Hey BC NDP’ers: Al Gore wants Cap and Trade…. plus Carbon Tax

This at least makes me feel a little better about Carole James cynical opportunism….

If you don’t feel like clicking (come on, it’s only 1 1/2 minutes long!)… at a Senate Hearing discussing what sort of Climate policy and bill the US Congress should pass, a Senator mentioned that a Carbon Tax is a Carbon Tax, but a Cap and Trade system is a “huge tax” as well.

To this, Al Gore said… a Carbon Tax is a tax, and Cap and Trade is expensive, but he actually supports HAVING BOTH… first the Cap and Trade, to encourage a global market and get more countries into the system… and then a revenue neutral Carbon Tax to further encourage reductions.

I’ll just close my eyes and believe that Carole James is really just in Al Gores head… it’s all good. Right?

On another note… Al Gore also directly mentioned Peak Oil in his comments to Senate leaders today… unfortunately it’s not in the video linked above, but the other rumour going around is that there some sort of “An Inconvenient Truth 2” focused on Peak Oil is in the works.

Hey Al? Can you hurry it up please? Thanks.

Here’s another opinion on the NDPs plan.

Here we go again… Oil Price Speculation or Real?

CNBC.com this morning has an article that I wasn’t expecting until at least August this year. But here it is all the same. The topic? Oil Prices Resist the World’s Recession Trend

Their main point:

The resilience shown by the oil markets is not because of any improvement in the global economy or rise in oil consumption. Global demand remains on course for its steepest drop since the early 1980s, and oil inventories are at their highest levels in 19 years.

Instead, analysts said, oil is once again being sought by investors as a refuge against a slumping dollar and rising inflation.

Lets stop right there. Slumping Dollar? The US Dollar has gained over 20% over the Canadian dollar since July and the same can be said for the Euro and Yen. INFLATION? Last month, the US officially experienced DEFLATION (negative inflation)… so I’m really not sure what planet CNBC is on!

But then, the very next sentence, they take a different tone:

Stabilization of the oil price is also a victory for the OPEC cartel, which has succeeded in cutting output sharply to match lower demand.

and so, once again, it’s all evil OPECs fault. Because, you know, it has nothing to do with plummeting oil production in Mexico (World #3 Super Giant field Cantarell is now producing less than other Mexican fields).

Oh.. but wait…

The perception remains well ingrained in the market that oil supplies, while plentiful today, may prove insufficient once demand picks up again.

Huh. So you mean investors don’t buy the “drill drill drill” mantra? You mean investors have looked abroad and seen conventional production in Mexico, Canada, the UK, Russia and Norway declining even while prices skyrocketed over the past 5 years? You mean investors have seen Saudi Arabia hit a wall, unable to pump more oil without damaging it’s fields.

Investors know this.

The OECD knows this.

So why the “speculation” talk? We have been given a great opportunity during this recession… depression, the first shrinking of the world economy since WWII (OECD), demand is knocked down. The pressure is off… people are LOOKING for work. We need to put them to work creating a new economy… low energy, high efficiency, low carbon.

If we wait until “recovery” happens, then we are doomed to be right back here within 2 years.

Are the US Financial Networks propping up the US Economy

And are they finally losing their grip?

CNN, CNBC, Bloomberg, FoxNews… one wonders… if this was 1929 would the psychology of the crash have happened?

Go read this link from Financial Sense.com:

Now the Intl Monetary Fund has decided to conduct an investigation into the financial management of the US banking system! This is totally unprecedented. The German journal Der Spiegel wrote that the IMF had informed US Federal Reserve chairman Ben Bernanke of its plans for a general examination of the US financial system. The IMF board of directors has ruled that a so-called Financial Sector Assessment Program is to be carried out in the United States. This, according to the German journal, “is nothing less than an X-ray of the entire US financial system… No Fed chief in US history has been forced to submit to the kind of humiliation that Ben Bernanke is facing.” For some reason, the entire story escaped the intrepid lapdog US press network system.

Bloggers Block… items of 2006

Call it fatigue.. call it New Years blaahhhgs.. call it laziness.

The meat of the matter is that I just haven’t felt compelled to blog recently. Th news lately has been particularly uninspiring. The Ukraine and Russia… in a tiff over gas delivery at market prices… threatened to destabilize gas supplies for a large part of Europe… oil and gas prices go up.. peak oil’s spectre draws a little closer.

