Thank You Fukushima: Global Cancer Cases To Skyrocket | Zero Hedge
Thank You Fukushima: Global Cancer Cases To Skyrocket | Zero Hedge.
The incidence of cancer worldwide is growing at an alarming pace. A new report by the World Health Organization finds that, as USA Today reports, new cancer cases will skyrocket globally from an estimated 14 million in 2012 to 22 million new cases a year within the next two decades, the report says. During that same period, cancer deaths are predicted to rise from an estimated 8.2 million annually to 13 million a year. The total annual cost globally of cancer was estimated to reach approximately $1.16 trillion in 2010, which is damaging the economies of even the richest countries and is way beyond the reach of developing countries.
…
The most common cancers diagnosed globally in 2012 were those of the lung (1.8 million cases, 13% of the total), breast (1.7 million, 11.9%), and large bowel (1.4 million, 9.7%), the group says. The most common causes of cancer death were cancers of the lung (1.6 million, 19.4% of the total), liver (0.8 million, 9.1%), and stomach (0.7 million, 8.8%).
…
“These new figures and projections send a strong signal that immediate action is needed to confront this human disaster, which touches every community worldwide, without exception.”
The report “actually puts onto paper what a lot of us have been saying for some time,” says Otis Brawley, chief medical officer for the American Cancer Society. “The burden of cancer internationally has doubled over the last 20 years, and it will double over the next 20 years. These facts support that we need to be serious about cancer prevention activities.”
…
As a consequence of growing and aging populations, developing countries are disproportionately affected by the increasing numbers of cancers, the report says.
More than 60% of the world’s total cases occur in Africa, Asia, and Central and South America, and these regions account for about 70% of the world’s cancer deaths, a situation that is made worse by the lack of early detection and access to treatment, it says.
…
The total annual cost globally of cancer was estimated to reach approximately $1.16 trillion in 2010, which is damaging the economies of even the richest countries and is way beyond the reach of developing countries, the report says.
Of course, the ongoing debacle in Fukushima will only exacerabate this trend as we have previously noted here – among Fukushima youths, here, and here – US sailors.
Mixed Messages: Clearing the Air on the Keystone XL environmental report | – Environmental Defence
Mixed Messages: Clearing the Air on the Keystone XL environmental report | – Environmental Defence.

Reaction was fast and furious to the State Department’s final report on the environmental impacts of TransCanada’s proposed Keystone XL pipeline on Friday, and you couldn’t be blamed if you wondered if environmental groups, the oil and industry and government were responding to completely different reports.
While many headlines trumpeted the report as good news for Keystone XL backers, we believe it swung the pendulum towards a rejection of the pipeline by President Obama.
Why? Because President Obama says that he is committed to climate action, and the report is clear that in a world where climate change is taken seriously, the Keystone XL tar sands pipeline would undoubtedly have a significant impact on climate change.
It is the President who will make the final decision to approve or reject the pipeline, and if he is serious about his commitment to climate action, this report gives him everything he needs to reject the pipeline.
The report looks at a series of scenarios and the climate impact of the pipeline in each one. In one of these scenarios, we are tackling climate change; demand for oil continues to drop in North America and the tar sands continue to face transportation constraints – not unlike the constraints they are facing today.
While the report still downplays the climate pollution, it is in this scenario that the pipeline would contribute most significantly to global carbon pollution, up to 5.7 million news cars or 7 coal-fired power plants worth of emissions per year. The other scenarios are ones in which the global demand for oil is aligned with carbon emissions that would lead to dangerous global warming. The other scenarios are ones where we are not meaningfully tackling climate change.
If the President is committed to a safe climate future – it is one that does not include the Keystone XL tar sands pipeline.
The tar sands exist because of a perfect storm of conditions: a high oil price, no meaningful regulatory costs, and a world with little action on climate change. This is a set of conditions that is crumbling despite increasingly desperate efforts to keep this expensive and carbon intensive operation profitable. Industry and government know very well that pipelines, and especially Keystone XL, are the key to being able to lock in more expansion and more production.
While some who support the pipeline argue that tar sands oil will still be brought to market regardless of whether the pipeline is approved – namely by rail – the cost, lack of policy, public concern and logistics are enough for experts and industry alike to know that rail cannot replace pipelines. In fact, industry projections depend on approval of every pipeline on the table plus some rail to be able to triple tar sands product as planned by 2030.
