Is the Earth warming? The current theory is that all this CO2 emission into the atmosphere is causing the Earth to gradually warm. This is expressed frequently as the "hockey stick", showing a gradual cooling from about 1300 to maybe about 1750, and then after that, a slow warming until about 1980, then suddenly shooting upward, producing a graph that looks like a hockey stick. An example might be this one from the UK. People concerned about global warming are saying that unless we do something about this, irreversible adverse things will happen such as the expansion of deserts and the flooding of coastal cities. Indeed, these graphs show about a 1.3 degree F increase in global temperature in the past 100 years.
We have now a new player in the game, however. The Sun has just passed the supposed minimum of its sunspot cycle and should be rapidly increasing in sunspots, especially at moderately high latitudes. However, for the past year, the Sun has shown almost no spots. What's happened to it? This is not the first time this has happened. In the 1600s, the Sun had no spots for an entire human lifetime. During this span of around 100 years, global temperatures fell about 0.9 degrees F, causing the "Little Ice Age".
Are we entering a new Maunder minimum? If so, the increase in temperatures caused by global warming will slow down or stop. The figures I have cited seem to suggest that the Earth will warm only by 0.4 degrees per century, or 0.04 degree F per year. That would then suggest that instead of preventing global warming caused by carbon emissions, we need to keep sending carbon dioxide into the atmosphere or else we could go into an Ice Age. Further, we will not be able to do this, because oil and other fossil production will eventually (and soon) decline and stop, at which point the ice age will come.
But I see a contradiction in this. The problem is that these figures suggest that the decrease caused by lack of spots is a substantial fraction of the increase caused by human-induced global warming. This should be reflected in the hockey stick graph. Since sunspots usually (and in the past century has) followed an 11-year cycle, that should cause 11-year oscillations in the graph of global temperature. But the graphs you see on warming in the past 100 years show no such oscillations. That suggests instead that temperature changes caused by sunspot changes are a minuscule fraction of the changes caused by human-induced global warming. But clearly they aren't.
Another way of looking at it is to look at the "solar constant", the amount of energy striking the Earth on the average. This is 1365 watts per square meter, and it can vary from 1363 to 1367 watts per square meter. Since the Sun has no spots, I would suppose the 1363 holds now. That translates into a decline of 0.3 degree F over the next few years. This also shows that sunspots cause a substantial part of the change in earthly temperatures, but by not as much as the 0.9 degree change cited earlier. and it does not resolve the contradiction between this type of reasoning which suggests 11-year oscillations in the global temperature and the lack of evidence of such cycles.
Until we resolve the contradiction, we don't know which way the world is going to go. Much discussion on global warming is one-sided, with people arguing unequivocally for one side or the other, both the global warming zealots and the global warming deniers. We need to stop arguing and do some analysis. Will the real global change determiners please stand up?
Sunday, July 05, 2009
Monday, June 29, 2009
Michael Jackson and Peak Oil
Oil prices are rising, the economy may be starting to stagger again, and many countries are fast using up their oil supplies. So what does the nation, and the world do? It goes ape over Michael Jackson at his death. This says a lot about where we are and where we are headed. See my companion blog "Beyond Opinion" for further information on Michael Jackson, and for a good description of what he means for us, look at James Howard Kunstler's weekly column "The Man in the Mirror".
Thursday, May 14, 2009
What now?
It's been some time since I posted here. But a lot has happened. I thought for sure that oil would continue to rise. But it rose too fast. It included the rise that should be there due to increasing scarcity of oil, but it also included the investments of many people who felt that oil stocks would continue to go up. The combination caused the price to shoot to $147 a gallon and gasoline to over $4 a gallon. People need gasoline to do their business. When they could not get it, they cut back on other things, including the mortgage payment. This caused the foreclosures, which in turn endangered the banks and threatened the entire financial system. When this happened, a severe recession occurred, causing even oil to drop drastically in price, all the way down to $35 a barrel and $1.46 a gallon for gasoline, causing me to get a gasoline bill in the single digits. The price of oil has moved back up to $57 a barrel.
So what's next? That's hard to say. The Fourth Turning says that history comes in cycles or turnings. The stages of life are 22 years long, and so are the lengths of generations, so history also comes in periods of 22 years, called turnings, which come in First, Second, Third, and Fourth varieties. The first is a High in which high hopes for society are made. This is followed by the disillusionment of the Second Turning, when the babies of the First rebel against the previous Crisis parents, as in Jimi Hendrix, campus protests, and marijuana. The Second Turning also included a mini-depression and two major oil crises. This gave way to the decadent Third Turning, or unraveling, with the focus placed on the individual, as societal pillars wear away. This leads to a Crisis, the Fourth Turning. The last Fourth Turning was the Great Depression and World War II.
I believe now the Fourth Turning has started. It started on 2007 July 27, when the Dow plummeted 400 points because of mortgage foreclosures. It really gained momentum in late summer 2008, when many institutions teetered on the brink and had to be tarped out.
