Bell Curve # 8 - Ocean Fisheries

Spain - the poor man's South Of France is what this story is about, but, such phenomena are being reported from all over the world.

Stinging Tentacles Offer Hint of Oceans’ Decline

Dani Cardona/Reuters
A jellyfish in the Mediterranean off the coast of the Spanish island of Mallorca.

By ELISABETH ROSENTHAL
Published: August 3, 2008
http://www.nytimes.com/2008/08/03/science/earth/03jellyfish.html?_r=1&hp=&oref=slogin&pagewanted=all

BARCELONA, Spain — Blue patrol boats crisscross the swimming areas of beaches here with their huge nets skimming the water’s surface. The yellow flags that urge caution and the red flags that prohibit swimming because of risky currents are sometimes topped now with blue ones warning of a new danger: swarms of jellyfish.

In a period of hours during a day a couple of weeks ago, 300 people on Barcelona’s bustling beaches were treated for stings, and 11 were taken to hospitals.

From Spain to New York, to Australia, Japan and Hawaii, hey!!! thats my line on the housing bubble!!! and everyone's complaint regarding the credit crisis. Frickin plagiarizer!!! jellyfish are becoming more numerous and more widespread, and they are showing up in places where they have rarely been seen before, scientists say. The faceless marauders are stinging children blithely bathing on summer vacations, forcing beaches to close and clogging fishing nets.

But while jellyfish invasions are a nuisance to tourists and a hardship to fishermen, for scientists they are a source of more profound alarm, a signal of the declining health of the world’s oceans. Designing stalwarts will come up with nets that catch only jellyfish and allow all other sea-creatures to slip thru them. This is the firefighting that I think we will indulge in, and then pat ourselves on our backs. To quote a current example that millions are witnessing without the slightest clue that they are doing so - the Chinese factory shutdowns. Show blue, smog free skies to a numb, slumbering population laying on their couches, glued to their TV sets and lapping up the buy-more ads; whew!!! Hoping everything will set itself right while unknowingly existing in denial, instead of making some painful choices. The choices not taken will come back to haunt us in ways we dont like. That is a Bell Curve of population which shall shortly be covered. Going to the 'root of the problem' is not in our societal mindset. We cannot see beyond our noses. It is not our fault, it is our very nature; the way we have evolved so to say. If we could see beyond our noses, we may not have survived our hunter gatherer days. Not many philosophers made it through that evolutionary bottleneck. Often in life, one's biggest strength ironically turns into one's biggest handicap. Like the peacock trying to get away from its predator and being forced to carry along its grand plumage. Life does suck!!!

“These jellyfish near shore are a message the sea is sending us saying, ‘Look how badly you are treating me,’ ” said Dr. Josep-María Gili, a leading jellyfish expert, who has studied them at the Institute of Marine Sciences of the Spanish National Research Council in Barcelona for more than 20 years.

The explosion of jellyfish populations, scientists say, reflects a combination of severe overfishing of natural predators, like tuna, sharks and swordfish; rising sea temperatures caused in part by global warming; and pollution that has depleted oxygen levels in coastal shallows. There was the recent event of dead fish floating in Mir Alam Tank in Hyderabad, cause unknown, but probably due to oxygen depletion in the lake waters they said. This was a local event and has absolutely nothing to do with global warming, but, for those unaware about ocean anoxia that could be an example close to home. Nutrition buildup leads to algal bloom. Algal dead bodies' decomposition-process sucks up and eventually depletes oxygen and leads to build-up of toxic gases in the lower levels of the water. Oxygen breathing organisms kick the bucket en masse. It has happened before in the oceans in the geological past.
http://en.wikipedia.org/wiki/Anoxia

These problems are pronounced in the Mediterranean, a sea bounded by more than a dozen countries that rely on it for business and pleasure. Left unchecked in the Mediterranean and elsewhere, these problems could make the swarms of jellyfish menacing coastlines a grim vision of seas to come.

“The problem on the beach is a social problem,” said Dr. Gili, who talks with admiration of the “beauty” of the globular jellyfish. “We need to take care of it for our tourism industry. But the big problem is not on the beach. It’s what’s happening in the seas.”

