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Guest Post: Running Away From Reality | Zero Hedge

Guest Post: Running Away From Reality | Zero Hedge.

From Fernando del Pino Calvo-Sotelo, published originally in Expansion

View from Spain: Running away from reality (pdf)

In a society that’s incessantly pulling all sorts of rights out of its hat, the right to not suffer is the father of them all. We feel entitled to keep our jobs, our health, our home and our leisure, demanding in fact to be carefree. We don’t want our lifestyle to depend on how hard we work or how much we save, and neither do we want our wrong decisions to have any consequences. In our delirium, we feel we have the right to know the future or even to decide when life should start (that of others, of course) and also when death should come (usually that of others as well). In brief, we want the security that we will be able to avoid pain. The problem is that, in life, pain is as undesirable as it is inevitable, and security, in the words of Helen Keller, is “a superstition that does not exist in nature”. However, man persists in his chimerical search for the security that will keep him free from suffering. Citizens demand that from their ruling classes, who promise ever more extravagant rights and certainties, constantly fleeing reality and truth. And in this hysterical, unbridled race to reach an evanescent security, liberty is thrown into the dust like a bothersome burden.

The free man must be responsible for his behavior without being able to blame anyone else when things go wrong. He must live in discomfort and uncertainty and accept the authorship of all his decisions. This is hard. That’s why as soon as the sweet illusion of freedom gives way for the bitter taste of responsibility and effort which that very freedom bears with it, man revolts against the latter. Some 3500 years ago, the Jewish people, having been oppressed for generations by slavery, was freed by Moses, who took them out of Egypt in order to lead them to the Promised Land. But just a few short days after their last minute’s escape from Pharaoh’s claws in the Red Sea, as the harshness of the desert started to put a dent in their spirit, the Jews forgot the humiliations, whippings, hardships and indignity of their slavery, cursed their freedom and blamed their liberator for freeing them, to the extent that Moses was nearly stoned: “Why did we not die at Yahweh’s hand in Egypt, where we used to sit round the flesh pots and could eat to our heart’s content!”. The security of a hot meal and a loaf of bread seemed worth more than the recently recovered freedom.

It goes without saying that throughout History all power seekers and power holders have taken good note of this story. They have come to realize that all they need to have the people surrender their liberty is to promise them security: a certainty – liberty – in exchange for a promise – security; an extremely valuable good in exchange for a chimera. And over and over again, the people have fallen into the same trap.

Today, under the disguise of a promise of physical security, governments treat each of us as if we were suspected criminals and not free citizens with rights: they record our conversations, intercept our mails, take our fingerprints and as many pictures as they deem necessary, do body searches and leave us half naked when we travel as if it were business as usual, and ruthlessly hunt down as traitors those who uncover these practices.

As far as economic security is concerned, totalitarian communism was an extreme of this barter: the people lost their liberty and never found any security, except for the certainty of being poor under a merciless tyranny. The fraudulent Welfare State proposed something similar (do you believe that the wording of Social “Security” is casual?): it promised a paradise of “free” pensions, healthcare and education in exchange for giving up our freedom to save (thus relieving us off the uncomfortable responsibility of doing so). We surrendered our savings to the politicians, those incurable squanderers, well known for anything but respecting either their word or other people’s money! And now that, even after burying us under a mountain of taxes and perpetual debts, public money is scarce and nearing extinction, where is the promised security to be found? We must understand once and forever more that security is not only liberty’s enemy, but an impediment to prosperity. In fact, security and prosperity are antonyms.

The 2008 financial crisis was mostly caused by politicians and central bankers wanting to avoid the suffering caused by economic cycles. Due to the irritating fact that pained voters tend not to reelect incumbent governments, what better promise could they make than that of trying to end recessions and live in a plateau of permanent prosperity? We still believe the charlatans who, in politics or in central banking, assure us that they can get rid of the uncertainty that terrifies us so much. We long for a control that simply does not exist, and these are the consequences: perversely, the chimeric search for security brings much more suffering than what it pretended to avoid in the first place.

In 1891, Pope Leo XIII prophetically forewarned us in his wise Encyclical Rerum Novarum about the evils that are now upon us: “To suffer and to endure, therefore, is the lot of humanity; let them strive as they may, no strength and no artifice will ever succeed in banishing from human life the ills and troubles which beset it. If any there are who pretend differently – who hold out to a hard-pressed people the boon of freedom from pain and trouble, an undisturbed repose, and constant enjoyment – they delude the people and impose upon them, and their lying promises will only one day bring forth evils worse than the present”.

We have to accept insecurity and pain as something inherent to human nature and promptly mistrust anyone promising the opposite, in the conviction that that promise only seeks to fool the unsuspecting. An economic and political system focused on avoiding the inevitable, promising an inexistent security, is due to fail and headed for poverty. That’s why we should make peace with the reality of uncertainty and suffering and not try to escape from both. Only from the deep acceptance of these realities, will the trembling, fragile ember of hope that has always raised the human being up from his falls catch fire again. The history of man is the successful story of a flexible adaptation to an ever changing, ever insecure environment. As a country, we should look suffering in the eye, without fear, and dedicate all our energies to adapting to the new reality instead of continuously running away from it.

Consumers Paying More as Nat Gas Cash Prices Spike

Consumers Paying More as Nat Gas Cash Prices Spike.

