On Monday, a barrel of West Texas Intermediate crude oil had less value on the market than a printed copy of this newspaper—which, under normal circumstances, is free. Anyone willing to accept delivery could expect to receive $40 along with each 42-gallon barrel.
Demand for oil was already falling early in March, due to the coronavirus. Because Vladimir Putin was resisting his plan to keep oil prices comfortable by lowering production, Saudi Arabia’s fun-loving Prince Mohammad Bin Salman decided to start an oil price war against Russia. He jacked up production and offered big price breaks on Saudi crude. The combined effect was a glut so sudden and so great that the whole global system for transporting oil seized up like an overwound watch.
This, of course, seems pretty weird. On NPR Tuesday morning, energy correspondent Camila Domonoske told host Noel King, “I’m running out of synonyms for unprecedented.” After an explanation of how this had come about, King, searching for some shred of normalcy, asked, “could the federal government intervene and stabilize the market in some way?” According to Domonoske, “President Trump mentioned a few different possible actions. … He talked previously about filling up the Strategic Petroleum Reserve [SPR] ….” That’s not going to help. The maximum capacity of the SPR is 717 million barrels [mb]. The current inventory is about 635 mb, so there’s only about 82 mb of capacity left. Before the virus and the price war, the world used more than that in a day.
According to Peter Zeihan, who appears to know about this sort of thing, the real weirdness is just beginning. In a post at Zero Hedge, he wrote, “this is nothing but the warmup for the big show.
“That will happen when the world runs out of storage.
“… no one thinks there’s a whole lot of storage capacity left. Global oversupply of crude right now is over 20 mpbd [million barrels per day] (with 30 mbpd seeming to be the “average” guestimate). Most folks in the know are now musing that what storage remains will be filled up completely sometime in May or early-June.
“And filled up it will be, because that is the express goal of the world’s largest oil exporter, Saudi Arabia. The Saudi price war started out as a spat with the Russians over carrying the burden of a production cut. It has since expanded into the Saudis targeting the end markets of every single one of what the Saudis’ consider to be inefficient producers. The Saudis are directly targeting markets previously serviced not just by U.S. shale and Russian [crude], but those serviced by Kazakhstan and Azerbaijan and Libya and Iraq and Iran and Malaysia and Indonesia and Mexico and Norway and the United Kingdom and Nigeria and Chad and you get the idea.”
A Pox on All Their Houses
In a melee involving the entire global fossil fuel industry, there are no good guys for whom to root. Fortuitously, though, according to Zeihan, there is one player in all the world that “has the most to lose” in this price war, and it’s one we should all be rooting against: Alberta, Canada.
Because it is landlocked, there is only one market for the nasty oil from its tar sands: via a pipeline, into the U.S. Since we’re already awash in oil, we don’t need it. TC Energy, though—the company behind the Keystone XL [KXL] Pipeline—has a lot invested and seems determined to do whatever it takes to reap what it considers to be its rightful profits.
James Hansen, the former NASA scientist who has been warning the world for thirty years about the greenhouse gasses and climate change, got right to the point about tar sands in a 2013 interview in The Guardian:
“Oil from tar sands makes sense only for a small number of people who are making a lot of money from that product. It doesn’t make sense for the rest of the people on the planet. We are getting close to the dangerous level of carbon in the atmosphere and if we add on to that unconventional fossil fuels, which have a tremendous amount of carbon, then the climate problem becomes unsolvable.”
Bill McKibben wrote in The Guardian on April 5th about just how far TC Energy execs, their cronies, and their enablers will go for a buck.
Thousands of demonstrators had persevered long enough to get the project shelved during the Obama Administration. Naturally, Donald Trump reversed that decision on his fourth day in office. Still, nothing happened because TC Energy was broke.
“[T]hen came the coronavirus epidemic,” McKibben wrote, “and the oil industry saw its opening. It moved with breathtaking speed to take advantage of the moment.
“In Alberta, premier Jason Kenney, a pliant servant of the oil companies who had already set up a ‘war room’ to fight environmentalists, invested $1.1 billion of taxpayers’ money [in] TC Energy to fund construction through the year, and set aside another $6 billion in a loan guarantee.
“Meanwhile, on the southern side of the border, a series of states quickly adopted laws making it a felony to protest ‘critical infrastructure’ like pipelines. (Last week South Dakota, a crucial link on the KXL route, made it a felony even to ‘incite’ such protest.) And the Department of Health and Human Services issued a memorandum exempting pipeline construction from stay-at-home orders because such work was ‘critical’—that is, the department is asserting it is essential to build oil pipelines at the precise moment that the world is swimming in oil and that the Trump administration is boasting about getting Saudi and Russian autocrats to cut supply.”
All is not yet lost, though.
As Niina H. Farah reported for E&E News, on April 15th, “Chief Judge Brian Morris for the Montana district court sided with environmental groups’ complaints that the Army Corps of Engineers had failed to perform a multiagency consultation mandated under the Endangered Species Act to assess the risks of its Nationwide Permit 12 ahead of the program’s five-year renewal in 2017.”
The Corps of Engineers has traditionally taken a rubber-stamp approach to individual permits making up part of a larger project.
“In their lawsuit, which focused on the KXL pipeline but raised broader claims about the Army Corps’ general permit,” Farah wrote, “the environmental challengers said the agency approval treats each of the pipeline’s water crossings as a distinct project and does not take into account the cumulative harms of building through all the water crossings along the entire project route.”
As Rick Perry might say, “Oops.”
About Those Pandemic Bonds
In our most recent printed edition, published on March 13th—and about which there is more below—we noted that two days earlier the WHO had finally declared that a pandemic was under way. We were wondering at that time if that declaration would finally trigger a payoff from the World Bank’s peculiar Pandemic Bonds.