Jellyfish, relatives of the sea anemone and coral that for the most part are relatively harmless, in fact are the cockroaches of the open waters, the ultimate maritime survivors who thrive in damaged environments, and that is what they are doing. I have heard it said, that, if anything survives a nuclear holocaust, it is going to be the cockroach. One needs to give that statement zero credence, but, just mentioning it.

Within the past year, there have been beach closings because of jellyfish swarms on the Côte d’Azur in France, the Great Barrier Reef of Australia, and at Waikiki and Virginia Beach in the United States. Where are the goddarn net designers???

In Australia, more than 30,000 people were treated for stings last year, double the number in 2005. An inverse doubling of the stock market would concern us or scare the freakin daylights out of us, but a doubling of jellyfish stings to some others.....nah, couldnt care less. As a species, we have survived by recognizing immediate dangers to our group as distinct from other groups. If we had gone to help Johnny over on the other side of the mountain, we wouldnt have returned from the mission and The rare but deadly Irukandji jellyfish is expanding its range in Australia’s warming waters, marine scientists say.

While no good global database exists on jellyfish populations, the increasing reports from around the world have convinced scientists that the trend is real, serious and climate-related, although they caution that jellyfish populations in any one place undergo year-to-year variation. these are the riders in science that will always be there. There is never certainty in biological phenomenon until 2 minutes before noon. At noon there is little we can do.

“Human-caused stresses, including global warming and overfishing, are encouraging jellyfish surpluses in many tourist destinations and productive fisheries,” according to the National Science Foundation, which is issuing a report on the phenomenon this fall and lists as problem areas Australia, the Gulf of Mexico, Hawaii, the Black Sea, Namibia, Britain, the Mediterranean, the Sea of Japan and the Yangtze estuary. Yeah, alright, I heard you. But i need more proof.

In Barcelona, one of Spain’s most vibrant tourist destinations, city officials and the Catalan Water Agency have started fighting back, trying desperately to ensure that it is safe for swimmers to go back in the water. I told you!!! Wait and watch - anyone willing to place a bet that some pharma company, somewhere, is burning the midnight oil, developing an antidote for jellyfish stings!!!

Each morning, with the help of Dr. Gili’s team, boats monitor offshore jellyfish swarms, winds and currents to see if beaches are threatened and if closings are needed. They also check if jellyfish collection in the waters near the beaches is needed. Nearly 100 boats stand ready to help in an emergency, said Xavier Duran of the water agency. Wow!!! what a boost to our economy!!! Increase In Boat Demand Stretches Boat Manufacturers: Stock Values Rise - Boosts in employment we could do with, given Spain's real estate & banking woes.The constant squeal of Dr. Gili’s cellphone reflected his de facto role as Spain’s jellyfish control and command center. Calls came from all over.

Officials in Santander and the Basque country were concerned about frequent sightings this year on the Atlantic coast of the Portuguese man-of-war, a sometimes lethal warm-water species not previously seen regularly in those regions.

Farther south, a fishing boat from the Murcia region called to report an off-shore swarm of Pelagia noctiluca — an iridescent purplish jellyfish that issues a nasty sting — more than a mile long. and we get nightmares about snakes with a sting of a couple of inches in length :) A chef, presumably trying to find some advantage in the declining oceans, wanted to know if the local species were safe to eat if cooked. If life deals you lemons, make, and drink, lemonade. Much is unknown about the jellyfish, and Dr. Gili was unsure. Dr. Gili will get back to you, Mr. Curious Chef.

In previous decades there were jellyfish problems for only a couple of days every few years; now the threat of jellyfish is a daily headache for local officials and is featured on the evening news. As if we were short of fodder for the idiot-box. “In the past few years the dynamic has changed completely — the temperature is a little warmer,” Dr. Gili said.

Though the stuff of horror B- movies, jellyfish are hardly aggressors. They float haplessly with the currents. They discharge their venom automatically could pretty much be describing the harmless homo sapiens (home colossus) !!! when they bump into something warm — a human body, for example — from poison-containing stingers on mantles, arms or long, threadlike tendrils, which can grow to be yards long.

Some, like the Portuguese man-of-war or the giant box jellyfish, can be deadly on contact. Pelagia noctiluca, common in the Mediterranean, delivers a painful sting producing a wound that lasts weeks, months or years, depending on the person and the amount of contact.

