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Iran, Russia Ruffle US Feathers With Oil-Swap Deal | Zero Hedge

Iran, Russia Ruffle US Feathers With Oil-Swap Deal | Zero Hedge.

This morning’s apparent U-turn in US-Iran relations – when the US demanded the UN rescind Iran’s invite to the Syrian peace conference having somewhat instigated their invitation in the first place – is a little confusing for some. However, as OilPrice’s Joao Peixe points out, reports are emerging that Iran and Russia are in talks about a potential $1.5 billion oil-for-goods swap that is sure to upset the powers that be in Washington.


Submitted by Joao Peixe via OilPrice.com,

Reports are emerging that Iran and Russia are in talks about a potential $1.5 billion oil-for-goods swap that could boost Iranian oil exports, prompting harsh responses from Washington, which says such a deal could trigger new US sanctions.


So far, talks are progressing to the point that Russia could purchase up to 500,000 barrels a day of Iranian oil in exchange for Russian equipment and goodsaccording to Reuters.


“We are concerned about these reports and Secretary (of State John) Kerry directly expressed this concern with (Russian) Foreign Minister (Sergei) Lavrov…  If the reports are true, such a deal would raise serious concerns as it would be inconsistent with the terms of the P5+1 agreement with Iran and could potentially trigger US sanctions,” Caitlin Hayden, spokeswoman for the White House National Security Council, told Reuters.


Russian purchases of 500,000 bpd of Iranian crude would lift Iran’s oil exports by 50% and infuse the struggling economy with some $1.5 billion a month, some sources say.


Since sanctions were slapped on Iran in July 2012, exports have fallen by half and Iran is losing up to $5 billion per moth is revenues.


In the meantime, a nuclear agreement reached in November with Iran and world powers is in the process of being finalized, and the news of the potential Russian-Iranian oil swap deal plays to the hands of Iran hawks in Washington who are keen to seen the November agreement collapse.


The November agreement is a six-month deal to lift some trade sanctions if Tehran curtailed its nuclear program. Technical talks on the agreement began last week.

Under the terms of the tentative November nuclear agreement, Iran will be allowed to export only 1 million barrels of oil per day.


In mid-December, Iranian oil officials indicated that they hoped to resume previous production and export levels and would hold talks with international companies to that end.


This announcement sparked an immediate reaction from US Congress, which has threatened oil companies with “severe financial penalties” if they resume business with Iran “prematurely” following the six-month agreement reached in Geneva.


There are plenty of figures in Congress—Republican and Democratic alike—who are opposed to the deal. The key “Iran hawk” in US Congress, South Carolina Republican Lindsey Graham, has described the deal as “so far away from what the end game should look like”, which should be to “stop enrichment”.


The opposition in this case believes any talk between Tehran and Western oil companies is premature because they are convinced that we won’t see a comprehensive resolution after the six-month period, and that sanctions will be laid on stronger than ever before.

Yet again, it would seem, Iran is another proxy pissing match between the US and Russia… and remember, nothing lasts forever...


Oxfam: 85 richest people as wealthy as poorest half of the world | Business | theguardian.com

Oxfam: 85 richest people as wealthy as poorest half of the world | Business | theguardian.com.

The InterContinental Davos luxury hotel in the Swiss mountain resort of Davos

The InterContinental Davos luxury hotel in the Swiss mountain resort of Davos. Oxfam report found people in countries around the world believe that the rich have too much influence over the direction their country is heading. Photograph: Arnd Wiegmann/REUTERS

The world’s wealthiest people aren’t known for travelling by bus, but if they fancied a change of scene then the richest 85 people on the globe – who between them control as much wealth as the poorest half of the global population put together – could squeeze onto a single double-decker.

The extent to which so much global wealth has become corralled by a virtual handful of the so-called ‘global elite’ is exposed in a new report from Oxfam on Monday. It warned that those richest 85 people across the globe share a combined wealth of £1tn, as much as the poorest 3.5 billion of the world’s population.

Working for the Few - Oxfam reportSource: F. Alvaredo, A. B. Atkinson, T. Piketty and E. Saez, (2013) ‘The World Top Incomes Database’, http://topincomes.g-mond.parisschoolofeconomics.eu/ Only includes countries with data in 1980 and later than 2008. Photograph: OxfamThe wealth of the 1% richest people in the world amounts to $110tn (£60.88tn), or 65 times as much as the poorest half of the world, added the development charity, which fears this concentration of economic resources is threatening political stability and driving up social tensions.

It’s a chilling reminder of the depths of wealth inequality as political leaders and top business people head to the snowy peaks of Davos for this week’s World Economic Forum. Few, if any, will be arriving on anything as common as a bus, with private jets and helicoptors pressed into service as many of the world’s most powerful people convene to discuss the state of the global economy over four hectic days of meetings, seminars and parties in the exclusive ski resort.

Winnie Byanyima, the Oxfam executive director who will attend the Davos meetings, said: “It is staggering that in the 21st Century, half of the world’s population – that’s three and a half billion people – own no more than a tiny elite whose numbers could all fit comfortably on a double-decker bus.”

Oxfam also argues that this is no accident either, saying growing inequality has been driven by a “power grab” by wealthy elites, who have co-opted the political process to rig the rules of the economic system in their favour.