Notably, the State Department itself threw cold water on the chances of Enbridge’s proposed Northern Gateway pipeline being built, stating that“…this project has been so derailed via political opposition, state determines ‘it remains uncertain at this time if the project would receive permits and be constructed and therefore… was eliminated from detailed analysis.”
Industry’s hopes for tar sands expansion are far from inevitable. Regardless of the Keystone outcome, it will never be easy to build another giant tar sands pipeline on this continent again.
Climate change is one of the greatest challenges of our time and the President has committed to doing everything he can to avoid the worst of it. The Keystone XL tar sands pipeline is the test of his sincerity. It is the single biggest thing he could do as President to make it clear to Canada and the world that the era of reckless fossil fuel development is over. That a country – like Canada – can’t get away with leaving its fastest growing source of greenhouse gas pollution completely unregulated. That now is the time to be investing in smarter, cleaner energy, not locking ourselves into decade’s worth of some of the world’ most carbon intensive fuels with a new giant pipeline.
Last week in his State of the Union speech the President said, “Climate change is a fact. And when our children’s children look us in the eye and ask if we did all we could to leave them a safer, more stable world, with new sources of energy, I want us to be able to say yes, we did.”
The reason we can be so optimistic about this report is that it gives the President the evidence he needs – if he is serious about the climate crises – to reject this pipeline, and leave a legacy of a clean energy future.
High Risk’ Drugs Used in Livestock » The Epoch Times
High Risk’ Drugs Used in Livestock » The Epoch Times.
Freedom of Information Act docs show FDA ignored dangers
Cattle eat on a farm near Cuba, Illinois, Aug. 3, 2012 near Cuba, Illinois. (Scott Olson/Getty Images)
That’s a breach of their responsibility and the public trust.
Carmen Cordova, NRDC microbiologist and lead author of the NRDC analysis
The U.S. Food and Drug Administration (FDA) has vowed to cut antibiotics use for livestock, but a new report finds that regulators aren’t taking the problem as seriously as its own research would suggest.
“Playing Chicken with Antibiotics” is a report by the Natural Resources Defense Council (NRDC) that looks at FDA documents obtained by a Freedom of Information Act request. Documents show that between 2001 and 2010, the FDA reviewed the safety of 30 penicillin and tetracycline feed additives approved for “nontherapeutic use” in livestock and poultry.
The documents show that the FDA rated 18 of the drugs as high risk of exposing humans to antibiotic resistant bacteria through the food supply and of adversely affecting human health.
For the 12 remaining drugs in the FDA review, drug manufacturers did not provide proof of safety for humans.
According Carmen Cordova, NRDC microbiologist and lead author of the NRDC analysis, the FDA knowingly allowed the use of drugs in animal feed even though they failed to meet approval standards the agency set in 1973.
“That’s a breach of their responsibility and the public trust,” Cordova said in a statement.
According to the NRDC report, the significance of these previously unreleased documents extends far beyond the 30 drugs reviewed. The tetracycline and penicillin FDA examined only make up about half of all the antibiotics used in animal agriculture. The NRDC said generics and other feed additives approved for similar uses may also contribute to antibiotic resistance risks.
“This discovery is disturbing but not surprising given FDA’s poor track record on dealing with this issue. It’s just more overwhelming evidence that FDA–in the face of a mounting antibiotic resistance health crisis—is turning a blind eye to industry’s misuse of these miracle drugs,” Cordova added.
Resistant to Change
In the 1950s, mixing low doses of antibiotics into animal feed was hailed as a miracle of modern science. The practice promoted faster growth and prevented the infections that often plague animals in the crowded, unsanitary conditions of factory farms.
Regulators first detected problems in antibiotic resistance linked to livestock feed additives in the 1970s. Yet despite FDA’s own research and warnings from the public health community about drug resistant superbugs, efforts to curb antibiotic use on the farm have been slow.
In December 2013, the FDA gave final guidance on a policy to address the issue. However, instead of strict regulations, the agency called for the industry to voluntarily withdraw from antibiotic use, “because it is the fastest, most efficient way to make these changes.”