In the Mediterranean, overfishing of both large and small fish has left jellyfish with little competition for plankton, their food, and fewer predators. Unlike in Asia, where some jellyfish are eaten by people, here they have no economic or epicurean value.

The warmer seas and drier climate caused by global warming work to the jellyfish’s advantage, since nearly all jellyfish breed better and faster in warmer waters, according to Dr. Jennifer Purcell, a jellyfish expert at the Shannon Point Marine Center of Western Washington University.

Global warming has also reduced rainfall in temperate zones, researchers say, allowing the jellyfish to better approach the beaches. Rain runoff from land would normally slightly decrease the salinity of coastal waters, “creating a natural barrier that keeps the jellies from the coast,” Dr. Gili said.

Then there is pollution, which reduces oxygen levels and visibility in coastal waters. While other fish die in or avoid waters with low oxygen levels, many jellyfish can thrive in them. And while most fish have to see to catch their food, jellyfish, which filter food passively from the water, can dine in total darkness, according to Dr. Purcell’s research.

Residents in Barcelona have forged a prickly coexistence with their new neighbors.

Last month, Mirela Gómez, 8, ran out of the water crying with her first jellyfish sting, clutching a leg that had suddenly become painful and itchy. Micro level system interplay? Her grandparents rushed her to a nearby Red Cross stand. “I’m a little afraid to go back in the water,” she said, displaying a row of angry red welts on her shin.

Francisco Antonio Padrós, a 77-year-old fisherman, swore mightily as he unloaded his catch one morning last weekend, pulling off dozens of jellyfish clinging to his nets and tossing them onto a dock. Removing a few shrimp, he said his nets were often “filled with more jellyfish than fish.” Hey!! Relax Padros, Mr Curious Chef may yet come up with an innovative, seminal, path-breaking recipe, and that will be the end of your woes.

By the end of the exercise his calloused hands were bright red and swollen to twice their normal size. “Right now I can’t tell if I have hands or not — they hurt, they’re numb, they itch,” he said.

Dr. Santiago Nogué, head of the toxicology unit at the largest hospital here, said that although 90 percent of stings healed in a week or two, many people’s still hurt and itched for months. He said he was now seeing 20 patients a year whose symptoms did not respond to any treatment at all, sometimes requiring surgery to remove the affected area. arent we good at fire-fighting!!!

The sea, however, has long been central to life in Barcelona, and that is unlikely to change. Recently when the beaches were closed, children on a breakwater collected jellyfish in a bucket. The next day, Antonio López, a diver, emerged from the water. “There are more every year — we saw hundreds offshore today,” he said. “You just have to learn how to handle the stings.” Alright!!! there is hope!!!

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Bell Curve # 7 - Credit

Credit is a potential Bell Curve, meaning that henceforth credit will be tighter than we have seen in the recent past. Add to that the fact that we are going to see a contracting economy. A contracting economy means reduced output or reduced availability of goods and services. It is a given that, if one doesnt want to add fuel to the fire, then, we also need reduced money supply to transact that reduced output. I rest my case for a strong possibility of a bell curve of credit. The only assumption it rests on is a sane monetary policy but that is a weak assumption. Central Bankers of the world acting responsibly (curtailing money supply in this case) isnt borne out very strongly, needless to say the prime example of that being, Greenspan.


To sum up, what i mean by that is - in order to rein in the current cost-push inflation, curtailing money supply is a necessary condition, but by no stretch of imagination is it a sufficient one. If on the other hand, Central Banks decide to not tighten money supply and we go into an era of high inflation and inflation expectations that is a different ball game.


Monetarists warn of crunch across Atlantic economiesBy Ambrose Evans-Pritchard
Last Updated: 11:40pm BST 11/07/2008
Page 1 of 2

The lifeblood of countries' economies is draining away - with grim consequences for us all, writes Ambrose Evans-Pritchard The money supply data from the US, Britain, and now Europe, has begun to flash warning signals of a potential crunch. Monetarists are increasingly worried that the entire economic system of the North Atlantic could tip into debt deflation over the next two years if the authorities misjudge the risk.

