We’re extraordinarily lucky. If present thinking is correct, the first single-celled living organisms may have appeared as much as 3½ billion years ago, and it would appear that once life arrived, it never went away. That’s a very long time for conditions to have remained favorable enough to keep the chain from breaking.

As the eons unspooled, Earth’s climate varied, sometimes wildly. It has been much hotter than it is today, and much colder. (One current theory holds that the average surface temperature has regularly oscillated between 120° and -50°F.) Nearly all of the changes have been due to variations, some of them cyclical, in the amount of solar radiation reaching the surface of the planet. Through it all, life endured, because of the existence of carbon.

Now, rather suddenly, carbon is the designated boogey man. Individually and collectively, we are told, we must work on reducing our “carbon footprint,” or else something awful is going to happen. The headlines are terrifying: we’ll have hellacious droughts, monster hurricanes, and entire cities disappearing beneath the waves.

Well, perhaps. In a climatic feedback system as complex as Earth’s, anything is possible. More likely, though, is that we’ll see none of the above. Or at least not because of anything humans do or fail to do.

The simple (yes, inconvenient) truth is that scientists don’t even know whether the planet is warming at all, let alone if AGW has any role in causing it. The data are inconclusive at best. Most of those dire predictions you’ve read are based upon computer modeling, and anyone who watches the nightly weather forecast knows how infallible that tends to be.

Yet the truth has not prevented the AGW theory from being presented to the public as fact. Its proponents have so captured the media that Al Gore’s Nobel Prize is a huge story, while the Manhattan Declaration of 2008 gets nary a mention in the press. The latter, endorsed by hundreds of prominent citizens, including two hundred climate scientists, concluded that “current plans to restrict anthropogenic CO2 emissions are a dangerous misallocation of intellectual capital and resources that should be dedicated to solving humanity’s real and serious problems.”

Sadly, that misallocation is about to get a whole lot bigger. If the Obama administration has its way – and it is expected to, since there’s no meaningful opposition – carbon caps will soon be coming to every American town.

If you’re unfamiliar with the concept of a carbon cap, it’s simple. It’s a tax. The president wants to reduce per-capita U.S. carbon emissions to 14% below 2005 levels by 2020, and 83% by 2050. And he’s promoting this as a good idea by suggesting that it will pour $646 billion into federal coffers between 2012 and 2019, through government auctions of the rights to emit greenhouse gases. Those rights would be sold to energy companies, manufacturers, utilities, or anyone else who “pollutes” the air with carbon dioxide. And they could be traded.

Leave aside the question of whether reducing human carbon emissions is truly a valid goal; and whether we need another huge tax; and whether the government will do anything constructive with an infusion of our money, to the tune of nearly two-thirds of a trillion dollars. Instead, just consider the consequences.

The cost of everything will go up, as the affected businesses compensate for their lost revenue. If carbon credits are auctioned at the lower end of the projected range (between $13 and $20 a ton), estimates are that the average price of gasoline will jump by 12 cents a gallon and the average electricity bill by 7%.

Worse, though, is that the pain will be unevenly distributed. As the Detroit News editorialized, the cap-and-trade plan “is a giant dagger aimed at the nation’s heartland — particularly Michigan. It is a multi-billion-dollar tax hike on everything that Michigan does.”

That is, it penalizes states and regions with large manufacturing bases and coal dependence for electricity, and rewards places with larger populations but light industry and cleaner power plants. As Michael Morris, CEO of coal-heavy American Electric Power, put it: “It is a clear transfer of the middle part of the country’s wealth to the two coasts.” Small wonder that politicians from California and New England are such enthusiastic supporters.

For what to expect here, we can look to Europe, where cap-and-trade is firmly established. While it has worked, in the sense of lowering carbon emissions (though not by as much as anticipated), its effects have been stifling. For example, the Washington Post cited “the Dutch silicon carbide maker that calls itself the greenest such plant in the world, but now can’t afford to run full-time; the French cement workers who fear they’re going to lose jobs to Morocco, which doesn’t have to meet the European guidelines; and the German homeowners who pay 25 percent more for electricity than they did before – even as their utility companies earn record profits.”

This is what’s coming to your town, if Congress capitulates to the White House. The bill that will bring us cap-and-trade recently squeaked through the House with just a single vote to spare. It faces an uncertain future in the Senate, where opposition is stiff. Modifications surely will be made. But with Al Franken having cemented the Democratic super-majority, it’s a lock to pass in some form or other.