In the report, entitled Working For The Few (summary here), Oxfam warned that the fight against poverty cannot be won until wealth inequality has been tackled.

“Widening inequality is creating a vicious circle where wealth and power are increasingly concentrated in the hands of a few, leaving the rest of us to fight over crumbs from the top table,” Byanyima said.

Oxfam called on attendees at this week’s World Economic Forum to take a personal pledge to tackle the problem by refraining from dodging taxes or using their wealth to seek political favours.

As well as being morally dubious, economic inequality can also exacerbate other social problems such as gender inequality, Oxfam warned. Davos itself is also struggling in this area, with the number of female delegates actually dropping from 17% in 2013 to 15% this year.

How richest use their wealth to capture opportunites

Polling for Oxfam’s report found people in countries around the world – including two-thirds of those questioned in Britain – believe that the rich have too much influence over the direction their country is heading.

Byanyima explained:

“In developed and developing countries alike we are increasingly living in a world where the lowest tax rates, the best health and education and the opportunity to influence are being given not just to the rich but also to their children.

“Without a concerted effort to tackle inequality, the cascade of privilege and of disadvantage will continue down the generations. We will soon live in a world where equality of opportunity is just a dream. In too many countries economic growth already amounts to little more than a ‘winner takes all’ windfall for the richest.”

Working for the Few - Oxfam reportSource: F. Alvaredo, A. B. Atkinson, T. Piketty and E. Saez, (2013) ‘The World Top Incomes Database’, http://topincomes.g-mond.parisschoolofeconomics.eu/ Only includes countries with data in 1980 and later than 2008. Photograph: OxfamThe Oxfam report found that over the past few decades, the rich have successfully wielded political influence to skew policies in their favour on issues ranging from financial deregulation, tax havens, anti-competitive business practices to lower tax rates on high incomes and cuts in public services for the majority. Since the late 1970s, tax rates for the richest have fallen in 29 out of 30 countries for which data are available, said the report.

This “capture of opportunities” by the rich at the expense of the poor and middle classes has led to a situation where 70% of the world’s population live in countries where inequality has increased since the 1980s and 1% of families own 46% of global wealth – almost £70tn.

Opinion polls in Spain, Brazil, India, South Africa, the US, UK and Netherlands found that a majority in each country believe that wealthy people exert too much influence. Concern was strongest in Spain, followed by Brazil and India and least marked in the Netherlands.

In the UK, some 67% agreed that “the rich have too much influence over where this country is headed” – 37% saying that they agreed “strongly” with the statement – against just 10% who disagreed, 2% of them strongly.

The WEF’s own Global Risks report recently identified widening income disparities as one of the biggest threats to the world community.

Oxfam is calling on those gathered at WEF to pledge: to support progressive taxation and not dodge their own taxes; refrain from using their wealth to seek political favours that undermine the democratic will of their fellow citizens; make public all investments in companies and trusts for which they are the ultimate beneficial owners; challenge governments to use tax revenue to provide universal healthcare, education and social protection; demand a living wage in all companies they own or control; and challenge other members of the economic elite to join them in these pledges.

• Research Now questioned 1,166 adults in the UK for Oxfam between October 1 and 14 2013.

Greece begins EU presidency by saying austerity policies are intolerable | World news | The Guardian

Greece begins EU presidency by saying austerity policies are intolerable | World news | The Guardian.

Greek EU Presidency

The start of Greece’s six-month European Union presidency reinforced the isolation of German chancellor Angela Merkel. Photograph: Alkis Konstantinidis/EPA

Greece kicked off six months in charge of the European Union on Wednesday declaring that the imposition of austerity, spending cuts and fiscal policy by Berlin and Brussels could no longer be tolerated.

Coinciding with a growing backlash across the EU against the austerity policies mainly scripted in Berlin, the start of Greece’s EU presidency reinforced the isolation of German chancellor Angela Merkel, who has dominated the policy response to the EU crisis for the past four years.

Following four years at the sharpest end of Europe‘s debt and currency crisis and €250bn in bailout funds, the Greek government declared enough was enough.

“Greece does not want to have any more fiscal conditionality,” the finance minister, Yannis Stournaras, said on Wednesday. “It is out of the question because it is already too tough.”

The cry of exhaustion from a country that went broke, sank into years of slump and mass unemployment, slashed labour costs, and saw incomes collapse by more than a third is finding an echo not only across southern Europe but in the prosperous north, too, as leaders fear for their career prospects.

They have had enough of austerity, leaving Merkel, the main architect of spending cuts as the cure to Europe’s malaise, isolated as seldom before in what is becoming less of a financial crisis and more of a political battle for Europe’s future direction.

“The acute phase of the financial crisis is now over,” the US financier, George Soros, said last week. “Future crises will be political in origin.” He foresaw a bleak period of Japanese-style stagnation worsened by constant bickering between EU national leaders.

“What was meant to be a voluntary association of equal states has now been transformed by the euro crisis into a relationship between creditor and debtor countries that is neither voluntary nor equal. Indeed, the euro could destroy the EU altogether.”

The political frictions are visible, with leaders using vivid language to try to sway one another and win the argument. Merkel recently likened the situation to that of 1914, complaining of complacency and speaking of sleepwalking European leaders who led the continent into the first world war. She also evoked parallels with growing up under communism in East Germany, a rare public reference to her childhood experiences.