The key measures of US cash, checking accounts, and time deposits - M1 and M2 - have been contracting in real terms for several months. A dramatic slowdown in Britain's broader M4 aggregates is setting off alarm bells here. Money data - a leading indicator - is telling a very different story from the daily headlines on inflation, now 4.1pc in the US, 3.7pc in Europe, and 3.3pc in Britain.

Paul Kasriel, chief economist at Northern Trust, says lending by US commercial banks contracted at an annual rate of 9.14pc in the 13 weeks to June 18, the most violent reversal since the data series began in 1973. M2 money fell at a rate of 0.37pc."The money supply is crumbling in the US. There was a very sharp lending contraction in the second quarter lending. If the Federal Reserve is forced to raise rates now to defend the dollar, it would be checkmate for the US economy," he said.Leigh Skene from Lombard Street Research said the lending conditions in the US were now the worst since the Great Depression. "Credit liquidation has begun," he said.

The Fed's awful predicament does indeed have echoes of the early 1930s when the bank felt constrained to tighten into the Slump in order to halt bullion loss under the Gold Standard. Investors - notably foreigners - dictated a perverse policy. Over 4,000 US banks collapsed. This time a de facto "Oil Standard" is boxing in Ben Bernanke. Benign neglect of the dollar has started to backfire. It is pushing up crude, with multiple leverage.


The monetary picture is highly complex. The different measures - M1, M2, M3, M4 - have all given false signals in the past. Each tells a different tale, and monetarists fight like alley cats among themselves.

The Federal Reserve stopped paying much attention to the data a long time ago. It has abolished M3 altogether. The US economic consensus is New-Keynesian (dynamic stochastic general equilibrium model). Delving into the money entrails is derided as little better than soothsaying. one should not pay too much attention to money is right, but, by no means does that imply money does not matter. All it means is that, using money supply to achieve results in the real economy due to the money illusion that economic agensts suffer from, has terrible consequences. This is what G'span did.

Friedman said it well in his Role of Monetary Policy paper.
...Monetary policy cannot peg these real magnitudes at peredetermined levels. But monetary policy can and does have important effects on these real magnitudes. The one is in no way inconsistent with the other.....

...But money has one feature that these other machines do not share. Because it is so pervasive, when it gets out of order, it throws a monkey wrench into the operation of all the other machines....
http://books.google.com/books?id=XVCgcHQS_nQC&pg=PA105&lpg=PA105&dq=friedman+role+of+monetary+policy+monkey+wrench&source=web&ots=SYxRuXSC23&sig=7IdyMyvlvhOdrHYwcIe-GEuLwps

What Friedman is saying is that money (supply) cannot achieve results that one wants in terms of pegging real variables like output, employment etc. where we want them to be. BUT, by no means does that imply it cannot take those variables in undesirable directions and peg them in undesirable locations. Funny thing uh this money???


That attitude, retort monetarists, is the root cause of the credit bubble. The money supply almost always gives advance warning of big economic shifts. Those who track the data are now calling on central banks to move with extreme caution. If the rate-setters overreact to an inflation spike caused by oil and food - or confuse today's climate with the early 1970s - they may set off an ugly chain of events. monetarists dont want a credit contraction now cuz they know what contraction it can cause. But, what were they doing when the money spigot was being opened like crazy, enjoying the higher stock valuations and the higher house valuations? both of them of course nominal in nature.

"The data is pretty worrying," said Paul Ashworth, US economist at Capital Economics. "US lending is shrinking dramatically in real terms, and we know from the Fed's survey that banks want to tighten further. People are clamouring for higher rates but we think deflation is now the biggest threat. The idea that the Fed should tighten with unemployment soaring is preposterous," but what choice does the Fed have? he said. The jobless rate jumped from 5pc to 5.5pc in May.

In Britain, the Shadow Monetary Policy Committee - hosted by the Institute for Economic Affairs, and a refuge for UK monetarists - issued its own alert this week. The focus is on "adjusted M4", which covers loans to "private non-financial corporations" and may offer the best insight into the health of British business.

The growth rate has dropped from 16.1pc a year ago to minus 0.5pc in April. It is the suddenness of the decline that matters most. The data reeks of recession. Professor Patrick Minford from Cardiff Business School called for an immediate rate cut, arguing that the credit crunch is a more powerful and long-lasting force than the oil inflation.