By Joao Peixe | Thu, 06 February 2014 22:43 | 0

As natural gas prices climb, reaching over $5/mcf again on 4 February, and with an unseasonably cold winter, local utilities say that natural gas customers’ bills are 30-40% higher now than last winter.

Last week, we saw natural gas prices rise above $5 for the first time in three years, then falling back a bit only to rise again on 4 February, with March futures trading above $5.25/mcf—or more than 6%, according to expert trader Dan Dicker.

Customers are footing the bill for higher gas prices and the coldest November-January period in four years in the Midwest and Northeast.

In Omaha, Nebraska, weather has been about 30% colder this year than last, and utility regulatory officials saying that gas use among customers is up while bills are up by 34-38% over last year.

Utilities are paying high prices for gas because demand has been higher and consumption rates at a level that has reduced storage by about 17% over the average of the previous five years.

In the meantime, there is a great deal of disconnect between cash prices and futures prices for natural gas, with futures trading an increasingly volatile business. While 6 February saw a spike in next-day prices, according to Reuters, 5 February saw natural gas futures fall sharply due to longer-term mild weather forecasts.

“The futures market appears to be disconnected from key developments occurring in the physical market,” Reuters quoted BNP Paribas analyst Teri Viswanath as saying on 6 February. “Today we witnessed a marked increase in spot prices for every consuming region, suggesting that utilities might be rationing limited inventories by purchasing gas off the market.”

As Dicker noted for The Street, “Low stockpiles caused by sequestration and a rush of domestic exploration and production companies away from natural gas production in favor of shale oil is taking its toll and providing the first real and consistent support of prices since 2007. Suddenly, natural gas markets are vulnerable to price spikes and traders are afraid to be short.”

By. Joao Peixe of Oilprice.com

Survive Peak Oil: Oil and Gas: How Little Is Left

Survive Peak Oil: Oil and Gas: How Little Is Left.

Tuesday, February 4, 2014

Oil and Gas: How Little Is Left

“If we’re doing things like fracking, it just shows how little is left of all this stuff, and how desperate we are to get at it.” — Anonymous

Global production of conventional oil is past its peak and is now beginning its decline. A mixed bag of unconventional fuels (shale oil, tar-sands oil, natural-gas-liquids, etc.) is keeping the total on a slight rise or a rough plateau.

The hottest discussion in the US over the last few years has involved the fracturing (“fracking”) of shale to extract both oil and gas, but production by this method is already slowing or in decline. The costs of fracking are considerable, and so is the environmental damage.

The price of oil is still about $100 a barrel, far above that of the 1990s, in terms of both nominal and real dollars. The failure of the price to go down is an embarrassment to those who think unconventional oil is really solving any problems. But the high price is due not just to increased demand or to geopolitical risk. It is because of trying to squeeze oil out of places where it makes little sense to be squeezing.

The following data are “annual” and “global” and are from BP’s 2013 report unless described otherwise.

Laherrère: “The plots of these data start flattening in 2005, followed by a bumpy plateau. The post-2010 increase is mainly caused by the increase of liquids from US shale gas and US shale oil.”

Hughes: “. . . Politicians and industry leaders alike now hail ‘one hundred years of gas’ and anticipate the U.S. regaining its crown as the world’s foremost oil producer. . . . The much-heralded reduction of oil imports in the past few years has in fact been just as much a story of reduced consumption, primarily related to the Great Recession, as it has been a story of increased production.”

RATE OF SUPPLY; NET ENERGY

Hughes: “The metric most commonly cited to suggest a new age of fossil fuels is the estimate of in situ unconventional resources and the purported fraction that can be recovered. These estimates are then divided by current consumption rates to produce many decades or centuries of future consumption. In fact, two other metrics are critically important in determining the viability of an energy resource:

“• The rate of energy supply — that is, the rate at which the resource can be produced. A large in situ resource does society little good if it cannot be produced consistently and in large enough quantities. . . . Tar sands . . . have yielded production of less than two percent of world oil requirements.

“• The net energy yield of the resource. . . . The net energy . . . of unconventional resources is generally much lower than for conventional resources. . . .”

GLOBAL OIL PRODUCTION

For conventional oil, the peak annual global production was about 27 billion barrels, or about 73 million barrels per day. The peak date of production was about 2010.

BP shows global oil production still increasing in 2012, although much more slowly than before — an annual increase of about 1 percent between 2002 and 2012, as opposed to about 9 percent annually between 1930 and 2001. Laherrère’s Figure 10, on the other hand, shows an actual peak at 2010. The difference is due to the fact that the BP figures include unconventional oil (shale oil, tar-sands oil, natural-gas-liquids, etc.).

According to most studies, the likely average rate of decline of oil production after the peak date is about 3 or 4 percent, resulting in a fall from peak production to half that amount about 20 years after the peak. However, there is also evidence (Höök et al., June 2009; Simmons, 2006) to suggest that the decline rate might be closer to 6 percent, i.e. reaching the halfway point about 10 years after the peak.

Per capita, the peak date of oil production was 1979, when there were 5.5 barrels of oil per person annually, as opposed to 4.4 in 2012.

Laherrère: “The confidential technical data on [mean values of proven + probable reserves] is only available from expensive and very large scout databases. . . .