Describing the mood among most EU national leaders, a senior policymaker in Brussels said: “The worst of the crisis is over. So the pressure to take tough measures is off. We’ve had enough of discipline, enough of sanctions, we’re sufficiently unpopular already. The worst is over, so let’s stop now.”

Merkel, whose steering of the euro crisis propelled her to soaring popularity at home and a third term, has become increasingly resented among elites in other EU capitals, underlining the differences between Germany and the rest.

“The problem in Europe is that there is a government headed by one person,” a west European ambassador said in reference to Merkel. “That’s the issue and how to deal with it. All decisions are taken by one leader. This is what is happening now.”

If that has been a big part of the narrative for the past few years, however, the story went into reverse just before Christmas in the first week of Merkel’s new term. She went to a Brussels EU summit determined to push a new policy of compelling structural reforms on the economies of the eurozone. But she found herself supported by not one single other national leader, opposed not only by her foes, but also her friends such as the Dutch, Austrians and Finns.

“It was really a strange discussion,” said the policymaker, “difficult from the start, full of prejudice, ideology and fear.” Merkel was said to be disappointed. That much is clear from her private remarks to fellow leaders at the summit. A transcript of the exchange, obtained by Le Monde, highlighted her frustration.

She said: “Sooner or later the currency will explode without the necessary cohesion. If everyone behaves as they could under communism, then we are lost.”

Merkel’s plan was to empower the European commission in Brussels to police structural reforms in eurozone countries and to sweeten the pain of the changes by partially subsidising them. She denied that she was dictating anything, but said it was better to spend €3bn on the changes now than €10bn later.

She was supported by three European presidents, José Manuel Barroso of the commission, Herman Van Rompuy chairing the summit and Mario Draghi at the European Central Bank. None of the trio have to face the voter. All the other elected leaders were against and the plan was shelved.

One prime minister warned that the years of austerity had given rise to increasing populism. In Athens on Wednesday, the deputy Greek prime minister, Evangelos Venizelos, spoke of the growing appeal of neo-Nazis, racists and xenophobes. “In most of the EU we see a new wave of euro-scepticism.”

Soros went so far as to blame the German chancellor for this. “Angela Merkel’s policies are giving rise to extremist movements in the rest of Europe.”

The strength of the new anti-European movements on the far right and the hard left will be tested in the elections for the European parliament in May when they are expected to make gains at the expense of the centre and possibly win the poll outright in countries such as Britain, France, the Netherlands and Greece.

Fear of the impact of more extreme politics helps to explain the current aversion in most of Europe to the crisis solutions scripted in Berlin.

Time to stop investing in carbon capture and storage

Time to stop investing in carbon capture and storage.

by Jennie C. Stephens, originally published by Wiley Online Library  | TODAY

Abstract: Government investment in carbon capture and storage (CCS) is a large and expensive fossil-fuel subsidy with a low probability of eventual societal benefit. Within the tight resource constrained environments that almost all governments are currently operating in, it is irresponsible to sustain this type of subsidy. CCS has been promoted as a ‘bridging’ technology to provide CO2reductions until non-fossil-fuel energy is ramped up. But the past decade of substantial government investment and slow progress suggests that the challenges are many, and it will take longer to build the CCS bridge than to shift away from fossil-fuels. Optimism about the potential of CCS is based primarily on research on technical feasibility, but very little attention has been paid to the societal costs of governments perpetuating fossil-fuels or to the sociopolitical requirements of long-term regulation of CO2 stored underground. Deep systemic change is needed to alter the disastrous global fossil-fuel trajectory. Government investment in CCS and other fossil-fuel technologies must end so that the distraction and complacency of the false sense of security such investments provide are removed. Instead of continuing to invest billions in CCS, governments should invest more aggressively in technologies, policies, and initiatives that will accelerate a smooth transition to non-fossil-fuel-based energy systems. We need to divest from perpetuating a fossil-fuel infrastructure, and invest instead in social and technical changes that will help us prepare to be more resilient in an increasingly unstable and unpredictable future.


For over a decade, billions of dollars of government investment in carbon capture and storage (CCS) technology have provided a glimmer of hope for reconciling carbon dioxide (CO2) emissions and global growth in fossil-fuel use.[1, 2] CCS has offered a vision of a future in which the impacts of growing fossil-fuel reliance are minimized by capturing and storing the CO2 instead of allowing it to accumulate in the atmosphere.[3, 4] Many have projected that CCS is a technology critical to ‘solving’ climate change while continuing our reliance on fossil-fuels.[5-10]

But it is becoming increasingly clear that investing in CCS is not money well spent. As the global climate-energy situation becomes increasingly dire, bold measures with near-term influence are needed to reduce, rather than sustain, fossil-fuel reliance. Governments around the world need to divest in fossil-fuel technology and stop subsidizing CCS and other fossil-fuel technologies. Instead of continuing to invest billions in CCS, governments should be investing more aggressively in technologies, policies, and initiatives that will accelerate a smooth transition to non-fossil-fuel-based energy systems. Despite the challenges of envisioning a less-fossil-fuel-dependent energy future, we know that an eventual move away from fossil-fuels is inevitable. A decrease in investment in fossil-based energy technology coupled with an increase in innovation investment in non-fossil-based energy systems will help us prepare for this transition promoting gradual change and reducing the likelihood of an abrupt, disruptive shift away from fossil-fuels.