Ever-savvy, the market isn’t waiting. Although no cap is yet in place, carbon credits have already arrived. There’s even a place to trade them, the Chicago Climate Exchange (CCX), founded in 2003. And companies are busily buying and selling in anticipation.

How does it work? CCX’s website explains: “CCX emitting Members make a voluntary but legally binding commitment to meet annual GHG [greenhouse gas] emission reduction targets. Those who reduce below the targets have surplus allowances to sell or bank; those who emit above the targets comply by purchasing CCX Carbon Financial Instrument® (CFI®) contracts.”

In other words, some outfits are stocking up on purchased credits, against the day when they’ll be required by law. Others are speculating that the value of those credits will go up once the federal cap is in place. And some are making a lot of money simply by selling carbon reductions they’ve already made.

Among the players are expected names from the heavy industry and utilities sectors: DuPont, Ford, Reliant, American Electric Power, Potash Corp., Waste Management, and so on. But it’s a very long list, and on it are tech companies like IBM and Intel; retailers like Safeway; Miami-Dade County, Florida and Sacramento County, California; the University of Idaho and half a dozen other schools; even the Embassy of Denmark.

There’s no secret key to why so many want a piece of this action. It’s going to be a very, very big business. If European standards are applied to the U.S., we’re talking about a quarter-trillion dollars of credit trading a year.

Investors – if they’re well heeled enough and willing to assume a lot of risk — can participate directly in carbon credit trading. Or they can buy stock in the parent of CCX, which is publicly traded in London.

But there are other ways to profit from this unstoppable force.

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Source:  The Carbon Cap: The Newest Form of Taxation

Except it’s not global warming anymore. Now it’s called “climate change.” Y’see, the cold winter wasn’t a sign of warming. It was a sign of global climate change. Got that? Mankind is burning too much fossil fuel, goes the thesis. So the cold gets colder. The hot gets hotter. The wet gets wetter. The dry gets dryer. And the confusion gets what? More confusing?

So is this game rigged? No matter what the evidence is, goes the argument, just pay no attention to the man behind the curtain. It’s all climate change. And that, of course, means that the government knows best. Especially when a certain class of people — with the right policy credentials — are running the government. As in the expression, “Trust us. We’re experts from the government. We’re going to help you.” Or as the narrator used to say at the beginning of the show The Outer Limits, “There is nothing wrong with your television set.” Or as the cops say as you drive past a crash scene today, “Move along, folks. There’s nothing to see here.” Yep. No looky-loo. Just climb aboard the Climate Change Railway Express. No peeking while we raise your taxes.

Decades of Malinvestment Become Apparent

Meanwhile, over the past winter, the economy was in the tank. The deep troubles got deeper. It makes me recall many of those hard times stories I used to hear from family and friends about the Great Depression. It makes me glad I listened.

This past winter, it seemed like all those decades of what the Austrian economists call malinvestment finally found a place in the light of day. But it’s not as if the whole tale were some sort of state secret, like the Venona files at the National Security Agency or something. Really, the nation’s industrial and productive decline was fairly clear all along if you knew what you were seeing. The problem has been hiding in plain sight since August 1971, when President Nixon killed any semblance of a gold-backed dollar.

Or it’s kind of like Peak Oil. M. King Hubbert drew the fundamental Peak Oil graph back in the 1950s. Heck, I heard Hubbert give his speech in fall 1977. I saw Peak Oil in action back when I was working at Gulf Oil Co. in the late 1970s. It was no shock to me, at least, when the world’s crude oil output curve finally maxed out in 2006.

What? Nobody told you that the crude curve maxed out? Hey, the world’s marginal oil output is now mostly natural gas liquids. It means that we’re blowing down the gas caps.

It’s why I like resource and energy companies, companies that bring real stuff to the surface. It’s why I’ll keep writing about energy and resources in a publication like ESI.

Obama’s Economic Policy

I try to avoid getting too “political” in these pages, aside from my rants about issues affecting energy policy, resource policy and the like. So today I’m just going to quote my friend James Howard Kunstler, a longtime Democrat and supporter of Barack Obama in the recent election.

Kunstler just published his comments on the Obama appearance on the CBS News show 60 Minutes on Sunday, March 22. According to Kunstler, Obama “may perfectly represent the majority who elected him… because he also appears to be in full-commanding denial of the realities overtaking our American experience. Those realities include the fact that we can’t possibly return to the easy-credit and no-money-down ‘consumer’ economy, no matter how many nominal dollars get shoveled into the fiery furnaces of banks too big to fail.”

