Russia is still the world’s largest producer of oil and gas, but growth has stalled and to get to new supplies requires going to a very difficult place — the Arctic.

“If you want to be in this business in 2020, 2025, you must think about the Arctic,” says Konstantin Simonov, head of the National Energy Security Fund in Moscow.

In the past month, Moscow has signed several deals with foreign oil companies designed to maintain Russia’s position as the top producer. The most important deal, and the most lucrative, is a partnership between Exxon Mobil and Russian oil giant Rosneft.

Exxon Mobil could eventually spend half a trillion dollars to look for and extract oil and gas in the Russian Arctic. The investment is enormous, but so are the potential rewards.

Getting To The Arctic’s Reserves

“The reserves in the Russian Arctic are vast,” says Roland Nash, chief investment strategist for Verno Investment in Moscow. “Nobody quite knows how vast, but the numbers are enormous.”

Some estimates put the oil and gas reserves in Russia’s Arctic waters at 100 billion tons. According to Simonov, the deal with Exxon Mobil is a sign that Russia knows it needs international investment and technology to get to those reserves.

“Without foreign partners, for us it will be impossible to develop this area,” Simonov says. “It’s out of [the] question.”

The deal was signed on April 18 with Russian President Vladimir Putin looking on. It gives Exxon Mobil access to oil fields in the Black Sea and provides Russia some access to Exxon Mobil’s oil deposits in Texas, Canada and the Gulf of Mexico.

At the signing, Putin said Exxon Mobil also had the option to work in Russia’s north and south, as well as in other regions. Meanwhile, the Russians will soon start work with Exxon Mobil in the U.S. and Canada.

In addition to the Exxon Mobil deal, Russia’s Rosneft recently signed smaller deals with Italian oil company Eni to go after oil in North Africa, and with Norway’s Statoil elsewhere in the Arctic.

But it hasn’t been easy for foreign oil companies to do business in Russia. BP had a similar deal with Rosneft that fell apart last year. According to Roland Nash, everyone knows about Russia’s troubled past with international oil companies.

“Signing the deal is Step 1,” Nash says. “Implementing the deal is a bigger step in some ways.”

So Russia has changed the game in favor of the oil giants. The government has eased the tax burden on Exxon Mobil and others looking for oil in the Arctic, making it a more attractive proposition.

And, according to Simonov, letting Rosneft in on energy deposits elsewhere in the world turns the Russian oil giant into an international player, helping it spread its risks. There are also potential political benefits.

“It’s like, you know, the logic of capitalism,” Simonov says. “If you are the shareholder of serious assets in Europe and the United States, maybe there will be more reason to have political dialogue also.”

Making Things Happen

The financial markets have reacted cautiously to the deal, given Russia’s checkered relations with international oil companies in the past. But Nash believes it’s a very good move by Exxon Mobil and by Russia.

“The real reason why Exxon Mobil should believe in this is because Russia really needs this investment. They recognize that without that investment, you’re not going to be able to maintain Russia as the world’s largest oil producer. You’re not going to be able to get this oil out of the ground in the Arctic,” he says. “When things are necessary in Russia, they tend to actually happen.”

But it won’t happen fast. Russia has a long-term deal with Exxon Mobil, and it’s unlikely that there will be any serious production from Russia’s soon-to-be explored Arctic waters until after 2020.

NPR

Last week I read that the glitzy world of virtual reality created instant multi-millionaires and several billionaires when Facebook went public selling shares.

Last week I also noted the important real world problem of some 250 million tons of solid waste a year in our country alone.

Guess which “world” gets the most investment, status, fame, klieg lights, and attention of the skilled classes and the power structure?

Guess which world is more important for our wellbeing and that of the planet?

You’ve heard of CEO Mark Zuckerberg and Facebook’s 900 users exchanging gossip and other personal pleasantries or worries through a medium that inflates narcissism.

The three Rs

You’ve probably not heard of Ben Rose of the New York City Materials Exchange Development Program (NYC MEDP) or the equivalent organizations in your communities providing services to thousands of charitable non-profit groups which promote the donating and reusing of materials to avoid incineration, landfilling and recycling.

To grasp the enormity of modern society’s waste products, Ann Leonard created a sparkling website, visited by millions of people (www.storyofstuff.org). She also published a recent popular book titled The Story of Stuff that details every aspect of your environment and physical being. Air, water, food, soil and even your genes absorb the byproducts of processing mountains of stuff. The results are not pretty.