“There is a huge difference between the political/financial proved reserves [so-called], and the confidential technical [proven + probable] reserves. Most economists do not believe in peak oil. They rely only on the proved reserves coming from [the Oil and Gas Journal, the US Energy Information Administration], BP and OPEC data, which are wrong; they have no access to the confidential technical data. . . .

“The last [International Energy Agency] forecasts report an increase in oil production from 2012 to 2018 of 8% for Non-OPEC (+30% for the US) and of 7% for OPEC, which is doubtful. . . .”

US OIL PRODUCTION peaked in 1970 at 9,637 thousand barrels daily, declined in 2008 to 5,000, and rose in 2013 to 6,488.

NATURAL GAS PRODUCTION

GLOBAL GAS PRODUCTION rose from 2,524 billion cubic meters in 2002 to 3,370 billion cubic meters (95 trillion cubic feet) in 2012, an average annual increase of 3%.

Laherrère: “. . . [Global] production will peak around 2020 at more than [100 trillion cubic feet per year].” [emphasis added]

“Outside the US, the potential of shale gas is very uncertain because the ‘Not In My Back Yard’ effect is much stronger when the gas belongs to the country and not to the landowners. . . . Up to now, there is no example of economical shale gas production outside the US. The hype on shale gas will probably fall like the hype on bio-fuels a few years ago. . . .

US GAS PRODUCTION rose from 536 billion cubic meters in 2002 to 681 in 2012, an average annual increase of 2.5%.

Laherrère: “Natural gas production in the US, which peaked in 1970 like oil, is showing a sharp increase since 2005 because of shale gas. In 2011 unconventional gas production ([coal bed methane], tight gas and shale gas . . . .) was higher than conventional gas production . . . .

This . . . leads to a peak in 2020 at 22 [trillion cubic feet] and the decline thereafter of all natural gas in the US . . . should be quite sharp. [emphasis added] The goal of exporting US liquefied natural gas seems to be based on very optimistic views. . . .

“The gross monthly natural gas production in the US has been flat since October of 2011, after its sharp increase since 2003, with only shale gas production rising. . . .” [emphasis added]

“Some claim that the US can export its shale gas as [liquid natural gas] even though conventional gas . . . is declining fast and will be quite small in just a few years.”

Hughes: “Shale gas production has grown explosively to account for nearly 40 percent of U.S. natural gas production; nevertheless production has been on a plateau since December 2011. . . . The very high decline rates of shale gas wells require continuous inputs of capital — estimated at $42 billion per year. . . . In comparison, the value of shale gas produced in 2012 was just $32.5 billion.”

TIGHT OIL (SHALE OIL) PRODUCTION

Laherrère: “Shale oil is now called light tight oil because the production in Bakken is not from a shale reservoir, but a sandy dolomite reservoir between two shale formations. . . . In Montana, production from Bakken is mainly coming from the stratigraphic field called Elm Coulee, which is decline since 2008. In North Dakota, production from Bakken has sharply increased.”

Hughes: “Tight oil production has grown impressively and now makes up about 20 percent of U.S. oil production. . . .More than 80 percent of tight oil production is from two unique plays: the Bakken in North Dakota and Montana and the Eagle Ford in southern Texas. . . . Tight oil plays are characterized by high decline rates. . . . Tight oil production is projected to grow substantially from current levels to a peak in 2017. . . . [emphasis added]

TAR-SANDS OIL PRODUCTION

Hughes: “Tar sands oil is primarily imported to the U.S. from Canada. . . It is low-net-energy oil, requiring very high levels of capital inputs (with some estimates of over $100 per barrel required for mining with upgrading in Canada). . . . The economics of much of the vast purported remaining extractable resources are increasingly questionable. . . .

NATURAL GAS PLANT LIQUIDS (NGPL) PRODUCTION

Laherrère: “World NGPL production . . . may peak in 2030 at over 11 [million barrels per day]. . . .”

OTHER RESOURCES

Hughes: “Other unconventional fossil fuel resources, such as oil shale [kerogen], coalbed methane, gas hydrates, and Arctic oil and gas — as well as technologies like coal- and gas-to-liquids, and in situ coal gasification — are also sometimes proclaimed to be the next great energy hope. But each of these is likely to be a small player. . . .

“Deepwater oil and gas production . . . would expand access to only relatively minor additional resources.”

CONCLUSIONS

Laherrère: “Peak oil deniers claim that peak oil is an unscientific theory, ignoring that peak oil has actually happened in several countries like France, UK, Norway. They confuse proved reserves with the [proven + probable] mean reserves. . . . It seems that world oil (all liquids) production will peak before 2020. . . The dream of the US becoming independent seems to be based on resources, but not on reserves.”

REFERENCES AND FURTHER READING

BP. (2013). Global statistical review of world energy. Retrieved fromhttp://www.bp.com/statisticalreview

Heinberg, R. (2013). Snake oil: How fracking’s false promise of plenty imperils our future. Santa Rosa, California: Post Carbon Institute.