Russia and Iran… meeting to figure out what to do with Irans nuclear enrichment program… but not much is really expected from it. Iran will continue to pursue nuclear technology no matter what, their oil fields have peaked, and they know it. So they’d rather sell their remaining oil (to China and India) and have nuclear power for their citizens (and a bomb for their enemies). The only thing we don’t know is how the western powers, and Israel will react.

Ariel Sharon. Likely on his deathbed. And with it perhaps this round of optimism for a solution in Israel and Palestine. For all his many many many faults, Sharon is the only Israeli leader to have actually given back Palestinian territory. That says a lot. With him gone, and an election forthcoming… I don’t think anyone knows what’s going to happen.

Iraq… still a quagmire… now “a high chance for all out civil war“. Nobody predicted that (*snort*). The UK wants out. The US wants out (but won’t admit it) and will now get out without paying for rebuilding. The Iraqis don’t know what they want… welcome to “representative” government… please pass the AK-47.

Global Climate Change. Still happening. Still being ignored. 2005 was the 2nd warmest year on record. Ice roads in Northern Alberta, Canada are thawed.. the Northwest Passage is opening for business. Yet Canada still pumps tons of CO2 into the atmosphere at a rate worse than the United States. But hey.. at least Canada is willing to lie about their contribution to the problem… and put on a brave face right?

Canadian Election… 2 weeks to go. The Conservatives are now leading in the polls, including a few ridings in Quebec. Barely… will they hold on? Are the polls correct? Will the Liberals be decimated ala Mulroney, by a Conservative/NDP pairing? Will a Conservative Minority last more than 2 months?

Welcome to 2006 everyone. It’s more of the same…. but the screws are tightened down just a little tighter… and my head is pounding just a little harder.

Here’s a question for you people out there…

What will be the overriding news item of 2006?

Last Year it was the price of oil, Hurricanes/Weather/Climate Change, and Iraq

Notice I didn’t mention the bombings in London? They weren’t at the top of my mind… were they on yours?

Will Al Qaeda pull off another major attack in the US? Does it matter?

Personally… I think oil and gas prices, supplies and demand will be the ongoing and overriding story of 2006 because everything ties into it. Gazprom/Russia will continue to flex it’s monopolistic muscle in the former Soviet Bloc and Europe. Iran will threaten to cut off or blockade oil shipments from the Middle East. Iraq will still not reach it’s pre-Invasion output of oil for more than days at a time. Saudi Arabia will (or will be forced to) finally admit that their production has peaked. Venezuela, Iran, Bolivia, and Cuba will form a new “Axis of Oil” trading in Euros and threatening US Oil imports and foreign debt. OPEC will admit they cannot raise production any higher. The US Economy will start to feel the pinch of limited oil supplies and limited cash… the monthly oil related stock market drops will turn into weekly events… which is actually a good thing. It will spare us a huge crash.

2006 will be the warmest year on record. There will be fewer hurricanes, however, two Category 4 or 5 hurricanes will impact the US… further disrupting oil/gas/refinery flow. Plans to drill in ANWR will again be pushed through Congress, but fail as more US lawmakers realise it is not the answer.

As I saw on another prediction site (I think it was the BBC) the most important event of 2006 will be the one that nobody can predict. Be it a terrorist attack or natural disaster… these things happen. However, the difference in 2006 will be the vunerability of the world at large and the worlds economy to the slightest of shocks. With oil and gas supply and demand running on a razor thin margin, it won’t take much to make a big impact on your lives and mine.

Wow.. I think that’s the most pessimistic I have ever been…

Iranian situation – marching towards March

Over the weekend some interesting information sort of coalesced into what might be considered a strong indication for what might happen come springtime.

This information spans multiple issues, from the Iranian nuclear issue, to peak oil, to Israeli security, to the global economy and the massive amounts of US debt in foreign hands.

  1. Israeli sources last week said Iran was 3 months from having the capability to build a nuclear device (the JPost says “to build a bomb, but I think that is over-simplifying things a little)
  2. Israels election will be March 28, 2006
  3. Iran will create a new Oil Market, to compete with the “Brent Crude”,”Texas Crude”, and “Dubai Crude”… but traded in Euros instead of Dollars.
  4. The US Fed will stop publishing M3 results, which tracks production and is used to calculated inflation (and thus how much USD the Government is printing) on March 23, 2006

I believe the most ominous of these snippets is not the Israeli saber-rattling but rather the ceasing of puplication of the M3 reports. This, combined with the new Iranian Oil Bourse seem to point to something on the horizon. I think the “power-that-be” see something coming and a sort of circling of the wagons is happening.