After describing the economic policies coming out of Congress and the new presidential administration, Kunstler continues: “Lending on the scale that became normal over the last decade is, for sure, the one thing that we will not recover. We turn around in 2009 to find ourselves a much poorer nation than we thought we were a year ago, especially among that broad range of formerly middle-class wage-earners who lived so luxuriously until yesterday. The public can’t process this reality, and the president, for all his relaxed charm, is either not ready to articulate it, or can’t process it himself.”

Kunstler describes the process of the Fed releasing new currency — created out of thin air — to buy up Treasury debt. He comments: “It would be sententious to explain how this destroys currencies, but wherever ‘monetizing debt’ has been tried before in history, that is the outcome. The result would be ruinous at every level and would lead straight to the second terrible force: social upheaval brought on by the conversion of economic problems into political turbulence.”

In my view, Jim Kunstler is exactly on target with his comments. I’m watching the shenanigans in Washington with something approaching utter fear. It’s why I’m recommending investments in gold and energy plays.

Spend, Borrow, Tax, Inflate

I’m truly worried about our future. The things that are going on in the U.S. economy are not sustainable, and I don’t just mean “happy motoring” into the Peak Oil future. The whole economy is on the edge. I don’t see anything on the political or policy horizon that offers any semblance of hope. Nothing. It’s just spend, spend, spend. Borrow, borrow, borrow. And tax, tax, tax.

What’s in all of this for you? What’s in it for me? A lot of inflation, most likely. That’s why you need to buy gold with 5-10% of your portfolio. And have more of your portfolio in good, solid mining firms.

Building on Kunstler’s comments just a bit more, the Obama economic policy assumes that someone out there will still buy U.S. Treasury paper. But will that happen? The best customers for U.S. debt are distinctly unenthusiastic about adding to their holdings.

The Chinese already own a trillion dollars or so in Treasury bills that are depreciating in value. Besides, China needs a continent full of new infrastructure, plus social spending for 1.3 billion people. And don’t forget the new navy China is planning, with which to police its interests from Africa to the central Pacific Ocean and onto South America. All of this will sop up funds China once used to buy U.S. securities.

Another large traditional customer for U.S. debt is Japan. But Japan is running a current account deficit. It lacks the large numbers of dollars to recycle.

In the Middle East, the petro states are no longer receiving a flood of dollars from high-priced oil ($147 per barrel last July). Don’t count on them to buy up U.S. Treasuries.

The bottom line is I don’t know — and I don’t know anyone else who knows — where the buyers will come from to absorb all the new debt that the Obama and congressional spending plans are going to generate. Something has to give. It’s going to be the long-term value of the dollar. I expect to see a lot of fuel poured onto the fires of inflation.

Source: An Unsustainable Way of Life

More than a year ago, the folks at Energy Bulletin ran a revealing test on Google Trends to see how many people were searching for “global warming” as opposed to “peak oil.” The results were disappointing. (Four days later came my way-too-premature prediction that Peak Oil was about to become a household word, but we won’t go there now…)

I ran the same test this morning and came up with similarly depressing results. And it’s not just people searching on the web. Confirmation comes from that ultimate arbiter of what America’s clueless nomenklatura are thinking — New York Times columnist Tom Friedman:

We’ve added so many greenhouse gases to the atmosphere, for our generation’s growth, that our kids are likely going to spend a good part of their adulthood, maybe all of it, just dealing with the climate implications of our profligacy. And now our leaders are telling them the way out is “offshore drilling” for more climate-changing fossil fuels.

Madness. Sheer madness.

Friedman has achieved such mythic status that the Times evidently feels he’s beyond any need for an editor. But if he had one, that editor would no doubt ask Friedman what he means by “the way out.” The way out of what? Presumably a shortage of fossil fuels. But Friedman makes no mention of a fossil fuel shortage in the sentence preceding. He’s talking about “the climate implications of our profligacy.”

Sloppy syntax, fuzzy thinking.

Friedman must believe, like Congressional Democrats, that a magical government program can bring about solar-powered cars and jets faster than it’ll take to bring new offshore oil fields online. Of course, if the Democrats are clueless, the Republicans are liars, with the repeated assertions that opening up offshore drilling will bring back cheap gasoline within weeks. It won’t. But it’ll buy us a little more time until something other than oil emerges in another 10-15 years as the transportation fuel of the future. And we’re gonna need all the time we can get to forestall catastrophic changes in the way we live.

Source: Peak Oil vs. Global Warming