Höök, M., Hirsch, R., & Aleklett, K. (2009, June). Giant oil field decline rates and their influence on world oil production. Energy Policy, Volume 37, Issue 6, pp. 2262-72. Retrieved fromhttp://dx.doi.org/10.1016/j.enpol.2009.02.020

Hughes, J. D. (2013, Feb.) Drill, baby, drill; Can unconventional fuels usher in a new era of energy abundance? Executive Summary. Post Carbon Institute. Retrieved fromhttp://www.postcarbon.org/reports/DBD-report-FINAL.pdf 

Klare, M.T. (2012).The race for what’s left: The scramble for the world’s last resources. New York: Picador.

Laherrère, J. H. (2013, July 16). World oil and gas production forecasts up to 2100. The Oil Drum. Retrieved from www.theoildrum.com/node/10009

Simmons, M. R. (2006). Twilight in the desert: The coming Saudi oil shock and the world economy. Hoboken, New Jersey: John Wiley & Sons.

Bosnia protesters attack presidency building – Europe – Al Jazeera English

Bosnia protesters attack presidency building – Europe – Al Jazeera English.

Protesters set fire to a section of the presidency building in the Bosnian capital city of Sarajevo, on the third day of unrest over unemployment and political intertia.

Reuters news agency reported that protesters had smashed windows and threw a flare into the building police efforts to disperse them with water cannons on Friday.

At least 150 people were injured in Friday’s clashes.

Earlier, police had fired rubber bullets and stun grenades to disperse hundreds of protesters the capital city, following Thursday’s violence which left more than 130 people injured.

Also on Friday, protesters set fire to a local government building in the northern town of Tuzla, the hotspot of violence that began on Tuesday. Authorities in Tuzla had ordered schools to cancel classes earlier in the day.

AFP news agency reported that about 100 hooded men were seen storming the building with flames, and thick smoke billowing from the first floor windows a short while after. Protesters outside prevented two fire engines from reaching the building.

At  least 6,000 people took to the streets in Tuzla, according to Reuters news agency, who also reported that protesters lobbed stones at police in Sarajevo.

Al Jazeera’s Alma Brnicanin reported that demonstrators gathered in the northern city of Bihac on Friday.

Tuzla’s protests spread to other parts of the country on Thursday and have morphed into widespread discontent in an election year about unemployment and rampant corruption.

Police on Thursday fired teargas to drive back several thousand people throwing stones, eggs and flares at a local government building in Tuzla, once the industrial heart of Bosnia’s north which has been hit hard by factory closures in recent years.

A strong police contingent dispersed the crowd in the evening after protesters started rioting, smashing shop windows and setting garbage bins on fire, a Tuzla police spokesman said.

The town’s emergency service said it admitted 104 police officers who were seriously hurt, and 30 civilians with lighter injuries.

Hundreds of people turned out in solidarity protests in the capital Sarajevo and the towns of Zenica, Bihac and Mostar. In Sarajevo, protesters clashed with police who had blocked traffic in the city centre. Four officers were taken to hospital, officials said.

Public resentment

The prime minister of Bosnia’s autonomous Bosniak-Croat federation, where the protests took place, held an emergency meeting with regional security ministers and prosecutors.

“We put on one side the workers who were left without basic rights, such as pensions and health benefits … , and on the other side all hooligans who used this situation to create chaos,” Prime Minister Nermin Niksic said after the meeting.

“We will not come to the solution by destroying property, damaging vehicles and windows and fighting the police,” Niksic said, adding that police and prosecutors should take steps against those he called the hooligans.

The protests highlight public resentment over the political bickering that has stifled governance and economic development since the 1992-1995 war in the Balkan country.

The protesters were initially made up mainly of workers laid off when state-owned companies that were sold off collapsed under private ownership. They have been joined by thousands of jobless people and youths.

At 27.5 percent, Bosnia’s unemployment rate is the highest in the Balkans.

China Spurs Market Rout Blamed on Fed, Goldman Sachs AM Says – Bloomberg

China Spurs Market Rout Blamed on Fed, Goldman Sachs AM Says – Bloomberg.

By Benjamin Purvis and Candice Zachariahs  Feb 7, 2014 12:56 AM ET

China’s policy shifts are a bigger driver of the selloff in emerging markets than the Federal Reserve’s decision to dial back stimulus, according to Goldman Sachs Asset Management.

Volatility will rise toward its long-term average and that means an increase in risk premiums, said Philip Moffitt, head of fixed income in Sydney for Asia and the Pacific at Goldman Sachs Asset Management, which had $991 billion of assets under supervision worldwide as of September. The risks for different emerging economies will become more idiosyncratic and Mexico presents a buying opportunity following the rout, he said.

Markets from Turkey to South Africa and Argentina were roiled during the past month as investors sold off emerging-economy currencies, stocks and bonds, prompting emergency measures from governments and central banks. The bout of risk aversion follows the Fed’s decision to scale back asset purchases and China’s pledge to rein in leverage and give market forces a more decisive role in allocating resources.

“The selloff in emerging markets has much more to do with China than with Fed tapering,” Moffitt said yesterday in an interview in Sydney. “China’s such a big source of global demand, in particular for other emerging markets, uncertainty’s going to stay high and risk premiums should be expanding.”

Photographer: Andrew Harrer/Bloomberg

Philip Moffitt, head of fixed income in Sydney for Asia and the Pacific at Goldman… Read More

Credit Boom

The worst isn’t over for emerging markets, Mark Mobius, who oversees more than $50 billion in developing nations as an executive chairman at Templeton Emerging Markets Group, said in an interview. Prices can decline further or take time to stabilize, he said.

