Beautiful Horizons

Krugman on the economics and politics of a Green Economy

NYT's magazine feature preview, here.

Let's Not Get Ahead of Ourselves

Erik Loomis points to this article in Tuesday's New York Times regarding Bolivia's lithium reserves and their location at the nation's famous Salar de Uyuni, the largest salt flats in the world. He expresses concern that the extraction of lithium would have a harmful impact on the region.

I think he's overstating the case. Here's how the lithium is extracted:

Technicians first need to get a brine, or water saturated with salt that is found deep beneath the salt desert, to the surface, where it is evaporated in pools to expose the lithium. Mr. Morales wants the plant finished by the end of this year.

This is similar to what people have been doing in the region for centuries:

On the flat salt desert of Uyuni, such debate seems remote to those still laboring as their ancestors did, scraping salt off the ground into the cone-shaped piles that line the horizon like some geometric mirage. The lithium found under the surface of this desert seems even more remote for these 21st-century salt gatherers.

It seems similar to how salt has been extracted from seawater for centuries and is still extracted. This is mining purley in the sense that it involves mineral extraction. No shafts are being dug, no mountains being stripped, no mountaintops being leveled.

I have been in a lithium mine near Araçuaí, Minas Gerais, Brazil, my father-in-law's hometown. This was a hole in the ground that we drove into in cars with hard hats, boots and ear plugs on. Drilling and blasting took place there. Three shifts work 24/7 in this mine. There is no comparison to this and the methods described in the article.

Erik also expresses concern about lithium extraction reaching a peak level as oil extraction. there's a difference and a major one, however: lithium batteries are recyclable. There is one company that does this and here's a description of their process:

Toxco’s lithium battery recycling facility is located on 11 acres adjacent to the Columbia River near picturesque Trail in southern British Columbia. With over 70,000 manufacturing square feet, Toxco Trail was the company’s first recycling facility. The facility inventories incoming lithium battery waste. The waste is then stored in earth covered concrete storage bunkers. Residual electrical energy is removed from larger, more reactive batteries. If necessary the batteries then begin Toxco’s patented cryogenic process and are cooled to -325°F. Lithium, although normally explosively reactive at room temperature, is rendered relatively inert at this temperature. The batteries are then safely sheared/shredded and the materials are separated. Metals from the batteries are collected and sold. The lithium components are separated and converted to lithium carbonate for resale. Hazardous electrolytes are neutralized to form stable compounds and residual plastic casings and miscellaneous components are recovered for appropriate recycling or scrapping. If the batteries contain cobalt this is also recovered for reuse. [my emphasis]

Sounds good to me. I usually agree with you Erik, but this time I think you need to look into this a little further.

Mission Accomplished

Ten years ago Osama bin Laden proclaimed that he wanted to see the price of oil spike to $144 a barrel. At the time it sold for $11. The rise in oil prices is, to some degree connected to increased demand by players like China, but a key part of the picture is undoubtedly Osama bin Laden's successful baiting of Bush into a Middle East quagmire (that, ironically, has bolstered the regional fortunes of Iran more than our own) at enormous political and economic cost to the US.

Regarding the BushCo venture into Iraq specifically, Mamdouh Salameh, an oil economist and adviser to the World Bank and the UN Industrial Development Organisation, believes the oil would be trading at $40 a barrel, less than a third of the current price, if not for the Iraq war. (Oil production in Iraq is currently $2 million barrels a day, down from 3.5 million under Saddam - despite sanctions against the dictator that limited Iraqi oil flow.) Weakening of the dollar and massive increases in indebtedness add to the administration failures that make us more vulnerable to the vagaries of the oil markets.

Rather than use the tragic events of Sepember 11, 2001 to wake the American people to the perils of dependence on a volatile, potentially hostile Middle East for our energy needs and to reassert a major push toward alternatives and conservation - which a stricken, united country would have responded to mightily - President Bush signaled that the most important task of the citizenry in the wake of the attacks was renewed consumption. (I say "reassert" because the much-maligned Jimmy Carter had projected this priority a quarter century before.) Meanwhile, the Bush administration set its sights on digging even deeper holes for us in the Arab world. Who knows - they might have even believed that they'd get their hands on cheap oil via an aggressive - albeit incoherent - military strategy. Given the record of miscalculation and incompetence in pursuing the overthrow of Saddam, anything is possible.