While recycling efforts in cities like San Francisco, Vancouver and Los Angeles rise above 50 percent, New York City has been slipping behind its own 2002 level and is still struggling to reach 20 percent. New York City has been a leader in improving air quality and reducing greenhouse gas emissions, but it still has dreaded incinerators producing toxic air and toxic residues.

In the early 90s, pragmatic environmental scientist, Professor Barry Commoner demonstrated in two operational pilot projects that the city could reach a residential recycling level of nearly 100 percent. Unfortunately, New York City missed a chance to become a world leader in recycling when its leaders, beginning with Mayor Rudolph Giuliani, declined to establish a city-wide recycling program based on Professor Commoner’s model.

The New York City recycling challenge still hasn’t recovered from that devastatingly wrongheaded decision. Politicians and corporations cannot stop an even superior environmental cycle, presently driven by charitable associations, in Mr. Rose’s words, “nimbly accepting, exchanging and distributing thousands of tons of reusable material each year,” as they have done for generations, “all the while contributing to the social, economic and environmental fabric of New York City.” Over the decades, the recipients have been communities in need, such as homeless shelters and poor populations.

The NYC Materials Exchange Development Program now sees a great potential to “organize, grow and advocate for the practice of donating and reusing materials for the benefit of all New Yorkers,” creating local jobs and adding productivity without any tax dollars. They are rediscovering the past of a thrifty culture and expanding it mightily to contribute to the neighborhood and economic landscape.

Donating materials instead of trashing or recycling them enlarges the gifting culture and the beneficial human interactions that follow. As Ben Rose notes: “In contrast to recycling, where used materials are broken down into their raw elements to make new items, reuse takes useful products and exchanges them without reprocessing, thus saving time, money, energy and valuable resources.”

Battling manufactured obsolescence

The obstacles are obvious. First a throwaway economy of waste is profitable for sellers who want you to keep throwing away and buying. They plan product obsolescence and lure consumers with the convenience of disposable products. So we have to change habits: become more cunning about what manufacturers and vendors are up to and expand second hand, reuse and material exchange programs.

What are reusable materials? Just about everything you purchase that doesn’t spoil or perish. Clothing, furniture, books, bicycles, containers, computers, tools, surplus construction materials and things you buy or grow that you do not use. Reuse outlets include Goodwill or Thrift stores, charitable book and clothing drives, ecology centers and creative arts programs.

Nothing less than a “New Age” for a burgeoning sub-economy of reusable products and materials is being envisioned by the collaborative likes of the New York City Sanitation Department and the City College of New York’s Department of Civil Engineering. Collecting data which shows how much energy is saved, how many jobs can be created, how much better pricing systems can be, and how much solid waste can be prevented will elevate this subject and its social status within the “zero waste” movement. We should aspire to using resources, in the worlds of Paul Hawken, “10 to 100 times more productively.”

Other countries are advancing in the reuse sector in ways we can learn from immediately. Holland is starting numerous “Repair Cafes,” that are attracting increasing interest in “fixing” rather than dumping. These used to be called “Fix-It Shops” in the U.S. before the advent of our throw-away corporate culture.

For more information visit (www.nycmedp.org).

– Ralph Nader, the Nader Page.

Fukushima plant operators are now admitting that the Fukushima radiation levels emitted from the disaster exceeds almost two and a half times the initial ‘estimate’ produced by Japanese safety regulators. The announcement comes after independent researchers exposed the true amount of radiation leaked from the plant back in October of 2011. The study revealed that significantly more radioactive caesium was released into the atmosphere as a result of the Fukushima explosion than many nuclear experts previously told the public.

Fukushima Radiation Levels: A Cause for Concern

The researchers from this study went against the official explanations (now confirmed as bogus by the operators themselves), and stated that the amount of radioactive isotope caesium-137 released at the height of the crisis was equivalent to 42% of that from Chernobyl. And that’s just the amount released at the height of the event. Many experts have actually labeled the Fukushima event to be even more catastrophic than the Chernobyl incident. Scientists who challenged the official report published their findings online in the journal Atmospheric Chemistry and Physics, and authors state that Fukushima radiation levels truly began flooding the environment between being struck by the magnitude-9 earthquake on March 11th and being hit with a tsunami 45 minutes later.