Professor Tim Congdon from the London School of Economics said the UK was lurching from boom to bust. "Real money growth is virtually nil. The British economy is taking a thrashing and it is going to get worse. Corporate money balances have contracted 3pc over the last three months, which is double digits on an annualised basis. This is a serious squeeze for companies," he said.

Mr Congdon warned three years ago that surging M4 would lead to a "dangerous" bubble, which is what occurred. He now fears the MPC will react too late as the process goes into reverse.

Roger Bootle from Capital Economics said Britain could be facing a "real economic crisis and a financial collapse. The MPC does not have the luxury of waiting until all is absolutely crystal clear. By that time the bird will have flown."

The eurozone is at a later stage of the credit cycle. Even so, house prices are collapsing in Spain, and falling in Germany and France. india is a little further behind in the cycle German industrial orders have dropped for the last six months in a row. A joint IFO-INSEE survey said eurozone growth had stalled to zero in the second quarter.



'Credit liquidation has begun'

"Consumer lending has fallen off a cliff. It is contracting in real terms," said Hans Redeker, currency chief at BNP Paribas. Core inflation has fallen from 1.9pc to 1.7pc over the last year.

Unlike the Fed, the European Central Bank keeps a close eye on money data (though not on real M1, now shrinking). It looks at the broader M3 figures. There is a raging debate in Europe over the signals now being sent by this indicator.

The M3 growth is still 10.5pc, down from 11.5pc in January. However, the data has been badly distorted by the closure of the capital markets. Firms have been forced to draw down existing credit lines from banks, which shows up as M3 growth. (It is the same story with America's M3 since the collapse of the Commercial Paper market).

"The credit lines are expiring. Companies cannot roll over loans. We are going to see the entire private credit multiplier go into a slowdown," said Mr Redeker.

Jean-Claude Trichet, the ECB's president, said last week that the M3 data "overstates the underlying pace of monetary expansion". The ECB nevertheless pressed ahead with a rate rise to 4.25pc, setting off a storm of protest. This may go down as one of the most unwise monetary decisions of modern times.

The strain on eurozone banks is growing by the day. They bid a record $85bn (£43bn) at the ECB's last auction for dollars. Only $25bn was available. The spreads on Euribor interbank lending are still at extreme stress levels.

Few dispute that "global inflation" is taking off. Over 50 countries now face double-digit price rises. Ukraine (29pc), Vietnam (27pc), and the Gulf states are out of control, with Russia (15pc), and India (11pc) close behind. China (7.1pc) is on the cusp. Interest rates are still below inflation across much of the emerging world. This is the driving force behind spiralling commodity prices. negative real rates of interest, meaning interest rate minus inflation is negative. Someone said, something like ...inflation, almost always, almost everywhere, is a monetary phenomenon...

The oil spike is already squeezing real wages in the Atlantic region. The debate is whether the Fed, Bank of England, and ECB should squeeze them further, trying to off-set energy rises with a deflationary bust in the rest of the economy. If and when oil peaks in this cycle, they may find inflation crashing faster than they dare to imagine. this can happen, a drastic and sudden turn in world output creats a sharp drop in oil demand, (assuming the decline in oil supply is less than the drop in oil demand) and leads to an oil price crash. and then a recovery begins from a far lower baseline, and again leads to a rise in oil price, this is the see sawing of oil prices that we are going to see

The 9th Circle in Dante's Inferno - starring Judas and Brutus - is a frozen lake. Cold can be more frightful than heat. "Blue pinch'd and shrined in ice the spirits stood," (Canto XXXIII). Such awaits the victims of debt deflation. whatever that means

Bell Curve # 2 - Natural Gas

Natural Gas - Indian Context

There are plenty in India who think that we are finding nat gas fields and that we will have comfortable supplies in the future of this fuel. They live in a fools' paradise. Someone told me that most of these finds were already mapped out by ONGC, they just passed on the data to Reliance....dont know how much water that theory holds. Hey!!! the Himayat Sagar doesnt hold any water, so since when do theories have to hold any??

If supplies were comfortable, the govt would not be dictating as to whom the supplies need to go to and the order of priority. The only thing that remains to be dictated is the price.

I had said earlier that govts are known to have reneged on promises and this will happen in India's energy sector, more in the fossil fuel part of it. Not that it is good or bad, but stating a fact.