“Based on our outreach, we have every reason to believe that animal pharmaceutical companies will support us in this effort,” said Michael Taylor, FDA’s deputy commissioner for foods and veterinary medicine, in a statement.
Representatives from the drug and livestock industries assert that most antibiotics found in factory farming are used responsibly—for the treatment of diseased animals. But the claim is hard to verify because regulators insist that details of livestock antibiotics use remains a trade secret. According to NRDC, 70 percent of all medically important antibiotics sold in the United States go to livestock production.
The NRDC won a lawsuit against the FDA for failing to address the threat posed by the misuse of antibiotics in the livestock industry. However, the FDA has appealed the ruling, and a decision is now pending in the U.S. Court of Appeals for the Second Circuit, in New York.
U.S. Crude Oil Exports, Really? – A Look at the UK
U.S. Crude Oil Exports, Really? – A Look at the UK.
Last week the U.S. Senate’s Energy Committee held the first hearing in decades on the question of whether exporting US crude oil, prohibited by law since the 1970s, should be allowed again. Attendees heard proponents say that allowing crude exports would hold prices down with opponents claiming the opposite case.
To be clear, these would not be net crude oil exports. Of the 19+ million barrels a day that we consume at present, we import roughly 7.5 million barrels of crude per day and export roughly 2.5 million b/day of petroleum products (diesel and propane, for example). And even the US EIA admits we’ll be importing millions of barrels of crude oil for decades, in fact indefinitely.
So this is really an intramural fight: US oil producers want to be able to export while refiners and most users want to keep the crude at home. As Senator Ron Wyden, Chairman of the Energy Committee, said in his remarks, don’t expect this argument to be resolved quickly.
Here’s a related thought experiment. It involves the UK crude oil situation between 1980 and today, shown in Figure 1 below. After joining the exclusive club of Top 20 world oil producers in 1978, two years later the UK’s oil producers joined the ranks of oil exporters. Over the next 25 years they exported roughly ¼ of their total oil production, earning around $20+ per barrel most of those years. But after production peaked in 1999, within six years the UK was back to importing oil, at an average price approaching $100 a barrel. Imports have grown back to ½ million b/d, which is 1/3 of total consumption.
My question to the Brits: if you could turn the clock back, would you allow all your oil to be produced at the maximum possible rate, earning the amount of export dollars you did, if it meant that within a generation you would be back to being an oil importer paying roughly five times as much per barrel? In other words, how did the buy-high sell-low plan work for you? And were those exports in your best long-term national interests? Didn’t think so…
There are almost as many differences as there are parallels between the UK and US circumstances. But they share a bottom-line question: is it in the USA’s best long-term national interests to produce unconventional shale oil sufficiently fast that we end up exporting some of it overseas? Didn’t think so…
Fig. 1: The UK exported oil for 25 years from 1980 through 2005, shown above as the amount produced above the consumption line. Exports peaked at 1.2 million barrels a day in 1999, the same year that production peaked at 2.93 million b/d. imported roughly a half-million b/d in Data is from BP (2013).
Steve Andrews is a former energy consultant and a contributing editor for Peak Oil Review.
Iraq: 935 Lies, A Tyrant with “Weapons of Mass Destruction” | Global Research
Iraq: 935 Lies, A Tyrant with “Weapons of Mass Destruction” | Global Research.

“The greatest crime since World War II has been U.S. foreign policy.” (Former US Attorney General, Ramsey Clark, b 1927.)
As outlined by Felicity Arbuthnot in this incisive historical review, the US is now providing weapons to the Maliki government to fight Al Qaeda in Iraq and the Levant (AQIL). In a bitter irony, they are also supplying AQIL with weapons to fight the US puppet regime.
This article carefully documents the role of war crimes in feeding the military industrial complex. “War is Good for Business” and so are war crimes. Russia is tacitly complicit in selling weapons to the Iraqi “government” which constitutes a US proxy regime.
The not so hidden objective is twofold: to feed multibillion dollar contracts to the US weapons producers while also contributing to the ongoing destruction of Iraq as a nation state. (GR Editor. M.Ch.)