Maxim Shingarkin, an expert in nuclear and radiation security, commented on the situation in Fukushima:

“In fact, this statement came with a big delay. The operating company deliberately concealed this information. The explanation is simple – the company is afraid that any checking by competent experts would reveal its inability to save the situation. Only recently, foreign experts founded a consultative body for the clean-up of the accident’s consequences. Moreover, the company is concealing the information about the amount of pollution of the environment.”

The plant now states that the meltdowns which took place at three reactors at the Fukushima Daiichi plant released about 900,000 terabecquerels of radioactive substances into the air. But what happened to the majority of the radioactive contamination? According to the earlier report, 20% of the caesium-137 fell on Japanese land, and about 2% ended up on land outside the country. The remainder came down in the Pacific Ocean. Is it any wonder that ‘hidden’ deaths are now being reported by scientific research?

Health and radiation experts are now admitting that radiation stemming from the Fukushima disaster is leading to an unknown number of deaths as a result of increasing cancer rates around the globe. They are also stating that these deaths will be ‘hidden’ from the public eye due to a lack of accurate identification when it comes to targeting Fukushima-related cancer deaths.

It seems that Japanese government officials and plant higher-ups are now being forced to reveal certain details of the Fukushima disaster. From concealing integral information from the public to ignoring the real threat to public health, there is sincere lack of honesty and communication between many worldwide health officials and the citizens of the world. As information continues to surface, more and more truths will be expelled from the mainstream media and ‘health’ officials alike regarding the troubling event.

InfoWars

There is no wealth but life. –John Ruskin

Have you ever considered the question: what is life? If we are aiming for a new economic system that will preserve and enhance life, rather than the current system, which more often than not seems to destroy and degrade life, perhaps we should consider what life is and how it is made possible. I recall learning about “living things” in high school biology classes, but always found the definitions of these “living things” to be somewhat vague. Let me try a physicist’s definition then, which might feel unfamiliar at first. A living thing is a kind of low-entropy-maintenance machine: a configuration of differentiated parts that succeeds in performing complex, interdependent functions for a prolonged period of time.

Having used the word “entropy” in the previous sentence, I should try to explain what it is. All living and non-living things (and hence all human economies, whether or not economists pay attention to the fact!) obey the laws of thermodynamics. The second law, in particular, introduces the concept of entropy and the idea that the entropy of a closed system must either remain constant or increase, but never fall. Entropy is a measure of how “special” a particular arrangement of parts is — the lower the entropy, the more “special” the arrangement. Life is “special.”

To illustrate this concept of “specialness,” imagine first a set of red and blue gas molecules, fifty of each say, bouncing around in a room. Which is more likely: (A) that all 50 red molecules will be in one half of the room and all 50 blue in the other half, or (B) that some roughly even mixture of red and blues will be present in both halves? Scenario B, is the less “special” and more likely one, but why? The answer is that there are many ways of arranging the molecules to have “some roughly even mixture” of red and blue — a great many pairs of molecules can be swapped between the halves without making a difference. However, with the perfect red and blue split, if any molecule is swapped with a partner in the other half of the room, then each half gets “contaminated” with one molecule of the “wrong” color — such a swap does make a difference. Hence what we see tends to be an equal mixture of each color, just because there are vastly many more ways of seeing an equal mixture.

Now I can state the notion of entropy precisely — the entropy of such a set of molecules is a number that is large when there are many ways of swapping pairs of molecules and getting the same overall state, and small when there are few ways of swapping them and getting the same overall state. Explicitly, an entropy S is given by Boltzmann’s entropy law:

S = k log W

Here k = 1.38 x 10−23 joule/kelvin (Boltzmann’s constant), W is the number of ways of swapping the components of a state (say red and blue molecules) without making an overall difference to that state and log W means “the natural logarithm of W” — the power you have to raise Euler’s number (e = 2.718) to in order to get W (for example if W is equal to e then log W is equal to 1, because e to the power 1 is e).

Boltzmann’s tomb, with his famous entropy law above the bust

That little equation of Boltzmann’s explains a huge number of phenomena. For example, why do hot things tend to get colder and cold things hotter? Easy — bring a hot thing and a cold thing into contact and it’s like the red and blue molecules all over again — there are many, many more ways for hot molecules and cold ones to get mixed together equally than for them to stay separated into a hot part and a cold part. So the temperature equalizes.