China’s policy makers have attempted to rein in the unprecedented credit boom they unleashed in 2008-2009 amid the global financial crisis. Money market rates in China have surged, the cost of insuring against credit default by banks has increased and payment difficulties are emerging in the country’s $6 trillion shadow-banking industry.

“They’re looking to create a market that prices credit risk, rather than having prices imposed,” Moffitt said. “In the absence of a strong mechanism for pricing credit risk, there’s likely to be a lot of uncertainty and volatility.”

The world’s second-largest economy is predicted to expand by 7.4 percent this year, the slowest pace since 1990, according to the median estimate in a Bloomberg News survey.

Diverging Outlooks

The slowdown in China comes as the U.S. economy is showing signs of a pickup, allowing the Fed to trim its monthly bond purchases to $65 billion from $85 billion. U.S. growth is expected to accelerate to 2.8 percent in 2014 from 1.9 percent last year, according to a another Bloomberg poll.

Moffitt said investing in Mexico would be his top trade at the moment because the country’s fundamental outlook is strong even though it has been affected by the global selloff.

“There’s been outflow from emerging-market assets and when you get that kind of flow people sell what they can sell, often high-quality assets,” he said. “It will benefit from the strong U.S. growth we’re expecting and there’s the prospect for rate cuts, so Mexico stands out to us on both value and fundamentals.”

To contact the reporters on this story: Benjamin Purvis in Sydney at bpurvis@bloomberg.net; Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

To contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net; Garfield Reynolds at greynolds1@bloomberg.net

WTI Crude Oil Surges To Highest Price On Record For This Day In History | Zero Hedge

WTI Crude Oil Surges To Highest Price On Record For This Day In History | Zero Hedge.

Whether driven by real supply-demand issues, concerns over terrorism (sparked by the Sochi plane debacle), or hopes a renewed un-tapered QE on the basis of 2 piss-poor jobs reports in a row is unclear. What is clear is that WTI crude is having its best day in over 2 months – now at its highest in 2014, back above $100 a barrel and its most expensive in history for this time of year.

2014 highs, biggest jump in 2 months, back over $100 per barrel

 

and the most expensive barrel of oil for this time of year in history…

 

Charts: Bloomberg

 

7 Environmental Charities Face Canada Revenue Agency Audits

7 Environmental Charities Face Canada Revenue Agency Audits.

CBC  |  By THE CANADIAN PRESS/Mark BlinchPosted: 02/06/2014 8:55 pm EST  |  Updated: 02/07/2014 9:59 am EST

canada revenue agency

The Canada Revenue Agency is currently conducting extensive audits on some of Canada’s most prominent environmental groups to determine if they comply with guidelines that restrict political advocacy, CBC News has learned.

If the CRA rules that the groups exceeded those limits, their charitable status could be revoked, which would effectively shut them down.

Many of the groups are among the Conservative government’s fiercest critics. Finance Minister Jim Flaherty signalled clearly in his budget of 2012 that political activity of these groups would be closely monitored and he allocated $8 million to the effort. The environmental organizations believe they have been targeted with the goal of silencing their criticism.

“We’re concerned about what appears to be an increase in audits around political activity and in particular around environmental organizations” said Marcel Lauzière, president of Imagine Canada, an umbrella organization for charities.

“There’s a big chill out there with what charities can and cannot do.”

The list of groups CBC has now confirmed are undergoing audits reads like a who’s who in the environmental charity world. They include:

– The David Suzuki Foundation

– Tides Canada

– West Coast Environmental Law

– The Pembina Foundation

– Environmental Defence

– Equaterre

– Ecology Action Centre

“This is a war against the sector,” says John Bennett, of Sierra Club Canada. His group is not yet being audited, but he said he is prepared.

“In the 40-year history of the Sierra Club Canada Foundation, it’s been audited twice in 40 years” so there are more audits than usual, Bennett said.

CBC has confirmed that at least one group, Environmental Defence, has received its report back from the CRA and they are appealing it. Sources said their report threatened to revoke their charitable status. Another group, West Coast Environmental Law, had auditors fly in from Ottawa to enhance the work of the local CRA team. One source said the Ottawa CRA people called themselves “The A team.”

Most groups on this list would not talk on the record, but sources say executive directors of these groups are meeting regularly by phone to discuss a united response to the government.

By law, charities are allowed to use a maximum of 10 per cent of their resources for political activity or advocacy, but the guidelines are clear that it cannot be partisan activity. That has been interpreted for years to mean that a group can oppose a government policy but cannot back a specific candidate in an election.

During a pre-budget consultation in December, Flaherty said he is considering making even more changes to rules for charities that have a political aspect.

“We’re reviewing that,” Flaherty said. “We spent some time on it last year and we’re looking at it again now as I prepare the budget.”

He went on to warn charities: “If I were an environmental charity using charitable money, tax-receipted money for political purposes, I would be cautious.”

Bennett said the rules seem to be constantly changing.

“We don’t know what rules we’re playing by. The problem with this is that they gave the power to CRA to walk in and shut you down. And then if you want to complain, you can go to court afterwards.”

The government insists it does not target certain charities, nor does it tell CRA to do so. Auditors alone determine whether they investigate a charity.

