June 30th, 2008

food and fuel

I read this:


last night and thought about commenting on it, but decided not to.

Today, I read this:


And two things happened. First, I concluded that whatever happy, respectful, good feelings I automatically had about Keith Bradsher had been thoroughly exhausted by this second agricultural article with his name (along with others) on the byline (the previous included the ode-to-chemical-fertilizers that caused me to shriek about how the Vietnam War might have had an impact on productivity, particularly the use of Agent Orange, wait, Agent Blue. Or whatever.). Second, I realized that you _really_ cannot talk about food and fuel separately, altho people persist in doing so.

The LA Times article is about what a world with $200/barrel of oil might be like. It's long. Because they are imagining this hypothetical future world based on current trends, it covers a lot of ground we're all pretty familiar with by now: people staying home, combining trips, moving closer to work, reducing the number of days worked a week, telecommuting, generalized inflation through consumer products that involve petrochemicals (look, just everything, okay?), reduction of disposable income leading to reduction in unrelated consumer spending (like eating out), new car sales tanking and remaining sales be disproportionately smaller cars, increased use of public transit, carpooling, and here's where it finally gets interesting.

The LA Times article actually ran some numbers on shipping, in particular, transoceanic shipping (everything we get is made in China, right?). The current price of fuel amounts to, according to their expert, a 9% tariff. This is a mysterious number. Don't you have to figure the tariff per pound (that is, high value, lightweight goods would pay proportionately less and low value, heavy goods proportionately more). At $200/barrel, it'd be more like 15%.

A little googling turns up this article from back in _May_ (those Canadians are so much more clever than us):


In which the expert mentioned in the LA Times explains himself. There isn't a zero year; he's treating the cost of shipping across the ocean as a plus cost. So in 2000, something that arrived in a port from China has the cost of shipping it from China, whereas something made in or near that port does not, with an added cost of 3%. Numbers from LA Times match. Still no explanation of how you deal with distributing it per item as opposed to per pound. Whatever. Rubin then mentions that at $200/barrel, the equivalent tariff is like tariffs were back in the 1960s. (When shipping from China cost no oil at all? That can't be right. Did he discount for the relative cost of shipping then? Hello? I mean, Rubin is probably hot shit when it comes to numbers, but the journalists never do seem to convey everything, do they?)

The article as a whole, and Rubin's point specifically, is that globalization relies upon cheap energy/shipping and less cheap/expensive energy/shipping will start to reverse that trend. In both articles, it is noted that we're seeing this reversal on steel already. Because these are Canadians, they're mostly focused on how NAFTA (they don't mention it, but it seems obvious) members might benefit from China's loss of business since Canada and Mexico are closer to the US. Of course, there is the whole issue that container shipping on, like, a boat, is hella cheaper than container shipping by, say, rail or *shudder* truck.

The LA Times article wraps it up by talking about how US oil workers are all busy right now, and the net effect of carpooling and telecommuting would be less congested highways (because that's pretty much how people think in California -- altho, to be fair, elsewhere as well). Shiny, happy silver lining.

What the LA Times article does not discuss is the issue of shipping food. Because part of globalization was about you just grow one thing, and then you trade that for everything else you eat. And you grow it in huge tracts of land with lots of petrochemicals. And you ship it. Meanwhile, over at the New York Times, Bradsher et all are bemoaning the blocking of exports of rice by scared countries who don't want Their People to starve. The whole point of globalization after all was to make sure everyone behaved "efficiently" by growing one thing and trading it. Stop the trading and people fall over dead, run out of water, etc. No mention of the cost of fuel. Also not much mention of about how brutally evil global markets are to the global poor in times of shortage: the rich will always eat (even meat), while the poor will have even the food they grow snatched from their hands in a market where Cash Reigns.


Trade -- global or otherwise -- has always had its problems. Unless the speculators-are-creating-this-crisis folks are right, trade has acquired a huge and growing cost that was small and ignorable not so very long ago. Bitching and wailing about export restrictions and how the agenda for Doha is so hard to adjust and blah blah blah is way pointless.