Another example: why do balls bounce lower and lower, but never start bouncing higher and higher? Easy — after they’re done falling, ball molecules are moving more, on average, than floor ones. During each bounce, there are more ways of sharing out this motion randomly amongst the ball and floor than there are of keeping all the faster molecules in the ball and all the slower molecules in the floor. So this sharing out is what happens, and the ball eventually stops bouncing. The opposite case — a ball spontaneously bouncing higher and higher — never happens in practice because it is so unlikely. That’s how you can tell a film is being played backwards; everything that happens is so unlikely that it is never seen to happen in practice. These examples demonstrate the second law of thermodynamics: the total entropy always increases and never decreases because of how incredibly unlikely a decrease is.

What about life and entropy? A living thing has a very low entropy compared to its surroundings, because there are not many ways of swapping its constituent parts and leaving it in an invariant state. For example, swapping molecules between your heart and brain wouldn’t leave you in “an invariant state” — it would kill you! In fact, coming into thermodynamic equilibrium with your surroundings is also known as being dead!

Next question: how is life able to maintain this low-entropy state, in apparent defiance of the second law? Well, life is part of the Earth-sun system. We can regard this as “a closed system” to a very good approximation — a vast ocean of space separates it from other systems. But the Earth alone (plus moon, of course!) is not “a closed system.” The sun — a nuclear fusion reactor — provides the Earth with a constant input of low-entropy “organized” energy in the form of high-intensity photons (particles of light). Plants use this energy to make food which animals (including humans) eat, keeping the low-entropy-maintenance machinery of life running.

The Earth-sun (plus moon) system, of which the human economy is a sub-system

Save for a few ocean vent ecosystems, this low-entropy input from the sun makes all life on Earth possible, and hence all human economies (again, whether or not economists pay attention to the fact!). When we humans burn reserves of oil and coal laid down over millennia in a geological eye-blink, we are liberating the low-entropy energy captured from ancient sunlight and buried deep underground.

The second law of thermodynamics has profound implications for our economic systems. A constant stream of low-entropy energy from the sun is required to maintain life’s organized state. Without this “entropy gradient” the machinery of life would soon wind down, like the bouncing balls or mixing molecules did. So in order to prolong life on Earth, we should try to use this vital low-entropy input as efficiently as possible, to recycle it through all sectors of the economy. We should certainly not waste it and assume that we will be able to increase our use of it more and more and more, forever.

Unfortunately, most mainstream economists don’t seem to have heard of the second law of thermodynamics. Perhaps this isn’t really their fault, since it’s not in their textbooks. But it should be. It governs all life and all systems on Earth, including the economy. As our leaders in business and government race to implement misguided economic models that are not founded upon the laws of thermodynamics, and as nation after nation refuses to question the pursuit of never-ending economic growth, we draw closer to a fate that will end in tears for the human race. I worry that the tears have already begun falling.

Steady State

The graph above shows the latest available data for Iraqi production.  As you can see, there was a sharp increase in March and April.  The April number is entirely dependent on one source – OPEC (secondary sources) – but post-invasion Iraq seems much more transparent than other middle eastern countries and the data sources don’t vary that much.  So I would expect this to be mostly confirmed.

According to Bloomberg, more is on the way:

The country is targeting production of 3.4 million a day this year and more than 4 million barrels in 2013, according to Asim Jihad, a spokesman for the Oil Ministry in Baghdad.

and

Iraq, seeking to more than double oil output by 2015, is poised to overtake Iran as OPEC’s second- largest producer by the end of the year as sanctions hobble crude production in its Persian Gulf neighbor.

My past coverage on prospects for Iraqi oil coverage can be found here.

Early Warning

Eni announced Thursday that it has made a significant oil discovery at the Emry Deep exploration prospect, located in the Meleiha Concession, in the Western Desert of Egypt, 180 miles (290 kilometers) south west of Alexandria.

Cellulosic biomass technology developer GraalBio is planning to help build Brazil’s biorefinery industry with a R$300m ($146m) investment of a new 22m gallons/year cellulosic ethanol plant to be constructed in Alagoas using sugarcane bagasse and straw for initial feedstock.

GraalBio is also developing a new type of cost-competitive biomass called Energy Cane, a cross hybrid of sugarcane varieties with selected types of grasses producing low sugar content but high fiber. An experimental site in Alagoas is expected to produce 100,000 Energy Cane seedlings by the end of the year. The company is hoping to achieve productivity target of 100 tons of dry mass/hectare.