Given the magnitude of society’s reliance on fossil-fuels, the technological vision of CCS has had a powerful influence on governmental action on climate change.[11, 12] The emergence of the possibility of CCS over 10 years ago enabled many fossil-fuel dependent actors, particularly individuals and institutions in coal-dependent regions of the world, to stop denying the existence of climate change; CCS provided the possibility of continuing coal use while also addressing climate change.[13] Now with recent increases in natural gas reliance, CCS similarly offers the possibility of reconciling climate mitigation goals with growth in natural gas power plants. But this vision of CCS has also enabled complacency about the growing dangers of sustained fossil-fuel dependence. And the billions of dollars in government funds devoted to CCS has reduced the level of investment in non-fossil-fuel energy including initiatives and technologies with more concrete, near-term societal benefits. As the need to reduce fossil-fuel reliance is increasingly acknowledged for climate and many other reasons, CCS investments are dangerous as they further incentivize and legitimize continued use of fossil-fuels, and they create a false sense of optimism that our current energy systems can be safely perpetuated.

Beyond acknowledging CCS investment as an additional fossil-fuel subsidy,[14] many other factors indicate that the time has come for governments to stop investing in CCS. First, despite the billions of dollars already invested, widespread CCS deployment remains a distant, far-fetched, extremely expensive possibility.[15-17] The slow progress and long-time horizon for realizing any potential societal benefits from CCS investments is problematic because the CCS strategy has a limited lifetime.[18] CCS has been promoted as a ‘bridging’ technology to provide some CO2 reductions until non-fossil-fuel energy is ramped up. But the past decade of steady investment but slow progress suggests that it will take longer to build this bridge than to shift away from fossil-fuels.[16] Australia’s recent cuts and deferred investment in its CCS programs reflects recognition of this time-scale problem; Australia cut its investment in its long-term CCS strategy to provide near-term budgetary relief and also to offset costs of the country’s emission trading scheme, which represents a more direct, near-term approach to reducing atmospheric CO2 (the future of Australia’s cap-and-trade system is now uncertain following the September 2013 election).

In the current global economic situation, government expenditure of the magnitude required to advance CCS is no longer justifiable. A single CCS demonstration plant is estimated to cost on the order of 1 billion dollars, and those advocating for more investment in CCS are asking governments to spend $3–4 billion each year for the next decade.[9, 19] Reallocation of this level of funding to promoting non-fossil-fuel energy would be a much less-risky more responsible and justifiable way for government to invest public money.

The amount of energy required to capture and store CO2 is often not adequately recognized in optimistic perceptions of the potential of CCS. This so-called energy penalty has been estimated to be about 30% with a range from 11 to 40%.[20] This means roughly that for every three coal-fired power plants utilizing CCS an additional power plant would be required simply to supply the energy needed to capture and store the CO2. The magnitude of this energy penalty (including even the lower estimates) is so high that it is difficult to imagine a future scenario in which consuming this much additional energy to enable CCS would actually make sense.

In addition, CCS is unlikely to ever become an effective global CO2 reduction strategy because of the political difficulties of managing and preventing leakage of the underground storage of CO2 for thousands of years after it is injected.[21] Optimism about the potential of CCS is based primarily on research on technical feasibility, but very little attention has been paid to the sociopolitical requirements of regulating and enforcing long-term monitoring and maintenance of CO2 stored underground.[22] Global institutional structures with capacity to enforce liability for thousands or even hundreds of years do not exist. And political instability, corruption, and inevitable tensions among countries create severe and constant risks of any proposed global CO2 storage management scheme.[23]

The health and safety costs of perpetuating fossil-fuels represent another reason to end government investment in CCS.[24] The large, industrial-scale, fossil-fuel power plants that CCS is being designed to enable cause major health and safety risks to both the communities surrounding the plant (including water and air pollution) and to the communities impacted by fossil-fuel extraction (including coal mining, hydraulic fracturing for natural gas extraction, and fossil-fuel transport).[25] In addition, strong public concern about the health and safety risks of storing CO2 underground has derailed several large-scale CCS demonstration projects in the past 4 years including the Vattenfall project in Germany and the Barendrecht project in the Netherlands.[26] Concern about earthquakes triggered by injection of large volumes of CO2 underground is contributing to technical understanding of the risks of leakage.[27, 28] The private sector has recognized the many risks of CCS and has only been willing to invest in CCS in conjunction with strong government investment.


A final critical reason to end government investment in CCS relates to the impossibility of claims that CCS is critical to ‘solving’ climate change. Climate science now tells us very clearly that no matter what is done to curb greenhouse gas emissions the climate is changing irreversibly to a new and different reality.[29] So any claims that a specific technology like CCS is critical to ‘solving’ climate change is misleading and perpetuates a false sense of complacency about the realities and risks of climate change. This complacency coupled with optimism that CCS provides a ‘solution’ to climate change is dangerous, and it detracts from the increasingly urgent need for systemic changes that are now desperately needed to prepare us for the changing climate regime.

