December 2015 – O'Brien International

Venice is a space station

Venice is a space station.

Hear me out. I’m not saying this just to accept the Mary McCarthy Challenge (“Nothing can be said here (including this statement) that has not been said before.”).

The picture above is of the Campo San Barnaba. You can just see a boat in green, with some carts in front of it.

Those carts are for trash. Venetians put out their trash every day in bags, and carts like those are pushed by hand to come along and pick them up. The mechanical arm that’s also just visible on the boat picks up the cart, the bottom falls out, and the trash goes into the hold of the boat.

Why?

Because everything in Venice comes in by boat, and everything has to go out by boat.

Yes, there’s the Piazzale Roma, where the buses come in, and its garage. But even then, to get to anyplace in the city itself, it has to be transferred to a boat.

The fire department (Vigili del Fuoco). Police. Ambulances. Groceries. Packages. Produce. Mass transit. All of these we saw as boats, at one point or another on our visit.

The boats orbit the city, like a hazy swarm of fireflies.

And if the boats are the shuttle pods of the city, the railway coming into Ferrovia Santa Lucia is the space elevator. Tying the city to the mainland by means of the causeway.

Others have commented on how Venice is without cars. That carlessness also plays into the space station nature of the town — one is forever going up and down stairs, down narrow passageways, seeing the boats just in the corner of one’s eye, or one rides on the vaporetti through the tunnels of the Grand Canal, the Giudecca Canal, or the northern edge by the Fondamenta Nove.

Another aspect that’s like a space station is how Venice is fully urbanized, edge to edge of the archipelago. Others have commented on this, but it makes the calli and canali seem all of a piece, all going to the skin where Venice meets the laguna.

Venice is of the Earth, but not on the Earth. Tethered, but floating. That it floats on water instead of in space is immaterial.

Venexia is a space station.

Peak oil demand?

The graph shows US consumption of oil, not in barrels, but in quadrillions of BTUs (“quads”).

Topline figures: Consumption in 2005 – a little over 40. And the peak. Consumption in 2015: Just under 35.

Call it decline of 5.5 — or about 13%.

That’s part of why the Saudis keep pumping — demand really has dropped off that much. Even as US GDP has grown from $13.1 trillion to today’s $16.8 trillion.

Let’s say that again — oil use in energy terms has fallen 13% while GDP has grown by 28%. It took roughly 3 quads of energy from oil to make a trillion dollars of GDP in 2005. Today it takes roughly 2 quads.

So it isn’t just the US is producing more oil of our own. It’s also we’ve become much more efficient at using it.

Putin’s bathtub force

The image above is a summary provided by the US Navy’s Office of Naval Intelligence in their new report, the first made publicly available since 1991.

Here’s their account of the Black Sea Fleet:

4 submarines
1 cruiser
1 destroyer
2 frigates

That’s it. That’s what Putin seized Crimea for. 8 warships.

Here’s how the US Navy defines a single Carrier Strike Group:

* a carrier — The carrier provides a wide range of options to the U.S. government from simply showing the flag to attacks on airborne, afloat and ashore targets. Because carriers operate in international waters, its aircraft do not need to secure landing rights on foreign soil. These ships also engage in sustained operations in support of other forces.
* a guided missile cruiser — multi-mission surface combatant. Equipped with Tomahawks for long-range strike capability.
* two guided missile destroyers — multi-mission surface combatants, used primarily for anti-air warfare (AAW)
* an attack submarine — in a direct support role seeking out and destroying hostile surface ships and submarines
* a combined ammunition, oiler, and supply ship — provides logistic support enabling the Navy’s forward presence; on station, ready to respond

So, the Black Sea Fleet is roughly equivalent to one US Carrier Strike Group. Minus the carrier, of course.

And, um, oh yes, the US has… ten of them.

Now think about what that says of Putin’s thinking regarding the readiness and utility of his other forces.

It’s a mystery

See that graph there? That’s the price of oil for the period 2013 through 2015.

Here’s the question: Why has oil fallen in price so dramatically?

I know what the standard answer is — The US has had the shale oil boom, and become nearly self-sufficient, and that increase in supply has led to the fall.

But there’s a problem with that. Saudi Arabia.

I was listening to the BBC’s World Service earlier today, and they had an interview with someone giving a bracing analysis of the conditions in Saudi. Austerity as far as the eye can see, with major projects being cancelled, all because their population is rising, even as their oil revenues have dropped off.

I had to ask: Why?

It’s been a given for decades that the Saudis are the swing producer in global oil production. The price of oil largely depends on how much oil Saudi Arabia brings to market.

So why haven’t they reduced their output? Why haven’t they taken steps to offset whatever increases the US may be bringing to the market, so the price can be stable? Why are they risking their own internal stability by allowing oil supply to be so high it depresses prices?

The only thing I can guess is… The Saudis are scared to death of a dropoff of demand. Which would cause oil prices to slump even lower.

This has always been my problem with the Peak Oil hypothesis. If we really are so close to the peak, and thus a dramatic increase of price, every barrel of oil sold today forgoes that future higher price. So, why sell oil on what is essentially a discount? Why were the Saudis selling like there was no tomorrow?

Again — the only thing I can think of (and I would welcome a different idea) is the Saudis are frightened demand is a will of the wisp, and subject to collapse.

How much oil do the Saudis have? What do they think of their prospects to sell that oil in the future? Look at what the Saudis do, not what others say.