In case you'll missed the mail reg. the nat gas scenario in the North American context, it is pasted below the Hindu article.


Note: Whats this EGOM??? As far as I know this concept came only when nat gas allocation problems arose. Steel, fert, power are the major consumers and each minister and sec. in those ministries must have been fighting over it....throw in a couple of state govts now and then. When the cats fight over the cake, the monkey is called in to help distribute the cake, in this case the monkey being the EGOM

Gas supplies: ‘accord priority to fertilizer, LPG plants’
Special Correspondent (June 26th, The Hindu)
Reliance to start pumping in gas from September

NEW DELHI: The Petroleum and Natural Gas Ministry on Wednesday notified the new guidelines approved by the Empowered Group of Ministers (EGoM) asking Reliance Industries to set priority for supplying natural gas from its Eastern offshore KG-D6 field first to fertilizer units, LPG plants and the existing power plants.

The EGoM headed by the External Affairs Minister, Pranab Mukherjee, had decided that the companies which produced gas from areas awarded under the New Exploration Licensing Policy (NELP) would have to sell the fuel in accordance with the marketing priorities determined by the Government, according to an official statement here on Wednesday. The EGoM has fixed priority for the 25 million standard cubic metres daily of gas Reliance plans to start pumping in from September this year and 40 mmscmd from March 2009. the govt decides to whom the gas should be sold, it will soon, if it isnt already decide the price too.

The EGoM has asked the company to first supply gas from the KG-D6 field, the first major field of NELP to go on production, to the existing gas-based urea plants, which are now getting fuel below their full requirement. After urea plants, a maximum quantity of 3 mmscmd would be supplied to the existing gas-based LPG plants and thereafter up to 18 mmscmd to gas-based power plants that were lying idle or under-utilised or likely to be commissioned in 2008-09 or liquid fuel plants, which are now running on liquid fuel and could switch over to natural gas. cuz the liquid fuels can be diverted for transportation requirements

Nat gas in N American context, Email of late May 2008

First good article on nat gas in mainstream media. Has implications for India. When gas prices are far higher abroad than in India, then contracts that private sector has entered into will be questioned. Govts have and will renege on promises made.

Keep in mind that nat gas markets were until recently extremely local; cuz nat gas has to transported via pipes/ships. Pipes are intra-continental and Liquified Natural Gas (LNG) shipping capacity was minimal as was ports' handling capacity of the same. Those markets (prices) are gradually getting interlinked due to an increase in the shipping and port capacity expansion. Now you see where the Iran-Pak-India pipeline fits in.

Cant help myself here from typing this. Canadian tar sands' oil extraction depends on nat gas. Their costing estimates are based on 2-4 $ nat gas, today the price is about $16. North American gas extraction is hitting a plateau supposedly....havent looked at the figures closely. NAFTA is supidly structured on nat gas trades between Canada and US. Canada will likely renege.

Natural Gas in Pause Mode

Michael Stravato for The New York Times A new tanker built to transport liquefied natural gas, sitting idle at a dock near an L.N.G. storage plant in Louisiana.

By CLIFFORD KRAUSS
Published: May 29, 2008

CAMERON PARISH, La. — The cost of a gallon of gas gets all the headlines, but the natural gas that will heat many American homes next winter is going up in price as fast or faster.

Michael Stravato for The New York Times
Cheniere Energy’s liquefied natural gas terminal near Cameron Parish in Louisiana is idle, because other countries, like Japan and Spain, are willing to pay more for the fuel.
Michael Stravato for The New York Times
Darron Granger, standing, a Cheniere senior vice president, said the investment would pay off, but “I just can’t say when.”
Michael Stravato for The New York Times
Construction work inside an L.N.G. storage tank at Cheniere’s terminal, in anticipation of increasing gas shipments.

That fact makes the scene in the languid, alligator-infested marshland here in coastal Louisiana all the more remarkable.

Only a month after Cheniere Energy inaugurated its $1.4 billion liquefied natural gas terminal here, an empty supertanker sat in its berth with no place to go while workers painted empty storage tanks.