Continued CCS investment appears to fuel optimism in the face of the dire global energy realities including rapid recent growth in coal-fired power plants in developing countries.[30] During the past decade global coal consumption has grown by more than 50% with much of that growth concentrated in China and India. Maintaining optimism about this situation is extremely difficult, but the assumption and hope that one day these new coal-fired power plants might be retrofitted with CCS has been an important mechanism for remaining positive.[31-33]


For many climate and energy experts around the world, CCS has become the holy-grail of climate mitigation. Advocating for government support for CCS technology has become a passion for many deeply committed, technologically optimistic energy professionals. This optimism seems to make sense for those who believe the dominant narrative that continuing growth of coal is inevitable due to its low cost, abundance, and reliability.[30] In this narrative coal offers unique potential to continue to expand electricity access in the developing world providing unparalleled economic development opportunity. The problem with this narrative is that the extreme negative social, economic, environmental, and human health impacts of coal[24] are dismissed and not adequately considered. The time has come for energy analysts and governments to recognize that sustained growth of coal use is NOT inevitable. If governments invest in and focus on alternative visions, mainstream energy projections based on dominant current assumptions become increasingly unlikely.

The case for substantial government investment in CCS seems to have sustained such broad appeal because many assume that the economic, political, and social hurdles of advancing CCS are lower than the hurdles of moving away from fossil-fuels. CCS advocates frequently point out that CCS is preferable to moving away from fossil-fuels because CCS does not demand a radical alteration of national economies, global trade, or personal lifestyles. But radical systemic change in our energy systems is needed now more than ever before, and investments that slow down this transition are a dangerous distraction.


From a technological perspective, it has been suggested that the infrastructural requirements and inflexibility of CCS would exacerbate ‘technological lock-in’ to fossil-fuel use.[11] From a political perspective, it now seems that the sunk-costs associated with the amount of money already invested in CCS is creating a difficult ‘political lock-in’. For governments that have already invested millions or billions of dollars and considerable political capital to advance CCS, ending this support is politically challenging. And the billions of dollars already spent has created a large and powerful CCS advocacy coalition that includes multiple institutions and individuals around the world whose professional responsibilities include advocating for more government funding for CCS.[34, 35] The technically optimistic focus of these CCS advocates has limited consideration of the societal risks of CCS investments and the societal value of investing instead in alternative non-fossil-fuel-based strategies.


For the well-being of societies around the world, divestment from fossil-fuels needs to become a governmental priority. Despite the obvious political challenges of resisting the powerful fossil-fuel establishment, a subtle but definite signal of movement toward such a rebellious idea was given by President Obama last summer when he mentioned ‘divestment’ in his speech on climate.[36] Although the US officially continues to espouse an ‘all of the above’ energy strategy which includes investing in CCS, the time has come for the United States and other governments who have invested in CCS to exercise their influence to selectively divest in fossil-fuels and invest more heavily in non-fossil-fuel energy technologies. The perceived need for CCS has already been reduced in the EU where regulations now in place incentivize moving away from fossil-fuels by putting a price on CO2 emissions. And proposed new CO2 regulations in the United States have already changed firmly held assumptions of sustained long-term coal use in the United States and reduced expectations of widespread deployment of CCS.[37]

Government investment in CCS is a large, expensive, and unnecessary fossil-fuel subsidy with an extremely low probability of eventual societal benefit. In the tight, resource constrained environment that almost all governments are operating within, it is irresponsible for governments to sustain this type of subsidy. Deep systemic change is required to alter the disastrous global fossil-fuel trajectory. Government investment in CCS and other fossil-fuel technologies must end, so that the distraction and complacency of the false sense of security such investments provide are removed.

Albert Einstein famously pointed out that problems cannot be solved with the same mindset in which they were created. We need to move beyond the powerful fossil-fuel mindset, and let go of the false sense of optimism that CCS investments provide. We also need to end the perception that CCS or any specific mix of technologies has the potential to ‘solve’ climate change. We need to divest from perpetuating a fossil-fuel infrastructure, and instead invest in social and technical changes that will help us prepare to be more resilient in an increasingly unstable and unpredictable future.


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37. Folger P. Carbon capture and sequestration: research, development and demonstration at the U.S. Department of Energy. In: Congressional Research Service (CRS) Report for Congress. Prepared for Members and Committees of Congress; 2013.
Citation: Stephens, J. C. (2013), Time to stop investing in carbon capture and storage and reduce government subsidies of fossil-fuels. WIREs Clim Change. doi: 10.1002/wcc.266
Power station image via shutterstock. Reproduced at Resilience.org with permission.

S&P cuts EU rating over tense budget talks – Europe – Al Jazeera English

S&P cuts EU rating over tense budget talks – Europe – Al Jazeera English.

S&P said that cohesion among EU members had lessened [GETTY]
Standard & Poor’s has downgraded the European Union’s long-term credit rating, stripping the bloc of the highest grade of AAA to AA+, citing rising tensions on budget negotiations.The move follows cuts to the ratings of EU member states in recent months.

The credit rating agency said on Friday that a bitter battle over the EU budget and worsening creditworthiness of its members are behind the decision to decrease the bloc’s long-term issuer credit rating by one grade.

“In our opinion, the overall creditworthiness of the now 28 EU member states has declined,” S&P said in a statement.