“I assume they receive all sorts of information from all sorts of Canadians, in terms of who they should or should not audit. Ultimately it is up to them as an independent agency who they audit or not,” Alberta Conservative MP James Rajotte said.

CBC News contacted the CRA several times to ask how auditing targets are chosen. Spokespeople suggested responses could be found on their website. There it states some of the reasons a charity could be selected for an audit including random selection, to review specific legal obligations under the law and to follow-up on possible non-compliance or complaints.

According to lawyer Mark Blumberg, who specializes in charity law, the CRA often audits charitable organizations based on complaints.

“If there are a number of complaints about a charity and its political activities, that could trigger an audit by CRA,” he said. That assessment is echoed by a number of groups currently undergoing audits.

“I believe our audit was complaint driven,” said Ross McMillan, the president and CEO of Tides Canada.

“I am confident of a positive outcome as we take seriously our responsibility to act in compliance with the Income Tax Act and Canada Revenue Agency guidelines,” he said.

Pro-oilsands group has filed complaints

McMillan goes on to cite complaints from Ethical Oil, a group that has formally submitted complaints to the CRA about Tides Canada, the David Suzuki Foundation and Environmental Defence.

The complaints are all filed through legal counsel and are part of a campaign Ethical Oil has started to strip these environmental groups of their charitable status.

Ethical Oil is a registered non-profit non-governmental organization that describes  itself as an “online community” to empower people to become grassroots activists in defence of the oilsands development.

The group was founded by Alykhan Velshi, who is currently the director of issues management in the Prime Minister’s Office. Environmental groups say Ethical Oil is funded by the oil and gas industry to try to undermine their work

CBC News has repeatedly asked Ethical Oil to reveal who their funders are but no specific list has been made public.

Environmental groups are not the only ones who have been audited. Social justice groups like Amnesty International Canada are also currently undergoing an audit about their political activities. CBC News contacted them but they declined to comment.

All the groups say they will be watching Tuesday’s budget for new rules that may affect their charitable status.

“We have an important role to play in our society and we want to play that role,” said Bennett. ” But we need a governing system that actually welcomes public dialogue instead of discouraging it.”

Welcome to the Grand Delusion, come on in and see what’s happening…

Welcome to the Grand Delusion[i], come on in and see what’s happening…

We live in a state of delusion, not merely illusion. As Wikipedia[ii] points out, “A delusion is a belief held with strong conviction despite superior evidence to the contrary. As a pathology, it is distinct from a belief based on false or incomplete information, confabulation, dogma, illusion, or other effects of perception.” The fact that a belief persists despite ‘superior evidence to the contrary’ is what makes the difference. This is why the majority live in a delusional state, not just one of illusion.

Sure, this delusion is aided and abetted by various ‘agents’ (i.e. corporate/mainstream media; government; bureaucrats; academics; corporations; etc.), including our own thought processes[iii]; however, despite growing, incontrovertible evidence to the contrary the majority persists in clinging to specific, unfounded beliefs.

Another aspect of our Grand Delusion is that the majority of us don’t want our fantasy to end. We are ‘benefiting’ from the lies and deceptions being perpetrated upon the world. The benefit may come in the form of unsustainable social services, a global economic Ponzi scheme, power and privilege, or something as simple as a ‘safe and secure’ position in society. We know deep down inside, however, that something is wrong with the world: that it is inequitable and violent; that the people in charge are corrupt and psychopathic; and, that greed and money rule the day.

We avoid reality. We tell ourselves that problems exist somewhere else. We persuade ourselves to continue living in the delusion. Don’t make waves. It’s safer to be wrong with the majority than stand out from the crowd and yell the sky is falling, especially if the-powers-that-be are doing all they can to keep the Grand Delusion alive just a bit longer.

Here are just a couple of the delusions that we hold:

1)    The banking/financial/economic system is sound.
The foundation of the banking system is built on a fraud, there is no other way around the scheme that is fractional reserve banking. When an institution can create money from air by hypothecation and rehypothecation ad infinitum, we have what is essentially a pyramid scheme. When these very institutions grow to the point where they are too big to fail, or the perpetrators of the scam too big to jail, then it is time to recognise that the system is not sound, despite it being legalised and legitimised by our politicians.

2)    Governments serve their citizens.
Edward Snowden joins a list of ‘whistleblowers’ who have shed light on the shadowy world of politics, and the power that is wielded in the name of ‘security’ and ‘nation building’. How many more lies and deceptions do we need to catch politicians in to realise that we are being fed a load of horseshit almost every time one of them makes any statement about anything. I quote economist Murray Rothbard in his essay, Anatomy of the State, when he summarises what the State is: “…the State is that organization in society which attempts to maintain a monopoly of force and violence in a given territorial area…[it] provides a legal, orderly, systematic channel for the predation of private property; it renders certain, secure, and relatively ‘peaceful’ the lifeline of the parasitic caste in society…[and] the majority must be persuaded by ideology that their government is good, wise, and, at least, inevitable…ideological support being vital to the State, it must unceasingly try to impress the public with ‘legitimacy,’ to distinguish its activities from those of mere brigands.” The State, mere brigands of a parasitic caste who get their revenue through force and depend upon support through the manufacturing of consent. It’s difficult not to view the government in this light given daily events.