Iraq War Preparations Behind Closed Door
On February 10th 2003, German Green MP Joschka Fischer, then Foreign Minister and Vice Chancellor, stunned an international security conference, in Munich’s opulent 19th century Bayerischer Hof hotel discussing the proposed invasion of Iraq, by banging on the table, switching to English to guarantee Donald Rumsfeld understood and shouted of the US arguments for war: ” … I am not convinced.” As he spoke, he gazed at the then US Defence Secretary over his silver, half framed spectacles, concluding: “That is my problem, I cannot go to the public and say, ‘these are the reasons’, because I don’t believe in them.”
A stony faced Rumsfeld was described as:”gazing at Mr Fischer through a tropical plant … he looked like a tiger in the jungle, ready to pounce.”
The astute Herr Fischer recognized a pack of lies when he heard them and saved Germany from enjoining a war of aggression – Nuremberg’s “supreme international crime” – against a country which posed no threat and had no way of defending itself against the world’s most devastating and destructive weapons, whose poisonous residual pollution will continue to maim and kill generations to come for all time.
Tony and George W.
Both Tony “I’d do it again” Blair and George W. Bush face a citizen’s arrest whenever they appear in public, with Blair also reiterating with others responsible for bombing Iraq back to a pre-industrial age (again) that the country is a better place without Saddam, “a tyrant who killed his own people.”
In fact the Western trumpeted mass graves found in Iraq were from the 1991 war and subsequent US encouraged uprising and it’s predictably violent suppression.
In Kurdistan, where the people in the Iran border are were terribly caught in the crossfire from the weapons used by both devastated sides (and sold to both sides by the US) Saddam Hussein was firmly in the firing line for the terrible deaths at Halabja. However a meticulous 1990 US War College Report threw doubt on the facts of even that horror, stating: “Iraq was blamed for the Halabja attack, even though it was subsequently brought out that Iran too had used chemicals in this operation, and it seemed likely that it was the Iranian bombardment that had actually killed the Kurds.” (i)
Further, according to a 2008 study (ii) George W. Bush: “and seven top officials – including Vice President Dick Cheney, former Secretary of State Colin Powell and then National Security Adviser Condoleezza Rice, made 935 false statements about Iraq” during the two years following 11th September 2001.
However, the US and UK are seemingly remarkably selective when it comes to tyrants who “kill their own people”, and not only have failed to censure their tyrannical Iraqi puppet, Nuri al-Maliki, but are arming him to the teeth with the same weapons which are linked to the horrific birth defects, and cancers throughout Iraq, which he is now using on “his own people.” Moreover, if allegations from very well informed sources that he holds an Iranian passport are correct, to say that US-UK’s despot of choice appears in a whole new political light would be to massively understate.
“Counterterrorism” is “Good for Business”
To facilitate Al-Maliki’s assault on Iraq’s citizens, the US “rushed” seventy five Hellfire missiles to Baghdad in mid-December. On 23rd January Iraq requested a further five hundred Hellfires, costing $82 million – small change compared to the $14 Billion in weapons provided by America since 2005.
The AGM-114R Hellfire II (image below), nauseatingly named “Romeo”, clocked in at: $94,000 each – in 2012. Such spending on weaponry in a country where electricity, clean water, education and health services have all but collapsed since the fall of Saddam Hussein.
Last week an “American cargo jet loaded with weapons” including 2,400 rockets to arm Iraqi attack helicopters also arrived in Baghdad.(iii)
This week a contract was agreed to sell a further twenty four AH-64E attack helicopters (image below) to Iraq “along with spare parts and maintenance, in a massive $6.2 Billion deal.” With them comes the reinvasion of Iraq, with: “hundreds of Americans” to be shipped out “to oversee the training and fielding of equipment”, some are “US government employees”, read military, plus a plethora of “contractors”, read mercenaries. (iv)
According to Jane’s Defence Weekly, on November 15th 2013 Iraq also took delivery of: ” its first shipment of highly advanced Mi-35 attack helicopters as part of a $4.3 Billion arms purchase from Russia”, of an order of: “about 40 Mi-35 and 40 Mi-28 Havoc attack helicopters.”
“Defeating Al Qaeda”, “Saving the Lives of Civilians”
The all to “attack his own people” in the guise of defeating “Al Qaeda” in Anbar province and elsewhere where the people have been peacefully protesting a near one man regime of torture, sectarianism, kangaroo courts which sentence victims who have also had confessions extracted under torture.