The M3 report, as explained here, is a comprehensive report published by the government which basically tracks all production, savings, accounts and spending in the US economy. Thus, it is used to track inflation and the printing of US dollars to keep up with US Debt. Without that information it becomes quite a bit harder for economists and investors to know exactly what is driving the economy.

So with US Current account deficits and government and consumer debt at all time highs due in large part to foreign investors holding vast amounts of “PetroDollars” what will happen when Iran starts this new “Iranian Oil Bourse” trading in Euros? That will mean more US Dollars being converted to Euros, and the US having to print more USD to keep up. This website has a good explanation of inflation since the 30s… and how in the past 20 years printing USD has been used to prop up the US Economy.

According to the explanation above:

The average annual increase in M3 during the past 20 years was 5.9%. However, during the past 3 months, M3 has increased at an annualized rate of over 10%. Given that the US dollar is also the reserve currency of the world, such high inflation rates for the dollar could impact more than the value of this currency alone.

My understanding is that printing billions of USD to replace foreign currency reserves that are lost to the Iranian Oil Bourse/Euro would be reflected in these M3 reports. Unfortunately, we will apparently never know, at least directly, whether that is actually happening. And what is *excluded* from the M3 reports? Military expenditures, so what better way to “prove” the economy is doing OK than to boost the numbers that we *do* see?

I think Iran is causing the US Administration and Fed some serious angst and it has little to do with the Nuclear program. If anything, the indicators above would seem to point to the nuclear issue being used as a distraction mechanism, namely. Israel attacks Iran re: nuclear weapons (and to appeal to a new spring mandate)… incredible instability ensues… no one uses Iranian Oil Bourse (or it simply collapses) thus keeping USD in more foreign reserves and staving off the immense downward pressure on the US dollar and economy and boosting the already lucrative defense contractors/establishment.

Is it a bit tin-hatish? Sure. But call me crazy for thinking that wars have been started for far less.

And for the record, no I don’t think attacking one of the Iranian nuclear establishments will do it… this isn’t Iraq… it’s not all at Osirak… it is well documented that the Iranian nuclear “complex” is spread wide and far across the Iranian landscape. If Israel really wants to deliver an Osirak-like blow, they’d have to do so in multiple operations… and without the cover and distraction provided to the Iraelis by the Iran-Iraq war as there was in ’81, it’s hard to fathom how the Iranians would not retaliate with everything they had. So I don’t think the Israelis are even that nuts… but hey, what do I know?

So in short… you may want to make your New Years resolution “Spend less, save More”… and stick to it this time. Because come springtime, world events may not be so conducise to that $10,000 Mastercard bill.


I just found that local business/investment guru and talk-show host Michael Campbell (he’s also BC Premier Gord Campbell’s brother) includes the above linked article by Paul van Eeden on his MoneyTalks.net website. Just thought this would interest those who might be skeptical of the qualifications of my sources.

Update 2

Fed Reserve Bank of San Fransisco definition of “M3” and for the sake of completeness, can cause definitions are funny… I included M2 and M1 as well. 🙂

M3. Measure of the U.S. money stock that consists of M2 plus large-denomination time deposits (in amounts of $100,000 or more), balances in institutional money funds, RP liabilities (overnight and term) issued by all depository institutions, and Eurodollars (overnight and term) held by U.S. residents at foreign branches of U.S. banks worldwide and at all banking offices in the United Kingdom and Canada. Excludes amounts held by depository institutions, the U.S. government, money funds, and foreign banks and official institutions.

M2. Measure of the U.S. money stock that consists of M1 plus savings deposits (including money market deposit accounts), small-denomination time deposits (time deposits-including retail RPs-in amounts of less than $100,000), and balances in retail money market mutual funds. Excludes individual retirement account(IRA) and Keogh balances at depository institutions and money market funds.

M1. Measure of the U.S. money stock that consists of (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) travelers checks of nonbank issuers; (3) demand deposits at all commercial banks other than those due to depository institutions, the U.S. government, and foreign banks and official institutions, less cash items in the process of collection and Federal Reserve float; and (4) other checkable deposits (OCDs), consisting of negotiable order of withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, credit union share draft accounts and demand deposits at thrift institutions.