“In our view, EU budgetary negotiations have become more contentious, signaling what we consider to be rising risks to the support of the EU from some member states.”

S&P said cohesion among EU members had lessened and that some might baulk at funding the EU budget on a pro-rata basis.

Average rating of contributors dropped

The average rating of net contributors to the EU budget has fallen to AA+ from AA since January 2012, when S&P revised its outlook on the long-term EU rating to negative, the company said.

S&P has had a negative outlook on the EU since that date and has since cut its ratings on members France, Italy, Spain, Malta, Slovenia, Cyprus and the Netherlands.

The EU is not a sovereign but it can borrow in its own name. As of this month, it had outstanding loans of 56 billion euros ($76.5 billion), according to S&P.

The credit-rating agency said its downgrade of The Netherlands last month left the EU with six AAA-rated members. Since 2007, revenues contributed by AAA-rated sovereigns as a proportion of total EU revenues nearly halved to 31.6 percent, it added.


Alberta Voices: Somebody…needs to wake up!

Alberta Voices: Somebody…needs to wake up!.

The Thomases’ story is the fifth in a series of short films on hydraulic fracturing in Alberta.

DSC_0319Dan and Elaine Thomas




Although Dan and Elaine Thomas are taken aback by the horizontal well that will be fracked directly beneath their Lochend retirement home, they are no newcomers to the oil and gas industry. Dan began his career as an engineer more than 30 years ago working with heavy oil in Alberta before heading abroad for 20 years of employment in South America, the North Sea, the Netherlands, and the Gulf of Mexico. Elaine spent eight years in the industry herself, lending her leadership development skills to an oil and gas company in downtown Calgary before joining Dan for three years in the Netherlands. Dan retired following a final stint of work with BP and Transocean a few weeks before the Deepwater Horizon – Macondo disaster in the Gulf of Mexico.

Three years ago, the time came to build a retirement home on the land Dan and Elaine had purchased north of Cochrane, Alberta nearly 20 years earlier. Elaine recalls that they would often make weekend trips to the property to camp out with the kids in their trailer. “We just enjoyed the pristine beauty of the Rocky Mountains and the clean fresh air,” she says.

In the same week that they broke ground to make way for their new house, a horizontal well was drilled 300 metres from the edge of their property line. It was the first of its kind in the immediate neighbourhood. “There had been oil and gas wells here in the area in the past,” says Elaine, “but what we didn’t know was that this was a whole new breed of oil and gas wells. This was multistage horizontal hydraulic fracturing.” Soon after, Elaine and others in the area began experiencing various health impacts that coincided with the arrival of countless oil and gas rigs.


Dan compares the recent oil and gas development in the area to a “home invasion” and says that the failure to engage resident stakeholders has left many in the community wondering why they do not learn about new wells before “seeing survey stakes and the erection of the derrick.” The Thomases received no notification that the site next door would be developed and Dan learned afterward that the planned well site was strategically relocated specifically in order to evade requirements to notify neighbouring residents. Had they known about the well beforehand, the Thomases say they would not have built the house.

In the year and a half that followed, nearly 80 new wells were drilled and fracked in the area. During this period, most wells were not tied into gas conservation pipeline infrastructure and the effluent was instead burned off for months on end. Dan says there was one flare that was visible from a distance of three kilometres, and it led him to wonder what net volume of gas was being burned in the area. Based on the volumes indicated in flaring notices and shareholder press releases, and based on the size of the equipment on various sites, he made rough calculations that in the Lochend alone, the oil and gas industry was releasing approximately 30 to 40 million standard cubic feet of gas per day (0.8-1.1 million cubic metres/day). “Thirty million standard cubic feet of gas is enough to heat about 60,000 Calgary households on a typical winter day,” concludes Dan. This volume of gas was released on a daily basis for a period of 12 to 18 months, he says. The flaring of marketable gas continues on some well sites today, he adds.

DSC_0863Under provincial regulation, flaring at these rates is allowed for a maximum of 72 hours. However, if conservation is not found to be economic, continued flaring is permitted based on an evaluation of costs that is to be submitted to the regulator on an annual basis.

Dan laments the emission of greenhouse gases, the uncompensated release of provincially owned resources into the air, the needless waste of valuable natural gas, and especially the health impacts. “Words fail me,” he says.

The most direct impact of the flaring has been experienced by Dan’s wife. One hot, muggy day last fall, says Elaine, she could see billowing smoke coming off a large flame at the site of a well that was being completed and flared about one and a half kilometres from their house. She did not realize the significance of her observations in that particular moment, but after the fact, she noted that the emissions would have been carried toward her by the prevailing winds.

“Within the next few days, I was severely impacted. I had burning on my scalp, which actually lasted for three months. After a month of burning scalp, hair loss started. I had a burning throat. I have a chronic cough.”

“When spring break up comes and fracking stops, my cough goes away. As soon as it starts up, my cough is back. I have had a number of other health issues and incidents where I have had to leave our home for several days at a time.” Dan explains that the first residents to experience health problems were those who lived closest to the earliest developments. With more wells planned nearby to their west, the Thomases themselves will soon bear the brunt of the pollution.