GraalBio said the cellulosic ethanol facility will be Brazil’s first. Construction is expected to start in July and start-up of operations is expected by the end of 2013. For pretreatment and conversion of biomass, GraalBio has licensed the PROESA technology from Italy-based Beta Renewables – a joint venture between Chemtex (a division of Italian plastic producer Gruppo Mossi & Ghisolfi) and investment firm TPG.

Chemtex will provide engineering services, equipment and technical field services to GraalBio’s facility. Dutch firms Novozymes and DSM will provide the enzymes and industrial yeasts, respectively.

By the way, Novozymes said it has been looking for locations in Brazil to build its new enzyme manufacturing plants dedicated to support the country’s growing advanced biofuel industry.

“The location of new plants will, among other things, depend on where the industry is expected to scale up, where Novozymes’ partners are located, and where the best framework conditions exist,” says Peder Holk Nielsen, Novozymes VP.

GraalBio said it will also expand the use of its Energy Cane biomass into the bio-based chemicals field. The company is also building a pilot plant in Campinas this year for the development of new biochemical pathways using PROESA. By 2017, GraalBio said it hopes to build five facilities for the production of biobased chemicals in Brazil using modified Brazilian yeasts.

“While the maturity of second-generation biofuels technologies in Brazil is materializing, the U.S. is building 29 biorefineries for several products obtained from the conversion of cellulose. GraalBio is in negotiations with patent holders to license, purchase and apply industrial solutions in Brazil, and it will look for partners in Brazil in different areas, including co-development, supply of feedstock and new projects.” – GraalBio

icis.com

There’s been a lot of excitement in the past year over the rise of North American oil production and the promise of increased oil production across the whole of the Americas in the years to come. National security experts and other geo-political observers have waxed poetic at the thought of this emerging, hemispheric strength in energy supply.

What’s less discussed, however, is the negligible effect this supply swing is having on lowering the price of oil, due to the fact that, combined with OPEC production, aggregate global production remains mostly flat.

But there’s another component to this new belief in the changing global landscape for oil: the dawning awareness that OPEC’s power has finally gone into decline. You can read the celebration of OPEC’s waning in power in practically every publication from Foreign Policy to various political blogs and op-eds. David Ignatius of the Washington Post wrapped up nearly all of the recent claims in a nice bundle in his May 4, 2012 piece, An Economic Boom Ahead?, when he quoted PFC Energy’s David West:

“This is the energy equivalent of the Berlin Wall coming down,” contends West. “Just as the trauma of the Cold War ended in Berlin, so the trauma of the 1973 oil embargo is ending now.” The geopolitical implications of this change are striking: “We will no longer rely on the Middle East, or compete with such nations as China or India for resources.”

(Source)

While it’s true that the Americas hold great promise to convert natural gas resources to higher production levels, that is not the case with oil. The celebration of a geo-political swing in energy power therefore misses a crucial point: No region — from OPEC to Non-OPEC, from Africa to Russia — has the single-handed ability to lower the price of oil now, because none can bring on new supply quickly enough for a long-enough sustained period of time. And there is more to this story than meets the eye.

History of OPEC

For over 30 years, OPEC has produced less than half of the world’s oil. Indeed, as of today, OPEC produces only a little more than 40% of the world’s oil. But most of the world’s spare capacity has been held by Gulf State producers. Thus OPEC, primarily Saudi Arabia, has long been able to control the price of oil in not one, but two, directions. Historically this has meant that the concentration of oil pricing power resided with OPEC and its largest producer, Saudi Arabia.

But starting in 2005, global oil markets sensed that OPEC was only able to influence the price of oil in one direction: higher, by lowering output. OPEC’s ability to lower prices started to crack, break up, and generally fail as the first phase of oil’s repricing headed into 2008. Indeed, OPEC raised production several times in the 2004-2008 period, attempting to restrain oil prices as it moved to protect the global economy from an oil shock. However, the oil market, which was going through a fundamental transition at the time, as it reoriented itself towards insatiable, price-insensitive demand from Asia — paid little attention.

Instead, supply disruptions at small producers and in small regions had a greater influence on oil price (pushing it higher) than OPEC’s influence on attempting to push the price lower.

It’s actually not clear that OPEC has had any measurable influence on restraining oil prices for years. Summer hurricanes in the Gulf of Mexico, unrest and outages in the Niger Delta, and various strikes presented greater upward pressure on oil prices than upward OPEC supply changes.