The chilling death penalty regime, lead the UN Commissioner for Human Rights, Navi Pillay to comment, with considerable understatement: “Weaknesses in the criminal justice system means that the death sentence is often handed down under questionable circumstances in Iraq.”
On 22nd January it was reported that thirty eight people had been executed in the previous four days.(v) In 2013 Iraq had the third highest executions in the world, according to Amnesty International.
So now Al-Maliki is to unleash weapons of mass destruction on any who oppose his reign of terror. Hellfire missiles, also used by the US forces in Fallujah are described as “Thermobaric Hellfire Missiles”(vi) “Their effective performance in Fallujah led to major production contracts in 2005.”
“Thermobaric weapons use high temperature/high pressure explosives as anti-personnel incendiary weapons. They char or vaporise victims in the immediate target location, or suffocate and collapse internal organs with their extended blast/vacuum effects.”
“These weapons use a new generation of reactive metal explosives, some of which are suspected of using Uranium for the high temperature and increased kinetic blast effects. If Uranium enhanced warheads were used in Fallujah these may have contained between ten and one hundred kgs of Uranium per warhead, depending on weapon type.” Ongoing.
They also contain a fuel air explosive (fae) of which:
“The (blast) kill mechanism against living targets is unique and unpleasant … What kills is the pressure wave, and more importantly, the subsequent rarefaction (vacuum) which ruptures the lungs ... If the fuel deflagrates but does not detonate,victims will be severely burned and will probably also inhale the burning fuel. Since the most common fae fuels, ethylene oxide and propylene oxide are highly toxic, undetonated fae should prove as lethal to personnel caught within the cloud as most chemical agents”, according to the US Defence Intelligence Agency. Syria watchers please note. (Emphasis mine.)
The temperature within the detonation can reach 4,500 to 5,400 °F (2,500 to 3,000 °C). Outside the cloud, the blast wave travels at over two miles per second (3.2 km/s) – 7200 mph.
There are also reports of white phosphorous or napalm having being used by Maliki’s forces in Falluja. Certainly if one two minute video is authentic, as it appears to be, a tell tale inflammatory weapon which cannot be extinquished is well apparent. (vii – in Arabic, but the visual speaks for itself.)
On 28th January World Bulletin recorded: “Some 650 people have been killed or injured and 140,000 displaced by indiscriminate army shelling in Iraq’s western city of Fallujah” according to Iraqi Parliament Speaker Osama Nujaifi.
The people of Samarra, whose eye wateringly beautiful, golden domed Al-Askari Mosque was blown up in 2006, offered their homes and hospitality to the people fleeing Fallujah and Anbar province, but Maliki’s security warned Samarra residents not to accept any displaced Fallujah and Anbar families. They were given twenty four hours to leave Samarra, writes a friend in Iraq, adding: “Can you believe such criminality? Forcing the kicking out the refugees who left their houses due to heavy bombing by Maliki’s criminal forces?”
On Thursday 30th January a source with contacts in Fallujah gave the names behind the statistics of just a few of the injured arriving at Fallujah General Hospital:
Iman Mohammed Abdul Razzaq 40 years old (female)
Isaac Saleh Mohammed 4 years (Male)
Abeer Mohammed Saleh 18 years old (female)
Shorooq Borhan Ali 7 years (female)
Ashoaq Mohammed Jassim, 25 years old (female)
Sarah Mohammed Odeh, 13 years old (female)
Fatima Mohammed Odeh, 15 years old (female)
Saleh Mohammed Abdul Razzaq 45 years old (male)
Nobel Peace Laureate Obama and Prime Minister David Cameron’s regimes are as culpable for their continuing support and facilitating of Al-Maliki’s crimes against humanity as were Bush and Blair in the lies that delivered Iraq’s ongoing death and destruction.
But they would do well to note that the escalation of the unrest in Fallujah began on the 30th of December, the anniversary of Saddam Hussein’s execution – by a man who was also called Al-Maliki.
The puppet Iraqi Prime Minister further enraged a justifiably angry population last week with a speech on TV talking of the interference of other countries and their support for terrorist groups. The response was to point out his apparent amnesia over the fact that he entered Iraq on the back of the American tanks in an illegal invasion – and there is still the question of that alleged Iranian passport.