3)    Economic growth can continue forever.
Our current economic system is built upon growth and not just any kind of growth but exponential growth. Such growth, however, is impossible on a finite planet. Economists defer to the belief of substitutability and market forces to assume it can. This is perhaps the most disturbing delusion because the mathematics to show it cannot is irrefutable. Yet, the consequences of this are ‘assumed away’.

4)    Civliisation is not threatened by energy issues.
Energy is the foundation of everything. Without it there can be no banking system, no governments, and no economic growth. Here is the biggest delusion, that our civilisation will continue unabated even as we come to the end of a one-time windfall of cheap, easy-to-retrieve, and easily-transportable energy. Ignoring the devastating consequences of mining, producing, and using vast amounts of energy (coal to nuclear), we must face the very real wall that is quickly approaching. Peak Oil is a geologic certainty, it is not a theory and it is not going away. Finite resources are finite and there must come a time when we confront this reality.

The world appears to be crumbling in various ways as we attempt to squeeze the last remnants of long-stored energy from the planet in order to sustain what is unsustainable. In what is likely to be a classic example of ecological overshoot and collapse, we race towards the cliff, hearts pumping knowing that the end is close but afraid to try and change directions. But that is what is needed. We need to change direction, as of yesterday, to avoid the continuing trap of the Grand Delusion.

SB

 

Styx: The Grand Illusion

Welcome to the Grand illusion
Come on in and see what’s happening
Pay the price, get your tickets for the show
The stage is set, the band starts playing
Suddenly your heart is pounding
Wishing secretly you were a star.

But don’t be fooled by the radio
The TV or the magazines
They show you photographs of how your life should be
But they’re just someone else’s fantasy

So if you think your life is complete confusion
Because you never win the game
Just remember that it’s a Grand illusion
And deep inside we’re all the same.
We’re all the same…

So if you think your life is complete confusion
Because your neighbors got it made
Just remember that it’s a Grand illusion
And deep inside we’re all the same.
We’re all the same…

America spells competition, join us in our blind ambition
Get yourself a brand new motor car
Someday soon we’ll stop to ponder what on Earth’s this spell we’re under
We made the grade and still we wonder who the hell we are

The Grand Illusion lyrics © Universal Music Publishing Group


[i] Apologies to Dennis DeYoung and Styx
[ii] http://en.wikipedia.org/wiki/Delusion
[iii] Reduction of cognitive dissonance having one of the strongest impacts. As social psychologist Leon Festinger has stated: “Humans are not a rational animal, but a rationalizing one.”

 

Energy Crunch: no end to the storms

Energy Crunch: no end to the storms.

by Energy Crunch staff, originally published by New Economics Foundation  | TODAY


Image via tim_d/flickr. Creative Commons 2.0 license.

Three things you shouldn’t miss this week
  1. Big oil stagnates:


    Source: Wall Street Journal

  2. “We can expect growing pressure points around water, food, and energy scarcity as the century progresses…Hovering over all of this is the merciless march of climate change. Because of humanity’s hubris, the natural environment, which we need to sustain us, is instead turning against us.” – IMF’s Christine Lagarde delivers her Richard Dimbleby lecture
  3. Nuclear setback as EC attacks Hinkley Point subsidy deal – Nuclear plant in doubt as European Commission says subsidies of up to £17.6bn risk handing EDF excess profits and may constitute illegal state aid.

 

It took major storm damage and record floods to get energy prices off the front pages, but any ministers hoping for a brief respite on the turmoil over energy policy will be no doubt disappointed.
The government’s nuclear plans look shakier after the European Commission tore into its recent deal with EDF on Hinckley Point C. The EC warns that a guaranteed strike price of £92.50/MW – double the current market rate – risks handing EDF excess profits and falling foul of state aid laws. The Commission also questioned assumptions used to reach this figure, and points out the government’s own research showing that nuclear plants could be built by 2027-30, even without subsidies.
Two new test fracking sites in Lancashire were named by Cuadrilla this week, but the hyperbole around shale was dampened as even Chancellor George Osborne admitted it probably won’t deliver cheap gas. Cuadrilla Chairman and government advisor Lord Browne said that it will take five years to establish the viability of the resource (even longer to start producing gas), and Business Secretary and former Shell executive Vince Cable described shale gas in the UK as “a long-term possibility – no more than that.” Lord Browne was also dismissive of chances for carbon capture and storage, thus inadvertently adding to the climate case against new gas. Meanwhile the industry faces a legal blockade from Sussex landowners and challenges over disposal of radioactive waste water.
DECC did get some positive news this week with the announcement that the UK had met its first carbon budget. But a reality check – much of this was due to the economic crash, and emissions are on the rise again. Both the UK and US currently favour an ‘all of the above’ energy policy, pursuing both fossil and renewable energy sources. While progress on clean energy should be applauded, it will ultimately come undone without plans for an orderly reduction of fossil fuel production.

One such reduction seems likely from our chart of the week, though it’s far from intentional. Oil giants Exxon, Shell and Chevron have been spending at record levels, but production continues to stagnate. Is the industry now reaching a turning point? Commentary such as this from FT blogger Nick Butler would certainly suggest so.

