done well to include Kate Sofis as well — and not only to right the gender imbalance at the dinner table. Sofis, executive director of SFMade, is helping breathe new life into a forgotten potential economic driver: manufacturing.

“Manufacturing isn’t dead and doesn’t need to be preserved,” she says. “Let’s stop fixating on what’s lost. Let’s see what we have here, what’s doing well, and let’s help those folks do better.”

Industries like the record business, publishing and technology are constantly evolving in order to survive. Both SFMade and its New York cousin, Made in N.Y.C., are increasingly able to share success stories of how manufacturing has developed new models for doing business in the 21st century. The monolithic single-industry model has evolved as manufacturers see the benefits of being smaller and paying attention to how patterns of consumption, ownership and use are shifting.

An example of this might be a company like Anchor Steam Brewery, which started as a saloon in San Francisco’s North Beach neighborhood in 1896. The scent of hops tells you you’re in the Potrero neighborhood, where they’re still brewing beer and producing small-batch bourbon. Today’s consumer, says Anchor’s Keith Greggor, “is much more likely to back the local guy.” Or there’s recent arrival Jamieson Leadbetter, a fourth-generation baker whose grandfather gave him this advice when he decided to continue the Portland, Me.-based family business in San Francisco: “Pick your community well. You’re not there solely to make money; you’re there to play a larger role.”

Jamieson Leadbetter, third generation baker, on the premises of Leadbetter's Bake Shop in San Francisco.
Despite the higher costs, 4th-generation baker Jamieson Leadbetter opened his bake shop in San Francisco.
Times have changed. So has business, and it’s time to rethink, and indeed rebrand, American manufacturing.

As Mark Dwight, who started SFMade in 2010, explains, “For decades we have developed a culture of disposability — from consumer goods to medical instruments and machine tools. To fuel economic growth, marketers replaced longevity with planned obsolescence — and our mastery of technology has given birth to ever-accelerating unplanned obsolescence. I think there is increasing awareness that this is no longer sustainable on the scale we have developed.”

Dwight, who walks the walk as someone who make stuff right here in San Francisco as CEO of Rickshaw Bagworks, had initially started SFMade with the intention of creating a brand identity for the products produced within San Francisco city limits, something he calls “geographic ingredient branding.”

More easily understood as something akin to terroir, geographic ingredient branding emphasizes “pride of place,” which runs deep in cities like San Francisco Continue reading

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New ‘Tactical Urbanism’ guide for aspiring guerrilla urbanists

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by Sarah Goodyear


With a few trees, some sidewalk tables, and lots of community input, a Dallas street was transformed.Photo: Go Oak Cliff

Do you have the power to make your city a better place? It might be easier than you think.

The Next Generation of New Urbanists (yes, these are young New Urbanists, because New Urbanism has been around long enough that it’s getting a little … old) and the Street Plans Collaborative want to help. They’ve put together a “Tactical Urbanism” guide that you can download for use when you need some ideas about how to catalyze lasting change in your urban world.

Examples include guerrilla gardening, pop-up cafés, mobile vendors, and “Build a Better Block” projects. Most involve partnership with government agencies or local business owners, but they are almost all things that ordinary folks can initiate. Here’s how the guide’s authors explain the concept of “tactical urbanism”:

[T]actical urbanism interventions create a laboratory for experimentation. Case studies from across North America reveal the benefit of taking an incremental approach to the process of city building. To be sure, long term change often starts with the process of trying something small. Upon implementation, results may be observed and measured in real-time. And when done inexpensively, and with flexibility, adjustments maybe made before moving forward. Indeed, there is real merit in a municipality spending $30,000 on temporary material changes before investing $3,000,000 in those that are permanent. If the improvement doesn’t work as planned, the whole budget will not be shot, and future designs can continue to be calibrated to meet the needs of a particular, and dynamic context.

So — “chair bombing,” anyone?

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