The Mythology of OPEC

There is a trailing cultural myth, therefore, (which is nothing more than a hangover from 30 years ago), that OPEC can mount swift, price-killing upsurges of production. But as the below chart shows, OPEC production has made no progress in at all in the seven years since 2005, as oil began its price transition.

As oil rose above $50 in 2005, eventually reaching $90 in 2007, and then on to levels above $140 in 2008, OPEC production both rose and fell, but without any reliable correlation to price. In the aftermath of 2008, OPEC production has correlated better with the recovery in oil prices. But again, the rise in OPEC production has only come back towards the previous highs from last decade. Here is a recent news story rather breathlessly discussing the most recent OPEC production levels this year:

Acting to mitigate market nervousness amid Iran supply fears, OPEC on Thursday said it was pumping more oil than the market needs—at levels not seen since summer 2008—and expressed a cautiously optimistic note on demand. The cautious optimism, combined with a production boost sufficient to cover all of Iran’s oil exports, is likely to further stabilize oil markets, where volatility by some measures has already smoothed in recent weeks. In its latest monthly market report, the Organization of Petroleum Exporting Countries said its crude production was 32.42 million barrels a day in March, up 317,000 barrels a day from the previous month.

Yes, but there’s a neglected point to make: these production levels are not special. Not meaningful. And are not newsworthy in any sense. Production at/above 32 million barrels a day? That level has been reached at least 4-5 times since 2005, with at best weak correlation to price changes.

Let’s take a closer look at the global share of oil supply, divided in two between non-OPEC and OPEC production.

Non-OPEC vs. OPEC Oil Production

There are several possible conclusions to draw from the above chart, which shows that non-OPEC provided nearly 58% of global crude oil supply in 2011, and OPEC provided 42%.

1. Non-OPEC is the domain of private oil companies, and has managed to increase its market share over the past 30 years through competition and through the use of technology.
2. OPEC’s market share has stagnated, possibly due to the predominance of state-run oil companies and the interference of political structures.
3. Non-OPEC has the pricing power, due to its larger market share.
4. Or perhaps OPEC still retains the pricing power, due to its greater quantity of spare capacity.

There’s an element of truth in each of these observations.

Many also believe that both OPEC and non-OPEC could be producing a lot more oil. In the case of OPEC, many harbor the view that state-run producers and governments are sitting on massive, hidden spare capacity and retaining it as a cartel to manipulate oil prices higher. In the case of non-OPEC, many believe that environmentalists, regulations, and other limits placed by democratically-elected governments are suppressing a wall of supply that could come to market easily if only the oil is ‘set free.’

These views, however, are not only extreme but shaky. They are typical of the kind of grand claims that fit people’s worries and suspicions, rather than fitting any empirical data. The fact is that OPEC spare capacity has been under pressure for some time despite persistent belief to the contrary, with estimates running below 3 mbpd, or even below 2 mbpd. (For recent commentary on OPEC spare capacity, see A Model of Oil Prices by Chris Nelder). The case for hidden, held-back oil capacity in OPEC is weak, especially as domestic populations in the Gulf have dramatically increased the consumption of their own oil.

Meanwhile, non-OPEC large producers like Russia have significantly increased production this past decade. And regions like North America have been able to slow declines. Western oil companies — which dominate non-OPEC production — have scoured the globe looking to replace their reserves, but largely to no avail. This is why ExxonMobil and ConocoPhilips eventually gave up, capitulated, and bought natural gas assets instead. By doing so, they followed in the steps of Royal Dutch Shell, which had taken the natural gas pathway years earlier.

Therefore, a fact about non-OPEC production that was unknown even to the industry ten years ago is now very plain: There just isn’t a vast quantity of new oil that can come online easily and inexpensively outside of OPEC-controlled regions. Only Russia, the largest non-OPEC producer and now the largest single country producer in the world — eclipsing even Saudi Arabia — was able to significantly increase production.

A Window into Non-OPEC Supply: Russia

Two charts will tell us all we need to know about the limits facing non-OPEC crude oil production. First, let’s take a look at total non-OPEC production on an annual basis:

Just as with OPEC production, little if any progress has been made in the past seven years. This has been a complete surprise to most analysts, especially within the industry itself. Who would have thought that with a regime change in oil prices, non-OPEC could not sustainably increase production to much higher levels? Instead, non-OPEC production remains stuck around a ceiling, just like OPEC.