But hubris has a price. Reality bit. And somewhere, someone is sitting in a cave, laughing. As oil hits $144 a barrell, Bin Laden can claim at least one mission accomplished.

Department of the Painfully Obvious

It's past time to end tariffs on sugar ethanol and clearly time to begin cutting back subsidies for corn ethanol. Ethanol is a good idea, but making it from corn - at a 1.3-1 gain in energy efficiency when you factor in the energy used in its production, compared to an 8-1 gain from sugar ethanol - is a "solution" to oil dependence which is remarkably minimal. Perhaps a bridge to developing more productive biofuels at best. Worse, it's a significant factor in the current crisis in grain prices that has become a matter of life and death for hundreds of millions of the poor worldwide.

The absurdity of putting a 54 cents-a-gallon tax on sugar ethanol (of which the dreaded, samba-crazed Brazilians are the leading producer) as a Beltway sop to the combined lobbying of sugar, corn and oil industries has long been apparent. Frankly, at this juncture of extreme rise in both oil and food prices, it's inexcusable. Midwestern liberals - most notably Senator Obama from Illinois in the current news cycle - are among the guilty parties in this utterly wrong-headed policy. In fact, party affiliation or political philosophy has virtually no bearing on where politicians stand on this issue. It's all about their proximity to the farm lobbies.

For more on this, as well as some of the concerns raised by expansion of Brazilian agricultural land as their sugar ethanol industry grows, McClatchy News Service has an informative article here.

Brazil Oil Discovery - And a Lesson in Bias

Petrobras, Brazil's state-owned oil company has discovered a major  location of oil reserves 180 miles off the coast of Rio de Janeiro that, under ideal circumstances, could launch Brazil as a petroleum exporter. As the article notes, it appears to be light oil, which is easier and cheaper to refine than heavier oil found in Venezuela. While this oil is deep below the surface of the ocean, Petrobras is an innovator in deep water drilling:

So, Petrobras engineers worked with manufacturers to develop pressure-resistant instruments and progressively moved seaward, breaking global depth records along the way.

"Petrobras became the leader in deepwater drilling," said Tom Marsh, publisher at ODS-Petrodata, a researcher based in Houston that tracks data on offshore energy projects. "Their oil was offshore and that made the Brazilian coast one big, giant research and development project."

So where does the bias come in? In this article about the discovery the Wall Street Journal gets out the knives at first:

But in a reminder of the role of governments in world oil supplies, Brazilian officials also yanked leases giving access to nearby and similar areas from a coming auction.

Wow! A government protects the investment it has in its state-owned energy company! Not content to get in a dig at Petrobras, the WSJ writers decide to downplay the significance of the find:

Even if Tupi contains the high estimate of eight billion barrels, the world consumes about 86 million barrels a day, so it may contain about three months of supply.

In other words if this were the only place in the world that had oil, it would be exhausted in three months. Perhaps the WSJ should have writers write about petroleum who have heard of such nations as Saudi Arabia, Kuwait, the UAE, Venezuela, Indonesia, Angola, Libya and Iran, among numerous others.

Let's compare that best case scenario to a favorite location to tap oil from the rightwingers: The Arctic National Wildlife Reserve (ANWR). According to this organization, which advocates opening ANWR to oil development, here's what may be there (warning: pdf file):

The quantities of technically recoverable oil are not expected to be uniformly distributed throughout the ANWR 1002 Area. The undeformed area is estimated to contain between 3.4 and 10.2 billion barrels of oil (BBO) (95- and 5-percent probability), with a mean of 6.4 BBO. The deformed area is estimated to contain between 0 and 3.2 BBO (95- and 5-percent probability), with a mean of 1.2 BBO.

In other words, the mean potential for ANWR is less than the ideal estimates for Tupi. If Alaska were the only place in the world that had oil, ANWR would also be exhausted in three months.

Better journalists, please.