HS Dent is a stock market advisor who bases his decisions essentially on the Strauss and Howe Turning theory. He predicted a big boom in the late 1990s, and booms in the Double Zero years, and now he calls for the Great Depression of the 2010s. I read his column, and he is calling for the current deflationary conditions to continue. Keep your money in money market funds and it will stay the same while deflation occurs; hence your buying power increases.
However, the major crisis on the horizon is Peak Oil. Apparently the production of oil has peaked. It dropped drastically this year, from 88 million barrels/day to 82, but that was because of lack of demand. Still it forms a peak. It may not recover from this, because the oil fields are starting to run out. A stock advisor who is aware of peak oil is Stephen Leeb. He says the low price of oil is temporary. The economy will pick up again this year, and when it does, so will the price of oil. We are already seeing this. Oil goes up and down with the market. He is calling for this to continue, with first prosperity, then a runaway inflation.
So which is it? Will we have deflation or 100% inflation? It's hard to say. It is a vicious cycle:
1. When the economy improves, the demand for oil will go up.
2. So oil prices go up.
3. So demand for oil (and other things) goes down.
4. So oil prices go down.
5. So demand for oil goes up.
(go to step 2)
When oil goes up, its demand goes down, and then oil prices go down. Hence the second derivative of oil prices is roughly proportional to the negative of oil prices. If you write this down as a differential equation and solve it, you get a sine function, a sinusoid. Both demand and oil prices go up and down over and over again. What happened in 2007-9 maybe the first such oscillation.
So now I can't predict much what will happen, so that makes it hard to invest. I don't want to invest in stock funds, only to lose my money in a stock bust like in 2008, but I don't want to hold it in money market funds, have inflation go way high and lose the purchasing power of my money and become a pauper in a multi-million-dollar house. Leeb and Dent have their ideas as to what to do, and they are as different as night and day. Dent says invest in bonds, money market funds, and Treasurys. Leeb says invest in commodities, such as BHP Billiton stock. I will be watching the market carefully to see which way to go.
So what's next? That's hard to say. The Fourth Turning says that history comes in cycles or turnings. The stages of life are 22 years long, and so are the lengths of generations, so history also comes in periods of 22 years, called turnings, which come in First, Second, Third, and Fourth varieties. The first is a High in which high hopes for society are made. This is followed by the disillusionment of the Second Turning, when the babies of the First rebel against the previous Crisis parents, as in Jimi Hendrix, campus protests, and marijuana. The Second Turning also included a mini-depression and two major oil crises. This gave way to the decadent Third Turning, or unraveling, with the focus placed on the individual, as societal pillars wear away. This leads to a Crisis, the Fourth Turning. The last Fourth Turning was the Great Depression and World War II.
I believe now the Fourth Turning has started. It started on 2007 July 27, when the Dow plummeted 400 points because of mortgage foreclosures. It really gained momentum in late summer 2008, when many institutions teetered on the brink and had to be tarped out.
HS Dent is a stock market advisor who bases his decisions essentially on the Strauss and Howe Turning theory. He predicted a big boom in the late 1990s, and booms in the Double Zero years, and now he calls for the Great Depression of the 2010s. I read his column, and he is calling for the current deflationary conditions to continue. Keep your money in money market funds and it will stay the same while deflation occurs; hence your buying power increases.
However, the major crisis on the horizon is Peak Oil. Apparently the production of oil has peaked. It dropped drastically this year, from 88 million barrels/day to 82, but that was because of lack of demand. Still it forms a peak. It may not recover from this, because the oil fields are starting to run out. A stock advisor who is aware of peak oil is Stephen Leeb. He says the low price of oil is temporary. The economy will pick up again this year, and when it does, so will the price of oil. We are already seeing this. Oil goes up and down with the market. He is calling for this to continue, with first prosperity, then a runaway inflation.
So which is it? Will we have deflation or 100% inflation? It's hard to say. It is a vicious cycle:
1. When the economy improves, the demand for oil will go up.
2. So oil prices go up.
3. So demand for oil (and other things) goes down.
4. So oil prices go down.
5. So demand for oil goes up.
(go to step 2)
When oil goes up, its demand goes down, and then oil prices go down. Hence the second derivative of oil prices is roughly proportional to the negative of oil prices. If you write this down as a differential equation and solve it, you get a sine function, a sinusoid. Both demand and oil prices go up and down over and over again. What happened in 2007-9 maybe the first such oscillation.
So now I can't predict much what will happen, so that makes it hard to invest. I don't want to invest in stock funds, only to lose my money in a stock bust like in 2008, but I don't want to hold it in money market funds, have inflation go way high and lose the purchasing power of my money and become a pauper in a multi-million-dollar house. Leeb and Dent have their ideas as to what to do, and they are as different as night and day. Dent says invest in bonds, money market funds, and Treasurys. Leeb says invest in commodities, such as BHP Billiton stock. I will be watching the market carefully to see which way to go.
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