The nearly idle terminal is a monument to a stalled experiment, one that was supposed to import so much L.N.G. from around the world that homes would be heated and factories humming at bargain prices. everyone thought that nat gas was plenty

But now L.N.G. shipments to the United States are slowing to a trickle, and Cheniere and other companies have dropped plans to build more terminals.

A longstanding assumption of American energy policy has been that natural gas would be plentiful abroad, and therefore readily available for importation, as production falls off in North America, where many fields are tapped out.

But some experts are starting to question that idea, saying natural gas could be subject to the same explosion in overseas demand that has made oil so expensive. Shows the thought process of the writer. It isnt the explosion in demand that is responsible for our current predicament (which BTW is not recognized as such by most policymakers); as much as the peaking of extraction is. Explosion in demand conveys a sense of us still being in 'control' and having the ability to do something about it. Recognition of the peaking of extraction of nat gas / oil will make us frame the issue differently; that frame will force us to look at it in a different light; and those lenses will enhance our ability to take mitigatory steps.

As it is, the supertankers that were supposed to deliver cargoes of gas from Africa and the Middle East to the United States are taking them to places like Spain and Japan instead, am not sure why they would do that....taking cargo elsewhere, but i do know that the highest bidder has in the past diverted shipments. pushing up gas prices and depleting the nation’s stockpiles as the hurricane season approaches.

“A few years ago myopia affliction people looked at L.N.G. as a solution to North America’s gas needs,” said Nikos Tsafos, an analyst with PCF Energy, a consulting firm. “But today we see that there is less L.N.G. around than people expected, and there is more competition for that L.N.G. from markets that are willing to pay more than the United States.”

Not long ago, Cheniere was a darling of Wall Street. It was widely praised for having the vision to plan four new liquefied gas terminals around the Gulf of Mexico to connect the country with supplies of natural gas from places like Nigeria and Egypt, gas once considered so worthless it was burned off.

Now the company’s stock price has sunk from $40 to just over $5 since last fall. Talk about volatility...i dont even need to check the time period for the fall....shows how well wall street does their homework. How come they didnt check who the competitors were for that nat gas? If you were in teh cold storage business you would try and see how much veggies and fruits were out there that would need to be carried over between seasons; will they fill your shelves or will you have to use your cold storage facility as a Snow World Theme Park!!

“The question that people ask is if L.N.G. doesn’t come to the United States for another year or two or three, what is going to happen to Cheniere,” acknowledged Charif Souki, the chief executive officer of the company. ask tough questions, what if it doesnt come, period!!!

While natural gas prices in the United States have spiked to over $11.80 per thousand cubic feet from $7.50 at the beginning of the year, the price that gas producers can draw in many other countries in the world is several dollars higher. All they need are terminals in producing countries that can chill natural gas to minus 260 degrees Fahrenheit for shipping across oceans and terminals in consuming countries that can regasify cargoes.

Just about the only place where demand for L.N.G. seems not to be growing is the United States, an abrupt shift from expectations as little as one year ago.

The Sabine Pass terminal was part of an estimated $7 billion construction of eight new L.N.G. receiving terminals being built around the Gulf of Mexico and the Atlantic Coast over the last five years to guarantee plentiful domestic supplies. With imports about 40 percent of the level of a year ago, and national receiving terminal capacity poised to double this year, the excess construction of import capacity has alarmed industry executives. what were they smoking...or sniffing??

However the executives predict that it is only a matter of time before the white elephants begin to look like a more robust breed. They say American gas suppliers will eventually be willing to pay the higher world prices on the spot market, especially if a gas shortage ensues after a punishing hurricane season or frigid winter. Energy demand is inelastic demand. Consumers will be willing to pay much higher. What happens to the economy?? Pray for a frigid winter dude; while the rest of the country prays for relief at their fireplaces and boilers.

They also predict future American consumption of natural gas is poised to increase because of hardening opposition to building new coal-fired electricity generating plants and delays in new nuclear plants. “Over time, we will need to start importing more gas,” said Darcel L. Hulse, president of Sempra LNGE, a division of Sempra Energy, which is building receiving terminals in Mexico and Louisiana. “We will not have enough.” Just because one needs more, it doesnt follow that the Lord will provide it. Still stuck in that same thinking and operating under invalid assumptions.