The Big Reveal comes, however, when we take a look at non-OPEC supply without Russia.

Without Russia, non-OPEC supply has actually lost about a million barrels a day of production in the last ten years. This speaks volumes to the quickly-rising costs of bringing on a new barrel of oil in non-OPEC regions, which we will discuss further in Part II of this report.

The Price of Oil When OPEC Is Powerless

Let’s imagine for a moment that OPEC could, if it chose to, pour an extra 3 mbpd of oil on the world market. And that by doing so, it could lower the price of WTIC oil to $90 or less. What would that accomplish? And for how long would such “lower” prices last?

In Part II: The Cruel Math of the Marginal Barrel, we explain that while fluctuations in economic activity can certainly raise and lower the price of oil, there are deeper structural reasons why OPEC — even with its spare capacity — can no longer sustainably “lower” the price of oil. Moreover, we will discuss how, paradoxically, any surge of supply from OPEC which did persuasively lower the price of oil could wind up having the opposite effect on price eventually thereafter.

Surprising? Yes, but not strange or unlikely, for reasons we will explain. Finally, we conclude that oil’s floor price – outside of volatile 30-90 day periods — is higher than ever before. This will make for a large surprise, should another acute phase of the financial crisis rock oil prices lower over a 2-3 month period.

chrismartenson.com

“Two independent reports show that the public and most workers received only low doses of radiation following last year’s meltdowns at the Fukushima Daiichi nuclear power plant in Japan. Nature reports that the risks presented by the doses are small, even though some are above guidelines and limits set by the Japanese government. Few people will develop cancer as a result of the accident, and those that do may never be able to conclusively link their illness to the meltdowns. The greatest risk lies with the workers who struggled in the early days to bring the reactors under control. So far no ill-effects have been detected. At Chernobyl, by contrast, the highest exposed workers died quickly from radiation sickness.”

Few people will develop cancer as a consequence of being exposed to the radioactive material that spewed from Japan’s Fukushima Daiichi nuclear power plant last year — and those who do will never know for sure what caused their disease. These conclusions are based on two comprehensive, independent assessments of the radiation doses received by Japanese citizens, as well as by the thousands of workers who battled to bring the shattered nuclear reactors under control.

The first report, seen exclusively by Nature, was produced by a subcommittee of the United Nations Scientific Committee on the Effects of Atomic Radiation (UNSCEAR) in Vienna, and covers a wide swathe of issues related to all aspects of the accident. The second, a draft of which has been seen by Nature, comes from the World Health Organization (WHO) in Geneva, Switzerland, and estimates doses received by the general public in the first year after the accident. Both reports will be discussed at UNSCEAR’s annual meeting in Vienna this week.

The UNSCEAR committee’s analyses show that 167 workers at the plant received radiation doses that slightly raise their risk of developing cancer. The general public was largely protected by being promptly evacuated, although the WHO report does find that some civilians’ exposure exceeded the government’s guidelines. “If there’s a health risk, it’s with the highly exposed workers,” says Wolfgang Weiss, the chair of UNSCEAR. Even for these workers, future cancers may never be directly tied to the accident, owing to the small number of people involved and the high background rates of cancer in developed countries such as Japan.

Scientists involved in producing the UNSCEAR report hope that their independent summary of the best available data could help to dispel some of the fear about fallout that has grown over the past year (see Nature 483, 138–140; 2012). As well as providing a preliminary assessment of workers’ exposure, the UNSCEAR report concludes that the Japanese government’s estimate of the radiation released was correct to within a factor of ten, and that further study is needed to fully understand the impacts of the accident on plants, animals and marine life near the power station. When a final version of the report is approved by the full UNSCEAR committee next year, it should provide a useful baseline for future studies.

The Fukushima crisis began on 11 March 2011, when a magnitude-9.0 earthquake triggered a tsunami off the coast of Japan. A 14-metre wave flooded four of the six reactors at the Fukushima Daiichi plant, knocking out emergency cooling systems and leading to meltdowns and explosions that released radioactivity into the air and ocean. In the year since the accident, the plant has been stabilized, and radioactive emissions have largely stopped.