Related Reports and Commentary
Macroeconomic impacts of oil price volatility: mitigation and resilience – Zoheir Ebrahim, Oliver R. Inderwildi, David A. King – final report link (paywall)review copy pdf download.
A Year of Cracking Ice: 10 Predictions for 2014 – Michael Liebreich, Bloomberg New Energy Finance
Nexus Guide: How Food, Water and Energy are Connected – GRACE Communications Foundation

Will Asia Ignite a Second Arab Spring? | The Diplomat

Will Asia Ignite a Second Arab Spring? | The Diplomat.

Will Asia Ignite a Second Arab Spring?
Image Credit: Wikimedia Commons

Will Asia Ignite a Second Arab Spring?

Asia’s economic slowdown threatens to disrupt the Persian Gulf monarchies that were able to weather the Arab Spring.

zachary-keck_q
February 06, 2014

One of the more interesting aspects of the Arab Spring is that it largely spared the Gulf monarchies. To be sure, the monarchies in Bahrain and Jordan had to contend with a degree of unrest. Still, the core of the Arab Spring protests occurred in the Arab Republics, some of which fell from power. By comparison, the monarchies in the region—many of which are located in the Persian Gulf—were spared the worst of the unrest.

Still, the past is often a poor indicator of the future, and the fact that the region’s monarchies were able to weather the Arab Spring does not necessarily mean they are stable. In fact, many fear that the violence in Syria will destabilize monarchies like Jordan, much as the civil war in Syria is already destabilizing countries like Lebanon and Iraq that had previously not witnessed much Arab Spring unrest.

Although this possibility cannot be discounted, the Persian Gulf and other Arab monarchies face a much graver threat to their stability, and that threat originates in Asia. Specifically, the economic slowdowns in Asia in general, and China and India in particular, could very well ignite a second Arab Spring, and this one would not spare the monarchies.

One of the major global developments over the past few decades has been the shift of economic power from Europe and North America to the Asia-Pacific. In few places has this shift been felt more intensely than in the Persian Gulf. In the span of a few years Asia has surpassed the West as the region’s largest trading partner.

Although this development is frequently discussed from the vantage point of Asia’s growing dependence on Middle Eastern oil, the flip-side of the equation—the Middle East’s growing dependence on Asia—usually gets short shrift. This is unfortunate, as the Middle East’s dependence on Asia is nearly as substantial. Take the six countries comprising the Gulf Cooperation Council (GCC), for example. Asia makes up no less than 57 percent of the GCC’s total trade. Asia also purchases an incredible two-thirds of the GCC’s most important export—oil. This figure will continue to rise substantially in the years ahead. According to the International Energy Agency, by 2035 Asian nations will purchase 90 percent of the Persian Gulf’s oil exports.

Asia’s willingness and ability to meet these projections are vital to the Persian Gulf’s stability. For the most part, Persian Gulf states like Saudi Arabia maintain stability by buying off their populations. They do this in at least two major ways. First, by maintaining excessively large bureaucracies that keep the population employed doing unproductive and unnecessary work. Additionally, many Persian Gulf states and Arab monarchies provide substantial subsidies to ensure low prices. For example, according to the Financial Times, Saudi Arabia subsidizes water to the tune of $50 billion a year.

The regimes use these subsidies of labor and goods to safeguard their rule, including by increasing wages and subsidies on various household staples when they fear potential unrest. For example, when unrest began afflicting Egypt in early 2011, Saudi Arabia quickly announced a $36 billion increase in subsidies. Jordan similarly authorized a $125 million subsidy package for its population, while Kuwait introduced both higher direct stipends and over a year of free food for its citizens.

This is a shrewd move, as it ties the population’s livelihood to the regime’s survival (much like the Chinese Communist Party’s 80 million person membership roll helps ensure support for the CCP). However, it is also prohibitively expensive to maintain these subsidies, and once they are so given, any government will find it difficult to eliminate them.

The Persian Gulf regimes, of course, use their extensive oil wealth to pay for these subsidies, which is what makes Asia’s slowdown so dangerous to the Persian Gulf states. Since Asia figures to purchase such a larger percentage of the Persian Gulf’s oil exports, if it proves unable to do so the price of oil is likely to plummet. Should this decline in oil prices persist for too long, depleting the monarchies’ treasuries, it would leave them unable to continue buying their populations’ loyalty.

China’s economic course in the coming years will be particularly crucial to Middle East stability. Not only does China directly purchase a greater proportion of Persian Gulf oil than other Asian nations, but China is the top trading partner of most of these other states.  Therefore, a significant downturn in the Chinese economy will greatly disrupt the economies of other important Middle East oil consumers like Japan and South Korea, further reducing petroleum demand.

Especially when combined with rising oil production in the Western Hemisphere, it’s hardly unimaginable that global energy prices could decline sharply in the years ahead. This would be disastrous for many Middle Eastern monarchies, particularly those in the Persian Gulf (as well as other so-called petrol states like Russia and Venezuela). Notably, this process could easily become self-sustaining as instability in the Persian Gulf is likely to cause a spike global energy prices. While this may temporarily help some of the Middle Eastern regimes, it would also further dampen the prospects of an economic recovery in Asia. This in turn would further soften global demand for oil.

Despite the perception in the West that the Arab Spring was largely a movement for greater negative freedoms like the right to vote and limited government, it in fact was principally driven by demands for greater positive freedoms like more economic opportunity. The second Arab Spring would be no different.

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