Yesterday we went looking for an update on those bonds. The best explanation came from Double Down News, a UK non-profit, in a YouTube video by Nick Dearden titled, “WTF Are Pandemic Bonds? And Why Are They So Shit?” Here’s a transcript:
The World Bank, which is supposed to be about developing societies, and fighting poverty around the world, one of the ways that it thinks that you fight epidemics is the creation of special bonds called pandemic bonds. Pandemic bonds are loans that are sold to investors, sold to pension funds, sold to hedge funds. And they pay a return to those big investors until a pandemic happens. And when the pandemic happens, the original capital that was invested in the bond, that is used to help countries deal with that pandemic.
The problem is that in order to encourage big investors to buy these bonds, they’ve been structured in such a way that they don’t really work at all. They’ve effectively never paid out to date, despite the Ebola crisis and whatever else, they’ve never paid out.
Now with corona virus pandemic bonds have finally been triggered, so we hope now that those bonds are going to pay out. However, these bonds have been paying out, high rates of interest for the entire time that they’ve been issued to rich investors. So a lot of people have made money.
It would be far far better if we put society’s resources into trying to take money out of tax havens, tax the super rich, tax big business, so that countries are able to develop decent universally accessible, public health care systems, so that when something like this happens, they have a head start—they’re ready to begin dealing with a public health crisis, in a way that can actually meet the needs of everybody but especially, those [who] were going to struggle otherwise.
The idea that you can kind of persuade the financial market to behave, as if it was a development institution, as if it was something that was interested in solving poverty around the world, is ludicrous and we shouldn’t tie ourselves up in knots like this.
We need to tax, and we need to regulate, and we need to build up decent public services.
I always like to think that after the Second World War, my grandparents’ generation suddenly thought: We’ve been through this war, we’ve been through horrendous suffering, we want to build a better society—how do we do that? And one of the things they did in this country was to say; health care is too important to be dictated by the market. Whether I get treated or not, how much I suffer or not, should not depend upon how much money I’ve got in my bank account. Health care should be a given. It should be available to everybody in society, no matter where they come from.
And that’s where they created the National Health Service, and it was a very effective way of trying to re-level, some of the inequalities that had evolved in society over a long period of time. And I think most people in Britain probably regard the NHS, as kind of the pinnacle of civilisation, of what if we put our minds to it we can achieve to create a better way of living.
Exactly that kind of solution needs to be rolled out, right the way around the world today.
Unfortunately, the very institutions like the World Bank, that are creating these ridiculous pandemic bonds, have spent years, and years and years telling countries they need to slash public spending, they need to privatise everything in sight, they need to liberalise their economies, they’ve made those kind of solutions that much more difficult. And we need to reverse course now very, very rapidly. And hopefully one of the few positives that might come out of this crisis, is that we finally wake up to the damage that’s been done, to our ability to meet our needs as human beings, by the ravages of the market for decades now.
The mainstream media has become more and more dominated by vested interests. That’s why alternative media is so utterly vital, if we’re to create the kind of better world that most of us want to create. And it’s why things like Double Down news are so important, so please, please, please support it if you possibly can.
Which we were happy to do.
Our Third Fortnight in Digital Limbo
It’s been 42 days since we loaded the hand truck and wheeled fresh papers to RiverRun Bookstore; six weeks since we sat and helped fold papers for mailing to subscribers. Lord, how we miss publication day—and all those other days in between. Seeing the paper on tables here and there, slightly crumpled or soup-stained, was visible, tangible evidence that all this daily key-poking had a purpose, and meaning. Now we make do with a few additional clicks, silently sending a file to some gadget on a rack in an air-conditioned room devoid of human life. This represents an incredibly radical and rapid change from our familiar, comfortable, former circumstances—a state of being it literally took decades to develop. Indulge us while we briefly reminisce….
The editor first heard of the New Hampshire Gazette in the late 1980s, during his second go-round at the Hillsborough [N.H.] Messenger. Its disgruntled employees, warned of an impending takeover by a man they knew too well to work for, were considering a mutiny. The plan was for the whole crew to jump ship and start a rival paper.
A paper needs a name. The editor had recently been reading certain quaint and curious volumes of forgotten lore, looking for confirmation of a story his father had told him three decades earlier: “There was a printer in the family, way back in the olden days, and he printed something the authorities didn’t like. So they threw him in jail.”
There it was, in Isaiah Thomas’ History of Printing in America : Daniel Fowle, thrown into Boston’s stone gaol in 1754, founded this—the first newspaper in New Hampshire—in 1756. Making things all the more enticing, Frank Luther Mott’s American Journalism  noted that “the oldest American paper surviving today is the New Hampshire Gazette, of Portsmouth….”
The editor hastened to the offices of William “Bill” Gardner, New Hampshire’s Secretary of State for Life. Writing a check for $40, hoping it wouldn’t bounce, he whisked the rights to the Nation’s Oldest Newspaper™ from the previous claimant, then the owner of the Portsmouth Herald, Kenneth Thomson, 2nd Baron Thomson of Fleet, and the 9th richest man in the world. (The Herald and the Gazette had been paired up since F.W. Hartford bought all the papers in town at the turn of the 20th century, shutting down all the others.)
Gardner made it official on May 1st, 1989. After a decade of publishing on irregular dates from a number of locations, we reintroduced this paper to Portsmouth 21 years ago, on May 1st, 1999. In mere months we gained two stalwarts still with us today: Business [Such as it Is] Manager Rose Eppard, and Starving Artiste Mike Dater.
Until we’re back on paper, we’ll be here, confined to www.nhgazette.com. Happily, though, we expect that on May 1st, 2020, this site will undergo a subtle transformation, making it more flexible and responsive.