Many others in the area— Dan included— have also experienced abnormal health problems. The Thomases report that some previously healthy Lochend residents have experienced frequent headaches, dizziness, rashes, muscle pain, and other symptoms. Elaine stresses that all of these symptoms have arisen in the short-term. “Who knows what the long-term effects are when you’ve been chronically exposed to these kinds of toxins that are in the air,” she adds.

It is possible that the health impacts of the flaring have been worse than might be expected because of the chemicals that are used in the fracking process. It is likely that the frack fluid components that are put down the well are also burned off in the flares, producing any number of toxins. Dan claims, “The fracked effluent from these wells is … potentially more dangerous than H2S, particularly given that many of the likely toxins are tasteless and odourless.”

He says another eight to twelve wells will soon be drilled in the area immediately surrounding their home. In the last year, perhaps partly as a result of landowner advocacy, many kilometres of new pipeline have been buried and the amount of flaring has decreased accordingly. The Thomases are glad for the improvement, but Dan asks, “Why was the infrastructure not there before?”

The pipelines are not a complete solution, however. During the completion phase of each well, flaring will continue to occur for a matter of days or weeks or longer until each well can be tied in, says Dan. While the approach would be more expensive, he explains that there is existing technology with the capacity to avoid flaring altogether. Given plans to drill dozens of new wells in the Lochend, it is likely that there will be active flares continuously throughout the year. The Thomases are making plans to leave the area as much as possible until oil and gas development near their home has subsided.


Because Dan and Elaine reside within 1.5 kilometres of various oil wells, they have on occasion received flaring notices, as per the regulations. Elaine is humoured when “smiling, handshaking” representatives distribute the notifications from door to door in what she suspects the companies feel is an act of neighbourliness. “I find that really interesting, because I have to leave the property and many aspects of life are put on hold,” she says in reference to the impacts of flaring on her health.

The flaring notifications do little to improve Elaine’s wellbeing, but she and her husband recognize that the companies are simply adhering to provincial regulations that require them to notify residents and nothing more.

“It’s an interesting example of regulatory policy that causes the industry to do this,” notes Dan. “It doesn’t go anywhere, so it’s fundamentally irrelevant.”

He says that this is just one example of “voluminous regulation” that is ineffective and without purpose. Dan’s experience in the industry both domestically and internationally has helped him understand the ongoing evolution of Alberta’s oil and gas sector. He mentions that the regulating body is now funded entirely by industry and he notes that it is clear in the mission statement of Canada’s main industrial association that profit comes before environmental and social prudence.

“We convince ourselves that we have the greatest legislative and regulatory environment in the world,” says Dan. “It’s not true. I’ve worked in developed countries — undeveloped countries — that in certain instances have better regulatory policy and possibly better enforcement than we have.”

Dan asserts that the way the oil and gas industry operates in Alberta would not be acceptable in many other parts of the world, including parts of the US that are further ahead in the development of unconventional regulation. Alberta has failed to learn from the multitude of mistakes incurred south of the border, he says. He suspects that industry may regret this failure when shareholders begin recognizing the risks that have already caused financial damage to several companies in the states. Instead, “Alberta is falling behind US legislation probably 8 to 10 years,” he says, with respect to hydraulic fracturing. He provides an example and explains that by 2015, flaring and venting will be banned even during completion stages on most well sites in the US.

“The Alberta regulator,” begins Dan, “has been trying to rewrite — trying to … basically write the regulation for unconventional gas development now for more than three years.” Meanwhile, he says, unconventional development has been ongoing for six or seven years in some areas of Alberta.

There is an industry mindset that less or no regulation of the unconventional industry will in some way lead to greater prosperity for us all. In our province, that mindset has been driven over the edge by some well-placed economists in the industry and government. That is a fallacy now and I believe the industry is quickly moving to a situation of higher costs, stakeholder revolts and, ultimately, unhappy shareholders. Somebody — government, the regulator, the industrial association or the industry — needs to wake up!
– Dan Thomas

This fall, despite the Thomases’ formal objections, a well pad was placed on the neighbour’s property. No information was provided to the couple, but Dan was able to read the signage and he discovered that four horizontal wellbores are being drilled from the pad, one of which will extend directly beneath the Thomases’ home and continue another 150 metres beyond. Dan’s conclusions were confirmed when he and Elaine were given a company map during a discussion of lease roads that also happened to include a sketch of the well next door.

DSC_0376“The industry in Alberta works on three principles,” says Dan. “Speed, stealth and secrecy.” The Thomases have been ensured that nothing can go wrong because the wells are more than two kilometres beneath the surface, but Dan points out that regardless of the depth, neither the industry nor the regulator has a worthy philosophy of risk management. There is no risk assessment, he says, no risk mitigation, and no contingency plan in the event that “the unthinkable happens.”

From Dan’s perspective, the risks posed by the well next door and beneath their home include air pollution, water contamination, and induced seismic events that could potentially cause structural damage to their home. The Thomases are almost certain that their health problems can be attributed to the flaring and on one occasion, Elaine and a neighbour both felt a tremor that coincided with a nearby fracking operation. To date, the Thomases’ well water has remained potable, but Dan contends that the contamination of the local aquifer is “almost inevitable.”

