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Showing posts with label economics. Show all posts
Showing posts with label economics. Show all posts

Monday, April 18, 2011

What the Frack?

You may have heard about it on the news recently: Fracking. The long term for it is Hydraulic Fracturing. Its a process by which millions of gallons of chemicals and water are pumped deep into gas-containing shale rock to fracture it and let the gas seep to the surface for collection. Its the biggest boon to the Natural Gas industry in decades, and is helping to drive down energy prices across the USA, which happens to be one of the largest sources of natural gas energy in the world. Heres a neat diagram showing how fracking works

On the surface, the process seems innovative and safe, but deep below the ground the chemicals, such as Methanol, are seeping into water tables and contaminating important aquifers in the northeast and Rocky Mountain west states, where the largest reserves of natural gas lie. Many gas companies claim the water stays deep underground, but natural capillary forces move the chemicals and contaminated water upward into looser surface layers where aquifers lie. Such chemicals are often highly poisonous and toxic to both the environment and to us Humans. These normally shouldn't be used in these instances, but thanks to a loophole in an energy bill passed by the Bush Administration and hurried through congress by Dick Cheney and Halliburton, these chemicals are not monitored by the E.P.A. and thus can be used without regulation, polluting the environment without any liability to the natural gas companies.

To make matters worse, since the recession hit 3 years ago, gas companies have been baiting landowners with high-paying contracts to use their land for fracking. A one-time installation of a fracking well can pay off in a short amount of time to the company while leaving the landowner with slowly degrading well water and hazardous chemicals. In the popular documentary Gasland, one homeowner in Pennsylvania is able to light his faucet tap water on fire simply due to the high concentration of gas and methanol seeping into his wellwater. Its disgusting, and people don't yet know how hazardous fracking really is. We urgently need to spread awareness of this problem and combat this situation before it gets out of hand and we're left with poisoned citizens and degraded watersheds across the U.S., simply because we wanted cheap gas.

Wednesday, April 13, 2011

Our Food Supply is in Trouble, but You can Help

Its time for another post, and sadly schoolwork has gotten the better of me and i haven't been able to post since this past weekend. Nonetheless, today I'm delving into the current drought and state of the nation's agricultural landscape. Thanks to the active La Nina winter, most of the northern U.S. experienced much above normal rain and snowfall, building up plenty of groundwater and filling rivers to their banks coming into this year's growing season. however, the southern half of the country has been suffering. From Arizona to North Carolina, an extensive and severe drought continues, and will only get worse as we move into summer, when once again the storm tracks edge north and the hot and heavy summer sun bats down on the landscape. Heres the current drought map and forecast, courtesy of the Climate Prediction Center
As you can see, the widest extent of the drought is across the great plains and high country of the lower Rockies Mountains. This is bad news for our wheat, cattle, and corn crops, which rely on warm thunderstorms and plenty of grass and groundwater for growing, but all this is in danger. With no rainfall, the water table drops, and irrigation becomes more costly. Aquifer levels which are already dropping at unsustainable rates will only deplete faster, and less net crop output will come out of the lower plains if this drought indeed continues. 


This problem is also running into another issue: Oil Prices. With a barrel of crude oil sitting between $105 and $115 as i write this, it has become very expensive to work the land, especially with the size of industrial equipment and petrochemical inputs to our modern form of agriculture. This is all bad news, but with hardship comes opportunity...

This could be our chance to localize our food sources. If we keep putting pressure on the great expanses of the plains to produce our food for us all the way out on the coastline, we will only do more damage to the land. We whould rely on farms and pastures closer to home, and let the residents of the plains grow their food for themselves first, lowering demand for their land and thus helping reduce some of the adverse effects of the drought. In turn, this can also lower food prices, which are rising globally. Theres different ways of taking action: 

Participate in CSA: Community-Supported Agriculture. For a yearly or seasonal fee, you can ensure fresh produce and meats get delivered or provided for you from your local farms, while you help support them. That way, the distance your food has to travel from field to your fridge is much less, cutting back on the use of fossil fuels (which lowers oil prices) as well as reducing carbon emissions into the environment.

Ask your local grocer for local or organic foods: often organic foods are sourced much closer to your supermarket due to their shorter shelf lives, and they use less petrochemical fertilizer and inputs than typical industrially-grown crops. Many large supermarkets have their own organic in-house brands which are comparable in price to brand name non-organic foods

Eat In-Season foods: Keep a list of what produce are in season and where they come from. That way, you dont have to waste all of the fossil fuels shipping strawberries up from chile in january. Lowering food miles (miles traveled between the field and your fridge), helps lower oil demand and food prices overall. 

It's worth the minor sacrifices to do your small part to help ensure that you get low-cost healthy food without doing damage to the environment.

Monday, April 4, 2011

Gas Prices are on the Rise

Heres an article for my buddies in the US. Some of you reading this may call it Petrol, but here we call it Gasoline, and in the U.S., we're starting to understand what it feels like to pay out the nose for the most precious fuel that we use every day. Recently, the price for a barrel of light sweet crude oil (The main oil used for automotive gasoline), has started to rise after spending a couple months between $80 and $100 per barrel with the price of a gallon rising to over 3.70 (close to $1 US per liter). Heres the past 3 months gasoline price chart, along with the price of a barrel of crude oil, courtesy of http://www.gasbuddy.com

Many people are up in arms over the gas prices, blaming everything from the President to greedy businessmen. However, the truth makes a lot more sense. Theres three main factors at play here

1: The Middle East: Uprisings and revolutions over the last 4 months have put pressure on many governments in northern Africa and Arabia that regulate the drilling and shipping of oil around Europe, Africa, and Asia, as well as much of the oil exported to the US. This tension has caused insecurity in the prospect of receiving oil, forcing a higher demand to claim oil contracts at lower prices, which in turn drives up the price. When a commodity is threatened, it costs more to secure the shipment of it.

2: Inflation: The value of the U.S. dollar is slowly falling in global markets. Seeing as much of the oil shipped around the world is traded on the U.S. dollar, when its value falls, it costs more for each barrel of oil, pushing prices up. With wages being outpaced by inflationary growth, people aren't going to be making enough money to catch up to price increases, placing pressure on our wallets every time we pull into the gas station.

3: Supply and Demand: more and more economists are becoming smart to the idea of Peak Oil: The idea, nay the fact, that world oil production is or will be peaking soon, and that after this peak, we will no longer be producing enough oil to keep up with its rise in demand. As oil becomes more and more scarce over the coming decades, it will be valued higher and higher, until its either unaffordable, or completely gone. While this  factor is the least considered in day to day trading of oil, its certainly the most certain.

What can we do? Conserve. Drive less often when you don't need to. Walk to the store or to pick your kids up from school. If you have a car that gets less than 20mpg and is over 5 years old, consider upgrading to a newer, more fuel efficient car. The money you spend on increased efficiency can be saved over the long term when you will be thanking yourself for not having to stop so often for gas when the price reaches $4-5 per gallon. Also, try driving 55. Unless you are in a hurry to work and willing to burn the gas, you don't need to rush everywhere. Every increase of 5mph above 55 you drive can chop a mile or two per gallon off your fuel mileage. After all, the EPA mileage estimate for your car is measured at 55mph, so if you drive 65 in a car that is rated for 30mpg you can really only be getting 26mpg, and that can make quite a difference. If we work collectively to lower the demand for gasoline, we can bring the demand down in the markets and hopefully slow the rise of oil prices and not break the bank.