Given the Iraqi’s record of running out of patience with imposed despots, he should watch out. The last imposed Prime Minister called Nuri (al-Said) who ignored, as Wiki puts it: “poverty and social injustice, became a symbol of a regime that failed to address these issues, choosing a course of repression, to protect the privileged”, met a very unpleasant end.
As mentioned before, Iraq’s history repeats in uncanny ways.
Notes
i. http://whatreallyhappened.com/WRHARTICLES/helms.html
ii. http://edition.cnn.com/2008/POLITICS/01/23/bush.iraq/
iii. http://freebeacon.com/abc-american-cargo-jet-delivered-weapons-to-iraq/
v. http://www.refworld.org/topic,50ffbce582,50ffbce59d,52e228fd4,0,,,.html
vi. http://www.conflictandhealth.com/content/5/1/15 vii. http://www.youtube.com/watch?v=3sd9NsHgxHU …
Global Defense Spending to Grow After Years of Decline – Bloomberg
Global Defense Spending to Grow After Years of Decline – Bloomberg.

The U.S. remained the top spender last year, at an estimated $582.4 billion, followed… Read More
Defense spending globally will increase this year for the first time since 2009 military budgets surge in Russia, Asia and the Middle East, according to an annual defense budget review by IHS Jane’s.
Four of the five fastest-growing defense markets last year were in the Middle East, the study found, according to a statement by the company. The defense budgets of Russia and China combined will exceed total defense spending of the European Union by 2015.
“Russia, Asia and the Middle East will provide the impetus behind the growth in global military spending expected this year and will drive the recovery projected from 2016 onwards,” Paul Burton, director of IHS Jane’s Aerospace, Defence and Security, said in the statement.
Russia, which is projected to increase defense spending by more than 44 percent in the next three years, now ranks as the third-largest military spender, pushing the U.K. into fourth place, the study showed.
The U.S. remained the top spender last year, at an estimated $582.4 billion, followed by China, with $139.2 billion. Russia spent $68.9 billion.
No region has seen a faster surge in defense spending than the Middle East, where Oman and Saudi Arabia have increased their military budgets by more than 30 percent in the last two years, the study said. Saudi Arabia’s budget has tripled in 10 years.
“We have seen a rapid acceleration of defense spending in the Middle East since 2011,” said Fenella McGerty, a senior IHS analyst, in the statement.
China’s Spending
China, already the No. 2 spender, will spend more than the U.K., France and Germany combined by 2015, McGerty said. China is forecast to spend $159.6 billion that year, compared with $149 billion for the three largest markets in Western Europe.
Total global defense spending this year is projected to reach $1.547 trillion, a 0.6 percent increase from last year’s $1.538 trillion, after adjusting for inflation, the study said.
That increase is the first since 2009.
“The decline in global defense spending over the past five years or so has been heavily influenced by the decline of the U.S. defense budget,” which was cut as part of the drawdown from the Iraq and Afghanistan wars, said Guy Eastman, a senior analyst.
“Combined with decreases in Western Europe, the portion of global defense represented by the West has and will continue to decrease over the near term,” Eastman said in the company statement.
U.S. Contractors
Major U.S. defense contractors, including Lockheed Martin Corp. (LMT), Boeing Co., Northrop Grumman Corp. (NOC) and Raytheon Co., are expecting to increase their international sales — especially to the Middle East — for everything from jet fighters to missile defense, said Kevin Brancato, a Bloomberg Government defense analyst.
Even so, the global market for these companies may be unchanged or decline slightly this year, particularly if Russia and China are driving the overall growth, Brancato said.
The study also identified long-term opportunities for defense companies in sub-Saharan Africa, where military spending rose by 18 percent last year. Angola’s spending grew 39 percent last year.
While the African market is expanding, “it still accounts for less than 2 percent of defense spending globally, so growth will need to continue in order for more opportunities to arise in the long term,” McGerty said.
IHS Jane’s is part of IHS Inc. (IHS), based in Englewood, Colorado.
To contact the reporter on this story: David Lerman in Washington at dlerman1@bloomberg.net
To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net
The moral of the natural gas/winter weather story | Peak Oil News and Message Boards
The moral of the natural gas/winter weather story | Peak Oil News and Message Boards.