That was the thinking that spurred the L.N.G. expansion in the United States in the first place. At the beginning of the decade, government officials and energy experts predicted a decline in domestic natural gas production as conventional fields on-shore and in the Gulf of Mexico declined. Companies like Cheniere, Sempra Energy and Exxon Mobil began snapping up coastal land and requesting regulatory approval for scores of terminals. Several other terminals were taken out of mothballs and expanded.

But recently domestic natural gas production has been stronger than expected and events abroad have drawn L.N.G. from the United States to countries that needed it more.

Last July an earthquake in Japan forced the closing of the Kashiwazaki-Kariwa nuclear power plant, which in turn has forced Japanese utilities to import huge amounts of L.N.G. World L.N.G. supplies grew even more scarce because of a persistent drought in Spain that has crimped that country’s hydroelectric capacity, forcing the Spanish to increase L.N.G. imports. look at the ripple effects...an accident here a drought there and you have a problem. World energy markets have become a tightly knit system that is taut. A taut global market for a product that is characterised by inelastic demand - recipe for volatility.

Prices in Asia and Europe have soared, as producers have sold more supply on the spot market where prices are higher than those in traditional long term contracts.

World demand for natural gas has grown about 2.6 percent a year over the last decade, but in Asia, the Middle East, Latin America and Africa it has averaged 7 percent over the same period, according to a recent UBS report. Growth in the developing world is expected to be supported in the years ahead by a construction boom in refineries and power and petrochemical plants.

Supplies of L.N.G. are going to grow in the next few years, but experts say they will not be enough to satisfy the growing demand. Liquefaction plant projects that prepare the gas for shipping in producing nations like Nigeria and Russia are being delayed and even shelved because of political turbulence, cost overruns and increasing domestic demand for gas in their own countries. Production in one major terminal in Indonesia is sliding because of a declining field, and production in another in Norway is facing mechanical difficulties.

With L.N.G. providing only about 3 percent of total American natural gas consumption in recent years, the fall in L.N.G. imports has made few headlines. But some experts say those responsible for importing gas are making a mistake by not buying more L.N.G. at current prices.

They warn that the failure to import more L.N.G. is leaving natural gas reserves precariously low should the country be hit by a harsh hurricane season or cold winter. They say low L.N.G. imports have helped push American natural prices higher, just not high enough to match the prices of Europe and Asia whose ability to produce and store gas is far inferior to the United States.

Andrew D. Grams, head of North American power and gas trading at Deutsche Bank, said the United States may eventually pay dearly for not importing more L.N.G. now. He calculated that given the reduced L.N.G. imports and expected energy use through the summer, the country will have only 3.1 trillion cubic feet of gas in storage at the end of October — almost 1 trillion cubic feet below full storage.

“Under a normal scenario, that’s just barely enough to get through winter,” Mr. Grams said. “It doesn’t take a rocket scientist to figure out that we may not get enough L.N.G. supply in the United States unless our pricing structure becomes more competitive with the rest of the world.”

Natural gas, unlike oil, is still a regional commodity and its price is only loosely connected to world oil benchmark prices. But L.N.G. has tied regional markets closer, and the arc of natural gas prices appears to be following close behind oil in recent months because of tightening L.N.G. supplies.

The same increases in the prices of steel and other materials and shortages in labor that are making to more expensive to explore for oil are making L.N.G. development more costly too. Meanwhile, countries that produce oil and gas like Libya and Algeria are replacing their oil-powered electricity plants with natural gas-burning plants. That way, they are able to export more oil, which costs less to ship than L.N.G.

“The value of gas to you is what people are willing to pay for the oil you are exporting,” said Don Hertzmark, a consultant who has advised several oil companies on L.N.G. projects. “At that point, the gas is worth a lot of money.”

Nevertheless hopes for L.N.G. still survive here. The secretary of energy, Samuel W. Bodman, and a Cajun zydeco band came last month to celebrate the opening of the Sabine Pass terminal, and a tanker delivered L.N.G. from Nigeria for testing purposes.

Workers are testing generators and painting and building five huge storage tanks, each capable of providing a full day’s supply of gas for Louisiana. Tugboat crews are practicing for any future cargo arrivals.

“I know the L.N.G. will come and we’ll make a profit on this,” said Darron Granger, a Cheniere senior vice president. “I just can’t say when.” wishful thinking stemming from denial

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