From last autumn, UNSCEAR has been reviewing all the available data on Fukushima’s radiation — just as it did to produce what was then the definitive report on the 1986 Chernobyl nuclear accident. In particular, it scoured anonymized medical data for 20,115 workers and contractors employed by the Tokyo Electric Power Company, which runs the plant. It found that 146 employees and 21 contractors received a dose of more than 100 millisieverts (mSv), the level at which there is an acknowledged slight increase in cancer risk. Six workers received more than the 250 mSv allowed by Japanese law for front-line emergency workers, and two operators in the control rooms for reactor units 3 and 4 received doses above 600 mSv, because they had not taken potassium iodide tablets to help prevent their bodies from absorbing radio­active iodine-131 (see ‘In the zone’). So far, neither operator seems to have suffered ill effects as a result of their exposure.

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Source: UNSCEAR, WHO & METI

Most of the workers who received high doses were exposed in the early days of the crisis. In those first hours, they were huddled in darkened control rooms, while small teams made forays inside the reactor buildings to survey the damage and manually operate valves and other equipment. Often, they did not know how much radiation was present — the report says that an automated system designed to monitor their radiation levels was not operating properly. By mid-April, basic access control and monitoring had been restored on the site.

Experts agree that there is unlikely to be a detectable rise in thyroid cancer or leukaemia, the two cancers most likely to result from the accident. “There may be some increase in cancer risk that may not be detectable statistically,” says Kiyohiko Mabuchi, who heads Chernobyl studies at the National Cancer Institute in Rockville, Maryland. In Chernobyl, where clean-up workers were exposed to much higher doses, 0.1% of the 110,000 workers surveyed have so far developed leukaemia, although not all of those cases resulted from the accident.

The risk to the roughly 140,000 civilians who had been living within a few tens of kilometres of the plant seems even lower. Because detailed radiation measurements were un­available at the time of the accident, the WHO estimated doses to the public, including radiation exposure from inhalation, ingestion and fallout. The agency concludes that most residents of Fukushima and neighbouring Japanese prefectures received a dose below 10 mSv. Residents of Namie town and Iitate village, two areas that were not evacuated until months after the accident, received 10–50 mSv. The government aims to keep public exposure from the accident below 20 mSv per year, but in the longer term it wants to decontaminate the region so that residents will receive no more than 1 mSv per year from the accident.

The WHO’s calculations are consistent with several health surveys conducted by Japanese scientists, which found civilian doses at or below the 1–15-mSv range, even among people living near the plant. One worrying exception is that infants in Namie town may have been exposed to enough iodine-131 to receive an estimated thyroid dose of 100–200 mSv, raising their risk of thyroid cancer. But data collected from 1,080 children in the region found that none had received a thyroid dose greater than 50 mSv. Chernobyl’s main cancer legacy in children was thyroid cancer.

Fearful and angry

The large population involved could mean that the eventual number of radiation-induced cancers among the public will actually be higher than among workers, even though the risk to each individual civilian is tiny, says David Brenner, a radiologist at Columbia University in New York city. But he doubts a direct link will ever be definitively made. Under normal circumstances, “40% of everybody will get cancer”, he says. “It doesn’t seem to me that it’s possible to do an epidemiological study that will see an increased risk.” Still, it may be valuable to conduct studies to reassure the population that they are not being misled, he adds.

A far greater health risk may come from the psychological stress created by the earthquake, tsunami and nuclear disaster. After Chernobyl, evacuees were more likely to experience post-traumatic stress disorder (PTSD) than the population as a whole, according to Evelyn Bromet, a psychiatric epidemiologist at the State University of New York, Stony Brook. The risk may be even greater at Fukushima. “I’ve never seen PTSD questionnaires like this,” she says of a survey being conducted by Fukushima Medical University. People are “utterly fearful and deeply angry. There’s nobody that they trust any more for information.”

Overall, the reports do lend credibility to the Japanese government’s actions immediately after the accident. Shunichi Yamashita, a researcher at Fukushima Medical University who is heading one local health survey, hopes that the findings will help to reduce stress among victims of the accident. But they may not be enough to rebuild trust between the government and local residents. Tatsuhiko Kodama, head of the radioisotope centre at the University of Tokyo and an outspoken critic of the government, questions the reports’ value. “I think international organizations should stop making hasty reports based on very short visits to Japan that don’t allow them to see what is happening locally,” he says.

UNSCEAR’s working committee of roughly 70 scientists still has much to do before the final report is completed. Committee members will continue to independently validate sources of data from the accident and work on models of the flow of radio­isotopes from the reactors into the environment. For the workers, “individual medical follow-up is more important than the statistical follow-up”, Weiss says. “People want to know whether what we say is true.”

Nature