If the ancient Greek storyteller Aesop were alive today, he might have written a fable about North American energy markets. Aesop’s sheet of papyrus may have ended with the moral: “If you wait long enough, gas prices will go up.”
Last week, the ticker showed the highest continental natural gas prices in four years, momentarily bobbing above $5.50 (U.S.) per 1,000 cubic feet (Mcf) in the United States and $5 (Canadian) in Canada. We know Aesop could have easily penned another truism, “Cold weather drives higher prices,” but would he have offered the more complex wisdom: “Prices under $3.50 are not sustainable?”
Are we to believe that the days of two or three dollars for a 1,000 cubic feet of the coveted heating fuel are gone?
Since December, the shivering populace on the eastern side of the continental divide have dialled up their thermostats and brought vigour back to winter natural gas consumption. Scenes of snowy roads and frosty mustaches made it look like conditions were exceptionally frigid in the U.S. and Canada. They were (and still are). But averaged over the span of the continent, the numbers tell a different story; the spreadsheets show that what we have been experiencing is nothing more than a good old-fashioned winter. While thermometers have been showing cold in the east, readouts in western states like California have been indicating warm temperatures.
Of all the natural gas burned in North America in one year, between 30 and 35 per cent is seasonally related to warming up our bodies in the winter months. Heating Degree Days (HDDs) are a measure of cold weather intensity that correlate directly to natural gas consumption. Figure 1 shows weekly U.S. HDDs from 2000 to present. The seasonality of heating is obvious: Furnaces are turned off in mid-summer and blowing hard in the third week of January.
What’s notable about our HDD chart this week is that there is nothing notable about this winter of 2013-14. Total HDDs have been close to the long-term average, back to 2000. In fact, this winter’s performance is unremarkably reminiscent of the winter of 2009-10.
It was the winter of 2011-12 that was weird – one of the warmest on record. And last winter, that of 2012-13, was also anomalously short on heating, and therefore gas demand. Back to back, these abnormally weak winters were juxtaposed against excessive gas output from shale drilling. On top of that, large quantities of associated gas – natural gas liberated as a byproduct from oil drilling – also pressurized the pipeline gauges to “full.” Storage levels ballooned out as a consequence. Not enough consumption and too much production combined in a “perfect storm” that pummelled gas for two years hence.
Today, North American natural gas production is still rising, but nowhere near the growth rate experienced between 2007 and 2012. During that boom era, productive capacity in the U.S. expanded by 20 per cent (10 billion cubic feet a day). Today, output growth is running at a reasonable 2 per cent to meet incremental demands, which means that the demand-pull of a normal winter isn’t masked by a surplus of production.
By the numbers, this coming year is like déjà vu 2010, which was arguably a pretty “normal” year. Volumes of natural gas in storage today – where supply meets demand – are on a restrained 2010 trajectory. By association, price indications for 2014 also seem to be tracking 2010. Back then Henry Hub averaged $4.40 (U.S.) Mcf while AECO logged the year at $4.00 (Canadian) Mcf. Those numbers are reasonable expectations for 2014.
Yet neither producer nor consumer should believe that $4.00 (U.S.) Mcf ($3.50 U.S. Mcf AECO) is a stable price, although the bias is for a firmer floor. Volatile weather will always conspire to rattle the markets up and down. Fundamentals are running hot and cold too. New drilling and completion techniques continue to improve productivity, yet the marginal cost of bringing dry gas to market is still obscured by waste gas coming from oil drilling. Production growth is becoming increasingly dependent on “sweet” areas like the Marcellus (concentration of assets is usually accompanied by greater volatility). And the price impact of potential liquefied natural gas exports may excite markets in a couple of years.
More than anything, the past couple of months remind us that natural gas is a commodity that can’t sit still. Prices are, and will continue, to be volatile. So it’s prudent for both producers and consumers to heed Aesop’s advice in his classic winter fable, The Grasshopper and the Ant: “It is wise to plan for tomorrow today.”
Peter Tertzakian is chief energy economist at ARC Financial Corp. in Calgary and the author of two best-selling books, A Thousand Barrels a Second andThe End of Energy Obesity.