He explains that there are several mechanisms by which methane gas, deep saline fluids, or frack fluid chemicals could migrate into shallower strata. Human error, mechanical failure, or the nature of irregular foothills geology could independently or jointly lead to the contamination of drinking water aquifers, says Dan. If something were to go wrong, both Dan and Elaine are convinced that they would have little recourse, just as has been the case with the flaring over the last three years.

“Rule one in this province,” says Dan, “in terms of protection for the rural resident, is that … there is no protection.”

The Thomases have done their best to mitigate the risks on their own. In addition to installing mechanical venting and methane alarms in their basement where they have a 300 gallon cistern that could potentially accumulate gases and lead to an explosion, Dan has made several offers and requests to the operator and the regulator. One such request was that he and Elaine be notified of the date and time when fracking would occur. No response has been received from the operator, but the regulator has reviewed Dan’s submissions, which included a document detailing various concerns — each matched with possible mitigation techniques and viable contingency plans. The regulator responded in writing and informed the Thomases,

The AER [Alberta Energy Regulator] notes that the pad site is a considerable distance from your lands and your residence. … The AER is satisfied that you have not demonstrated that your lands, including your home and water well and your business, will suffer any direct and adverse impact from the wells.

Dan concedes that the pad site is a fair distance from their residence, but he is not convinced that the pad’s location is relevant to the fractures that will soon be induced directly beneath his home. The letter also notes that the wells do not contain H2S gas. Dan was aware of this beforehand and he says the fact remains irrelevant and did nothing to alleviate the concerns that were initially put forward.

From their kitchen window, the Thomases can see another drilling rig in the distance. The well site is approximately 300m from Westbrook School on Highway 22 and both Dan and Elaine are distressed by the fact that, during completion, flaring will occur within sight of the playground. Dan also asks whether there is an emergency response plan in the case of a well site accident and whether the school and its officials are equipped to properly manage such an emergency.

“I’ve seen some things burn down, blown up, and people hurt in other parts of the world,” says Dan, “but I’ve also seen how the potential risk of those things can be reduced significantly in ways that are mostly if not totally absent in the thinking in Alberta right now.”








While Dan is not sure that the water can be sufficiently protected from the impacts of fracking, he suggests that many other problems can be avoided. “There are solutions to this,” he says. “This can be done differently. This can be done safely and without significant negative impacts to the resident stakeholder group and the environment in general.” However, he concedes that the will to adopt and enforce best practices is lacking. For instance, he asks why the regulator has been reluctant to require the use of tracers in each oil and gas well. These could later be easily detected in the event of water contamination in order to identify the correct source and hold operators responsible for the impacts of their activities.

“I feel that there is no desire to do anything like that in this province,” he says.

However, there is good news, ensures Dan. “I honestly believe we’re at a tipping point where the current legislative and regulatory environment is probably costing the industry money now. It is very certainly in my opinion costing us our reputation globally.”

Dan says that even “industry insiders” are beginning to stand up and voice their concerns with respect to the regulator. He recognizes that some oil and gas executives want to employ better practices, but are limited by the demands of shareholders and the bottom line.

DSC_0365“This is a competitive environment,” says Dan. Any deviation from the standard could threaten a company’s competitive edge. Only a strong regulatory framework that defines the parameters of operation can ensure the application of best practices, he says.

“We’re all trapped in the insanity of an inappropriate, inadequate, out-of-date and dangerous regulatory environment,” he says. “It’s no good for anybody. It’s time to change.”

The Thomases recognize that as former professionals in the industry, they speak from a unique position.

“We’re not trying to stop oil and gas development in Alberta,” says Dan. “Obviously both Elaine and I worked in industry, had a good living from the oil and gas industry, and we don’t want to demonize anybody who happens to be in industry right now.” In general, he adds, the most important changes must occur at the policy level and at the leadership level.

Elaine provides some insight as to how current oil and gas workers and professionals might fail to recognize problems like those she and Dan have been experiencing.

“When you’re within an organization, you’re trying to fulfill the goals and strategies of the company,” she says. “You’re doing your best to be a credible employee and to further the company and you really don’t think about the implications of some of the actions, for example, for residents out in the country.”

“Now that I’m out of the oil and gas industry and I’m on the other side, you definitely see a totally different perspective.”

The Thomases’ experiences both within industry and in retirement have influenced their decision to speak publicly over the last three years and as they continue to advocate safe and responsible oil and gas development. “We made our living inside the oil industry,” says Dan, “so we have a little bit of a responsibility to give back.”

In addition to the time-consuming nature of these issues, Elaine says an enormous amount of stress has been placed on families and on the community. “I’ve seen it pitting neighbour against neighbour,” she says.

“We’re exposing ourselves right now to some more potential risks, and more potential conflict with the landowners who have the wells, and more potential criticism,” says Dan. It has been slow progress, but the Thomases retain the hope that things might be about to change and they continue to push forward despite any difficulties.

“The truth is there,” says Dan. “People are being hurt by this. The causes are pretty obvious and we’ve got to stand up and we’ve got to talk about this in as unemotional and as truthful and as ethical a fashion as we can and allow whatever negative consequences it might bear to just let them take care of themselves.”

Dan and Elaine are members of an advocacy group called Cochrane Area Under Siege – Coalition (CAUS-C). The group can be contacted at causccoa(at)gmail.com.

– Hans Asfeldt
October 30 2013



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