And talking about food and fuel separately is To Miss the Point.

just stick it way offshore and no one will notice

Many years ago, John McPhee (and yes, this is one in a long list of reasons why I don't much care for John McPhee) wrote an essay in which he advocated for (or, at the very least, didn't seem overly perturbed by) the idea of offshore nuclear power plants.

Really. I could not possibly make shit like this up. An abstract of the essay (which I saw in a book that I was weeding at the local library) can be found here:


I was so shocked when I read this I could barely describe it coherently to R., who really enjoys reading McPhee (I disliked McPhee long before encountering this gem -- I'm willing to allow that this could be a generational issue).

Anyway. Offshore drilling has always made me somewhat nervous, and of course Katrina didn't help much. _Shipping_ oil makes me anxious, and I do recognize that we all need it quite desperately. Whatever. Our Awful Leader is pressing more more offshore drilling, trying to get changes made to what individual states can regulate (so much for the party of states rights, hunh? Truly returning to Lincolnian days, apparently). And then there are people trying to build wind power plants offshore.


An interesting proposal to do offshore wind generation in a lake (so no salt water corrosion problems). Nice comparison of the tradeoffs with nuclear (time to build, capacity, cost per generated amount, whether it's baseload power or not, toxicity, blah, blah, blah).

FWIW, I'm all in favor of offshore wind generation, subject to the usual (turbine spin speeds optimized to _not_ kill migrating birds; attention given to neutral-to-positive impact on the marine environment). I don't give a flying fuck about anyone's view (yes, that's to _you_, Nantucket); I like looking at windmills and I really hate breathing crap air.

more yammering about refis

I've been over this ground several times now, and barely remember what I might or might not have said, so here's a summary:

in at least some states, when you use a mortgage to buy a house, that mortgage is set up in such a way that if it is foreclosed upon, the lender can't come after you for a deficiency judgment (non-recourse loan). Refis, generally, are not set up this way (do people have any idea when they sign away this, to me anyway, valuable feature?)

many refis have prepayment penalties

blah blah blah


Wachovia has a particularly heinous loan product called Pick-a-Pay. You get to decide which of three (I think) payments you make each month. IIRC, one is an interest + principal payment, one is an interest only payment, and one doesn't even cover the interest (negative amortization, or NegAm). The negative amortization feature is only available up to a certain LTV (loan to value: something like 120%, I think, but please do not hold me to this). Once you're in that deep, you're stuck with the other choices (interest only, or interest + principal), and don't forget: the bigger the amount you owe, the higher the minimum interest payment. Plus these are ARMs that tend to adjust upward and not downward.

And on _top_ of all that, you couldn't even refi out of these disasters without paying a penalty (altho given how bad they were? The penalty would have to be substantial to stop one from getting the hell out of this if you had any alternative at all). Wachovia (probably sensing they're about to go down in flames for a wide variety of reasons) is buying themselves a tiny amount less bad PR by waiving the prepay penalty.

Good? I wouldn't go that far. Marginally less evil? Ok. I'd agree to that.

DVC update

I just got a call from the woman who is apparently responsible for trying to sell me ownership in DVC (Disney Vacation Club). For those of you who skipped earlier, lengthy posts on this topic, let me just summarize briefly.

I mocked it.

I discovered that friends whose judgment I respect have been members for quite a while and enjoy it a lot.

I love me some Disney.

I find the economics of DVC to be, to put it gently, impenetrable.

If I buy at all, it'll either be after the BLT (Contemporary Resort DVC tower, Bay Lake Tower) goes on sale or bought resale because why pay full price?

Now, I knew there were incentives being offered. Some of these incentives were oriented towards people who wanted to finance (which I would never, ever do), in particular, cash back that can applied towards the balance owing, but NOT towards the 10% down payment. This lovely lady, in addition to calling to make sure I'd received the rather shockingly expensive looking marketing volume she sent me, wanted to make sure I knew the latest incentive: the cash back can now be applied towards the down payment.

I smell desperation. *chortle*